Entrepreneurship

Assignment: Business Plan

SUBMITTED BY:
Waqas Ahmed
Afnan Ali
Haris Riaz
M. Umar Ashraf

2013-IM-09
2013-IM-13
2013-IM-21
2013-IM-23

SUBMITTED TO:
Prof. Dr. M. Pervez Mughal

Department of Industrial and Manufacturing Engineering

University of Engineering and Technology, Lahore
1

Plastic Recycling Business Plan

APEX Plastics

Quality is our Hallmark

CONTENTS
Executive Summary
Company Overview

4
4

Company Ownership

Mission Statement

Objectives

Key To Success
Markets And Products
Product And Services

5
6
6

Market Comparison

Potential Risks

Swot Analysis

Competition

Target Market Segment Strategy

Industry And Marketplace Analysis

Competitor Analysis

11

Marketing Strategy

11

Product/ Service Strategy

12

Advertising & Promotion Strategy

12

Sales Strategy

12

Marketing & Sales Forecast

13

Development

14

Development Strategy

14

Management

15

Operations

15

Supply Chain

18

Financials and Income Statement

20
3

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 APEX 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.

COMPANY OVERVIEW
APEX Plastics give an extensive variety of plastic solutions for household and crude material for
packaging to the different organizations. Lahore is the place where the facility will be established
and other operation will start. We will gather 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
crude material has two parts one is PVC (Polyvinyl chloride) and other is PET (Polyethylene
Terephthylene). Firstlythe entire garbage is melted and afterward PVC and PET are isolated from
each other by froth flotation technique.

We will make a plant (actual facilities to be shared with the recycling unit) to produce 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)

COMPANY OWNERSHIP
APEX Plastics is owned by the initial founders, Mr.Waqas, Mr.Umar, Mr.Afnan and
Mr.Haris, who are the proposed executives of the operating entity. The plan was conceived
and developed by these individuals, with the intent to apply their extensive experience and
contacts in the industry to build a successful and profitable corporation.

MISSION STATEMENT

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

OBJECTIVES

Develop a business that survives on its own cash.

Create a company that exceeds customer satisfaction level.
Expand the service to whole Punjab in first five years.
Extending the services to electronic component manufacturing companies for production
of capacitors printed circuit boards etc.

KEY TO SUCCESS:
The main keys to the success of the Company are:

Secure Supply- Contract for supply of post-consumer bottles and post-industrial

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

MARKETS AND PRODUCTS

The plastic items more often than not don't carry a brand name so intruding in the business like
plastic will not be too hard with low price strategy. The number of inhabitants in Lahore and its
surrounding areas is around more than 10 million and this range essentially contains low to
center pay gather families so they concentrate on plastic items as.
Lahore is also the engineering hub of Pakistan with industries such as car manufacture, heavy
machinery, steel, IT, chemicals and computers all contributing to its 13.2% contribution to
Pakistans national economy. It is currently ranked 122nd largest in the world for GDP with an
average growth rate of nearly 6%.
Plastics industry in Pakistan is one of the oldest in the country. At the time of independence, the
industry was unorganized and progressed in a chaotic manner produced very low quality
products. The process of industrialization in 1960s improved the production process through
introduction of new technology and diversification into independent small scale units which
further increased the demand of cheap durable consumer goods.
There are two folds of products that we are providing one are industrial and other is household.

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 is a thermoplastic polymer
viscous of polyester family. The biggest property of this compound is that it is transparent. This
is the reason for its use in packaging. Moreover, PET have good strength, ductility, stiffness and
hardness. An extruded plastic is generated after the completion of recycling process. Plastics
extrusion is a high volume manufacturing process in which raw plastic material is first melted
and then formed into a continuous profile.
The products which we are manufacturing are

Cleaned and recycled plastic flakes of PET and bottles, obtained from post-consumer
beverage bottles. (This PET will work as raw material for packaging to various firms, not
for the end user)
Household finished plastic products. We will manufacture plastic tubes of different
diameters, plastic kitchenware. (For the end user)
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 the sake of packaging.

Recycled plastic is widely utilized in mainstream construction products such as damp proof
membrane, drainage pipes, ducting and flooring. Bins, road signs and planters are frequently
6

made from plastic. They are cost effective and resistant to damage. 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.are frequently used. So there is a big demand of these in local market.

