NOORUDDIN MC070400829 TEACHER: CH.SHAHZAD ANSAR ENTREPRENEURSHIP MGT-602 PROJECT – BUSINESS PLAN RECYCLING PLASTIC PLAN Company Name & Address Mc070400829 VIRTUAL UNIVERSITY OF PAKISTAN MA JINNAH CAMPUS DEFENCE ROAD, OFF. RAIWIND ROAD, LAHORE UAN: 042-111-880-880 FAX: 042-9202174 Our Statement of Confidentiality The undersigned reader acknowledged that the information provided by the MC070400829 in this business plan is confidential, therefore , reader agrees not to disclose it without the express written permission of MC070400829 MC070400829 Signature Our Statement of Financial Needs There are three primary financial statements: The balance sheet, income statement and statement of cash flow. Each one of these statements is equally important in communicating the existing or projected financial health of the our recycling business. These statements are prepared at the end of the financial year to assist our business to consistently establish, meet goals and objectives. o Income Statement: The major category in this statement are revenues and expenses Both revenue and statement are to be recorded in the year they are earned or expensed, not when the actual cash is paid or received. Revenues: sales revenue, service revenue, and interest revenue. Expenses: salaries of executives, staff salaries, R&D expenses, bad debt expense, depreciation for the current year expense, interest expense, and income tax expense o Cash Flow Statement: This financial statement deals with the cash transactions of the business in a financial year. Each period for which the cash flow statement is prepared begins with a beginning cash balance (which may be zero). Examples : any revenue received in cash is added and expenses paid in cash are subtracted. The only transactions which are recorded in this statement are those which have been made in CASH. Executive Summary …………………………………………………………….1.0 Industry Analysis ……………………………………………………………….2.0 Future outlook and trends………………………..2.1 Analysis of competitors………………………….2.2 Market segmentation ……………………………2.3 Industry forecast…………………………………2.4 Description of Venture……………………………………………………………3.0 Product…………………………………………..3.1 Services…………………………………………3.2 Size of business…………………………………3.3 Office equipment and personnel………………..3.4 Background of entrepreneurs…………………..3.5. Marketing Plan…………………………………………………………………..4.0 Form of ownership……………………………..4.1 Identification of partners………………………4.2 Authority of principals…………………………4.3 Management team backgrounds……………….4.4 Roles and responsibilities of members of organization……………………4.5 Organization Plan ……………………………………………………………..5.0 Form of Ownership …………………….……...5.1 Identification of Partners…………………….. 5.2 Management Team Background ……………..5.3 Role and Responsibilities……………………..5.4 Assessment of Risk……………………………………………………………..6.0 Evaluate weakness of business ………………...6.1 New technologies………………………………6.2 Financial Plan……………………………………………………………………7.0 Sources of funds………………………………..7.1 Performa income statement……………………7.2 Performa balance sheet…………………………7.3 Cash flow projections…………………………..7.4 Appendix………………………………………………………………………..8.0 1.0 EXECUTIVE SUMMARY The purpose of the proposed MC070400829 Recycling Plastic Plan is to provide resources which seeks to meet the day to day need of plastic consumable, The growing utilization of plastic in industrial and consumer applications, combined with increased consumer awareness surrounding solid waste recycling, has lead to increase demand for recycled plastic materials for recycling Replay Plastics will capitalize on the opportunities in the recycled resin and packaging markets through two main divisions: a Recycling Division and a Packaging Division. The sophisticated washing treatment plant installed at premises enables MC070400829 to produce high quality plastic raw materials and plastic products made from hundred percent post industrial waste. The plastic is then dried and extruded into high quality recycled granules on the Company’s Double vented Japanese extruders. And in turn produced a large variety of value added products. MC070400829 is earth friendly and it provides a clean environment to this part of the world. We firmly believe that it is everyone’s responsibility to recycle everything they can because they can make the difference. We are trying so