Plastic Recycling Business Plan y5m2e
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Plastic Recycling Business Plan Hind Plastics High Quality Delievered
Group 22
ANKUR VERMA BALVINDER PRATEEK DAHIYA SHIVAM RAJAT
Executive summary COMPANY OVERVIEW .................................................................................................... 6 Mission Statement ..................................................................................................... 6 Markets and Products .................................................................................................... 7 Objectives................................................................................................................... 7 Key to success: ........................................................................................................... 7 Product and services ...................................................................................................... 8 Market comparison .................................................................................................... 8 Possible obstacles .......................................................................................................... 9 Industry and marketplace analysis ................................................................................ 9 Industry analysis ........................................................................................................ 9 STRUCTURE OF THE PLASTICS INDUSTRY .................................................................... 11 Raw Material Producers........................................................................................... 11 Compounders........................................................................................................... 11 Stockists ................................................................................................................... 11 Specialist Manufacturers or Molders ...................................................................... 11 Other Manufacturers ............................................................................................... 12 Fabricators ............................................................................................................... 12 Marketplace analysis ................................................................................................... 13 Customer analysis ........................................................................................................ 13 Competitor analysis ..................................................................................................... 13 Marketing strategy....................................................................................................... 15 Product/ service strategy ............................................................................................. 15 Pricing strategy ............................................................................................................ 15 2|
Distribution strategy .................................................................................................... 16 Advertising & promotion strategy ............................................................................... 16 Sales strategy ............................................................................................................... 16 Marketing & sales forecast .......................................................................................... 17 Development................................................................................................................ 18 Development strategy ............................................................................................. 18 Management ................................................................................................................ 19 Job description ......................................................................................................... 19 Operations ................................................................................................................... 20 Stages of Recycling and Production ......................................................................... 21 Chipping ................................................................................................................... 21 Segregation .............................................................................................................. 21 Cleaning.................................................................................................................... 21 Agglomerating / Colouring ....................................................................................... 22 Extrusion / Palletisation ........................................................................................... 22 Fabrication into end Product ................................................................................... 22 Scope of operations ................................................................................................. 22 Supply chain ............................................................................................................. 22 Gantt chart .............................................................................................................. 25 FACILITY LAYOUT ............................................................................................... 25 Financials.................................................................................................................... 26 Income statement ........................................................................................................ 27 Balance sheet ............................................................................................................ 28 Break Even Point .......................................................................................................... 30 3|
Appendix ...................................................................................................................... 31 Annuity table:........................................................................................................... 31 Bibliography ................................................................................................................ 36
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EXECUTIVE SUMMARY Plastic is the basic need of our day-to-day life. During recent years the plastic industry has grown with a substantial growth rate. This growth is driven by three sectors viz. packaging, infrastructure and agriculture. There are the various verities of plastics out of which PVC (Polyvinyl chloride) and PET (Polyethylene Terephthylene) plastics have their considerable contribution. PET plastics are generally used in the manufacturing of beverage bottles for the packaging and PVC plastic is used in the production of household plastic materials. The growing utilization of plastics in industrial and consumer applications and surrounding solid waste recycling, has led to an increased demand for recycled plastic resins and products. We the Hind plastics provide a wide range of plastic solutions for household and raw material for packaging of various companies. As a part of our ongoing efforts to exploit this opportunity we will recycle the plastics and then produce kitchenware items and other related plastic material. We will also sell the recycled plastics to the companies in the plastic business. We will have a recycling plant along with the production unit. The raw material will be procured from the waste collectors. The raw material will be post-consumed beverage bottles and other soft plastic materials Our main focus is our industrial customer whom we will sell PET bottles and PET flakes. It will contribute more than 60% of our sales. We will also focus on the household plastic business, which is the part of our portfolio. The initial set up cost will be Rs 34, 40,000. Hind plastics will be a solution proprietorship business run by the promoters. Since plastic material does not carry any brand name so it will give us an addition benefit in long term to establish our brand name. To exploit the market we will use penetration pricing as our marketing strategy and utilize our stringent distribution network and strong industrial relationship. As a future plan in coming years we will increase the variety of plastics like LDPE (Low density polyethylene) and HDPE (High density polyethylene). By doing this we will be able to produce plastic carry bags and raw material for production for plastic chairs and tables and other fiber based products.
5|
COMPANY OVERVIEW Hind Plastics provide a wide range of plastic solutions for households and raw material for packaging to the various companies. Allahabad is the place where the facility will be established and other operation will commence. We will collect the plastic garbage like consumer beverage bottles, plastic bags from various garbage stores and then our recycle unit will process it which eventually be used for the production of finished goods. The plastic garbage we are getting as raw material has two components one is PVC (Polyvinyl chloride) and other is PET (Polyethylene Terephthylene). Firstly the whole garbage is melted and then PVC and PET are separated from each other by froth flotation technique. We will create a plant (actual facilities to be shared with the recycling unit) to manufacture extruded plastic flakes (purified plastic). The extruded plastic is then molded in the various products. We will produce two types of replay plastics
PVC (Polyvinyl chloride) PET (Polyethylene terephthylene)
Mission Statement
6|
Strive to provide the excellent plastic solution to the customers at competitive prices. Continually expand our range of products. Poised to service both large and small customers.
MARKETS AND PRODUCTS The plastic products usually do not carry a brand name so intruding in the business like plastic will not be too hard with low price strategy. The population of Allahabad and the cities around it like Varanasi, Gorakhpur, Johnpur is around 3 Crores and this area basically comprises of low to middle income group families so they focus on plastic products rather than fiber since it is a cheaper. Hence it is huge market to exploit. From Allahabad city 500 tons of solid waste is produced from that 15tons of plastic bags and around 7 tons of plastic bottles is generated per day. So the supply of raw material will be continuous. Apart from this we will sell raw material for packaging to the various small companies in this area. Around 30 small and medium scale companies are working in this region. So a large amount of industrial customer is also available. There are two folds of products that we are providing one are industrial and other is household.
Objectives
Develop a business that survives on its own cash. Create a company that exceeds customer satisfaction level. Expand the service to whole UP in first five years and then to Delhi. Extending the services to electronic component manufacturing companies for production of capacitors printed circuit boards etc.
Key to success:
7|
The main keys to the success of the Company are: Secure Supply- Contract for supply of post-consumer bottles and postindustrial manufacturing waste for PET raw material feed stock. Satisfy our customer so that we can retain them Maintain low overhead and operating costs Provide better prices than all our competitors
PRODUCT AND SERVICES We will provide a wide range of plastic products for households and raw material for packaging. The recycled plastic is processed to Polyethylene Terephthalate (PET). PET is a thermoplastic polymer viscous of polyester family. The biggest property of this compound is it transparent. This is the reason why it is used for packaging. Apart from this PET have good strength, ductility, stiffness and hardness. After the recycling process completed an extruded plastic is generated. Plastics extrusion is a high volume manufacturing process in which raw plastic material is melted and formed into a continuous profile. The products we are producing are
Cleaned and recycled plastic flakes of PET and bottles, recovered from postconsumer beverage bottles. (This PET will work as raw material for packaging to various firms, not for the end ) Household finished plastic goods. We will manufacture plastic tubes of various diameters, plastic kitchenware. (For the end ) PET flake will be sold to thermo formers (those who mold plastic sheets into usable products) primarily to be used to produce high-visibility packaging. And also to the beverage companies for packaging.
Recycled plastic is widely used in mainstream construction products such as damp proof membrane, drainage pipes, ducting and flooring. Bins, street signs and planters are frequently made from plastic. They are cost competitive and resistant to damage. Local authorities and schools are able to demonstrate recycling in action by specifying recycled products High strength PET is used in the clothing, furnishings, tyre cord and technical textiles. Apart from PET the household plastic will be directly sold to the end customers. In day-to-day life plastic items like water bottles, shop case scrubber etc. is frequently used. So there is a big demand of these in local market.
