OFFICE SOLUTIONS

Ltd.

SUBJECT: BUSINESS PLAN

By: Pankul Kohli (2nd year NMIMS SOC – BBA) and

Yash Bhayani (2nd year NMIMS MPSTME – MBA

Tech Chemical)

[BUSINESS
PLAN]
CONTENTS

CONTENTS............................................................................................................. 2

PROJECT CONCEPT.................................................................................................4

LOCATION .......................................................................................................... 5

STATIONERY....................................................................................................5

HUBS............................................................................................................... 5

TYPE OF BUSINESS.............................................................................................6

MANAGEMENT....................................................................................................... 6

ROLES & RESPONSIBILITIES................................................................................7

MEANS OF FINANCING...........................................................................................9

ENVIRONMENTAL SCANNING...............................................................................10

SOURCING OF RAW MATERIALS...........................................................................10

Productivity Summary on Resources Employed in Stationery Business...........10

Calculation for Delivery Van.............................................................................11

Calculation for Marketing Executive.................................................................11

MARKETING PLAN................................................................................................12

INCENTIVES AND BONUSES.................................................................................13

UNIQUE SELLING POINT (U.S.P.)..........................................................................14

PRODUCT MIX......................................................................................................16

SENSITIVITY ANALYSIS.........................................................................................17

FUTURE PLANS.................................................................................................... 18

CAPITAL EXPENDITURE ............................................................................20

CALCULATION OF DEPRECIATION........................................................................22

....................................................................................................................22

HUB COST STATEMENT ..............................................................................23

.................................................................................26

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 REVENUE REALISATION FOR HUBS...............................26

HEAD OFFICE COST STATEMENT.........................................................................26

COST OF STATIONERY TO BE SOLD.....................................................................27

REVENUE GENERATION FROM STATIONERY SALES..............................................28

ESTIMATES OF PROFITABILITY OF OFFICE SOLUTIONS LTD..................................29

RATIOS...................................................30

CONCLUSION....................................................................................................... 31

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PROJECT CONCEPT

The project proposed in this report is to provide stationery supplies and

other lateral services required by offices. The lateral services intended to
be provide include a host of other activities, primarily printing.

An expected clientele would be corporate houses, partnership firms,

individuals and SME’s. The roll-out of this plan is intended to be such that
its reach is restricted to the business districts of the Mumbai Metropolitan
Region (MMR). Based on initial research and market findings, this sector is
highly disorganized.

Thus, the entry of a player into such a market with an effort to integrate
the market seems extremely lucrative. This sector ranks extremely low in
quality service, feedback and operation, in particular supply chain
management.

The stationery business can be carried out through a centralized

administrative office at a location considered convenient, based on the
prevalent constraints.

The host of lateral services we intend to provide can be carried on

through HUBS, which will be decentralized and designated office spaces
located in proximity to selected business districts.

This project has been based on the concept of utilizing economies to

scale. The concern is looking at scaling up operations initially to take
benefits of economies for procurement and distribution. The plan is to
scale up as soon as possible and then take a few years to stabilize the
operations. Through a host of USP’s we shall try to cater to a vast number
of companies.

Using the staff functions of liaison officers along with others we see the
concern having an excellent, synchronized set-up to create a stationery
concern with no parallel in administration and other operational activities.

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LOCATION

STATIONERY
• For supplying of stationery the concern proposes to have a
centralized set-up at BYCULLA INDUSTRIAL ESTATE.
• This shall help in efficient management and quality service.

HUBS
• For this, the management and decision-making authorities have
approved that it is best to go in for a decentralized set-up.
• The two factors determining location in this context are:
 Proximity
 Time Service
• Since functions of printing and other lateral services, need to be in
close proximity to offices (consumers), hubs shall be established
close to the various business districts.
• In order to contain costs, it has been decided that these hubs would
be based in areas adjoining the business districts. This way, the
concern could benefit from cheaper real-estate prices.
• A centralized set-up could lead the concern not only to distance
itself from the customers but also delay its time service.