hard to stem the tide of pollution that is overwhelming our beautiful planet. We encourage you to take a part in it. 2.0 INDUSTRY ANALYSIS 2.1 FUTURE OUTLOOK AND TREND Sales passing 15 million in first year, 31 million in year 2, growing to $43 million due to high demand in the region. Gross margin of 35% or more in first year, 45% in second year then 50% or more. Net profit of 13% in year one, then exceeding 20% annually starting in year two. The main key to success is that we will buy all kind of industrial/ post consumer plastic materials and scraps in various forms, like baled/fluff/sheet/powder/rolls/others. Some of the regular materials are listed below. If you have additional material related in plastic. We can handle that too. Material HDPE LDPE LLDPE PET PS PVC Form Baled/lumps/fluff/powder & etc Baled/lumps/fluff/powder & etc Baled/lumps/fluff/powder & etc Baled/lumps/flakes/rolls & etc Lumps/Regrind/Rolls Baled/lumps/fluff/Rolls Color Natural /others Natural /others Natural / Others mix Natural /others Natural /others printed / unprinted printed / unprinted printed / unprinted any Unprinted Quantity Description BOPP (ROLLS) all size mix rolls PET (ROLLS) all size mix rolls PP (ROLLS) all size mix rolls Audio/Video damage/broken/crush/rolls Cassettes / tapes Tetra Pack PE/Allu Coated Sheets/Rolls Reels/sheets/etc full industrial/post consumer. container full industrial/post consumer. container full industrial/post consumer. container full Post consumer container Bottle grade, preform full INJECTION container full extrusion container full Rejects/Surplus/Over container Produce materials full Rejects/Surplus/Over container Produce materials full Rejects/Surplus/Over container Produce materials rejected/surplus/ full overproduce tapesFor container recycling full Rejects/Surplus/Prime container Over Produce Material Along with good resources we have enrich management and marketing capabilities to promote our business to provide efficient resources. The forecasted benefits we will be going to avail are as follows: 2.2 ANALYSIS OF COMPETITORS Plastics' competitive edge rests with its proximity to its target markets, as well as the industry knowledge, reputation and contacts of its senior management. Their many years of direct experience have led them to identify this unique opportunity and put together the technology and sources to take advantage of it. Their reputation in the specific market segment will result in the achievement of long-term commitments for our production 2.2.1 OUR COMPETITORS We have already surpassed 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 have already applied for our product under Trade Mark and Patent Law High start-up costs—In many cases, this barrier is the most daunting one for small businesses, we have a huge investors and we encourage more to promote us. • Knowledge—Lack of technical, manufacturing, marketing, or engineering expertise apart from other competitors , we will resolve it as top level management of our company is high skill and experiences. • Market saturation—It is a basic reality that it is more difficult to carve out a niche in a crowded market than it is to establish a presence in a market marked by relatively light competition. We are not going to sell in open market. But our plan is to provide distributors the chance to earn themselves and earn us revenue as target planning. 2.3 MARKET SEGMENTATION We have already selected certain product to out market segmented audience. Such services are Consulting, Size Reduction/Grindling, Subcontracting Jobs, Fine Seperation, Dry Blending. 2.4 INDUSTRY FOCUS Our facility is equipped with the latest state-of-the-art single and twin screw compounding equipment. Each of these instruments incorporates computer controlled operations and data acquisition to ensure the optimum product quality and lot-to-lot consistency Now under the MC070400829 umbrella all the companies are dedicated to providing a superior level of service and quality. If you would like to try this for yourself visit the online catalogue or contact us 3.0 DESCRIPTION OF VENTURE 3.1 PRODUCTS We have a wide varities of product to offer which are carefully designed as per the rules and regulations of IS0 9001-2000 to provide better quality plastic products / raw materials. 