Market comparison While quality and delivery are important factors to our potential clients, price is most often the determining factor in a buying decision. Good-quality packaging products manufactured from recycled (less expensive) resins, as close as practical to the end customer's operations, will be most competitive and achieve a significant market share. These factors have helped to determine the business parameters of Replay Plastics. 8|
POSSIBLE OBSTACLES The product is completed and ready for the market launch. The possible obstacles are: Unavailable or scarce raw material stock for production Replay is confident that it has secured good availability of low cost post-consumer PET bottles (feed stock) derived from post-consumer beverage bottles. It may be possible that we would not get desired raw material. Company may not meet environmental standards This environmentally-favorable venture provides for the development of technically feasible and economically viable solutions to PET plastic beverage bottle recycling, as well as environmentally aware in-house re-use practices which filter and return nearly all of the process water to the production lines
INDUSTRY AND MARKETPLACE ANALYSIS Industry analysis Plastic recycling is an industry in itself in India. According to the Crisil research 7360 companies are working in this industry with a turnover of Rs 9200 Crore provides employment to 3.5 million people. In India, per capita plastic consumption is one of the lowest in the world. The per capita consumption is just one fifth of world average that is 5kg. The domestic demand of plastic has grown by 9% and reached to 4.5MMT in year 2005.The GDP has grown during this period at 6.3% and plastic industry 1.3 times of GDP. According to the Crisil report the demand of plastic by 2012 will be around 12MMT. The plastic consumption in India is booming. Demand for commodity plastics is growing at the rate of 15% per year. . India holds immense potential for the use of plastic in the infrastructure and agriculture. In case of packaging industry we are using more plastic than the developed countries. The growth is driven in three major sectors – infrastructure that is 13%% of the total, packaging is 15% of the total and 10% for plastic consumer durables. It is projected that the plastic waste generation will reach the will reach the level of 1.6 million tons annually. India produces 5600 tons of plastic waste per day.
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Region wise and polymer wise turnover of recycling industry in Rs.Crore Region
PVC
PET
West
156
383
East
75
86
North
338
158
South
111
139
Total
680
766
Each region is specialized in one type of plastic viz south: PET; north: PVC; Plastic India Foundation estimates the current plastic recycling rate at 60%. One estimate is that about 20,000 microenterprises are engaged in reprocessing and recovery of plastic waste in addition to 180,000 of various sorting and washing units, 60% of which are uned. Delhi alone has estimated 53,400 units and Delhi and Bombay together process over 50% of India's waste plastics.
STRUCTURE OF THE PLASTICS INDUSTRY Raw Material Producers These are chemical and petroleum companies who produce "virgin" plastic (sometimes called resin or polymer) in huge quantities. The main influence they have on the recycler is to fix prices and availability of virgin materials. Virgin material is delivered in powder or pellet form, in plastic or paper sacks of around 20 kilos weight, in large cardboard drums that hold many times that quantity or even by road tanker.
Compounders These specialist companies, usually small, stock various polymers and provide the manufacturers of plastic goods with technical advice and the most suitable materials or mixtures for each individual need. The compounder is often the best market for the recycler because he possesses superior technical knowledge and has a large volume throughput of virgin material, in which small percentages of reclaim will reduce cost without seriously affecting the quality required by the molder.
Stockists These warehouses stock polymers and compounds but neither manufacture themselves, nor provide a compounding service. They may be agents or subsidiaries of the producer companies or departments of companies concerned with the supply of other materials such as chemical, rubber or paper. They may be willing to stock reclaim alongside virgin materials, especially if these are in short supply.
Specialist Manufacturers or Molders These buy their raw materials from compounders. If they do their own compounding, or if the material is used as produced and does not need compounding, they may buy direct from stockists or producers. They are specialists in plastics and do not perform other types of manufacturing. They may be an attractive market to the recycler because they operate at high volume, but rarely have as much flexibility to vary product quality as molders who know, accurately, the final market for the product. 11 |
Other Manufacturers Many companies are not plastics specialists but employ molding operations in the manufacture of some other product. For example shoe and boot makers use plastics extensively and may carry out the various plastics molding operations in the same production sequence as the work in leather, canvas, rubber etc. Many manufacturers use plastic packaging machinery at the end of a production operation.
Fabricators These firms cut and sheet, rod or extrusion to manufacture a variety of products. They have no opportunity to use reclaim. Machinery and Tool Makers and other sector of the plastics industry justifies mention although not customers for reclaim. The makers and suppliers of plastics manufacturing machinery, tools, moulds and dies are well informed about who does what, who makes what and who uses what within the local plastics industry. They may advise who is likely to buy material.
12 |
MARKETPLACE ANALYSIS Various overseas players wish to explore the Indian market and invest in opportunities thrown open by the country, projected to be world number 3 in plastics consumption by 2010. As shown above the north region of India is specialized in recycling of PVC. So there is a great scope of PET recycling. Apart from this the other
A huge market with full of opportunity. Absence of standard product and service Well connected with other rural areas Having good transportation facility
CUSTOMER ANALYSIS Since we are new player in the market so we need to make some stringent strategies to penetrate market and grab customers. The customers of the plastic industry are scattered due to lack well known brand names. So our first priority will be to accumulate the defused customers. The direct customers are the customers whom we are selling our product regularly. So for us households whom we are selling plastic goods and companies who are getting raw materials for packaging are direct customers (PET bottles). So only in Allahabad around 20,000 families are our direct prospective customers and in of business-to-business market around 20 small and medium scale companies are our direct customers Apart from them there are few small companies that are giving compounding services. They use to collect various types of plastics flakes along with the virgin plastic and suggest customer (companies) in choosing appropriate plastic. An Asha enterprise is one compounder whom we will sell our plastics.
COMPETITOR ANALYSIS In plastic manufacturing market there is no specific brand name exists so small companies that are in this business flood the market. So they are our biggest direct competitors. As we are also not alone as a supplier of PET to the companies as raw materials there are many companies in this region that are supplying PET. Indira Plastics is one of 13 |
them who is currently selling all types of plastics items. So in case of business-tobusiness market they are our direct competitors. Kanpur is plastic recycling city of UP. The direct threat we will also have is with the companies operating in Kanpur. But as the distance between Kanpur and Allahabad is 200km as well as the road is not in good condition, so it will not affect much.
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MARKETING STRATEGY The Company has chosen to focus on the production of plastic packaging materials from recycled post-consumer beverage bottles. We have identified a significant available market in the eastern part of UP. All of our initial marketing strategy will be to secure contracts in that segment, and after reaching full planned capacity, look to grow in concert with that segment and related markets. We see little need at present for further market research and development, and will focus on continually updating our production technology in an effort to remain in the forefront of our chosen marketplace.
PRODUCT/ SERVICE STRATEGY The packaging companies require high quality and highly transparent PET bottles. The companies that are producing mineral water will reject PET bottles with even small impurity/ opaqueness. So we the Hind Plastics provide high-end PET flakes for the perfect packaging. Hind Plastics will apply recycling and extrusion technology managed by decades of industry specific expertise to create a competitive advantage for its clients. These processes will produce clean, cost-efficient, recycled raw material for manufacturers of thermoform, laminate and other high value-added products, and high strength packaging strapping for shippers of large products and pallets, thereby reducing costs and creating a clear pricing edge among their competitors . Plastic bags and plastic sheets are now in high demand. And this demand is driven by continuously increasing promotional activities.
PRICING STRATEGY As plastic products do not carry any brand name so only pricing and distribution strategies will works to achieve competitive edge. The pricing strategy we will use is penetration pricing. The price of all household plastic goods we will sell will be lower than the market price. Also for the PET flakes and bottles the price will be lower than the competitors. A lower price enables me to get contracts of PET bottles and sheets from various companies. In case of kitchenware and other household products we will provide combo offers and discounts which a common customer expects.
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DISTRIBUTION STRATEGY As I described before that firstly we will target Allahabad city and villages close to it. We will have a distribution center in the Allahabad city that continuously maintains the supply of goods. So the household plastics will be sold through small local grocery shops from which the customers can get them easily. Apart from this we will hire street hawkers who will roam around the city and sell the goods door to door. PET bottles will be stored in warehouse that is close to the facility itself. The sales people will directly to the companies that require these bottles for packaging and look for the contracts. In city as stated above that we will have a distribution center, from that center we will distribute to whole sellers.
ADVERTISING & PROMOTION STRATEGY As I described we are in both B2C and B2B so for this we will use two different promotional strategies. For B2C business we will use flyers that will have full detail of our product range, price, combo offers and discounts. These flyers will circulate through the newspapers across whole city. For B2B business we will promote through online social media and we will also develop our website through which enable us to widely spread our among various companies. The site will have full details of product that are available for companies as well as end .
