S S Rotomoulders

Manish Kumar
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 Table of Contents

1.0 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

1.1 Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Keys to Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

2.0 Company Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

2.1 Company Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Start-up Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Company Locations and Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

3.0 Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

4.0 Market Analysis Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

5.0 Strategy and Implementation Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

5.1 Competitive Edge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5.2 Sales Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5.2.1 Sales Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

6.0 Management Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

6.1 Management Team . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
6.2 Personnel Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

7.0 Financial Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

7.1 Start-up Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
7.2 Key Financial Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
7.3 Break-even Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
7.4 Projected Profit and Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.5 Projected Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.6 Projected Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.7 Business Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.8 Valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.9 Payback . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
 S S Rotomoulders

1.0 Executive Summary

S S Rotomoulders manufactures Polyethylene Water Storage Tanks for the supply in the local market
pertaining to civil and commercial construciton. Our customers seek this product as it provides them with a
point of differentiation to specialty. In the past sten years, demand for the product has exceeded the amount
we can supply with our current proposed capacity, still there shall be gap in demand and supply.

Our keys to success are:

1. Establishing and maintaining working relationships and contractual agreements with the local
builders and construction material suppliers.
2. Bringing the new facility to maximum production within three years of operation.
3. Increasing our profit margin with the use of improved technology in the new facility.
4. Effectively communicating to current and potential customers, through targeted efforts, our position
as a differentiated provider of the highest quality of tanks.

1.1 Objectives

With the increasing demand for housing needs, there is a quite heavy demand for water stroage facilities,
thus the main objective of S S Rotomoulders is to provide Polyethylene Water Storage Tanks to the growing
housing industry.

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1.2 Mission

S S Rotomoulders seeks to serve Water Storage Tank users and enthusiasts by exceeding minimum
acceptable quality standards and by providing the highest quality product at the lowest possible price. We
value our relationships with current and future customers and hope to communicate our appreciation to
them through our outstanding, guaranteed product quality, personal service, and efficient delivery. Our
commitment to our customers and the country of India will be reflected through honest and responsible
business.

1.3 Keys to Success

S S Rotomoulders keys to success will include:

1. A high level of quality in its product line.

2. Maintaining and growing its referral networks to generate new and repeat sales.
3. Significant investments in research and development and engineering with the aim to focus on
precisely controlled equipment.
4. Improving efficiencies of operations.

2.0 Company Summary

S S Rotomoulders is a start-up manufacturing firm which will be managed by two executives. These
executives bring to the firm a large degree of experience in the manufacturing industry. They perceive an
oppportunity to aquire a significant amount of market share by focusing on the specific needs of the
commercial construction industry and by providing greater products than other competitiors. The firm will be
organized as a closely-held partnership.

2.1 Company Ownership

S S Rotomoulders is a partnership firm owned and operated by Mr Sushil Kumar Jhunjhunwala and Mrs
Sucheta Agrawal.

2.2 Start-up Summary

The details of the Start up investment is as following:

Start up Expenses:

Preliminary Expenses: Rs 30,000.00

Fixed Assets:

Land and Building Development Expenses: Rs. 300,000.00

Plant and Machinery

Rock & Roll Moulding Machine: Rs. 500,000.00

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 S S Rotomoulders
S S Moulds: Rs. 400,000.00

Mobile EOT Crane: Rs. 100,000.00

Genset: Rs. 150,000.00

Table: Start-up

Start-up

Requirements

Start-up Expenses
Legal R25,000
Other R5,000
Total Start-up Expenses R30,000

Start-up Assets
Cash Required R150,000
Start-up Stock R500,000
Other Current Assets R200,000
Fixed Assets R1,450,000
Total Assets R2,300,000

Total Requirements R2,330,000

2.3 Company Locations and Facilities

S S Rotomoulders shall be located at the Dharampur Industrial Estate of Darbhanga, one of the oldest
industrial estate. The shed shall be leased by the BIADA in favour of the firm.

3.0 Products

Roto Moulded Plastic Water Storage Tanks are made from Linear Low Density Polyethylene. These tanks
are light in weight therefore; it is easy to fix them at the place of choice. The product is formed inside a
closed mould rotating biaxial in two plains perpendicular to each other. In batch type Rock n Roll type
Rotational Moulding machines, frame of the machine is turned in a primary axis while mould is rotated in
secondary axis.

These tanks keep water clean, odour free and maintain the quality of water stored intact. These tanks are
economical, practical and hygienic alternative of storing potable water in single or multi storied residential
units, industrial setups, commercial establishments and sites everywhere under the sun. These tanks are
becoming increasingly popular in India and have caught the eyes of many users for their requirements of
storing water for domestic and other purposes. These tanks are also used in hostels, hospitals, schools,
cinema houses and construction sites.

Complex parts can be moulded without need for post-assembly.

Low machiney cost relative to production capacity.

Double walled items can be produced.

Ease of colour and material change.

Multiple product and multi colours can be moulded at the same time.

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Minimum wastages.

