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TABLE OF CONTENT

Project Overview.............................................................................................................................3
Acknowledgements:........................................................................................................................4
Objectives.........................................................................................................................................5
Background.....................................................................................................................................5
SWOT Analysis...............................................................................................................................6
Strength:.................................................................................................................................................6
Weakness................................................................................................................................................6
Opportunity ...........................................................................................................................................6
Threats....................................................................................................................................................6
Executive summary: .......................................................................................................................7
Industry Analysis.............................................................................................................................8
Market study..........................................................................................................................................8
Analysis of Competitors.........................................................................................................................8
Description of venture:...................................................................................................................9
Products:.................................................................................................................................................9
Size of Business:....................................................................................................................................10
Office equipment and Personnel:........................................................................................................10
1.Registration of the company......................................................................................................12
Production Plan............................................................................................................................12
Direct Use:............................................................................................................................................13
By dyeing the fiber:..............................................................................................................................13
By carding the fiber and using it:........................................................................................................13
Tools and Equipments required for production ...............................................................................13
Name of supplier of raw materials:.....................................................................................................13
Operation Flow ............................................................................................................................13
Marketing plan:.............................................................................................................................14
2.Organizational Chart.................................................................................................................15
Financial Plan...............................................................................................................................15
Funding.................................................................................................................................................15
Fixed Assets:.........................................................................................................................................15
Buildings:..............................................................................................................................................15
Other Infrastructure:...........................................................................................................................16
a)Machinery and Equipments.............................................................................................................16

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Vehicles.................................................................................................................................................16
Fixed Cost.............................................................................................................................................16
Variable Cost:......................................................................................................................................17
Total Revenue per Year:......................................................................................................................17
Payback Period Analysis:....................................................................................................................18
ANNEXES.....................................................................................................................................20

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Project Overview

Name : Banana Babushka Pvt. Ltd

Head Office : Mangalbazar , Lalitpur

Plant Location : Sunsari, Mahendranagar-15 District-4

Proprietors :

Nature of Business: Banana Yarn and Handicrafts

Total Investment Required: Rs. 20,000,000

Promoters: Rs. 9,000,000

Bank Loan: Rs. 11,000,000

Annuity of Loan for 10 years: Rs. 2,191,772.68

Total Fixed Cost: Rs. 7,760,000

Total Annual Operating Cost: Rs. 16,905,892.69

Total Annual Revenue: Rs. 21,324,000

Internal Rate of Return (IRR): 41%

Payback Period: 4 years

(It is assumed that revenue is increased each year by 5%)

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Acknowledgements:

We appreciate the help of our respected teachers who have

provided opportunity for preparing this report. We would like to give
special thanks to Er. Ramesh Karki, head of industrial department
for his great support and encouragement for this work. We are
extremely grateful to Dr. Govind Raj Pokharel for his special
guidance and support in our work.

During the preparation of this report we visited different places

and consulted various people. We also browsed Internet and
received materials from Journals, magazine related to the topic. We
express our sincere gratitude to all the people who helped us in our
project specially Mr Sansardhar Tuladhar, Mr Kancha Maharjan, Mr
Deepak Tuladhar, Mr. Sanjay Amatya and other people for helping
us directly or indirectly in our project.

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Objectives

The primary objective of this firm is to promote use of natural fibers using
locally available resources.

The secondary objectives of this industry are as follows:

i. To generate raw and refined banana fiber.

ii. Waste management of the banana stems after the harvest of banana fruits.
iii. Promotion of traditional skills and handicraft industry of Nepal.
iv. To increase the production of pure organic banana (fruits and fibers).
v. Research and development of alternative natural fibers.
vi. To train the local women with various income generating skills.

Background

Banana is one of the most widely cultivated plants in Nepal. It has been
grown in about 5,500- 6,000 hectares of land and gives about 10,000 of tons of
banana fruit. Hot and moist climate is favorable for the growth of banana and
fruits ripen within 10/12 months of its plantation. The stems of these fruits are
annual that is, they die after perfecting the fruit, and new stems are developed
from buds in the rootstock.

The problems arise due to the improper management of the stems. Once the
stems are cut, farmers dump these stems in the river banks polluting the rivers
and the whole areas as well. The ignorance of the farmers about the refinement
and reuse of the stems for the production of fibers are depriving them from
earning extra money.

Besides, increasing interests in the use of natural fibers to produce various

handicrafts item and textiles have led to the research in various plants from
which yarns can be produced. Fibers have been produced from plants such as
Agaves (ketuki), hemps, jute etc from generations and generations in traditional
and commercial ways.