SALES STRATEGY The strategy of sales effort will be to convert potential and first time customers into long term customers. Our sales strategy is totally based upon the distribution channel and the pricing strategies. We will have a distribution centre in the city that will take care of sales of household and also supply products to the wholesalers. We will also give the industrial customers a facility to order the products through our website which will help them in reducing the delivery time. To market the products, the Company will use a number of sales agents/brokers. They have a customer base of their own, having developed successful relationships with their client over the years. Their customer base is currently demanding product so they can expand upon their current base. Of course, they will expand that to new customers when product is available. If the Company grows faster than its prime customer base, additional capacity may be developed. We will identify additional prospective customers who can be attracted for our products. 16 |
MARKETING & SALES FORECAST The first month prior to the opening will be used to get the new office in order, set up appointment and begin marketing activities. In the first month we will focus on the generating public visibility. The sales forecast is based on the assumption that we will sell all of the highest volume PET bottles that we can produce. This flake will be sold to other manufacturing companies. Recycling industry is growing with 15-20% each year. So we can assume that we will grow with at least 20%. There is a continuing strong demand for flake and extruded products made from recycled PET. Sales forecast Year 1
Year 2
Year 3
Year 4
1620000
2106000
2737800
3559140
Monthly sales
135000
175500
228150
296595
PET Sales
94500
122850
159705
207617
Household items
40500
52650
68445
88978.5
Annual sales
17 |
DEVELOPMENT The development of Hind plastics required accomplishing a series of action and formalities. Since we are new in the market we kept our production is low initially, as demand will increase the production will be enhanced respectively. Now we are recycling and producing only two types of plastics i.e. PVC and PET, as we grow we will produce a wide the range of plastics and its finished product. . The development process involves following steps:
Legal formalities Office/business setup Future offerings and expansion plan
Development strategy In future we are looking for the production of a variety of plastic. These plastics will be
LDPE (Low density polyethylene) HDPE (High density polyethylene)
LDPE plastic is used in the production carry bags and other plastic sheets as well as cling wrap, car covers, squeeze bottles, liners for tanks and ponds, moisture barriers in construction. And HDPE plastics are used in production of freezer bags, water pipes, wire and cable insulation, extrusion coating. Our development strategy will base on timely completion of the establishment of the business centre with low execution cost. Our strategy will focus not only the current uninterrupted production of PVC and PET and acquisition of customer as fast as we can, but we will also look for the future expansion plan and execution strategy. Our future development strategy will focus on to chart out a careful plan for the future expansion and growth of our business. The development strategy will address following issue:
How will we expand our services? Which are the new areas we will include to provide our services? What will be the format of the business
Our development strategy will address all those above-mentioned point. As we will grow and our earning will increase, we will produce more of PVC and PET as well as expand in new area. We have a development strategy to expand our facility size in order to meet the production size. 18 |
MANAGEMENT Promoters and six ing staff will manage the company. There will be five promoters of Hind Plastics. Marketing skills like convincing power, negotiating ability, creating promotional strategies and sales skills will all be extremely helpful in taking the business a long way and will prove intensely valuable to take Hind Plastics to flaring heights. Thus with such potential skills, and other qualities like efficient interpersonal skills, leadership skills and decision making quality, aptly makes him the best promoter and eligible founder and owner of Hind Plastics Along with promoters five more employees will work for the accomplishment of companies’ objective. One supervisor will work on the facility along with two ing staff. Supervisor who will work upon the facility does not need to be a chemical engineer a simple technician has experience on working upon the facility can be able to do this.
Job description Process
No of employees
Proficiency
Sorting
2
Unskilled
Belt Conveyer
1
Semiskilled
PET Separator
1
Semiskilled
Packaging
4
Unskilled
19 |
OPERATIONS The operations is defined as the process used to deliver your products and service to the customer market place and also include manufacturing transportation logistics travel and after sales services. The facility is located at outside the city. Facility is divided in two parts
Recycling and Production unit Warehouse
The facility is located in an area of 3000 sqft. Apart from these two units there will be an office that will look for the perpetual supply of required raw material and also take care about the outbound logistics. The production capacity is 80kg/hr. The operations will be based upon JIT i.e. just in time. We will have contracted with the suppliers who can supply the raw material as quickly as we want. The raw material contains post consumer beverage bottles and other plastic materials. The bottles and other plastic material that can be recycled have a specific sign from which it can be identified that it can be recycled or not. The plastic is then transferred to respective unit to be recycled because PET and PVC cannot be recycled simultaneously due to their different properties. There will be two units running parallel to each other. On unit will recycle and produce PVC plastic and other will perform the same for the PET plastic. The recycled PVC is then moved for the plastic injection-molding unit in the various shapes. Since there are a variety of product is being produced so the preference will be given to that product whose demand is high. All the products will not be produced each and every day. There will be different products that will be produced on different day according to the demand in market. After the recycling process is completed one part of PET flake is moved to the warehouse according to the demand of raw material that different companies need and other part will move for the molding in bottles. The recycled PET flake is then heated and made the viscous solution of it. The PET resin is then feeded to the molder and molder will give it various shape bottles. And then it left for drying. Those products that further need for processing like buckets; the handle will be inserted after the bucket is dried.
20 |
Stages of Recycling and Production The process of recycling of waste plastics into products of varying usefulness involves the following essential steps:
Sizing / Chipping Cleaning Segregation. Agglomerating / Colouring Extrusion / Palletisation Fabrication into end Product.
Chipping The plastics waste should be properly sized so that those may be fed into the extruders for processing and palletizing. The sizing operation depends on the type and shape of the waste plastics. During this process, attention is required to separate any powdery material from the sized / chipped plastics.
Segregation Certain polymeric materials are compatible with each other at all proportions. For example LDPE and Lldpe are generally compatible to each other at all proportions. The advanced technology of separating / segregating different types of waste plastics involves ‘Floatation Process’. In this process the property of the varying densities of different plastics is made use of for segregating different types of plastics. However in the Indian Context, this separation or segregation process, in many cases, are done by manual process utilizing the availability of cheap and expert labor force. In case the waste is contaminated with embedded metals, proper method of separating the metals / other contaminants is required.
Cleaning The scale of cleaning depends on the type of waste. Whenever a cleaning operation is involved, it is to be ensured that the water or any other cleaning material used, should be discharged after ascertaining that the discharge does not contain any objectionable substance. A proper Treatment Device may have to be deployed – like a water treatment plant / effluent treatment plant. For drying, a suitably designed drier is used. 21 |
Many industries situated outside the metropolises, use open space for natural drying of the cleaned waste.
Agglomerating / Colouring In the next operation the sized plastics waste is mixed with colour master batch in high-speed mixers / agglomerators and the output is ready for extrusion into pellets.
Extrusion / Palletisation This is the most important part of the process wherein the sized / chipped plastics are plasticized and granulated to make the plastics material ready for fabrication next. The type and size of the Extruder depend on the type and volume of the plastics waste.
Fabrication into end Product Finally the reprocessed plastics granules are used as raw material for producing end products using similar fabrication machines like Injection Molding / Extrusion etc., depending upon specific requirement.
Scope of operations Now presently our production capacity is 200kg/day from which in initial stages we are utilizing around 50% of it. As the business expands we will reach to optimum capacity utilization. We are expecting that we will start producing more advance plastics in the fourth year of our operations and accordingly the sales will increase and the facility will have to be expanded.
Supply chain In the city there are various small post consumer plastic bottle collectors. To make a continuous supply of raw material we will have four suppliers with us. There will be one permanent supplier that will continuously supply the raw material. In case of excess demand other suppliers will be taken into consideration. Supplier will cover the transportation cost only. The finished product will be stored in the warehouse and according to the demand it will be send to city distribution center. The distribution center will directly sell the finished household plastics as well as to the small shops. Our average daily demand of raw material is 300kg and the lead-time we will keep lead-time of 6hrs. We keep a safety stock of 50 kg. So the reorder point is given by 22 |
Reorder point= average daily uses x lead time + safety stock Reorder point = 300 X .25day + 50 = 125 kg. So at each and every day we will have minimum of 125kg (safety stock+ reorder point) of raw material in our inventory.
This means that when the raw material level reaches to 125kg we will place the next order. The difference time in which we will place the order and receive the order is the lead-time that is 6hrs.