High production capacity on selected parts.

Production design freedom.

4.0 Market Analysis Summary

Roto Moulded Plastic Water Storage Tanks being lighter in weight are easy in handling and can be easily
fitted at any desired place, and are hence preferred and practically replacing the conventional tanks of
steel, cement concrete or stone. These tanks are available in market in various sizes and shapes. The
prices of these tanks are at the rate of Rs. 3.00 to Rs. 3.50 approximate per liter of water capacity. The
demand of plastic water storage tanks is increasing day-by-day. They are not only installed in the individual
houses and flats but are also fitted in factories, group housing schemes and multi storied buildings as well.

Due to increase in the house building activities and preference given by the government to
provide homes to the homeless people, the demand for plastic water storage tanks is likely to
increase in the years to come. Hence there is a good scope for establishing a few units for the
manufacture of water storage tanks by Roto Moulded Process.

5.0 Strategy and Implementation Summary

5.1 Competitive Edge

Since the product is light in weight and transportation cost is quite high, the local markets shall be catered
well and economically in comparison to the products being procured from outside, so the industry is in quite
substantial advantage to the outside competitors.

5.2 Sales Strategy

5.2.1 Sales Forecast

This is the Sales Forecast at 60% of production capacity.

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Table: Sales Forecast

Sales Forecast
Year 1 Year 2 Year 3 Year 4 Year 5
Sales
Tank 500 Ltrs R4,464,000 R4,910,400 R5,401,440 R5,941,584 R6,535,742
Tank 750 Ltrs R6,696,000 R7,365,600 R8,102,160 R8,912,376 R9,803,614
Tank 1000 Ltrs R8,928,000 R9,820,800 R10,802,880 R11,883,168 R13,071,485
Total Sales R20,088,000 R22,096,800 R24,306,480 R26,737,128 R29,410,841

Direct Cost of Sales Year 1 Year 2 Year 3 Year 4 Year 5

Raw Material R14,256,000 R15,681,600 R17,249,760 R18,974,736 R20,872,210
Fuel R2,501,053 R2,751,158 R3,026,274 R3,328,901 R3,661,791
Wages and Salaries R300,000 R330,000 R363,000 R399,300 R439,230
Tank Lid R432,000 R475,200 R522,720 R574,992 R632,491
Electricity R300,000 R330,000 R363,000 R399,300 R439,230
Subtotal Direct Cost of Sales R17,789,053 R19,567,958 R21,524,754 R23,677,229 R26,044,952

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6.0 Management Summary

6.1 Management Team

The firm shall be headed by Mr Sushil Kumar Jhunjhunwala having decades of experience in manufacturing
business in Darbhanga as well as Asansol. His profile as below.

SUSHIL KUMAR JHUNJHUNWALA (B.Com.)

Home Address: West Dighi Tank, Professor Colony, Darbhanga, Bihar

Cell Phone: +91-9835671057

Work Phone: +91-9204797772

Date of Birth: 03.05.1960

Nationality: Indian

Profession: Industrialist

PROFILE

Engaged in production of Soap since last 30 years. Experience of production of fibre glass products.

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WORK HISTORY

Since 2005 Director, Swadesi Soap Industries (Asansol, West Bengal)

Since 1990 Proprietor, Savitri Chemicals (Darbhanga)

1985 to 1990 Proprietor, North Bihar Ferro Fabrication (Darbhanga)

LANGUAGES

Fluent : English, Hindi, Marwari

Basic : Maithili, Bhojpuri, Bengali

6.2 Personnel Plan

Table: Personnel

Personnel Plan
Year 1 Year 2 Year 3 Year 4 Year 5
Production Personnel
Production Manager cum Supervisor R120,000 R132,000 R145,200 R159,720 R175,692
Skilled Worker R96,000 R105,600 R116,160 R127,776 R140,554
Unskilled Worker R84,000 R92,400 R101,640 R111,804 R122,984
Subtotal R300,000 R330,000 R363,000 R399,300 R439,230

Sales and Marketing Personnel

Sales Manager R96,000 R105,600 R116,160 R127,776 R140,554
Name or Title or Group R0 R0 R0 R0 R0
Subtotal R96,000 R105,600 R116,160 R127,776 R140,554

General and Administrative Personnel

Accountant cum Store Keeper R96,000 R105,600 R116,160 R127,776 R140,554
Name or Title or Group R0 R0 R0 R0 R0
Name or Title or Group R0 R0 R0 R0 R0
Subtotal R96,000 R105,600 R116,160 R127,776 R140,554

Other Personnel
General Manager R180,000 R198,000 R217,800 R239,580 R263,538
Name or Title or Group R0 R0 R0 R0 R0
Name or Title or Group R0 R0 R0 R0 R0
Subtotal R180,000 R198,000 R217,800 R239,580 R263,538