MARKET COMPARISON
While quality and delivery are vital variables to our potential customers, price is frequently the
deciding component in a purchasing choice. Good quality packaging items fabricated from
reused (less costly) resins, as close as practical to the end client's operations, will be most
focused and accomplish a huge share of the overall industry. These components have decided the
business parameters of our plan

POTENTIAL RISKS
The possible risks are:
Unavailable or scarce raw material feed stock for production
Our firm is confident that it has secured good availability of low cost post-consumer PET
bottles (feed stock) derived from post-consumer beverage bottles from recycling collectors, and
has back up sources identified.
Technology employed may be unreliable or unproven
APEX plastics will use a proven, patented technology that was developed by one of its principals
for the cleaning and recycling phase. The extrusion division will employ commercially proven
technology - the industry is employing unique recycled PET technology.
There may not be a market for the Company's products
The Industry-wide experience of the Management Team has allowed them to identify markets for
the Company's products. Their expertise and reputations have allowed them to obtain
commitments for virtually all of the planned initial production.
The location may not be near enough to markets
The markets that have been identified are primarily in Punjab which will provide a distinct
advantage to the Company because of economical factors..
The Company may not be able to attract top management
The Company has assembled a world class management team with proven ability and direct
experience in the Company's market segments.
7

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.
The Company may not be able to sell all of its production capability
Through the Senior Management's industry-wide contacts, the Company has identified potential
customers and received commitments for all of the production potential of the initial facility.

SWOT ANALYSIS
Strengths

consolidation
Low price
Environment Friendly
Low resource consumption
Unavailability of Machinery

Weakness:

People may not accept this product if we do not rightly market it.
lack of markets for collected materials

Opportunities

Employment Opportunities
Demand Supply Gap, creates a room for
our business
Purchasing power of the people will be increased so they will favor our products.

Threats:

custom duties
growing competition

COMPETITION:
Plastics competitive edge rests with its proximity to its target markets, as well as the industry
knowledge, reputation. The experience of the management will lead to identify unique
opportunity and put together the technology and sources to take advantage of it. The reputation
in the specific market segment will result in the achievement of long-term commitments for our
production. We will surpass the following characteristics through strategic planning and
forecasting, which will deal the most common competitive issues in our future run. Such issues
are:

Patents: We will apply for our product under Trade mark and Patent law.
High startup costs.
Improving skills in technical, manufacturing, marketing and engineering expertise.

TARGET MARKET SEGMENT STRATEGY:

The Company has chosen its target markets because recycled PET (OPET) is in high demand as
flake resin by converters, as roll stock sheet used to produce high visibility packaging and as
high strength strapping for the lumber industry. Sales are price-sensitive, so that proximity to
markets and feed stock source provide a competitive edge.

INDUSTRY AND MARKETPLACE ANALYSIS

Plastics Industry of Pakistan
Plastics industry in Pakistan is one of the oldest in the country. At the time of independence, the
industry was unorganized and progressed in a chaotic manner produced very low quality
products. The process of industrialization in 1960s improved the production process through
introduction of new technology and diversification into independent small scale units which
further increased the demand of cheap durable consumer goods. At present, our plastic industry
is the second largest domestic market in South East Asia after India. This industry contributes 1.6
percent in national output and around Rs7.5 billion annually in the government revenue
Pakistan's plastic industry is thriving at an average annual growth rate of 15% with a total
estimated production capacity of 624,200 M/T per annum12. The industry attracted investment
amounting to more than US$ 260 billion13, almost half of which was foreign direct investment
(FDI), and as a result export growth has increased to 35%14. Pakistan has established successful
export markets for its plastic goods. In foreign markets including countries like Australia, South
Africa, Saudi Arabia, West Indies, UAE, Kuwait, Taiwan, Nigeria and Zimbabwe; Pakistan is
strategically well placed to target all important local and international buyers in one of the
world's largest trading regions. Particular growth is being seen in exports of plastic components
for the automobile industry. The industry is contributing more than Rs7.5 billion annually to the
national 18 exchequer in shape of custom duty, sales tax and income tax. Its contribution to the
gross domestic product (GDP) was 1.69%
9