3.1.1 REPROCESS GRANNULES The Reprocessed Grannules we offer has an excellent balance of impact strength and flexure modulus as well as offering high melt flow and good processability . 3.1.2 GARBAGE BAGS When it comes to Garbage bags ,Refuse sacks, Refuse Garden sacks , Bin Liners and standard can liners, Modern offers quality, reliability and customer service at competitive prices. 3.1.3 PLASTIC PIPES Excellent mechanical strength and impact resistance . Highly controlled production processes leading to high quality pipe products . No requirements for protective coatings . 3.1.4 PET BOTTLES A technology leap that breaks the mold. With a Bottle that provides all the multiple advantages of PET. Its lightweight , its shatterproof , and its recloseable. 3.1.5 PLASTIC MOLDED PRODUCTS One of MC070400829 main aims is the drive for new and innovative techniques to provide cost effective solutions . Our house hold products such as Hangers / Buckets / Cups and other 3.2 SERVICES Consulting, Size Reduction/Grinding, Subcontracting Jobs, Fine Separation, Dry Blending. 3.3 SIZE OF BUSINESS Strategist , Directors, Investors Top Level Management 3 Managers, Planning, Distribution & Finances Researchers , 5- 6 according to plant resources and new conducting operations Office Staff, 10-15 Accountants, Administration, Sales Rep, Outdoor Clerks Non Contractual Employee. 5 Peon and Sweepers to keep it clean Plant Workers , 10 Shift operators and technician 3.4 OFFICE EQUIPMENT & PERSONNEL Heavy Duty Machineries at Plant Office Furniture, Chairs, Tables, Filing Closet, Electronics, Computers, Servers, Routers, Radio Link Tower etc Accessories, Papers, Pen, Files etc 3.5 BACKGROUND OF ENTREPRENEUR Entrepreneur is currently studying in VU 3rd Semester, having 5-6 year experienced in different industries such as, Commerce, Trade, Manufacturing etc and family history of running different entrepreneur businesses. 4.0 MARKETING PLAN 4.1 PRICING MC070400829 has chosen to focus on the production of plastic packaging materials from recycled post-consumer beverage bottles. Because of the industry experience and expertise of the management, we have identified a significant available market in the Pakistan Unit Prices Recycled Bags Recycled Mold Products Recycled Bottle Recycled Pipes 2008 0.25 3.75 0.45 12.99 2009 0.30 4.75 0.50 14.99 2010 0.35 5.75 0.55 16.99 2011 0.36 6.75 0.60 18.99 2012 0.40 7.75 0.65 20.99 Direct Unit Costs Recycled Bags Recycled Mold Products Recycled Bottle Recycled Pipes 2005 0.5 1.75 0.30 9.19 2006 0.10 2.25 0.32 9.50 2007 0.15 3.50 0.35 11.75 2008 0.20 4.75 0.38 12.80 2009 0.25 6.00 0.43 13.17 4.2 DISTRIBUTION All of our initial marketing strategy will be to secure contracts in that segment, and after reaching full planned capacity, look to grow in concert with that segment and related markets. We see little need at present for further market research and development, and will focus on continually updating our production technology in an effort to remain in the forefront of our chosen marketplace 4.3 PROMOTION PRODUCT FORECAST Milestone Start Date Advertising Banners News paper Adds Brochures Rewards & Incentives Awards Scholarships Totals 1/1/2009 1/1/2010 1/1/2009 1/1/2009 01/01/2011 01/01/2012 01/01/2010 End Date 31/12/2010 31/12/2012 31/12/2012 31/12/209 31/12/2011 31/12/2012 31/12/2012 Budget Rs.5,096,256 Rs.1,553,896 Rs.1,099,153 Rs.226,153 Rs.300,000 Rs.824,542 Rs.1,000,000 Rs.10,100,000 4.4 CONTROLS Because the Company is a start-up, our milestones will surround the establishment of continuing facilities, confirmation of sourcing and sales contracts, equipment acquisition and installation, staffing and training, and initiating production Order Equipment Secure Location Hire & Trained Skilled Labor Hire Plant Manager 5.0 ORGANIZATION PLAN 5.1 FORM OF OWNERSHIP MC070400829 is owned by the initial founders, Nooruddin and other investors who are the proposed three 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 building a successful profitable corporation 5.1.1 START UP SUMMARY Our largest Start-up Requirement is the building of the recycling and extrusion facility. Its final value at completion is listed below as a long-term asset of 7,620,000. Aside from the building itself, we need 2,500,000 in machinery and fixtures, 5,000,000 