23 |
PROCESS FLOW CHART
24 |
Gantt chart
As it is an assembly line the output of one stage is feeded to the input of next stage. The whole process will run in series format. That is the reason why no parallel process is mentioned in the gantt chart.
FACILITY LAYOUT
25 |
FINANCIALS The startup cost of our business is as follows: Start-up Requirements
Amount
Start-up Expenses Legal
6,000
Stationery
500
Business Cards
500
Initial Mailing
100
Process Funding
400
Office Equipment
2,500
26 |
Total Start-up Expenses
10,000
Start-up Assets Cash Required
1,00,000
Other Current Assets
0
Long-term Assets
33,30,000
Total Assets
34,30,000
Total Requirements
34,40,000
INCOME STATEMENT The projected income is as shown below it shows that first year we will end up with loss but from second year we will start making profits. Particulars
YEAR 1
YEAR 2
YEAR 3
Year 4
Net sales
1620000
2106000
2737800
3285360
Cost of good sales
891000
1158300
1505790
1806948
Gross margin
729000
947700
1232010
1478412
exp.
3000
3150
3308
3473
ment
6000
7200
8640
10368
Salaries
192000
211200
232320
255552
Transportation
96000
105600
116160
127776
Maintenance
15000
15750
16538
17364
Operating expenses:
27 |
Electricity
4800
5040
5292
5557
Telephone
10000
11000
12100
13310
Legal exp.
10000
1000
1000
1000
Insurance
20000
20000
20000
20000
Rent
24000
26400
29040
31944
Other exp
6000
6600
7260
7986
386800
412940
451657
494330
EBITDA
342200
534760
780353
984082
less depreciation
303000
272700
245430
220887
EBIT
39200
262060
534923
763195
Less interest paid
175550
165061
153243
139926
EBT
-136350
96999
381680
623269
tax @ 30%
0
29100
114504
186981
PAT
-136350
67899
267176
436288
BALANCE SHEET The projected balance sheet of four years is as follows: Sources of Funds
Year-1
Year-2
Year-3
Year-4
Owner's capital
1930000
1930000
1930000
1930000
Surplus
-136350
-68451
130274
765287
Net worth
1793650
1861549
2060274
2695287
Capital
28 |
Long Term loan Loan
1417302
1324116
1219111
1100789
Creditors
70500
56722
68066
81680
Total liabilities
3281452
3242387
3347451
3877756
Plant & M/C
3030000
2727000
2454300
2208870
Less depreciation
303000
272700
245430
220887
2727000
2454300
2208870
1987983
Land
300000
300000
300000
300000
Actual Fixed Asset
3027000
2754300
2508870
2287983
Inventory
97200
315900
410670
821340
Bank
10000
40000
100000
100000
Debtors
147252
132187
117911
232703
Advance to suppliers’
0
0
210000
335730
Current Liabilities
Application of fund
Current Assets:
Investment Total Assets
29 |
100000 3281452
3242387
3347451
3877756
BREAK EVEN POINT VC
Amount in Rs
FC
Amount in Rs
3000
Other exp
6000
Interest
175550
Transportation
96000
ment
6000
Telephone
10000
Insurance
20000
Wages
119250
Salary
192000
Carriage inward
238500
Rent
24000
Power
119250
Maintenance
15000
Raw material
414000
Depreciation
303000
Legal
10000
Total
748550
Total
1003000
Contribution
617000
pv ratio
0.3808642
BEP units
1965398.703
BEP SALES
15
in months
1.21
In years
135000
As the BEP is 15months it means that at 15th month we will be in a trade off total expenses and revenue.
30 |
APPENDIX Annuity table: total loan amt.= pmt[1-1/(1-i)^n]/i n is number of years i is interest rate loan amount
1500000
######
interest rate annually
0.12
######
pmt
21521
21520.64
=
month
EMI
Interest
principle
balance O/S Annual interest
1
21521
15000
6521
1493479
2
21521
14935
6586
1486894
3
21521
14869
6652
1480242
4
21521
14802
6718
1473524
5
21521
14735
6785
1466738
6
21521
14667
6853
1459885
7
21521
14599
6922
1452963
8
21521
14530
6991
1445972
9
21521
14460
7061
1438911
10
21521
14389
7132
1431780
11
21521
14318
7203
1424577
12
21521
14246
7275
1417302
13
21521
14173
7348
1409954
14
21521
14100
7421
1402533
31 |
175550
15
21521
14025
7495
1395038
16
21521
13950
7570
1387468
17
21521
13875
7646
1379822
18
21521
13798
7722
1372099
19
21521
13721
7800
1364300
20
21521
13643
7878
1356422
21
21521
13564
7956
1348466
22
21521
13485
8036
1340430
23
21521
13404
8116
1332313
24
21521
13323
8198
1324116
25
21521
13241
8279
1315836
26
21521
13158
8362
1307474
27
21521
13075
8446
1299028
28
21521
12990
8530
1290498
29
21521
12905
8616
1281882
30
21521
12819
8702
1273180
31
21521
12732
8789
1264391
32
21521
12644
8877
1255515
33
21521
12555
8965
1246549
34
21521
12465
9055
1237494
35
21521
12375
9146
1228348
36
21521
12283
9237
1219111
37
21521
12191
9330
1209782
32 |
165061
153243
38
21521
12098
9423
1200359
39
21521
12004
9517
1190842
40
21521
11908
9612
1181229
41
21521
11812
9708
1171521
42
21521
11715
9805
1161716
43
21521
11617
9903
1151812
44
21521
11518
10003
1141810
45
21521
11418
10103
1131707
46
21521
11317
10204
1121504
47
21521
11215
10306
1111198
48
21521
11112
10409
1100789
49
21521
11008
10513
1090277
50
21521
10903
10618
1079659
51
21521
10797
10724
1068935
52
21521
10689
10831
1058103
53
21521
10581
10940
1047164
54
21521
10472
11049
1036115
55
21521
10361
11159
1024955
56
21521
10250
11271
1013684
57
21521
10137
11384
1002300
58
21521
10023
11498
990803
59
21521
9908
11613
979190
60
21521
9792
11729
967461
33 |
139926
124920
61
21521
9675
11846
955615
62
21521
9556
11964
943651
63
21521
9437
12084
931567
64
21521
9316
12205
919362
65
21521
9194
12327
907035
66
21521
9070
12450
894584
67
21521
8946
12575
882010
68
21521
8820
12701
869309
69
21521
8693
12828
856481
70
21521
8565
12956
843526
71
21521
8435
13085
830440
72
21521
8304
13216
817224
73
21521
8172
13348
803876
74
21521
8039
13482
790394
75
21521
7904
13617
776777
76
21521
7768
13753
763024
77
21521
7630
13890
749134
78
21521
7491
14029
735104
79
21521
7351
14170
720935
80
21521
7209
14311
706624
81
21521
7066
14454
692169
82
21521
6922
14599
677570
83
21521
6776
14745
662825
34 |
108010
84
21521
6628
14892
647933
85
21521
6479
15041
632892
86
21521
6329
15192
617700
87
21521
6177
15344
602356
88
21521
6024
15497
586859
89
21521
5869
15652
571207
90
21521
5712
15809
555398
91
21521
5554
15967
539432
92
21521
5394
16126
523305
93
21521
5233
16288
507018
94
21521
5070
16450
490567
95
21521
4906
16615
473952
96
21521
4740
16781
457171
97
21521
4572
16949
440222
98
21521
4402
17118
423104
99
21521
4231
17290
405814
100
21521
4058
17462
388352
101
21521
3884
17637
370715
102
21521
3707
17813
352901
103
21521
3529
17992
334910
104
21521
3349
18172
316738
105
21521
3167
18353
298385
106
21521
2984
18537
279848
35 |
88957
67486
107
21521
2798
18722
261126
108
21521
2611
18909
242216
109
21521
2422
19098
223118
110
21521
2231
19289
203829
111
21521
2038
19482
184346
112
21521
1843
19677
164669
113
21521
1647
19874
144795
114
21521
1448
20073
124722
115
21521
1247
20273
104449
116
21521
1044
20476
83973
117
21521
840
20681
63292
118
21521
633
20888
42404
119
21521
424
21097
21308
120
21521
213
21308
0
43293
16031
BIBLIOGRAPHY Crisil report on plastic industry Plastic waste option for small scale recourse recovery by Inge Lardinois Small scale recycling of plastic by- Jon Vogler
36 |
Group 22
ANKUR VERMA BALVINDER PRATEEK DAHIYA SHIVAM RAJAT
Executive summary COMPANY OVERVIEW .................................................................................................... 6 Mission Statement ..................................................................................................... 6 Markets and Products .................................................................................................... 7 Objectives................................................................................................................... 7 Key to success: ........................................................................................................... 7 Product and services ...................................................................................................... 8 Market comparison .................................................................................................... 8 Possible obstacles .......................................................................................................... 9 Industry and marketplace analysis ................................................................................ 9 Industry analysis ........................................................................................................ 9 STRUCTURE OF THE PLASTICS INDUSTRY .................................................................... 11 Raw Material Producers........................................................................................... 11 Compounders........................................................................................................... 11 Stockists ................................................................................................................... 11 Specialist Manufacturers or Molders ...................................................................... 11 Other Manufacturers ............................................................................................... 12 Fabricators ............................................................................................................... 12 Marketplace analysis ................................................................................................... 13 Customer analysis ........................................................................................................ 13 Competitor analysis ..................................................................................................... 13 Marketing strategy....................................................................................................... 15 Product/ service strategy ............................................................................................. 15 Pricing strategy ............................................................................................................ 15 2|
