Bangladesh: Potato price fall in 8 Northern districts

frustrates farmers, traders

- The Daily Star, October 20, 2008
we see this as
an opportunity because,
Available Raw Materials
Existing Process
Existing market


R-tech ltd.
agenda
4000 tons
Market 40.4 crore
China, France and South Korea
45% to 80% of the weight of tablets
industry
industry


15% import duty + 40% of other
charges
Avg cost: Tk. 102/kg
R-Tech price: TK. 95 per kg
Annual savings: TK. 700,000 (per 100
tons)
trends
competitors
r-tech ltd.
Vision
To develop the backward linkage
sector based on potato starch

Mission
Provide high quality pharmaceutical
grade potato starch at a competitive price to
the pharmaceutical companies of Bangladesh

r-tech ltd.
# Type : Public Limited Company
# Total Investment : BDT 170,600,000
# Source of funds : Shares
Long term loans
# Number of shares : 100,000
location

what we offer

Pharma grade starch
20% amylase content
Average granule size 25 m
Scope of value-addition
Easily customizable
Higher temperature tolerance
Byproduct (Animal Feed)



marketing
details

Insights




4.3
3.5
4
1.5
0
1
2
3
4
5
Quality Timeliness Consistent
Supply
Others
Facts in choosing a supplier (5point scale)
SWOT
strengths
weakness
opportunity
threat


segment : pharmaceutical

target : 240 pharma cos
4000 tons/year
low price
quality


positioning
China
France
R-Tech
branding
marketing mix
value creation

why potato?




Source: http://www.wikepedia.com
why pharma?

value price

cost based pricing approach
37% mark up
BDT 95 per kg
Higher value in terms of cost and
quality



value delivery
Own distribution
Others distribution channel:





R-tech distribution channel:




Manufacturer Agent Local Agent
Pharmaceutical
Company
Manufacturer
Pharmaceutical
Company

value promotion
Personal selling
Sales executive
Corporate presentation+ exhibition
Corporate dinner
Relationship management
Direct marketing
email, website, mail, brochure, greeting
cards etc.


Operations
details

Supply

factors solutions
fluctuations contractual farming
farmer's financing
ability advance payment



inventory
Production
process
Production
process
Production
process
Production
process
factory layout





Production Floor Plan

organizational structure





CEO
Operations manager Sales manager Marketing
manager
Chief engineer
Floor manager
Security supervisor
Promotion officer
Distribution officer
Others
CFO
Financial
Details

assumptions





Market Growth (KG) 13%
Market Share Growth 15%
Tax Holiday 7 years
Salary Growth 11%
Wastage 10%
Inflation
10%
Interest Rate 14.6%
Change in Exchange Rate 4.76%
Change In Price 4%
By Product
80%
Capital structure

profit after taxes





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10.00
20.00
30.00
40.00
50.00
60.00
70.00
1 2 3 4 5
N
e
t

I
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c
o
m
e

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M
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l
l
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B
D
T


Indicators

worst case normal case
NPV 22,717,338 31,781,319
IRR 18.19% 25%


*WAAC : 16.48%
*Balance sheets & details have been added with the report
Payback

ratios


Main Ratios Year 01
Current Ratio 2.45
Quick Ratio 2.11
Total Debt to Total Assets 0.33
Return on Equity (ROE) 20.87%
Accounts Receivable Turnover 16.54
Accounts Payable Turnover 10.00
Interest Coverage Ratio/Times Interest
Earned 3.64
Return on Assets (ROA) 19.46%
*Balance sheets have been added with the report
risk management
& future plans
risks
future plans

milestones


Year 1 Year 2 Year 3 Year 4 Year 5

Gestation
period: 4
months
Year end sales:
920 tons

Total Sales:
1050 tons

Total Sales:
1200 tons

Total Sales:
1400 tons


Achieve
market share
of 25%
Year end sales:
1600 tons


takeaways


Booming pharma industry needs backward linkage
A market of BDT40.4 crore
High quality @ lower price (competitive advantage)
r-tech has the opportunity to be the pioneer



Thank you!