Selected Locations of Hubs:

Location of Hub Areas Serviced

Dharavi Bandra Kurla Complex (BKC)

Grant Road Nariman Point, Worli

Andheri (East) Andheri and adjoining suburbs

Parel Dadar, Parel and adjoining

suburbs

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TYPE OF BUSINESS

Partnership – This business proposal is a 2 person. Each will have

equal share in the business which is 50%.

Primarily the job profile of each of the promoter will be related to

marketing the business and adding clientele frequently.

Initially the marketing will be carried out by us to cut down on cost and
build a good client base so that new employees can then capitalise on the
existing resources and can further add to the revenues by bringing in
more company units.

The management will basically constitute us initially and when profits are
rationally high we will induct professionals even in our place. We aim to
make it a professionally run business.

We will look for good marketing skills in the employees whom we will be
inducting and also good bargaining power as that will determine to a
great extent the profitability as in this unorganised sector otherwise it will
be hard to survive.

MANAGEMENT

The business would essentially require skilled labour at the lower levels
with a few more at the middle level. Manpower costs would not be very
high as the cost of acquiring these human assets at the required level is
nominal.

In comparison to other stationery companies the staffs function,

responsibility and role distribution is highly organized to ensure smooth
operations. To offset the heavy manpower bill it is necessary to generate
economies of scale. Also, if scales are not generated we cannot enter the
market as a differentiated player providing a variety of services through a
single interface.

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People Needed In Stationery & Supplies: (at the end of the year)

People Involved Nos.

Promoters 2

Administration 4+2

Marketing 5

Accounts 6

Delivery Boys 12

TOTAL 31

Manpower Requirements in Hubs: (at the end of the year)

People Involved Nos.

Computer Operator 1

Printing Supervisors 2

Staff 2

TOTAL 5

ROLES & RESPONSIBILITIES

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1) Promoters- The primary job of the promoter is to leverage on existing
personal relations and the creation of newer relations to ensure a base
of patrons and customers. A majority of the capital shall be invested by
the promoters. In the initial months, marketing activities shall rest with
the promoters. However, later as rapid growth is predicted, inducting
professions would be vital.

2) Administration-

a) Supply Chain Officer: The person assigned with this role shall co-
ordinate the entire supply chain. With huge volumes of goods to be
procured and delivered, we would need to arrange for the required
goods from our suppliers and the right goods we delivered to the
right party. This causes a requirement for a professional adept in
handling the entire supply chain. Inventory management (even for
the short period that it is held) would be taken care of by the SCO.

b) Marketing: This along with supply chain management is a key area.

The functioning of this department to optimum is vital for the rapid
upscale growth that has been planned and accounted for. Hence,
we would be keen on someone from the stationery background. This
job will call for continued sales pitches and regular reporting to
promoters. A management trainee could be useful for research,
analysis and aiding the marketing process. Their primary job is to
visit offices and ensure mutual future commitments. After that, their
job for these companies would include follow-up to ensure that the
orders are placed.

c) Logistics Manager: His responsibility is to ensure a smooth flow of

the consignments making sure that they are delivered in time. Also,
he will be responsible for the materials delivered to the storage unit.
He will manage the drivers. Basically, the SCO and LM supervise
and manage the administration/storage unit.

d) Accountant: General accounts, creating invoices and maintaining a

check on the cash flow will be taken care of by the accountant.

e) Liaison/call operator: Liaison’s responsibility is to out call, setup

appointments for the marketing executives, a follow up on raw
material purchased etc. The liaison will also take orders from
corporate for stationary.

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3) Delivery Boys: Entails delivering all stationery supplies to clients. They
would also have to collect supplies for the next day towards the
evening of the previous day. They would be responsible for delivering
the consignments as well as the invoices. The responsibility for loading
and unloading would be theirs. Some of the delivery boys shall be
trained drivers and be compensated accordingly.

MEANS OF FINANCING

The project shall be financed by a mix of debt and equity.

With a capital expenditure of Rs. 60 lacs and a pre-operative expenditure

of Rs. 20 lacs, we would look to finance the project using Rs.30 lacs as
loan and an equity or ‘risk capital’ of Rs. 50 lacs from the 2 partners.
Thus, each partner to the business would bring in equity of Rs.25 lacs
each.