Total People 0 0 0 0 0

Total Payroll R672,000 R739,200 R813,120 R894,432 R983,875

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7.0 Financial Plan

7.1 Start-up Funding

Table: Start-up Funding

Start-up Funding
Start-up Expenses to Fund R30,000
Start-up Assets to Fund R2,300,000
Total Funding Required R2,330,000

Assets
Non-cash Assets from Start-up R2,150,000
Cash Requirements from Start-up R150,000
Additional Cash Raised R170,000
Cash Balance on Starting Date R320,000
Total Assets R2,470,000

Liabilities and Capital

Liabilities
Current Borrowing R500,000
Fixed Liabilities R1,500,000
Accounts Payable (Outstanding Bills) R0
Other Current Liabilities (interest-free) R0
Total Liabilities R2,000,000

Capital

Planned Investment
Owner R500,000
Investor R0
Additional Investment Requirement R0
Total Planned Investment R500,000

Loss at Start-up (Start-up Expenses) (R30,000)

Total Capital R470,000

Total Capital and Liabilities R2,470,000

Total Funding R2,500,000

7.2 Key Financial Indicators

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7.3 Break-even Analysis

Table: Break-even Analysis

Break-even Analysis

Monthly Revenue Break-even R687,018

Assumptions:
Average Percent Variable Cost 89%
Estimated Monthly Fixed Cost R78,625

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7.4 Projected Profit and Loss

Table: Profit and Loss

Pro Forma Profit and Loss

Year 1 Year 2 Year 3 Year 4 Year 5
Total Income R20,088,000 R22,096,800 R24,306,480 R26,737,128 R29,410,841
Cost of Goods Sold R17,789,053 R19,567,958 R21,524,754 R23,677,229 R26,044,952

Gross Profit R2,298,947 R2,528,842 R2,781,726 R3,059,899 R3,365,889

Gross Profit % 11.44% 11.44% 11.44% 11.44% 11.44%

General and Administrative

Expenses
General and Administrative Payroll R96,000 R105,600 R116,160 R127,776 R140,554
Marketing/Promotion R0 R50,000 R100,000 R150,000 R200,000
Depreciation R157,500 R133,875 R113,794 R96,725 R82,216
Rent R120,000 R120,000 R120,000 R120,000 R120,000
Utilities R6,000 R8,000 R10,000 R12,000 R14,000
Insurance R12,000 R13,200 R14,520 R15,972 R17,569
Other General and Administrative
R276,000 R303,600 R333,960 R367,356 R404,092
Expenses
------------ ------------ ------------ ------------ ------------
Total Expense R943,500 R1,037,875 R1,142,394 R1,257,185 R1,382,522

Profit Before Interest and Taxes R1,355,447 R1,490,967 R1,639,333 R1,802,714 R1,983,367
EBITDA R1,512,947 R1,624,842 R1,753,126 R1,899,439 R2,065,583

Other Income
Other Income Account Name R0 R0 R0 R0 R0
Other Income Account Name R0 R0 R0 R0 R0
Total Other Income R0 R0 R0 R0 R0

Other Expense
Interest Expense R240,000 R180,000 R120,000 R60,000 R0
Income Tax R381,884 R433,453 R489,938 R551,832 R619,675
Total Other Expense R621,884 R613,453 R609,938 R611,832 R619,675

Net Other Income (R621,884) (R613,453) (R609,938) (R611,832) (R619,675)

Net Profit R733,563 R877,514 R1,029,395 R1,190,883 R1,363,692
Net Profit/Sales 3.65% 3.97% 4.24% 4.45% 4.64%

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7.5 Projected Cash Flow

Table: Cash Flow

Pro Forma Cash Flow

Year 1 Year 2 Year 3 Year 4 Year 5
Cash Received

Cash from Operations

Cash Sales R0 R0 R0 R0 R0
Cash from Receivables R18,469,800 R21,934,980 R24,128,478 R26,541,326 R29,195,458
Subtotal Cash from Operations R18,469,800 R21,934,980 R24,128,478 R26,541,326 R29,195,458

Additional Cash Received

Non Operating (Other) Income R0 R0 R0 R0 R0
GST/HST Received (Output Tax) R0 R0 R0 R0 R0
GST/HST Repayments R0 R0 R0 R0 R0
New Current Borrowing R700,000 R0 R0 R0 R0
New Other Liabilities (interest-free) R0 R0 R0 R0 R0
New Fixed Liabilities R0 R0 R0 R0 R0
Sales of Other Current Assets R0 R0 R0 R0 R0
Sales of Fixed Assets R0 R0 R0 R0 R0
New Investment Received R0 R0 R0 R0 R0
Subtotal Cash Received R19,169,800 R21,934,980 R24,128,478 R26,541,326 R29,195,458

Expenditures Year 1 Year 2 Year 3 Year 4 Year 5

Expenditures from Operations

Cash Spending R672,000 R739,200 R813,120 R894,432 R983,875
Bill Payments R17,443,283 R19,689,136 R21,737,084 R23,940,219 R26,358,469
Subtotal Spent on Operations R18,115,283 R20,428,336 R22,550,204 R24,834,651 R27,342,344