Distribution strategy .................................................................................................... 16 Advertising & promotion strategy ............................................................................... 16 Sales strategy ............................................................................................................... 16 Marketing & sales forecast .......................................................................................... 17 Development................................................................................................................ 18 Development strategy ............................................................................................. 18 Management ................................................................................................................ 19 Job description ......................................................................................................... 19 Operations ................................................................................................................... 20 Stages of Recycling and Production ......................................................................... 21 Chipping ................................................................................................................... 21 Segregation .............................................................................................................. 21 Cleaning.................................................................................................................... 21 Agglomerating / Colouring ....................................................................................... 22 Extrusion / Palletisation ........................................................................................... 22 Fabrication into end Product ................................................................................... 22 Scope of operations ................................................................................................. 22 Supply chain ............................................................................................................. 22 Gantt chart .............................................................................................................. 25 FACILITY LAYOUT ............................................................................................... 25 Financials.................................................................................................................... 26 Income statement ........................................................................................................ 27 Balance sheet ............................................................................................................ 28 Break Even Point .......................................................................................................... 30 3|
Appendix ...................................................................................................................... 31 Annuity table:........................................................................................................... 31 Bibliography ................................................................................................................ 36
4|
EXECUTIVE SUMMARY Plastic is the basic need of our day-to-day life. During recent years the plastic industry has grown with a substantial growth rate. This growth is driven by three sectors viz. packaging, infrastructure and agriculture. There are the various verities of plastics out of which PVC (Polyvinyl chloride) and PET (Polyethylene Terephthylene) plastics have their considerable contribution. PET plastics are generally used in the manufacturing of beverage bottles for the packaging and PVC plastic is used in the production of household plastic materials. The growing utilization of plastics in industrial and consumer applications and surrounding solid waste recycling, has led to an increased demand for recycled plastic resins and products. We the Hind plastics provide a wide range of plastic solutions for household and raw material for packaging of various companies. As a part of our ongoing efforts to exploit this opportunity we will recycle the plastics and then produce kitchenware items and other related plastic material. We will also sell the recycled plastics to the companies in the plastic business. We will have a recycling plant along with the production unit. The raw material will be procured from the waste collectors. The raw material will be post-consumed beverage bottles and other soft plastic materials Our main focus is our industrial customer whom we will sell PET bottles and PET flakes. It will contribute more than 60% of our sales. We will also focus on the household plastic business, which is the part of our portfolio. The initial set up cost will be Rs 34, 40,000. Hind plastics will be a solution proprietorship business run by the promoters. Since plastic material does not carry any brand name so it will give us an addition benefit in long term to establish our brand name. To exploit the market we will use penetration pricing as our marketing strategy and utilize our stringent distribution network and strong industrial relationship. As a future plan in coming years we will increase the variety of plastics like LDPE (Low density polyethylene) and HDPE (High density polyethylene). By doing this we will be able to produce plastic carry bags and raw material for production for plastic chairs and tables and other fiber based products.
5|
COMPANY OVERVIEW Hind Plastics provide a wide range of plastic solutions for households and raw material for packaging to the various companies. Allahabad is the place where the facility will be established and other operation will commence. We will collect the plastic garbage like consumer beverage bottles, plastic bags from various garbage stores and then our recycle unit will process it which eventually be used for the production of finished goods. The plastic garbage we are getting as raw material has two components one is PVC (Polyvinyl chloride) and other is PET (Polyethylene Terephthylene). Firstly the whole garbage is melted and then PVC and PET are separated from each other by froth flotation technique. We will create a plant (actual facilities to be shared with the recycling unit) to manufacture extruded plastic flakes (purified plastic). The extruded plastic is then molded in the various products. We will produce two types of replay plastics
PVC (Polyvinyl chloride) PET (Polyethylene terephthylene)
Mission Statement
6|
Strive to provide the excellent plastic solution to the customers at competitive prices. Continually expand our range of products. Poised to service both large and small customers.
MARKETS AND PRODUCTS The plastic products usually do not carry a brand name so intruding in the business like plastic will not be too hard with low price strategy. The population of Allahabad and the cities around it like Varanasi, Gorakhpur, Johnpur is around 3 Crores and this area basically comprises of low to middle income group families so they focus on plastic products rather than fiber since it is a cheaper. Hence it is huge market to exploit. From Allahabad city 500 tons of solid waste is produced from that 15tons of plastic bags and around 7 tons of plastic bottles is generated per day. So the supply of raw material will be continuous. Apart from this we will sell raw material for packaging to the various small companies in this area. Around 30 small and medium scale companies are working in this region. So a large amount of industrial customer is also available. There are two folds of products that we are providing one are industrial and other is household.
Objectives
Develop a business that survives on its own cash. Create a company that exceeds customer satisfaction level. Expand the service to whole UP in first five years and then to Delhi. Extending the services to electronic component manufacturing companies for production of capacitors printed circuit boards etc.
Key to success:
7|
The main keys to the success of the Company are: Secure Supply- Contract for supply of post-consumer bottles and postindustrial manufacturing waste for PET raw material feed stock. Satisfy our customer so that we can retain them Maintain low overhead and operating costs Provide better prices than all our competitors
PRODUCT AND SERVICES We will provide a wide range of plastic products for households and raw material for packaging. The recycled plastic is processed to Polyethylene Terephthalate (PET). PET is a thermoplastic polymer viscous of polyester family. The biggest property of this compound is it transparent. This is the reason why it is used for packaging. Apart from this PET have good strength, ductility, stiffness and hardness. After the recycling process completed an extruded plastic is generated. Plastics extrusion is a high volume manufacturing process in which raw plastic material is melted and formed into a continuous profile. The products we are producing are
Cleaned and recycled plastic flakes of PET and bottles, recovered from postconsumer beverage bottles. (This PET will work as raw material for packaging to various firms, not for the end ) Household finished plastic goods. We will manufacture plastic tubes of various diameters, plastic kitchenware. (For the end ) PET flake will be sold to thermo formers (those who mold plastic sheets into usable products) primarily to be used to produce high-visibility packaging. And also to the beverage companies for packaging.
Recycled plastic is widely used in mainstream construction products such as damp proof membrane, drainage pipes, ducting and flooring. Bins, street signs and planters are frequently made from plastic. They are cost competitive and resistant to damage. Local authorities and schools are able to demonstrate recycling in action by specifying recycled products High strength PET is used in the clothing, furnishings, tyre cord and technical textiles. Apart from PET the household plastic will be directly sold to the end customers. In day-to-day life plastic items like water bottles, shop case scrubber etc. is frequently used. So there is a big demand of these in local market.