Debt shall be 37.5% of the project cost whereas equity shall be 62.5%.

This leads the concern to a D: E ratio of 3:5 or 0.6:1.

The loan amount shall be returned to the financial institution over a

period of 3 years at a fixed rate of 13.5% compounded annually.

OPERATIONAL ASPECTS OF BUSINESS

• An important aspect of the operations is supply chain management.
Following a principle of delivery of any order on the next working
day, the sourcing contracts will enable us to take delivery from the
supplier’s offices and warehouses the previous evening and deliver
the same to the parties on the next working day.

• Thus, it is extremely important to ensure that orders are placed

within time and the delivery boys are co-ordinated with to collect
the same.

• The stationery supply business shall operate on low inventory levels

which heightens the importance of supply chain.

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 • The hubs shall obtain its raw materials required for printing from the
stationery supply business. Its stocks shall be supplied on a weekly
basis.

ENVIRONMENTAL SCANNING

• This sector is highly fragmented, disorganized and lacks efficient

customer service.

• It is also characterised by a large number of middlemen. Due to a

variety of products that are required in offices and most in small
volumes there a large number of people in circulation.

• With high volumes we plan procurement from producers to ensure

that we have a competitive advantage in price, quality and service.

• The market is characterized by many small players but no large

players. Hence, no player dominates the market.

• Our niche market as a concern is to service MSME’s, individuals and

mid-size offices. Large corporate have high unit volumes for a
variety of products and hence have sourcing contracts with
producers. Though, this would be a lucrative market, it could be
inaccessible in the early days.

SOURCING OF RAW MATERIALS

Paper Products- BILT Regional Office, Mumbai

HP Printer Products- HP Sales Office, Mumbai

Other Products- Crawford Wholesale Market

Supplies for other products like files, pens shall be done from producers
once sufficient volumes are generated.

Productivity Summary on Resources Employed in

Stationery Business
• 1 Delivery Boy can cater to 3 offices (3 company units) in a day
without van.

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 • 1 Delivery Van can cater to 30 offices in a day.

• 1 Marketing executive shall carry out at 10 sales calls in a day. The

assumption is that each sales call would cater to a company unit
resulting in sales of Rs.10000 in a future placed order. In adding 300
company units in a month through 7 marketing executives it is seen
that each executive would have a monthly target of 40 company
units.

Calculation for Delivery Van

• 2 people * 2 deliveries per hour * 8 hours = 30 companies (approx.)

• 30 companies * 25 working days = 750 companies in a month

However, in the projections it is seen that the entire capacity has not
been assumed to be used yet we declare profits. Thus, the scope of
profits is higher than estimated.

Calculation for Marketing Executive

• 1 sales pitch daily (successful) * 25 working days = 25 companies in
a month (approx.)

Policy of Cash Management

• Trade Credits- The concern plans to enter into mutual agreements

with firms and customers to extend them a 15 day credit period.
The amounts being small , it would be possible to work on such an
agreement.

• The concern believes that its suppliers would not extend them a
credit period until 6 months by which the concern establishes itself
with the suppliers and offer to purchase substantial volumes from
the suppliers.

• Thus, for the first 6 months, the concern would accrue 50% of its
revenues in the next month but pay for it while purchase.

• After 6 months, the concern would seek a 15 day credit period from
its suppliers. After this, the payments to be made will be made in
the same period as payments to be received. Thus, cash will be
rotated and there shall not be over-straining of cash resources.

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 • Taking the first year of business into consideration, it is seen due to
above circumstances that inflow and outflow is simultaneous and
the need for working capital does not affect profitability.

• For the printing hubs, the suppliers are the stationery business and
the customers are the offices. Hereto, we work out an equal credit
period with customers and suppliers, eliminating a strain on cash
resources.

MARKETING PLAN

We intend to launch a large scale marketing campaign for at least 2

months before we go in full swing operation. This campaign will include
the promoters themselves marketing for our services.

With a product mix like ours and an organized player like us entering a
fragmented and unorganized market with an extremely competent set of
promoters it should not be a problem in bagging contracts from
companies for stationary supply and printing.