Additional Cash Spent

Non Operating (Other) Expense R621,884 R613,453 R609,938 R611,832 R619,675
GST/HST Paid Out (Input Tax) R0 R0 R0 R0 R0
GST/HST Payments R0 R0 R0 R0 R0
Principal Repayment of Current
R700,000 R0 R0 R0 R500,000
Borrowing
Other Liabilities Principal
R0 R0 R0 R0
Repayment
Fixed Liabilities Principal Repayment R0 R500,000 R500,000 R500,000
Purchase Other Current Assets R0 R0 R0 R0 R0
Purchase Fixed Assets R0
Dividends R100,000 R400,000 R400,000 R500,000 R500,000
Subtotal Cash Spent R19,537,168 R21,941,788 R24,060,141 R26,446,483 R28,962,019

Net Cash Flow (R367,368) (R6,808) R68,337 R94,843 R233,440

Cash Balance (R47,368) (R54,176) R14,161 R109,004 R342,443

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7.6 Projected Balance Sheet

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Table: Balance Sheet

Pro Forma Balance Sheet

Year 1 Year 2 Year 3 Year 4 Year 5
Assets

Current Assets
Cash (R47,368) (R54,176) R14,161 R109,004 R342,443
Accounts Receivable R2,153,82 R2,369,2
R1,618,200 R1,780,020 R1,958,022
4 07
Stock R1,973,10 R2,170,4
R1,482,421 R1,630,663 R1,793,729
2 13
Other Current Assets R200,000 R200,000 R200,000 R200,000 R200,000
Total Current Assets R4,435,93 R5,082,0
R3,253,254 R3,556,507 R3,965,912
0 63

Fixed Assets
Fixed Assets R1,450,00 R1,450,0
R1,450,000 R1,450,000 R1,450,000
0 00
Accumulated Depreciation R157,500 R291,375 R405,169 R501,893 R584,109
Total Fixed Assets R1,292,500 R1,158,625 R1,044,831 R948,107 R865,891
Total Assets R5,384,03 R5,947,9
R4,545,754 R4,715,132 R5,010,744
7 53

Liabilities and Capital Year 1 Year 2 Year 3 Year 4 Year 5

Current Liabilities
Accounts Payable R1,982,68 R2,182,9
R1,442,190 R1,634,055 R1,800,271
2 06
Current Borrowing R500,000 R500,000 R500,000 R500,000 R0
Other Current Liabilities R0 R0 R0 R0 R0
Subtotal Current Liabilities R2,482,68 R2,182,9
R1,942,190 R2,134,055 R2,300,271
2 06

Fixed Liabilities R1,500,000 R1,000,000 R500,000 R0 R0

Total Liabilities R2,482,68 R2,182,9
R3,442,190 R3,134,055 R2,800,271
2 06

Paid-in Capital R500,000 R500,000 R500,000 R500,000 R500,000

Retained Earnings R1,210,47 R1,901,3
(R130,000) R203,563 R681,078
2 55
Earnings R1,190,88 R1,363,6
R733,563 R877,514 R1,029,395
3 92
Total Capital R2,901,35 R3,765,0
R1,103,563 R1,581,078 R2,210,472
5 47
Total Liabilities and Capital R5,384,03 R5,947,9
R4,545,754 R4,715,132 R5,010,744
7 53

Net Worth R2,901,35 R3,765,0

R1,103,563 R1,581,078 R2,210,472
5 47

7.7 Business Ratios

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Table: Ratios

Ratio Analysis
Industry
Year 1 Year 2 Year 3 Year 4 Year 5
Profile
Sales Growth 0.00% 10.00% 10.00% 10.00% 10.00% 10.00%

Percent of Total Assets

Accounts Receivable 35.60% 37.75% 39.08% 40.00% 39.83% 40.00%
Stock 32.61% 34.58% 35.80% 36.65% 36.49% 35.00%
Other Current Assets 4.40% 4.24% 3.99% 3.71% 3.36% 3.00%
Total Current Assets 71.57% 75.43% 79.15% 82.39% 85.44% 78.00%
Fixed Assets 28.43% 24.57% 20.85% 17.61% 14.56% 22.00%
Total Assets 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

Current Liabilities 42.73% 45.26% 45.91% 46.11% 36.70% 50.00%

Fixed Liabilities 33.00% 21.21% 9.98% 0.00% 0.00% 35.00%
Total Liabilities 75.72% 66.47% 55.89% 46.11% 36.70% 85.00%
Net Worth 24.28% 33.53% 44.11% 53.89% 63.30% 15.00%

Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Gross Margin 11.44% 11.44% 11.44% 11.44% 11.44% 10.00%
Selling, General & Administrative
7.79% 7.47% 7.21% 6.99% 6.81% 7.00%
Expenses
Advertising Expenses 0.00% 0.00% 0.00% 0.00% 0.00% 2.00%
Profit Before Interest and Taxes 6.75% 6.75% 6.74% 6.74% 6.74% 5.00%