Market comparison While quality and delivery are important factors to our potential clients, price is most often the determining factor in a buying decision. Good-quality packaging products manufactured from recycled (less expensive) resins, as close as practical to the end customer's operations, will be most competitive and achieve a significant market share. These factors have helped to determine the business parameters of Replay Plastics. 8|
POSSIBLE OBSTACLES The product is completed and ready for the market launch. The possible obstacles are: Unavailable or scarce raw material stock for production Replay is confident that it has secured good availability of low cost post-consumer PET bottles (feed stock) derived from post-consumer beverage bottles. It may be possible that we would not get desired raw material. Company may not meet environmental standards This environmentally-favorable venture provides for the development of technically feasible and economically viable solutions to PET plastic beverage bottle recycling, as well as environmentally aware in-house re-use practices which filter and return nearly all of the process water to the production lines
INDUSTRY AND MARKETPLACE ANALYSIS Industry analysis Plastic recycling is an industry in itself in India. According to the Crisil research 7360 companies are working in this industry with a turnover of Rs 9200 Crore provides employment to 3.5 million people. In India, per capita plastic consumption is one of the lowest in the world. The per capita consumption is just one fifth of world average that is 5kg. The domestic demand of plastic has grown by 9% and reached to 4.5MMT in year 2005.The GDP has grown during this period at 6.3% and plastic industry 1.3 times of GDP. According to the Crisil report the demand of plastic by 2012 will be around 12MMT. The plastic consumption in India is booming. Demand for commodity plastics is growing at the rate of 15% per year. . India holds immense potential for the use of plastic in the infrastructure and agriculture. In case of packaging industry we are using more plastic than the developed countries. The growth is driven in three major sectors – infrastructure that is 13%% of the total, packaging is 15% of the total and 10% for plastic consumer durables. It is projected that the plastic waste generation will reach the will reach the level of 1.6 million tons annually. India produces 5600 tons of plastic waste per day.
9|
Region wise and polymer wise turnover of recycling industry in Rs.Crore Region
PVC
PET
West
156
383
East
75
86
North
338
158
South
111
139
Total
680
766
Each region is specialized in one type of plastic viz south: PET; north: PVC; Plastic India Foundation estimates the current plastic recycling rate at 60%. One estimate is that about 20,000 microenterprises are engaged in reprocessing and recovery of plastic waste in addition to 180,000 of various sorting and washing units, 60% of which are uned. Delhi alone has estimated 53,400 units and Delhi and Bombay together process over 50% of India's waste plastics.
STRUCTURE OF THE PLASTICS INDUSTRY Raw Material Producers These are chemical and petroleum companies who produce "virgin" plastic (sometimes called resin or polymer) in huge quantities. The main influence they have on the recycler is to fix prices and availability of virgin materials. Virgin material is delivered in powder or pellet form, in plastic or paper sacks of around 20 kilos weight, in large cardboard drums that hold many times that quantity or even by road tanker.
Compounders These specialist companies, usually small, stock various polymers and provide the manufacturers of plastic goods with technical advice and the most suitable materials or mixtures for each individual need. The compounder is often the best market for the recycler because he possesses superior technical knowledge and has a large volume throughput of virgin material, in which small percentages of reclaim will reduce cost without seriously affecting the quality required by the molder.
Stockists These warehouses stock polymers and compounds but neither manufacture themselves, nor provide a compounding service. They may be agents or subsidiaries of the producer companies or departments of companies concerned with the supply of other materials such as chemical, rubber or paper. They may be willing to stock reclaim alongside virgin materials, especially if these are in short supply.
Specialist Manufacturers or Molders These buy their raw materials from compounders. If they do their own compounding, or if the material is used as produced and does not need compounding, they may buy direct from stockists or producers. They are specialists in plastics and do not perform other types of manufacturing. They may be an attractive market to the recycler because they operate at high volume, but rarely have as much flexibility to vary product quality as molders who know, accurately, the final market for the product. 11 |
Other Manufacturers Many companies are not plastics specialists but employ molding operations in the manufacture of some other product. For example shoe and boot makers use plastics extensively and may carry out the various plastics molding operations in the same production sequence as the work in leather, canvas, rubber etc. Many manufacturers use plastic packaging machinery at the end of a production operation.
Fabricators These firms cut and sheet, rod or extrusion to manufacture a variety of products. They have no opportunity to use reclaim. Machinery and Tool Makers and other sector of the plastics industry justifies mention although not customers for reclaim. The makers and suppliers of plastics manufacturing machinery, tools, moulds and dies are well informed about who does what, who makes what and who uses what within the local plastics industry. They may advise who is likely to buy material.
12 |
MARKETPLACE ANALYSIS Various overseas players wish to explore the Indian market and invest in opportunities thrown open by the country, projected to be world number 3 in plastics consumption by 2010. As shown above the north region of India is specialized in recycling of PVC. So there is a great scope of PET recycling. Apart from this the other
A huge market with full of opportunity. Absence of standard product and service Well connected with other rural areas Having good transportation facility
CUSTOMER ANALYSIS Since we are new player in the market so we need to make some stringent strategies to penetrate market and grab customers. The customers of the plastic industry are scattered due to lack well known brand names. So our first priority will be to accumulate the defused customers. The direct customers are the customers whom we are selling our product regularly. So for us households whom we are selling plastic goods and companies who are getting raw materials for packaging are direct customers (PET bottles). So only in Allahabad around 20,000 families are our direct prospective customers and in of business-to-business market around 20 small and medium scale companies are our direct customers Apart from them there are few small companies that are giving compounding services. They use to collect various types of plastics flakes along with the virgin plastic and suggest customer (companies) in choosing appropriate plastic. An Asha enterprise is one compounder whom we will sell our plastics.
COMPETITOR ANALYSIS In plastic manufacturing market there is no specific brand name exists so small companies that are in this business flood the market. So they are our biggest direct competitors. As we are also not alone as a supplier of PET to the companies as raw materials there are many companies in this region that are supplying PET. Indira Plastics is one of 13 |
them who is currently selling all types of plastics items. So in case of business-tobusiness market they are our direct competitors. Kanpur is plastic recycling city of UP. The direct threat we will also have is with the companies operating in Kanpur. But as the distance between Kanpur and Allahabad is 200km as well as the road is not in good condition, so it will not affect much.
14 |
MARKETING STRATEGY The Company has chosen to focus on the production of plastic packaging materials from recycled post-consumer beverage bottles. We have identified a significant available market in the eastern part of UP. All of our initial marketing strategy will be to secure contracts in that segment, and after reaching full planned capacity, look to grow in concert with that segment and related markets. We see little need at present for further market research and development, and will focus on continually updating our production technology in an effort to remain in the forefront of our chosen marketplace.
PRODUCT/ SERVICE STRATEGY The packaging companies require high quality and highly transparent PET bottles. The companies that are producing mineral water will reject PET bottles with even small impurity/ opaqueness. So we the Hind Plastics provide high-end PET flakes for the perfect packaging. Hind Plastics will apply recycling and extrusion technology managed by decades of industry specific expertise to create a competitive advantage for its clients. These processes will produce clean, cost-efficient, recycled raw material for manufacturers of thermoform, laminate and other high value-added products, and high strength packaging strapping for shippers of large products and pallets, thereby reducing costs and creating a clear pricing edge among their competitors . Plastic bags and plastic sheets are now in high demand. And this demand is driven by continuously increasing promotional activities.
PRICING STRATEGY As plastic products do not carry any brand name so only pricing and distribution strategies will works to achieve competitive edge. The pricing strategy we will use is penetration pricing. The price of all household plastic goods we will sell will be lower than the market price. Also for the PET flakes and bottles the price will be lower than the competitors. A lower price enables me to get contracts of PET bottles and sheets from various companies. In case of kitchenware and other household products we will provide combo offers and discounts which a common customer expects.
15 |
DISTRIBUTION STRATEGY As I described before that firstly we will target Allahabad city and villages close to it. We will have a distribution center in the Allahabad city that continuously maintains the supply of goods. So the household plastics will be sold through small local grocery shops from which the customers can get them easily. Apart from this we will hire street hawkers who will roam around the city and sell the goods door to door. PET bottles will be stored in warehouse that is close to the facility itself. The sales people will directly to the companies that require these bottles for packaging and look for the contracts. In city as stated above that we will have a distribution center, from that center we will distribute to whole sellers.
ADVERTISING & PROMOTION STRATEGY As I described we are in both B2C and B2B so for this we will use two different promotional strategies. For B2C business we will use flyers that will have full detail of our product range, price, combo offers and discounts. These flyers will circulate through the newspapers across whole city. For B2B business we will promote through online social media and we will also develop our website through which enable us to widely spread our among various companies. The site will have full details of product that are available for companies as well as end .