of inventory (plastic raw materials) and cash to cover us through the initial year. 5.2 IDENTIFICATION OF PARTNERS NOORUDDIN , one of the active partner is the student studying in VU MBA 3 rd Semester. Alongwith Investors from different part of the Pakistan enjoying their return for the initial investment they have made to purchase Bonds of MC070400829 5.3 AUTHORITY OF PRINCIPALS Chief Executive Office alongwith the Top, Lower And Middle Managers playing their parts. Also to focus on stakeholder whereas the future Investors 5.4 MANAGEMENT TEAM BACKGROUND MC07040829 currently has commitments from customers to purchase all of the initial production capacity. Excess flake will be sold to outside customers. All contractual planned and skilled labor from top managers upto lower plant workers will be higher based on expertise and qualification. Nooruddin, President and CEO, has a history of working in this type of industries for the last 5 years as a junior and have the capabilities to work with other to encourage potential hidden inside the plastic business Mr. Arif Karim, Investor in Money Market for the last 10-15 years have a portfolio of more than Rs.1,000,000 in different securities Ms. Sarah Zain, SEVP and EVP in Garfield Bank in Forex and Treasury Division and have the founding that this business have potentials in the future to attract investor 5.5 ROLES AND RESPONSIBILITIES OF MEMBERS OF ORGANIZATION Production Personnel Responsibilities Shift Supervisor Maintainence Techs Skilled Recycle Plant Labor Production Assistant (full time) Sales and Marketing Personnel General and Administrative Personnel President Vice Pres COO CFO Plant Manager Accountant Clerk Shipper Receiver To supervise all day to day operation and keep it going To maintain all technical solution arise from non functionality of machinery To produce and make it available within time To assist in production issues To make sales and keep achieving their targets Responsibilities To make deicisions To assist in making decisions To control of all financial operations and forecasting To achieve by producing as per given target Day to day balancing of books To assist in miscellaneous activities To keep track of inventories. 6.0 ASSESSMENT OF RISK 6.1 EVALUATE WEAKNESS OF BUSINESS 6.1.1 Limited Supply of raw material Recycled Plastics s are in high demand, and demand is currently under-supplied. Many manufacturers are delaying expansion because of uncertainty of supply. Entrants would have to consider sourcing post-consumer or post-industrial waste and clean and refine it rather than attempting to purchase flake on the open market. 6.1.2 Equipment costs are high and industry specific, resulting in a high exit cost. Because of the scarcity of RPET flake, entrants may be forced to establish cleaning and refining facilities for post-consumer bottles. The equipment required is costly and very industry specific. It would not easily be resold as a system. There is a market for used extrusion equipment, which normally sees 60-70% of new value being realized. 6.1.3 Vertical integration is an important consideration and difficult to accomplish successfully. Because of the scarcity of RPET resin, and to maximize profit potential, entrants must consider a two-stage production facility. Cleaning and refining post-consumer bottles and extruding the resulting flake into commercial products requires a management team such as Replay has, with a broad range of expertise, experience, industry contacts and knowledge in both areas. 6.1.4 Firm contracts for supply and sales. Replay Management's industry contacts will allow us to secure contracts for both supply of feed stock and sale of finished goods. 6.1.5 Freight is a major cost of operations; proximity to source of supply and markets is crucial. Hauling plastic materials is expensive so entrants will have to consider establishing facilities close to materials and markets. Entrants with existing operations would have to consider new separate facilities in many cases, reducing economies of scale and making management more difficult. 6.2 NEW TECHNOLOGIES 6.2.1 RPET Flake The current pricing for virgin resin is 0.65-0.73 per lb. and 0.42-.53 for RPET flake. The new spread between the two has traditionally been maintained at approximately $0.20 per lb. Technological changing has ascertain great return. 