This field that we propose to enter is not organized and very fragmented.
The need of the day is quality service in time. We propose to come up as
an organized player and also provide a range of other services like
printing business cards, brochures, annual reports, envelopes and
letterheads which will be done at any of our 4 hubs. Our hubs which cover
south, central and western parts of Mumbai will cater to these needs.
Providing these services in an organized fashion as an organized player
gives us an edge above the rest.

Existing Chain

The existing chain of supply of materials from the producers to the

customers has many middlemen in between. The price therefore
increases due to many unnecessary margins coming in the picture. We
plan to break this chain by having a direct tie up with the producing
companies.

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Our Planned supply chain

The above chain planned by us will eliminate many unnecessary margins

and thus we can provide materials at a cheaper rate.

We also plan to provide companies with furniture, electronics, computers

and its ancillaries using our strategic tie ups with the respective producers
or wholesale-retailers. Thus, even our product mix gives us an edge above
the rest.

In the first 3 months the promoters will be marketing for the firm. Later
we plan to gradually hire a total of 16 marketing executives.

Our marketing team consists of two executives who will work towards
acquiring contracts and getting business to the firm. The marketing team
will be driven by a task oriented model. They will have a target which will
be preset. Their incentives will be a percent of the business brought in,
after a particular slab.

Advertisements through newspapers and other written media for

businesses will be essential.

INCENTIVES AND BONUSES

We believe that a well paid staff will be a highly productive one. For this
purpose we have come up with an incentive plan which is target oriented
and very lucrative and also decided to pay our employees a yearly bonus
of 20% of their yearly salaries.

We expect high productivity from both our management and marketing

employees. To drive our marketing employees a very attractive incentive
scheme has been put in place.

The incentive plan is as follows:

100 – 200 units Rs 100/unit

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200-300 units Rs 150/unit

300 units and above Rs 200/unit

UNIQUE SELLING POINT (U.S.P.)

• Next Working Day Delivery:

The concern shall focus on taking customer service to the next
level. Through carefully drafted contracts of procurement it shall
be seen that the concern shall maintain a JIT inventory as well as
ensure that they can service their customers on the next working
day itself.
This would be an added incentive to the customer as not only is
he going to receive a variety of services from a single concern
but also receive them extremely quick. In doing so, the customer
clearly emphasizes its commitment to speedily serve its
customers and value their time.

• Organised Player in a Fragmented Market:

Market research of the sector has shown that this sector consists
of a large number of firms which cater to an extremely small
base of customers.
Additionally, due to small size the existing players are able to
cater to very few demands of the customer, these forces
customers to contact a few stationers for different products.
Also, this fragmented competition is extremely helpful to our
concern as it has lowered the entry barrier considerably. Due to
being small players they are single-man companies due to which
administration is not focused upon.

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 In addition, despite a small clientele the existing players lack the
ability to deliver customer service and maintain client relations.
Lack of strategy is another deterrent of the existing players.

• Sound Management:
As has been previously mentioned management, administration
and strategy formulation is absent in the operations and
functioning of the existing players. The method of operation is
highly conservative and does not focus on new-age philosophies
of volume sales, customer satisfaction, inventory levels etc.
The sophistication of application of such techniques shall hold
the proposed concern in good stead in the market place.

• Sound Financial Health:

The concern has booked a really low D: E ratio. Apart from the
healthy financial ratios, it shall declare excellent value for its
stakeholders like shareholders, employees, promoters and the
lending institution. The operations and marketing plan as
explained further are designed such that the concern can
generate healthy cash flows and ensure a healthy payback
period.
A healthy financial condition would hold the concern above
competitors in the market place. Most of the players in the
market are in the unorganized form, most being one-man
companies whose finances are not strategically controlled and
planned.