SALES STRATEGY The strategy of sales effort will be to convert potential and first time customers into long term customers. Our sales strategy is totally based upon the distribution channel and the pricing strategies. We will have a distribution centre in the city that will take care of sales of household and also supply products to the wholesalers. We will also give the industrial customers a facility to order the products through our website which will help them in reducing the delivery time. To market the products, the Company will use a number of sales agents/brokers. They have a customer base of their own, having developed successful relationships with their client over the years. Their customer base is currently demanding product so they can expand upon their current base. Of course, they will expand that to new customers when product is available. If the Company grows faster than its prime customer base, additional capacity may be developed. We will identify additional prospective customers who can be attracted for our products. 16 |
MARKETING & SALES FORECAST The first month prior to the opening will be used to get the new office in order, set up appointment and begin marketing activities. In the first month we will focus on the generating public visibility. The sales forecast is based on the assumption that we will sell all of the highest volume PET bottles that we can produce. This flake will be sold to other manufacturing companies. Recycling industry is growing with 15-20% each year. So we can assume that we will grow with at least 20%. There is a continuing strong demand for flake and extruded products made from recycled PET. Sales forecast Year 1
Year 2
Year 3
Year 4
1620000
2106000
2737800
3559140
Monthly sales
135000
175500
228150
296595
PET Sales
94500
122850
159705
207617
Household items
40500
52650
68445
88978.5
Annual sales
17 |
DEVELOPMENT The development of Hind plastics required accomplishing a series of action and formalities. Since we are new in the market we kept our production is low initially, as demand will increase the production will be enhanced respectively. Now we are recycling and producing only two types of plastics i.e. PVC and PET, as we grow we will produce a wide the range of plastics and its finished product. . The development process involves following steps:
Legal formalities Office/business setup Future offerings and expansion plan
Development strategy In future we are looking for the production of a variety of plastic. These plastics will be
LDPE (Low density polyethylene) HDPE (High density polyethylene)
LDPE plastic is used in the production carry bags and other plastic sheets as well as cling wrap, car covers, squeeze bottles, liners for tanks and ponds, moisture barriers in construction. And HDPE plastics are used in production of freezer bags, water pipes, wire and cable insulation, extrusion coating. Our development strategy will base on timely completion of the establishment of the business centre with low execution cost. Our strategy will focus not only the current uninterrupted production of PVC and PET and acquisition of customer as fast as we can, but we will also look for the future expansion plan and execution strategy. Our future development strategy will focus on to chart out a careful plan for the future expansion and growth of our business. The development strategy will address following issue:
How will we expand our services? Which are the new areas we will include to provide our services? What will be the format of the business
Our development strategy will address all those above-mentioned point. As we will grow and our earning will increase, we will produce more of PVC and PET as well as expand in new area. We have a development strategy to expand our facility size in order to meet the production size. 18 |
MANAGEMENT Promoters and six ing staff will manage the company. There will be five promoters of Hind Plastics. Marketing skills like convincing power, negotiating ability, creating promotional strategies and sales skills will all be extremely helpful in taking the business a long way and will prove intensely valuable to take Hind Plastics to flaring heights. Thus with such potential skills, and other qualities like efficient interpersonal skills, leadership skills and decision making quality, aptly makes him the best promoter and eligible founder and owner of Hind Plastics Along with promoters five more employees will work for the accomplishment of companies’ objective. One supervisor will work on the facility along with two ing staff. Supervisor who will work upon the facility does not need to be a chemical engineer a simple technician has experience on working upon the facility can be able to do this.
Job description Process
No of employees
Proficiency
Sorting
2
Unskilled
Belt Conveyer
1
Semiskilled
PET Separator
1
Semiskilled
Packaging
4
Unskilled
19 |
OPERATIONS The operations is defined as the process used to deliver your products and service to the customer market place and also include manufacturing transportation logistics travel and after sales services. The facility is located at outside the city. Facility is divided in two parts
Recycling and Production unit Warehouse
The facility is located in an area of 3000 sqft. Apart from these two units there will be an office that will look for the perpetual supply of required raw material and also take care about the outbound logistics. The production capacity is 80kg/hr. The operations will be based upon JIT i.e. just in time. We will have contracted with the suppliers who can supply the raw material as quickly as we want. The raw material contains post consumer beverage bottles and other plastic materials. The bottles and other plastic material that can be recycled have a specific sign from which it can be identified that it can be recycled or not. The plastic is then transferred to respective unit to be recycled because PET and PVC cannot be recycled simultaneously due to their different properties. There will be two units running parallel to each other. On unit will recycle and produce PVC plastic and other will perform the same for the PET plastic. The recycled PVC is then moved for the plastic injection-molding unit in the various shapes. Since there are a variety of product is being produced so the preference will be given to that product whose demand is high. All the products will not be produced each and every day. There will be different products that will be produced on different day according to the demand in market. After the recycling process is completed one part of PET flake is moved to the warehouse according to the demand of raw material that different companies need and other part will move for the molding in bottles. The recycled PET flake is then heated and made the viscous solution of it. The PET resin is then feeded to the molder and molder will give it various shape bottles. And then it left for drying. Those products that further need for processing like buckets; the handle will be inserted after the bucket is dried.
20 |
Stages of Recycling and Production The process of recycling of waste plastics into products of varying usefulness involves the following essential steps:
Sizing / Chipping Cleaning Segregation. Agglomerating / Colouring Extrusion / Palletisation Fabrication into end Product.
Chipping The plastics waste should be properly sized so that those may be fed into the extruders for processing and palletizing. The sizing operation depends on the type and shape of the waste plastics. During this process, attention is required to separate any powdery material from the sized / chipped plastics.
Segregation Certain polymeric materials are compatible with each other at all proportions. For example LDPE and Lldpe are generally compatible to each other at all proportions. The advanced technology of separating / segregating different types of waste plastics involves ‘Floatation Process’. In this process the property of the varying densities of different plastics is made use of for segregating different types of plastics. However in the Indian Context, this separation or segregation process, in many cases, are done by manual process utilizing the availability of cheap and expert labor force. In case the waste is contaminated with embedded metals, proper method of separating the metals / other contaminants is required.
Cleaning The scale of cleaning depends on the type of waste. Whenever a cleaning operation is involved, it is to be ensured that the water or any other cleaning material used, should be discharged after ascertaining that the discharge does not contain any objectionable substance. A proper Treatment Device may have to be deployed – like a water treatment plant / effluent treatment plant. For drying, a suitably designed drier is used. 21 |
Many industries situated outside the metropolises, use open space for natural drying of the cleaned waste.
Agglomerating / Colouring In the next operation the sized plastics waste is mixed with colour master batch in high-speed mixers / agglomerators and the output is ready for extrusion into pellets.
Extrusion / Palletisation This is the most important part of the process wherein the sized / chipped plastics are plasticized and granulated to make the plastics material ready for fabrication next. The type and size of the Extruder depend on the type and volume of the plastics waste.
Fabrication into end Product Finally the reprocessed plastics granules are used as raw material for producing end products using similar fabrication machines like Injection Molding / Extrusion etc., depending upon specific requirement.
Scope of operations Now presently our production capacity is 200kg/day from which in initial stages we are utilizing around 50% of it. As the business expands we will reach to optimum capacity utilization. We are expecting that we will start producing more advance plastics in the fourth year of our operations and accordingly the sales will increase and the facility will have to be expanded.
Supply chain In the city there are various small post consumer plastic bottle collectors. To make a continuous supply of raw material we will have four suppliers with us. There will be one permanent supplier that will continuously supply the raw material. In case of excess demand other suppliers will be taken into consideration. Supplier will cover the transportation cost only. The finished product will be stored in the warehouse and according to the demand it will be send to city distribution center. The distribution center will directly sell the finished household plastics as well as to the small shops. Our average daily demand of raw material is 300kg and the lead-time we will keep lead-time of 6hrs. We keep a safety stock of 50 kg. So the reorder point is given by 22 |
Reorder point= average daily uses x lead time + safety stock Reorder point = 300 X .25day + 50 = 125 kg. So at each and every day we will have minimum of 125kg (safety stock+ reorder point) of raw material in our inventory.
This means that when the raw material level reaches to 125kg we will place the next order. The difference time in which we will place the order and receive the order is the lead-time that is 6hrs.