Main Ratios
Current 1.68 1.67 1.72 1.79 2.33 1.50
Quick 0.91 0.90 0.94 0.99 1.33 1.00
Total Debt to Total Assets 75.72% 66.47% 55.89% 46.11% 36.70% 75.00%
Pre-tax Return on Net Worth 122.82% 94.30% 74.16% 62.13% 52.68% 60.00%
Pre-tax Return on Assets 29.82% 31.62% 32.72% 33.48% 33.35% 25.00%

Additional Ratios Year 1 Year 2 Year 3 Year 4 Year 5

Net Profit Margin 3.65% 3.97% 4.24% 4.45% 4.64% n.a
Return on Equity 66.47% 55.50% 46.57% 41.05% 36.22% n.a

Activity Ratios
Accounts Receivable Turnover 12.41 12.41 12.41 12.41 12.41 n.a
Collection Days 29 28 28 28 28 n.a
Stock Turnover 12.00 12.57 12.57 12.57 12.57 n.a
Accounts Payable Turnover 13.09 12.17 12.17 12.17 12.17 n.a
Payment Days 27 28 29 29 29 n.a
Total Asset Turnover 4.42 4.69 4.85 4.97 4.94 n.a

Debt Ratios
Debt to Net Worth 3.12 1.98 1.27 0.86 0.58 n.a
Current Liab. to Liab. 0.56 0.68 0.82 1.00 1.00 n.a

Liquidity Ratios
Net Working Capital R1,311,063 R1,422,453 R1,665,641 R1,953,248 R2,899,156 n.a
Interest Coverage 0.00 0.00 0.00 0.00 0.00 n.a

Additional Ratios
Assets to Sales 0.23 0.21 0.21 0.20 0.20 n.a
Current Debt/Total Assets 43% 45% 46% 46% 37% n.a
Acid Test 0.08 0.07 0.09 0.12 0.25 n.a
Sales/Net Worth 18.20 13.98 11.00 9.22 7.81 n.a
Dividend Payout 0.14 0.46 0.39 0.42 0.37 n.a

Page 16
 S S Rotomoulders

7.8 Valuation

Table: Investment Analysis

Investment Analysis
Start Year 1 Year 2 Year 3 Year 4 Year 5
Initial Investment
Investment R500,000 R0 R0 R0 R0 R0
Dividends R0 R100,000 R400,000 R400,000 R500,000 R500,000
Ending Valuation R0 R0 R0 R0 R0 R20,587,000
Combination as Income Stream (R500,000) R100,000 R400,000 R400,000 R500,000 R21,087,000
Percent Equity Acquired 35%
Net Present Value (NPV) R11,139,254
Internal Rate of Return (IRR) 130%

Assumptions
Discount Rate 12.00%
Valuation Earnings Multiple 10 10 10 10 10
Valuation Sales Multiple 2 2 2 2 2

Investment (calculated) R500,000 R0 R0 R0 R0 R0

Dividends R100,000 R400,000 R400,000 R500,000 R500,000
Calculated Earnings-based
R7,340,000 R8,780,000 R10,290,000 R11,910,000 R13,640,000
Valuation
Calculated Sales-based Valuation R40,180,000 R44,190,000 R48,610,000 R53,470,000 R58,820,000
Calculated Average Valuation R23,760,000 R26,485,000 R29,450,000 R32,690,000 R36,230,000

7.9 Payback

Table: Payback

Payback

Projected Payback Calculation

Investment Year 1 Year 2 Year 3 Year 4 Year 5
Investment R500,000
Cash Returns by Year R100,000 R100,000 R100,000 R100,000 R100,000
Combination as Income Stream (R500,000) R100,000 R100,000 R100,000 R100,000 R100,000
Cumulative Net Cash Flow to (R400,000 (R300,000 (R200,000 (R100,000
(R500,000) R0
Investors ) ) ) )
Payback Period 5 years

Page 17
S S Rotomoulders

Page 18
 Appendix

Table: Sales Forecast

Sales Forecast
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Sales GST/HST Rate
Tank 500 Ltrs R372,000 R372,000 R372,000 R372,000 R372,000 R372,000 R372,000 R372,000 R372,000 R372,000 R372,000 R372,000
Tank 750 Ltrs R558,000 R558,000 R558,000 R558,000 R558,000 R558,000 R558,000 R558,000 R558,000 R558,000 R558,000 R558,000
Tank 1000 Ltrs R744,000 R744,000 R744,000 R744,000 R744,000 R744,000 R744,000 R744,000 R744,000 R744,000 R744,000 R744,000
Total Sales R1,674,000 R1,674,000 R1,674,000 R1,674,000 R1,674,000 R1,674,000 R1,674,000 R1,674,000 R1,674,000 R1,674,000 R1,674,000 R1,674,000