So with the objectives of providing quality services from the total waste
material (stems of banana), this venture is proposed.

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SWOT Analysis

Strength:

• Being a new kind of business in Nepal , competitors are less.

• The demand is high in international market.
• The products are environmentally friendly and hygienic.

Weakness

• Difficult to get proper market in domestic side because of less publicity.

• Resistance against change in ongoing trend.
• Only well off people can purchase these products.

Opportunity

• New ventures of business can be explored and researched.

• Awareness to recycle the waste.
• Increasing faith and interest of people towards natural fiber products.
• Increase standard of living of people of that place.
• Helps in waste management, thereby control pollution.

Threats

• Government policies towards foreign exports of Handicrafts.

• Political bandhs and trade union strikes.
• Difficult to compete with similar organic products.
• Emergence of big investors.

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Executive summary:

Banana fibers and handicrafts is a medium scaled agro based industry established
with the joint effort of five energetic entrepreneurs with the capital of 19602000.
45% of the capital will be invested equally by the five partners and
remaining will be from Agriculture Development Bank with yearly interest
of 15%. Its objective is to provide services to the customers by the production of
quality goods and handicrafts from the banana yarn. Banana yarn is produced from the
banana stem which is otherwise considered a waste product.

This industry’s head office will be situated at Mangal Bazaar, Lalitpur and the
plant will be located at Sunsari, Mahendranagar-15. As per the contract with the local
cooperative, the raw material (Jhapali Malbhok) will be collected from Sunsari itself.
The projected plan is to produce 50 kg of banana fiber daily.

Production of yarn will be seasonal. The fiber will be produced in the months of
Mangshir-Chaitra. But the production of handicraft goods will be continuous through
out the year. The final products will be curtains, carpets, mufflers, caps, bags and
different other decorative items.

A total of about 131 employees will be employed whom can be categorized as

skilled, semi skilled and unskilled workers. The general administration, finance and
accounting section, marketing and sales departments will be under the direct
supervision of five partners of business. The salary and the wages will be paid
according to the skills of employees and the level of work.

The products are mainly targeted to be exported to foreign countries but the
products will be distributed in domestic markets as well.

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Industry Analysis

Market study

The banana fiber business is a new concept in Nepal. Although it has been
passed from generation to generation as a family tradition for domestic uses, it has
not been commercially launched in Nepal. The practice of making handicrafts and
textiles are being practiced in different Asian countries such as Philippines,
Vietnam and some parts of India and are successfully running in those states. So
with ideas from those countries and our active participation, the prospect of this
business is good in Nepal as well.

The expected clients of our products are from both here and abroad. The
targeted market is different European and American countries but the local market
won’t be neglected at all. Different products such as caps, bags, mats, hair bands,
purses, bottle holders, carpets, mufflers and other elegant products shall be
designed and distributed to the customers in reasonable prices.

Analysis of Competitors

Competition is a performance stimulant. Competition with other industries

is intended and we are prepared for the challenges. As described earlier products
from banana yarn are not formally commenced in Nepal. But we have to compete
with the existing fiber firms which are providing their services prior to us. The
fiber products from Agave (Ketuki), hemps, jute, mesta, allo etc are already doing
their business in Nepalese market.

We are enthusiastic to compete with these business firms and have devoted
ourselves to launch our products in competitive prices. Also the quality of our
manufactured goods will not be negotiated and we ensure topmost satisfaction to
all the customers.

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Description of venture:

The plant of our industry will be located in Sunsari, Mahendranagar-15. The

funds will be invested to purchase 5 ropani land, and to construct necessary buildings
and other infrastructures.

Human and Nature are the two inevitable aspects of the universe. The existence
of one without another seems to be impossible. The products and services that have
been used by the humans are destroying the environment and it also adversely
affecting the health of human. Hence, it is believed that there is an immense necessity
of production of the goods that facilitate people without deteriorating the nature and
without adverse effect to human themselves.

After over viewing such theme, we decided to launch the new venture that
produces the environment friendly and hygienic products. Our Motto is “Fruit is good,
Shoot is even better”. In today’s world everyone is concerned about using the organic,
as well as renewable products. Our venture is going to produce such types of organic
goods. Hence we are hopeful that our business will be successful.

Products:

From the point of initiation to the end (i.e. farming of banana to the finished
goods) , the whole process is totally chemical free. Only organic fertilizers were
being used during farming.

Different types of machines are used (Raspador machines, Single ply

machines, carding machines etc) while preparing to transform logs of banana to
yarn.

After screening the markets demand, initial products that our firm is
launching are as follows:

1. Carpet
2. Table cloth
3. Cushion
4. Door mat
5. Bags
6. Cap
7. Curtains
8. Gift items
9. Different decorative items etc.