Pakistan plastic industry produces two types of plastic goods such as thermoplastic and
thermosetting plastic. This industry falls in small scale to medium scale industries and scattered
all provinces of countries. Punjab produces 60 percent of total production followed by Sindh 30
percent, Khyber Pakhtunkhwa 7 percent and 3 percent in Baluchistan. There is only one big
industry and some small scale manufacturers in Pakistan who produce raw material for this
industry and fulfill only 10-20 percent of plastic industry demand while more than 80 percent of
raw material demand is fulfilled from imports of different countries. Pakistan mostly imported
raw material from UAE and other Eastern countries for plastic industry on higher cost whereas
this raw material is available in India in huge quantity, who is also exporting to other countries.
This is hi-tech industry uses processing machinery which imported mostly from Japan, Korea,
Italy, Taiwan, Hong Kong, England, China and Germany. There are some 6,000 plastic products
manufacturers in the country and 600,000 people are directly and indirectly engaged with this
business.
Pakistan imports 80-90 percent raw material for plastic making from different countries. The
total consumption of raw material used in the plastic industry in the country is around 450,000
tonnes. The country imports raw material from UAE and Far Eastern countries and special grade
raw material is imported from Germany and USA.
Plastic has become an integral part of the modern living, with an estimated consumption of 90120kg per capita per annum in the developed world. The per capita consumption of plastic in
Pakistan is 3.1 kg, while this is 5-6 kg in India, 12 kg in China and 33 kg in Gulf countries. In
developed countries the consumption of plastic is high due to light weight, economical, cost
effective, flexible and easy to clean. The low per capita consumption in Pakistan reflect that there
is great opportunity that the plastics industry can get greatly benefited from the substitution of
plastic for other materials including various metals, wood, paper, glass, cardboard and natural
fibers etc.
The price of raw material depends upon the price of crude oil. Higher the price of crude oil in
international market, higher will be the cost of production of plastic products. In International
market Pakistan faces tough competition from China, Thailand, Korea and India. The recent
penetration of cheap Chinese products into Pakistan has made the competitive situation in the
local plastic industry very intense. Moreover, there is huge smuggling from Iran which distorted
our domestic industry with low market rates and affects the domestic producers. Plastics raw
material production in Pakistan is at low scale and does not meet the required demand. Presently,
the total combined annual production capacity of four leading plastic resins producers stands at a
little over 0.5 million tons while Pakistan total imports of all plastics raw material, as per Trade
Map data, reached 0.525 million tons valuing US$ 913 million in 2009. Country consumes
280,000 tons/year of polyethylene (PE), almost entire demand is met by imports.

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The plastic industry in Pakistan is potentially one of the most dynamic segments of the
manufacturing sector as it involves many industries that produce for the domestic as well as the
export market.

COMPETITOR ANALYSIS
PVC (Polyvinyl Chloride) producer
Engro Polymer & Chemicals Limited (EZ / 1/ P-11-1, Eastern Zone, Bin Qasim, Karachi,
Pakistan), a subsidiary of Engro Corporation, is the only producer of PVC in Pakistan. The plant
has annual production capacity of 150,000 metric tons. The company now has an integrated PVC
facility after expansion and backward integration in 2009 for the manufacture of Ethylene Di
Chloride (EDC), Chlor-alkali and Vinyl Chloride Monomer (VCM). The company was able to
export 10,000 tons of PVC in 2009. At present only traditional PVC items are being
manufactured i.e. pipes and fittings, shoes, cables, water conservation and compounding etc.
With increased application of PVC in other products, there is good potential for growth in PVC
consumption.
PET Resin (Polyethylene Terephthalate) producer
The only producer of Polyethylene Terephthalate (PET bottle grade resin) is Novatex (117-83,
Off Railway Siding EPZ Road, Near Wheat Godown Landhi, Karachi 75180, Sindh, Pakistan) , a
sister concern of Gatron Industries. Gatron was established in 1984 as a producer of texturized
and flat polyester filament yarn. The company diversified into PET bottle grade resin to cater to
the increasing demand of the bottling industry. The company, with an annual production capacity
of 235,000 tons of PET Resin (bottle grade), is not only meeting countrys demand but has also
entered into export market. Gatron has its Polymerization Plant and Technology from Zimmer
AG, Germany while the Solid State Poly-condensation Plant and Technology has been acquired
from Sinco Engineering, Italy. Presently there is a huge potential for growth as demand is
increasing due to high consumer usage in Pakistan.

MARKETING STRATEGY
The Company has concentrated on the manufacturing of plastic packaging materials from reused
post-customer beverage bottles. We have recognized a critical accessible market in Punjab. The
greater part of our starting marketing strategy will be to secure contracts in that section, and in
the wake of achieving full planned capacity, hope to develop working together with that segment
and related markets. We see little need at present for further statistical surveying and
improvement, and will concentrate on continually redesigning our production innovation with an
end goal to stay in the front line of our chosen marketplace

PRODUCT/ SERVICE STRATEGY

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The packaging organizations require high caliber and highly transparent PET bottles. The
companies that are delivering mineral water will Reject PET BOTTLES with even little
contamination/mistiness. So we the APEX Plastics give high-end PET pieces for the ideal
packaging
APEX 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.

ADVERTISING & PROMOTION STRATEGY

As 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 flow through the daily papers crosswise
over entire city. For B2B business we will advance through online web-based social networking
and we will likewise build up our site through which empower us to broadly spread our contact
among different organizations. The site will have full details of product that are available for
companies as well as end user.

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 provide the industrial customers a
facility to order the products through our website which will help them in reducing the time od
delivery. To market the products, our 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 time. 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 towards our products.