6.2.2PET Film & Sheet The reported market demand (to replace virgin PS, PVC and PET) if RPET was available is estimated at 1 billion Current pricing for RPET sheet is 0.70-0.79 per lb. This technology for Bottle reshaping and designing have been adopted by different international company. 6.2.3RPET Strapping The total reported domestic plastic strapping market is 240 million . Of this market, industry usage of virgin polypropylene is 132 million and of PET is 108 million . Strapping technology have been advanced 7.0 FINANCIAL PLANS 7.1 SOURCES OF FUNDS o Stakeholder o Shareholders o Investors o Money Market o Financial Institutions 7.2 PERFORMA INCOME STATEMENT Income Statement Revenue: Gross Sales Less: Net Sales Sales Returns and Allowances 0.00 0.00 0.00 Cost of Goods Sold: Beginning Inventory Add: Purchases Freight-in Direct Labor Indirect Expenses Ending Inventory 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Less: Cost of Goods Sold Gross Profit (Loss) Expenses: Advertising Amortization Bad Debts Bank Charges Charitable Contributions Commissions Contract Labor Credit Card Fees Delivery Expenses Depreciation Dues and Subscriptions Insurance Interest Maintenance Miscellaneous Office Expenses Operating Supplies 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Payroll Taxes Permits and Licenses Postage Professional Fees Property Taxes Rent Repairs Telephone Travel Utilities Vehicle Expenses Wages Total Expenses Net Operating Income 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Other Income: Gain (Loss) on Sale of Assets Interest Income Total Other Income 0.00 0.00 0.00 0.00 Net Income (Loss) 7.3 PERFORMA BALANCE SHEET Balance Sheet Current Assets: Cash Accounts Receivable Less: Reserve for Bad Debts Merchandise Inventory Prepaid Expenses Notes Receivable Total Current Assets Fixed Assets: Vehicles Less: 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Accumulated Depreciation 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Furniture and Fixtures Less: Accumulated Depreciation Equipment Less: Buildings Less: Land Total Fixed Assets 0.00 Accumulated Depreciation 0.00 Accumulated Depreciation 0.00 0.00 0.00 Other Assets: Goodwill Total Other Assets 0.00 0.00 0.00 Total Assets Liabilities and Capital Current Liabilities: Accounts Payable Sales Taxes Payable Payroll Taxes Payable Accrued Wages Payable Unearned Revenues Short-Term Notes Payable Short-Term Bank Loan Payable Total Current Liabilities Long-Term Liabilities: Long-Term Notes Payable Mortgage Payable Total Long-Term Liabilities 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Total Liabilities Capital: Owner's Equity Net Profit 0.00 0.00 0.00 0.00 Total Capital Total Liabilities and Capital 7.4 CASH FLOW PROJECTIONS Cash Flow Budget Worksheet [Month] Beginning Cash Balance Cash Inflows (Income): Accts. Rec. Collections Loan Proceeds Sales & Receipts Other: Total 0.00 0.00 0.00 0.00 0.00 Total Cash Inflows Available Cash Balance Cash Outflows (Expenses): Advertising Bank Service Charges Credit Card Fees Delivery Health Insurance Insurance Interest Inventory Purchases Miscellaneous Office Payroll Payroll Taxes Professional Fees Rent or Lease Subscriptions & Dues Supplies Taxes & Licenses Utilities & Telephone Other: Subtotal Other Cash Out Flows: Capital Purchases Loan Principal Owner's Draw Other: Subtotal Total Cash Outflows Ending Cash Balance 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 8.0 APPENDIX Bangs, David H. The Business Planning Guide: Creating a Plan for Success in Your Own Business. Upstart, 1998. Belkin, Lisa. "The Art of Making a Plan and Making It Happen." New York Times. December 18, 2000. Covello, Joseph A., and Brian J. Hazelgren. The Complete Book of Business Plans. Sourcebooks Trade, 1994. "How to Write a Great Business Plan." Harvard Business Review. July-August 1997. Jones, Rebecca. "Business Plans: Roadmaps for Growth and Success." Information Outlook. December 2000. Kravitt, Gregory I. Creating a Winning Business Plan. Probus, 1993. Massarella, Gregory J. et al. How to Prepare a Results-Driven Business Plan. Amacom, 1993. Pinson, Linda. Anatomy of a Business Plan. 2d ed. Enterprise Dearborn, 1993. "Your Business Plan." Phoenix Business Journal. September 29, 2000