Direct Cost of Sales GST/HST Rate Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Raw Material R1,188,000 R1,188,000 R1,188,000 R1,188,000 R1,188,000 R1,188,000 R1,188,000 R1,188,000 R1,188,000 R1,188,000 R1,188,000 R1,188,000
Fuel R208,421 R208,421 R208,421 R208,421 R208,421 R208,421 R208,421 R208,421 R208,421 R208,421 R208,421 R208,421
Wages and Salaries R25,000 R25,000 R25,000 R25,000 R25,000 R25,000 R25,000 R25,000 R25,000 R25,000 R25,000 R25,000
Tank Lid R36,000 R36,000 R36,000 R36,000 R36,000 R36,000 R36,000 R36,000 R36,000 R36,000 R36,000 R36,000
Electricity R25,000 R25,000 R25,000 R25,000 R25,000 R25,000 R25,000 R25,000 R25,000 R25,000 R25,000 R25,000
Subtotal Direct Cost of Sales R1,482,421 R1,482,421 R1,482,421 R1,482,421 R1,482,421 R1,482,421 R1,482,421 R1,482,421 R1,482,421 R1,482,421 R1,482,421 R1,482,421

Page 19
 Appendix
Table: Personnel

Personnel Plan
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Production Personnel
Production Manager cum Supervisor R10,000 R10,000 R10,000 R10,000 R10,000 R10,000 R10,000 R10,000 R10,000 R10,000 R10,000 R10,000
Skilled Worker R8,000 R8,000 R8,000 R8,000 R8,000 R8,000 R8,000 R8,000 R8,000 R8,000 R8,000 R8,000
Unskilled Worker R7,000 R7,000 R7,000 R7,000 R7,000 R7,000 R7,000 R7,000 R7,000 R7,000 R7,000 R7,000
Subtotal R25,000 R25,000 R25,000 R25,000 R25,000 R25,000 R25,000 R25,000 R25,000 R25,000 R25,000 R25,000

Sales and Marketing Personnel

Sales Manager R8,000 R8,000 R8,000 R8,000 R8,000 R8,000 R8,000 R8,000 R8,000 R8,000 R8,000 R8,000
Name or Title or Group R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0
Subtotal R8,000 R8,000 R8,000 R8,000 R8,000 R8,000 R8,000 R8,000 R8,000 R8,000 R8,000 R8,000

General and Administrative Personnel

Accountant cum Store Keeper R8,000 R8,000 R8,000 R8,000 R8,000 R8,000 R8,000 R8,000 R8,000 R8,000 R8,000 R8,000
Name or Title or Group R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0
Name or Title or Group R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0
Subtotal R8,000 R8,000 R8,000 R8,000 R8,000 R8,000 R8,000 R8,000 R8,000 R8,000 R8,000 R8,000

Other Personnel
General Manager R15,000 R15,000 R15,000 R15,000 R15,000 R15,000 R15,000 R15,000 R15,000 R15,000 R15,000 R15,000
Name or Title or Group R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0
Name or Title or Group R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0
Subtotal R15,000 R15,000 R15,000 R15,000 R15,000 R15,000 R15,000 R15,000 R15,000 R15,000 R15,000 R15,000

Total People 0 0 0 0 0 0 0 0 0 0 0 0

Total Payroll R56,000 R56,000 R56,000 R56,000 R56,000 R56,000 R56,000 R56,000 R56,000 R56,000 R56,000 R56,000

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 Appendix
Table: Profit and Loss

Pro Forma Profit and Loss

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Total Income GST/HST Rate R1,674,000 R1,674,000 R1,674,000 R1,674,000 R1,674,000 R1,674,000 R1,674,000 R1,674,000 R1,674,000 R1,674,000 R1,674,000 R1,674,000
Cost of Goods Sold R1,482,421 R1,482,421 R1,482,421 R1,482,421 R1,482,421 R1,482,421 R1,482,421 R1,482,421 R1,482,421 R1,482,421 R1,482,421 R1,482,421

Gross Profit R191,579 R191,579 R191,579 R191,579 R191,579 R191,579 R191,579 R191,579 R191,579 R191,579 R191,579 R191,579
Gross Profit % 11.44% 11.44% 11.44% 11.44% 11.44% 11.44% 11.44% 11.44% 11.44% 11.44% 11.44% 11.44%

General and Administrative Expenses GST/HST Rate

General and Administrative Payroll R8,000 R8,000 R8,000 R8,000 R8,000 R8,000 R8,000 R8,000 R8,000 R8,000 R8,000 R8,000
Marketing/Promotion R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0
Depreciation R13,125 R13,125 R13,125 R13,125 R13,125 R13,125 R13,125 R13,125 R13,125 R13,125 R13,125 R13,125
Rent R10,000 R10,000 R10,000 R10,000 R10,000 R10,000 R10,000 R10,000 R10,000 R10,000 R10,000 R10,000
Utilities R500 R500 R500 R500 R500 R500 R500 R500 R500 R500 R500 R500
Insurance R1,000 R1,000 R1,000 R1,000 R1,000 R1,000 R1,000 R1,000 R1,000 R1,000 R1,000 R1,000
Other General and Administrative
R23,000 R23,000 R23,000 R23,000 R23,000 R23,000 R23,000 R23,000 R23,000 R23,000 R23,000 R23,000
Expenses
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Total Expense GST/HST Rate R78,625 R78,625 R78,625 R78,625 R78,625 R78,625 R78,625 R78,625 R78,625 R78,625 R78,625 R78,625