23 |
PROCESS FLOW CHART
24 |
Gantt chart
As it is an assembly line the output of one stage is feeded to the input of next stage. The whole process will run in series format. That is the reason why no parallel process is mentioned in the gantt chart.
FACILITY LAYOUT
25 |
FINANCIALS The startup cost of our business is as follows: Start-up Requirements
Amount
Start-up Expenses Legal
6,000
Stationery
500
Business Cards
500
Initial Mailing
100
Process Funding
400
Office Equipment
2,500
26 |
Total Start-up Expenses
10,000
Start-up Assets Cash Required
1,00,000
Other Current Assets
0
Long-term Assets
33,30,000
Total Assets
34,30,000
Total Requirements
34,40,000
INCOME STATEMENT The projected income is as shown below it shows that first year we will end up with loss but from second year we will start making profits. Particulars
YEAR 1
YEAR 2
YEAR 3
Year 4
Net sales
1620000
2106000
2737800
3285360
Cost of good sales
891000
1158300
1505790
1806948
Gross margin
729000
947700
1232010
1478412
exp.
3000
3150
3308
3473
ment
6000
7200
8640
10368
Salaries
192000
211200
232320
255552
Transportation
96000
105600
116160
127776
Maintenance
15000
15750
16538
17364
Operating expenses:
27 |
Electricity
4800
5040
5292
5557
Telephone
10000
11000
12100
13310
Legal exp.
10000
1000
1000
1000
Insurance
20000
20000
20000
20000
Rent
24000
26400
29040
31944
Other exp
6000
6600
7260
7986
386800
412940
451657
494330
EBITDA
342200
534760
780353
984082
less depreciation
303000
272700
245430
220887
EBIT
39200
262060
534923
763195
Less interest paid
175550
165061
153243
139926
EBT
-136350
96999
381680
623269
tax @ 30%
0
29100
114504
186981
PAT
-136350
67899
267176
436288
BALANCE SHEET The projected balance sheet of four years is as follows: Sources of Funds
Year-1
Year-2
Year-3
Year-4
Owner's capital
1930000
1930000
1930000
1930000
Surplus
-136350
-68451
130274
765287
Net worth
1793650
1861549
2060274
2695287
Capital
28 |
Long Term loan Loan
1417302
1324116
1219111
1100789
Creditors
70500
56722
68066
81680
Total liabilities
3281452
3242387
3347451
3877756
Plant & M/C
3030000
2727000
2454300
2208870
Less depreciation
303000
272700
245430
220887
2727000
2454300
2208870
1987983
Land
300000
300000
300000
300000
Actual Fixed Asset
3027000
2754300
2508870
2287983
Inventory
97200
315900
410670
821340
Bank
10000
40000
100000
100000
Debtors
147252
132187
117911
232703
Advance to suppliers’
0
0
210000
335730
Current Liabilities
Application of fund
Current Assets:
Investment Total Assets
29 |
100000 3281452
3242387
3347451
3877756
BREAK EVEN POINT VC
Amount in Rs
FC
Amount in Rs
3000
Other exp
6000
Interest
175550
Transportation
96000
ment
6000
Telephone
10000
Insurance
20000
Wages
119250
Salary
192000
Carriage inward
238500
Rent
24000
Power
119250
Maintenance
15000
Raw material
414000
Depreciation
303000
Legal
10000
Total
748550
Total
1003000
Contribution
617000
pv ratio
0.3808642
BEP units
1965398.703
BEP SALES
15
in months
1.21
In years
135000
As the BEP is 15months it means that at 15th month we will be in a trade off total expenses and revenue.
30 |
APPENDIX Annuity table: total loan amt.= pmt[1-1/(1-i)^n]/i n is number of years i is interest rate loan amount
1500000
######
interest rate annually
0.12
######
pmt
21521
21520.64
=
month
EMI
Interest
principle
balance O/S Annual interest
1
21521
15000
6521
1493479
2
21521
14935
6586
1486894
3
21521
14869
6652
1480242
4
21521
14802
6718
1473524
5
21521
14735
6785
1466738
6
21521
14667
6853
1459885
7
21521
14599
6922
1452963
8
21521
14530
6991
1445972
9
21521
14460
7061
1438911
10
21521
14389
7132
1431780
11
21521
14318
7203
1424577
12
21521
14246
7275
1417302
13
21521
14173
7348
1409954
14
21521
14100
7421
1402533
31 |
175550
15
21521
14025
7495
1395038
16
21521
13950
7570
1387468
17
21521
13875
7646
1379822
18
21521
13798
7722
1372099
19
21521
13721
7800
1364300
20
21521
13643
7878
1356422
21
21521
13564
7956
1348466
22
21521
13485
8036
1340430
23
21521
13404
8116
1332313
24
21521
13323
8198
1324116
25
21521
13241
8279
1315836
26
21521
13158
8362
1307474
27
21521
13075
8446
1299028
28
21521
12990
8530
1290498
29
21521
12905
8616
1281882
30
21521
12819
8702
1273180
31
21521
12732
8789
1264391
32
21521
12644
8877
1255515
33
21521
12555
8965
1246549
34
21521
12465
9055
1237494
35
21521
12375
9146
1228348
36
21521
12283
9237
1219111
37
21521
12191
9330
1209782
32 |
165061
153243
38
21521
12098
9423
1200359
39
21521
12004
9517
1190842
40
21521
11908
9612
1181229
41
21521
11812
9708
1171521
42
21521
11715
9805
1161716
43
21521
11617
9903
1151812
44
21521
11518
10003
1141810
45
21521
11418
10103
1131707
46
21521
11317
10204
1121504
47
21521
11215
10306
1111198
48
21521
11112
10409
1100789
49
21521
11008
10513
1090277
50
21521
10903
10618
1079659
51
21521
10797
10724
1068935
52
21521
10689
10831
1058103
53
21521
10581
10940
1047164
54
21521
10472
11049
1036115
55
21521
10361
11159
1024955
56
21521
10250
11271
1013684
57
21521
10137
11384
1002300
58
21521
10023
11498
990803
59
21521
9908
11613
979190
60
21521
9792
11729
967461
33 |
139926
124920
61
21521
9675
11846
955615
62
21521
9556
11964
943651
63
21521
9437
12084
931567
64
21521
9316
12205
919362
65
21521
9194
12327
907035
66
21521
9070
12450
894584
67
21521
8946
12575
882010
68
21521
8820
12701
869309
69
21521
8693
12828
856481
70
21521
8565
12956
843526
71
21521
8435
13085
830440
72
21521
8304
13216
817224
73
21521
8172
13348
803876
74
21521
8039
13482
790394
75
21521
7904
13617
776777
76
21521
7768
13753
763024
77
21521
7630
13890
749134
78
21521
7491
14029
735104
79
21521
7351
14170
720935
80
21521
7209
14311
706624
81
21521
7066
14454
692169
82
21521
6922
14599
677570
83
21521
6776
14745
662825
34 |
108010
84
21521
6628
14892
647933
85
21521
6479
15041
632892
86
21521
6329
15192
617700
87
21521
6177
15344
602356
88
21521
6024
15497
586859
89
21521
5869
15652
571207
90
21521
5712
15809
555398
91
21521
5554
15967
539432
92
21521
5394
16126
523305
93
21521
5233
16288
507018
94
21521
5070
16450
490567
95
21521
4906
16615
473952
96
21521
4740
16781
457171
97
21521
4572
16949
440222
98
21521
4402
17118
423104
99
21521
4231
17290
405814
100
21521
4058
17462
388352
101
21521
3884
17637
370715
102
21521
3707
17813
352901
103
21521
3529
17992
334910
104
21521
3349
18172
316738
105
21521
3167
18353
298385
106
21521
2984
18537
279848
35 |
88957
67486
107
21521
2798
18722
261126
108
21521
2611
18909
242216
109
21521
2422
19098
223118
110
21521
2231
19289
203829
111
21521
2038
19482
184346
112
21521
1843
19677
164669
113
21521
1647
19874
144795
114
21521
1448
20073
124722
115
21521
1247
20273
104449
116
21521
1044
20476
83973
117
21521
840
20681
63292
118
21521
633
20888
42404
119
21521
424
21097
21308
120
21521
213
21308
0
43293
16031
BIBLIOGRAPHY Crisil report on plastic industry Plastic waste option for small scale recourse recovery by Inge Lardinois Small scale recycling of plastic by- Jon Vogler
36 |
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