• Strategic Tie Ups and Forward Sourcing Contracts:

Apart from providing a variety of services to fulfil the stationery
needs of customers like printing and stationery supplies the
concern realizes the fact that there are a variety of services and
goods that are used by offices like security, furniture,
housekeeping and maintenance, electronics etc.
Providing these services under the banner of our concern would
be an extensive variety of services and huge lateral
diversification which would be an extremely risky proposition for
the management and promoters.
However, keeping in tune with our commitment to provide all
possible office solutions we plan to enter into strategic alliances
with furniture major, Godrej Interio for furniture supplies and
maintenance and Croma(a division of Tata Retail) for supply of
electronic goods like PC’s , laptops etc. This would not generate

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 accruals and revenues but contribute to better PR and serve as
an attractive marketing package.

• Complete Spectrum of Services:

In order to mitigate business risks and create an increased
consumer dependence on the concern we plan to cater to not
only supplying office stationery, stores and supplies but also
printing and binding.
As we become a single interface for a variety of services, we
would be able to serve our customers better and foster healthier
client relationships.

PRODUCT MIX

The concern would offer a complete solution to office needs. Below is a

brief list of major items to be supplied. These goods are available through
a large number of brands an in all large number of variants. Thus, it shall
be the endeavour of the concern and the management that the widest
range of services are provided in terms of quality and quantity.

STATIONERY -

Paper products – In variants of quality, thickness and size

Writing Instruments- Markers, Hi-Lighters, Pens etc.

Computer peripherals- Mouse, Keyboard etc.

Portable Hardware- CD, DVD – in variants of price

Storage Stationery- Files, Card Holders etc. - Variants of Size

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Ink- Cartridges, Rollers, Toners etc. - in variants of printer brand

Writing Pads, Notepads etc. - in variants of no. of pages

Sundry Items - Tissues, Soaps, Tea Bags, Sugar Cubes etc.

The Jobs Carried Out At the Hubs -

1) Printing –
• Business Cards
• Annual Reports
• Letter- Heads
• Envelopes
• Brochures

2) Photo-copy Facilities( Xerox)

3) Binding

SENSITIVITY ANALYSIS
Sensitivity is a factor of measuring the bearing a certain factor has the
economics and business of a good, commodity or product.

1) Sensitivity to Raw Materials:

Paper and ink form a major share of raw materials. Thus, the price of
these inputs has the capability to damage the existing price structure.
Thus, sensitivity to raw materials is HIGH. This is emphasized in the raw
material to output ratio.

2) Sensitivity to price:

The services provided form an extremely small percentage of expenditure

of firms. Due to this, a small change in price will not be followed by an
equal change in demand. This form of relatively inelastic demand makes
the products and services offered by the concern maintain a LOW
sensitivity to price.

3) Sensitivity to Volume:
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This business is sensitive to volume. All estimates are based on a
respectable percentage of productivity. Every resource employed has a
productivity to be achieved which has been designed such that resources
do not idle. Thus, the concern is extremely sensitive to productivity and
volume sales are to be achieved.

Also, sourcing depends on high levels of volumes. So, lack of volume in

sales shall drive up costs. Thus, the concern and its services show HIGH
sensitivity to volume sales and productivity.

4) Sensitivity to Interest Rates:

The debt borrowed is extremely low. Apart from that ,the gestation period
of the firm is extremely low. Money does not get blocked in long credit
periods due to its low denomination. Thus, owing to low debt and steady
rotation of cash , the concern shows LOW sensitivity to raw material
prices.

This fact is emphasized in the high DSCR.

5) Sensitivity to Obsolescence:

The products and services provided by the firm, especially the printing
hubs is dependent on latest technologies for higher productivity. This is a
key driver of volume sales. However, the machines have a life span of 5
years in which one does not observe rapid change in technology. A proper
procurement policy can minimize risks of faulty and old technology. Thus,
the concern shows AVERAGE sensitivity to obsolescence of technology.

FUTURE PLANS

• A roll-out in major Indian cities- Bangalore, Hyderabad,

Pune-

A roll-out across major cities in India will ensure that the concern
would be one of the first to be an organized player and thus the
many benefits of being an organised player would accrue to the
concern.

Our niche market, after establishing and scaling up operations

would be corporate groups with large volumes. However, our
focus on the smaller companies would not dilute as they can
serve as clients for players seeking entry into the market.

• Contracted paper production-

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 Paper is one of the most used stationery in the workplace. Thus,
once we achieve a large supply we as a concern would contract
paper production to service our own demand.