Profit Before Interest and Taxes R112,954 R112,954 R112,954 R112,954 R112,954 R112,954 R112,954 R112,954 R112,954 R112,954 R112,954 R112,954
EBITDA R126,079 R126,079 R126,079 R126,079 R126,079 R126,079 R126,079 R126,079 R126,079 R126,079 R126,079 R126,079

Other Income
Other Income Account Name R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0
Other Income Account Name R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0
Total Other Income R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0

Other Expense
Interest Expense R20,000 R20,000 R20,000 R20,000 R20,000 R20,000 R20,000 R20,000 R20,000 R20,000 R20,000 R20,000
Income Tax R31,824 R31,824 R31,824 R31,824 R31,824 R31,824 R31,824 R31,824 R31,824 R31,824 R31,824 R31,824
Total Other Expense R51,824 R51,824 R51,824 R51,824 R51,824 R51,824 R51,824 R51,824 R51,824 R51,824 R51,824 R51,824

Net Other Income (R51,824) (R51,824) (R51,824) (R51,824) (R51,824) (R51,824) (R51,824) (R51,824) (R51,824) (R51,824) (R51,824) (R51,824)
Net Profit R61,130 R61,130 R61,130 R61,130 R61,130 R61,130 R61,130 R61,130 R61,130 R61,130 R61,130 R61,130
Net Profit/Sales 3.65% 3.65% 3.65% 3.65% 3.65% 3.65% 3.65% 3.65% 3.65% 3.65% 3.65% 3.65%

Page 21
 Appendix
Table: Cash Flow

Pro Forma Cash Flow

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Cash Received

Cash from Operations

Cash Sales R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0
Cash from Receivables R55,800 R1,674,000 R1,674,000 R1,674,000 R1,674,000 R1,674,000 R1,674,000 R1,674,000 R1,674,000 R1,674,000 R1,674,000 R1,674,000
Subtotal Cash from Operations R55,800 R1,674,000 R1,674,000 R1,674,000 R1,674,000 R1,674,000 R1,674,000 R1,674,000 R1,674,000 R1,674,000 R1,674,000 R1,674,000

Additional Cash Received GST/HST Rate

Non Operating (Other) Income R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0
GST/HST Received (Output Tax) R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0
GST/HST Repayments R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0
New Current Borrowing R700,000 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0
New Other Liabilities (interest-free) R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0
New Fixed Liabilities R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0
Sales of Other Current Assets 14.00% R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0
Sales of Fixed Assets 14.00% R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0
New Investment Received R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0
Subtotal Cash Received R55,800 R2,374,000 R1,674,000 R1,674,000 R1,674,000 R1,674,000 R1,674,000 R1,674,000 R1,674,000 R1,674,000 R1,674,000 R1,674,000

Expenditures Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Expenditures from Operations

Cash Spending R56,000 R56,000 R56,000 R56,000 R56,000 R56,000 R56,000 R56,000 R56,000 R56,000 R56,000 R56,000
Bill Payments R82,478 R2,441,595 R1,491,921 R1,491,921 R1,491,921 R1,491,921 R1,491,921 R1,491,921 R1,491,921 R1,491,921 R1,491,921 R1,491,921
Subtotal Spent on Operations R138,478 R2,497,595 R1,547,921 R1,547,921 R1,547,921 R1,547,921 R1,547,921 R1,547,921 R1,547,921 R1,547,921 R1,547,921 R1,547,921

Additional Cash Spent GST/HST Rate

Non Operating (Other) Expense R51,824 R51,824 R51,824 R51,824 R51,824 R51,824 R51,824 R51,824 R51,824 R51,824 R51,824 R51,824
GST/HST Paid Out (Input Tax) R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0
GST/HST Payments R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0
Principal Repayment of Current Borrowing R0 R0 R100,000 R100,000 R100,000 R100,000 R100,000 R100,000 R100,000 R0 R0
Other Liabilities Principal Repayment R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0
Fixed Liabilities Principal Repayment R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0
Purchase Other Current Assets 14.00% R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0
Purchase Fixed Assets 14.00% R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0
Dividends R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R100,000
Subtotal Cash Spent R190,302 R2,549,418 R1,599,745 R1,699,745 R1,699,745 R1,699,745 R1,699,745 R1,699,745 R1,699,745 R1,699,745 R1,599,745 R1,699,745