MARKETING & SALES FORECAST

12

The first month before the opening will be used to get the new office in order, set up appointment
and start marketing activities. In the first month we will focus on the generating public visibility.

Marketing strategy with 4ps:

Product:
Environmentally friendly production may increase costs for organisations and their suppliers but
this may be offset by lower fuel bills through energy efficiency measures or an increase in sales
caused by a positive product image.
Price:
The ideal marketing mix is a reduction in costs and/or an increased in costs which is exceeded by
an increase in profits. (must be affordable to all category of people)
Place:
All organisations will need to carefully time when their product reaches consumers; exact time
of distribution will depend on the product or service being distributed. Such timing may have an
environmental implication
Promotion:

Media and Celebrities.

Local TV channels.
Awareness programmes.
Distributing dust pins to hospitals, institutions, city bus stops

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 industries. Recycling
industry is growing with a rate of 15-20% per year. So we can assume that our company will
grow with at least 20%. There is a strong market demand for flake and extruded products made
from recycled PET.

Sales forecast
Year 1

Year 2

Year 3

Year 4
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Annual sales 1620000

2106000

2737800

3559140

Monthly
sales

135000

175500

228150

296595

PET Sales

94500

122850

159705

207617

Household
items

40500

52650

68445

88978.5

DEVELOPMENT
The advancement of APEX plastics required accomplishing a progression of activity and
conventions. Since we are new in the market we kept our production low at first, as demand will
expand the production will be upgraded respectively. Presently we are reusing and producing just
two sorts of plastics i.e. PVC and PET, as we develop we will deliver a wide range of plastics
and its finished goods. . The improvement procedure includes taking 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 finds its use in the production of 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 be mainly based on timely completion of the establishment of the
business centre with as low execution cost as possible. 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.
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?
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What will be the format of the business ?

Our development strategy will address all those above-mentioned point. As we will develop and
our revenue 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.

MANAGEMENT
Promoters and six supporting staff will deal with the organization. There will be five promoters
of Hind Plastics. Advertising aptitudes like convincing power, negotiating ability, creating
promotional strategies and sales skills will all be to a great degree accommodating in taking the
business far and will demonstrate seriously important to take Hind Plastics to flaring statures.
In this manner with such potential abilities, and other qualities like efficient interpersonal skills,
leadership skills and decision making quality, aptly makes him the best promoter and qualified
author and proprietor of APEX plastics. Along with promoters five more employees will work
for the achievement of organizations' objective. One supervisor will work on the facility along
with two supporting 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
Sorting
Belt Conveyer
PET Separator
Packaging

No of employees
2
1
1
4

Proficiency
Unskilled
Semiskilled
Semiskilled
Unskilled

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.
Facility is divided in two parts
Recycling and Production unit

Warehouse

The facility is located in an area of 3000 sqft. Aside 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.

15

The operations will be based upon the concept of JIT i.e. just in time. We will have contracted
with the suppliers who have the ability to 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 which shows whether 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 according to our plan, preference will
be given to the product having high demand. 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 market demand.
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
fed to the molder and molder will give it various shape bottles. And then it is left for drying.
Those products that further need for processing like buckets; the handle will be inserted after the
bucket is dried.

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 / Coloring
Extrusion
Fabrication into end Product.

Chipping
The plastics waste should be properly sized so that those may be fed into the extruders for
processing. The sizing operation depends on the type and shape of the waste plastics.

16

During this process, attention is required to separate any powdery material from the sized /
chipped plastics.
Segregation
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
utilized for the segregation of different types of plastics.
However in the Context of Pakistan, this separation or segregation process, in many cases, are
done by manual process utilizing the availability of cheap and expert labor force. Proper method
of separating the metals or some other contaminants is required In case the waste is contaminated
with embedded metals
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
Coloring

In the next operation the sized plastics waste is mixed with colour master batch in high-speed
and the output is ready for extrusion into pellets.
Extrusion
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
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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
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.

FACILITY LAYOUT

18

FINANCIALS
19

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
Total Start-up Expenses

10,000

Start-up Assets
Cash Required
Other Current Assets
Long-term Assets
Total Assets
Total Requirements

1,00,000
0
33,30,000
34,30,000
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 891000

sales

1158300

1505790

1806948

Gross margin

947700

1232010

1478412

729000

Operating expenses:
Admin exp.

3000

3150

3308

3473

Advertisement

60000

72000

86400

103680

Salaries

192000

211200

232320

255552

Transportation

96000

105600

116160

127776

Electricity
Telephone

48000
10000

50400
11000

52920
12100

55570
13310
20

Legal exp.
Insurance
Other exp

10000
20000
6000

1000
20000
6600

1000
20000
7260

1000
20000
7986

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