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According to the market demand we can change the products as per need.

Size of Business:

Initially the size of the business will be medium one. Our capital is about
one crore seventy lakhs. Initially there will be only one manufacturing section
which will be located in Mahendranagar, Sunsari District Ward no 15. But in near
future we are planning to amplify the business.

Customers can visit our show room in Mangalbazar, Lalitpur. They can also
visit our website www.bananababushka.com where they can get the details about
us and our products and can order the products online as well. Our future plan is
also to open showrooms in Thamel, Bhaktapur, Malaysia, Singapore etc targeting
the tourist destinations.

Office equipment and Personnel:

The necessary office equipments are listed as

1. Tables
2. Chair
3. Computer
4. Cupboard
5. Decorative items
6. Miscellaneous
7. Furniture
8. Carpets
9. Electrical Devices

Personnel involving are

S. No. Post Number
1. General Administrative Manager 1
2. Marketing and Sales Manager 1
3. Accounts and Finance Manager 1
4. Yarn Production Manager 1
5. Knitting Production Manger 1
6. Sales Representative 1
7. Marketing Officer 1
8. Accountant 1
9. Office Assistant 1
10. Receptionist 1
11. Skilled Labor 4
12. Semi skilled Labor 119

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13. Un skilled labor 4

Total 131

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1. Registration of the company

Banana Babushka is a partnership form of organization consisting of five

partners. All the rules and regulation as per the general partnership organization are
followed. The company is registered under the act of small and cottage industry and
is vowed to fulfill all the rules, regulation and norms of the company act. The
document required for registration process as follows:-

I. Registration form

II. Duplicate of the citizenship certificate of all members.

III. Legal contract among the parties to follow the act as per the general
partnership.

IV. Plans, policies, act, rules and regulation of the company to be followed by
the owners and the employees and articles of the company.

As the company’s total initial investment is above Rs1,40,00,000

which is above the last barriers i.e. Rs. 50,00,000 , the registration fees that
shall be deposited to in small and cottage industry is Rs. 15,000 and the
registration period is for three years. After three years, the registration shall
be renewed and the charge to renew the industry is Rs. 300 within 35 days
after the registration period will be expired.

Production Plan

It takes about a year to grow a banana tree. After the fruit has been harvested
the middle stem part is chopped and collected for yarn production. About 1.5 ft of the
stump part is left in the field. A chopped stem has to pass through five stages to
develop into final product. They are listed as
• Cutting into small logs
• Putting logs into water tank
• Machining
• Drying
• Knitting

The dried fiber can be used in following ways:

a) Direct use
b) By dyeing the fiber
c) Carding the fiber and using it

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Direct Use:

The fine yarn produced is knitted directly and various goods are produced.
Mats, Table mats, Door mats etc can be produced directly.

By dyeing the fiber:

Various colored threads can also be produced by dyeing like commercial

cotton threads. Such fibers are used to produce bags, purses, cushions, caps and
other decorative items.

By carding the fiber and using it:

Carding machine softens the fiber and produces much fine thread from
which various items can be produced.

Tools and Equipments required for production

• Hacksaw blades
• Raspador Machine
• Carding Machine
• Single ply machines
• Double ply machines
• Water tanks
Name of supplier of raw materials:

The raw material will be supplied by Bishwokarma Cooperative Limited.

Raw Material In
Operation Flow
Storage

Cutting into logs

Putting into water

Machining to produce yarn

Drying

Knitting
Finished goods storage and
Delivery
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Marketing plan:

The potential of banana fiber is infinite but it is not being tapped satisfactorily.
These products can be a huge success if promoted properly and the feedback is well
from the consumers.

Promotion:
The products are expected to be sold mostly abroad. As internet is the most
accessible and easily available connection between the buyer and seller, a website
(www. Organicbanana.com) will be designed and launched containing information
about our products and services provided. The customers can also place their orders
online. Also an advertisement will be placed on the official website of Federation of
Handicrafts Association Nepal (www.handicraftsassociationofnepal.com) which will
help to attract more customers.

Besides we will participate in various exhibitions and trade fairs where we will
interact directly with the customers and promote our products. Direct relations with
the clients will help strengthen our relationships and will help in the increased sales
of our product.

Price:
The price of each product is set taking into consideration two factors which are:

• The level of skill required for the making of that product.

• The price of similar product in domestic and international market.