Net Cash Flow (R134,502) (R175,418) R74,255 (R25,745) (R25,745) (R25,745) (R25,745) (R25,745) (R25,745) (R25,745) R74,255 (R25,745)
Cash Balance R185,498 R10,080 R84,335 R58,590 R32,846 R7,101 (R18,644) (R44,389) (R70,133) (R95,878) (R21,623) (R47,368)

Page 22
 Appendix
Table: Balance Sheet

Pro Forma Balance Sheet

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Assets Starting Balances

Current Assets
Cash R320,000 R185,498 R10,080 R84,335 R58,590 R32,846 R7,101 (R18,644) (R44,389) (R70,133) (R95,878) (R21,623) (R47,368)
Accounts Receivable R0 R1,618,200 R1,618,200 R1,618,200 R1,618,200 R1,618,200 R1,618,200 R1,618,200 R1,618,200 R1,618,200 R1,618,200 R1,618,200 R1,618,200
Stock R500,000 R1,482,421 R1,482,421 R1,482,421 R1,482,421 R1,482,421 R1,482,421 R1,482,421 R1,482,421 R1,482,421 R1,482,421 R1,482,421 R1,482,421
Other Current Assets R200,000 R200,000 R200,000 R200,000 R200,000 R200,000 R200,000 R200,000 R200,000 R200,000 R200,000 R200,000 R200,000
Total Current Assets R1,020,000 R3,486,119 R3,310,701 R3,384,956 R3,359,211 R3,333,467 R3,307,722 R3,281,977 R3,256,232 R3,230,488 R3,204,743 R3,278,998 R3,253,254

Fixed Assets
Fixed Assets R1,450,000 R1,450,000 R1,450,000 R1,450,000 R1,450,000 R1,450,000 R1,450,000 R1,450,000 R1,450,000 R1,450,000 R1,450,000 R1,450,000 R1,450,000
Accumulated Depreciation R0 R13,125 R26,250 R39,375 R52,500 R65,625 R78,750 R91,875 R105,000 R118,125 R131,250 R144,375 R157,500
Total Fixed Assets R1,450,000 R1,436,875 R1,423,750 R1,410,625 R1,397,500 R1,384,375 R1,371,250 R1,358,125 R1,345,000 R1,331,875 R1,318,750 R1,305,625 R1,292,500
Total Assets R2,470,000 R4,922,994 R4,734,451 R4,795,581 R4,756,711 R4,717,842 R4,678,972 R4,640,102 R4,601,232 R4,562,363 R4,523,493 R4,584,623 R4,545,754

Liabilities and Capital Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Current Liabilities
Accounts Payable R0 R2,391,864 R1,442,190 R1,442,190 R1,442,190 R1,442,190 R1,442,190 R1,442,190 R1,442,190 R1,442,190 R1,442,190 R1,442,190 R1,442,190
Current Borrowing R500,000 R500,000 R1,200,000 R1,200,000 R1,100,000 R1,000,000 R900,000 R800,000 R700,000 R600,000 R500,000 R500,000 R500,000
Other Current Liabilities R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0
Subtotal Current Liabilities R500,000 R2,891,864 R2,642,190 R2,642,190 R2,542,190 R2,442,190 R2,342,190 R2,242,190 R2,142,190 R2,042,190 R1,942,190 R1,942,190 R1,942,190

Fixed Liabilities R1,500,000 R1,500,000 R1,500,000 R1,500,000 R1,500,000 R1,500,000 R1,500,000 R1,500,000 R1,500,000 R1,500,000 R1,500,000 R1,500,000 R1,500,000
Total Liabilities R2,000,000 R4,391,864 R4,142,190 R4,142,190 R4,042,190 R3,942,190 R3,842,190 R3,742,190 R3,642,190 R3,542,190 R3,442,190 R3,442,190 R3,442,190

Paid-in Capital R500,000 R500,000 R500,000 R500,000 R500,000 R500,000 R500,000 R500,000 R500,000 R500,000 R500,000 R500,000 R500,000
Retained Earnings (R30,000) (R30,000) (R30,000) (R30,000) (R30,000) (R30,000) (R30,000) (R30,000) (R30,000) (R30,000) (R30,000) (R30,000) (R130,000)
Earnings R0 R61,130 R122,261 R183,391 R244,521 R305,651 R366,782 R427,912 R489,042 R550,172 R611,303 R672,433 R733,563
Total Capital R470,000 R531,130 R592,261 R653,391 R714,521 R775,651 R836,782 R897,912 R959,042 R1,020,172 R1,081,303 R1,142,433 R1,103,563
Total Liabilities and Capital R2,470,000 R4,922,994 R4,734,451 R4,795,581 R4,756,711 R4,717,842 R4,678,972 R4,640,102 R4,601,232 R4,562,363 R4,523,493 R4,584,623 R4,545,754

Net Worth R470,000 R531,130 R592,261 R653,391 R714,521 R775,651 R836,782 R897,912 R959,042 R1,020,172 R1,081,303 R1,142,433 R1,103,563

Page 23