The products will be charged as follows (in NRs):

Particulars Unit Rate Total

Carpet 100 11000 1100000
Cushion 180 800 144000
Bag 180 600 108000
Cap 270 300 81000
Curtain 90 3000 270000
Table Cloth 45 600 27000
Shoe 40 800 32000

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Miscellaneous 10 1500 15000

Total Revenue per month 1777000
*12(months)
Total revenue per year 21324000

2. Organizational Chart

Financial Plan
Funding

Capital 20000000
Promoters 9000000
Loan 11000000

Fixed Assets:

Land Per ropani ropani

Acquisition 300000 1500000

Buildings:

S.N. Particulars Amount

1 Stem Storage Block 400000
2 Machine Section 500000
3 Refining unit 300000

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4 Knitting center 500000

5 Inventory warehouse 400000
6 Administrative block 800000
Total 2900000

Other Infrastructure:
Particulars Unit Rate Total
Tanks 7 250000 175000
Fencing 1 250000 25000
Miscellaneous 293000
Total 493000
a) Machinery and Equipments

Particulars Unit Rate Total

Raspador machine 10 100000 1000000
Single Ply machine 10 8000 80000
Carding machine 10 8000 80000
Total 1160000

Vehicles

Particular Unit Rate Total

Mini truck 1800000 1 1800000
Total 1800000

Fixed Cost

Land 1500000
Buildings 2900000
Other Infrastructure 200000
Machinery and Equipment 1160000
vehicles 1800000
Miscellaneous 200000
Total 7760000

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Variable Cost:

Variable Cost Unit Price Quantity Total

Raw materials 5 90000 450000
Electricity 5 40000 200000
Communication 100000
Transportation 180000
Rent 20000 12 240000
Miscellaneous 100000
Repair and Maintenance 40000
Salaries:
Officer staff per year no.
Manager 240000 5 1200000
Skilled labour 96000 4 384000
Semi-skilled labour 72000 113 8136000
Unskilled labour 54000 4 216000
Marketing officer 180000 1 180000
Sales Representative 96000 1 96000
Receptionist 60000 1 60000
General Admin. Officer 180000 1 180000
Accountant 180000 1 180000
Total Salary 10632000
Per year Years
Annuity on loan(15%) 2191772
TAX
TOTAL 16905892

Total Revenue per Year:

Particulars Unit Rate Total

Carpet 100 11000 1100000
Cushion 180 800 144000
Bag 180 600 108000

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Cap 270 300 81000

Curtain 90 3000 270000
Table Cloth 45 600 27000
Shoe 40 800 32000
Miscellaneous 10 1500 15000
Total Revenue per month 1777,000
*12(months)
Total revenue per year =21,324,000

Payback Period Analysis:

Years Cash In Flow Cash Out Flow Net Cumulative

0 0 -20,000,000 - -20,000,000
1 21,324,000 -16,905,893 20,000,000
4,418,107 -15,581,893
2 22,390,200 -17,044,499 5,345,701 -10,236,191
3 23,509,710 -6,688,382 16,821,328 6,585,136
4 24,685,196 -22,966,741 1,718,455 8,303,591
5 25,919,455 -7,901,649 18,017,806 26,321,397
6 27,215,428 -22,407,898 4,807,530 31,128,927
7 28,576,199 -13,574,906 15,001,294 46,130,220
8 30,005,009 -13,876,651 16,128,358 62,258,579
9 31,505,260 -14,211,684 17,293,576 79,552,155
10 33,080,523 -14,512,468 18,568,055 98,120,210

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CASH FLOW CHART

120.00

CUM ULATIVE
100.00 98.12 CASH FLOW

80.00 79.55
Amount in Mil l ion R s .

62.26
60.00

46.13
40.00 CASH
31.13 IN FLOW
26.32
20.00 NET CASH
FLOW
6.59 8.30

0.00
-10.24 CASH
-15.58 OUT FLOW
-20.00

-40.00
1 2 3 4 5 6 7 8 9 10 11
Time in Year s

Payback Period = 2 +(0-(-10.24))/(6.59-(-10.24))*(3-2) = 2.60665 year

= 2 year 7.30 month

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ANNEXES

1. Entreprenureship Development – MC Graw Hill, 2nd Edition.

2. Gharelu Udhyog Digest – 23rd year, Vol-57

3. www.wikipedia.en.org

4. www.csidg.gov.com.np

5. www.freshplaza.com/fibre2fashion.com

6. Encarta Encyclopedia 2007

7. Different Reports, Journals and Magazines.

8. All Eco Pty. Limited

9. Timilsina Carpet Industries - 486/10 Maijubahal Marg, Chabahal-7, Kathmandu,

Nepal.

Fruit is Good , Shoot is even Better. :SMRPS