This would help reduce dependence on paper majors mitigating

the possible business risks that could be there due to over-
exposure to a single supplier.

• Strategic tie-ups other than paper and cartridges-

Cartridges are used in offices as well as hubs. Thus we would

prefer to set strategic alliances for cartridge procurement and
cartridge refilling from major players in the market. Thus, it
would help to provide customer with the options of changing
their cartridges as well as refilling.

• Take stationery orders on a website (online)-

This would be a first in the Indian office stationery retail sector.

This would hasten the process of booking customer orders
allowing the concern to improve productivity and take more
orders which can be systematically synchronized into a
database.

The technological advantage would accrue innumerable benefits

to the concern and give it edge over competition. Also, it would
be easier for the customer as he can place an order at any time.

• Plans of stocking of raw materials based on development

in customer intelligence-

A JIT inventory system can cause a few problems as the concern

grows. As the finances steady, some stationery which has
recurring demand could be stored. Depending on an outsider for
timely supplies in the long run is something the concern sees
vulnerability in and hence, would store some inventories.

The inventories would include commodities like types of paper or

cartridges that are demanded very frequently. Such customer
intelligence would be available in a few months of operations due
to experience.

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 • Additional printing facilities for diaries ,calendars and
customized stationery printing-

Customised stationery would serve as an added attraction to

large companies. This would be in addition to the host of facilities
being provided by the concern through a single interface.

This would include letterheads, calendars, dairies which would

have huge demand but require a large client base due to
seasonal demand and heavy capital expenditure.

• Propose to enter ship-chandling-

Supplies of food, maps, books and other products are part of the
job of ship chandling. It involves supplying ships commodities of
daily use. Margins of this business are extremely high. The
promoters believe that this sector has growing potential due to
the growing shipping business in India.

However, this sector is heavily cartelized and entry barriers are

extremely high. A huge financial muscle is required to seek entry
into this business. The promoters are keen in entering this
business using the internal accruals of the existing business.

A lot of shipping companies shall be our customers in the

stationery business and it would not be very difficult to leverage
on existing relationships if we can display competitive pricing
and service.

CAPITAL
EXPENDITURE

S.No Quantit
. Item To Be Spent On Price y Amount

1 Mini-Trucks or Vans 6,00,000 6 36,00,000

2 Two-wheelers 45,000 4 1,80,000

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3 Registration Cost 2,50,000

4 Creation of infrastructure at hubs 4,50,000 4 18,00,000

5 Crate Equipment 150 200 30000

6 Computers for head office 20,000 4 80,000

7 Carraige trolley 2,500 2 5,000

TOTAL 59,45,000

Preoperative Expenses

Rent Deposit (one year) 1970000

Sales tax Registration 10000
Total 1980000

Reasons
Will be inducted in the 3rd month of
operations once scales of economy become
favourable. Will help in speedier and
efficient operations.

Help in delivery of services provided by

hubs. Will be inducted in the first month of
operations. Formalities of vehicles like
registration etc. Such requirements are
statutory in nature.

Hubs need a variety of

services to be installed.

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 CALCULATION OF
DEPRECIATION

Cost of
Item Product Life Rate Product Depreciation

Distribution
1 Van 5 20% 36,00,000 7,20,000
Two-
2 Wheelers 10 10% 1,80,000 18,000
3 Crates 1 100% 30,000 30,000
Carriage
4 Trolleys 1 100% 5,000 5,000
Machinery in
5 Hubs 5 20% 18,00,000 1,80,000

TOTAL 9,53,000

*Depreciation has been

calculated by SLM

RENT(monthly)
Location of Hubs Amount

Parel 40000
Andheri East 40000
Grant Road 45000
Dharavi 35000

Total 160000

Location of Head Office Amount

Byculla Industrial Estate 50000

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 HUB COST STATEMENT

M1 M2 M3 M4 M5 M6 Yr. 1 Yr. 2 Yr. 3

Capacity
Utilisation 50% 60% 70% 80% 90% 95%

Hubs Rental 40000 40000 40000 40000 40000 40000 480000 480000 480000

Utilities:

Electricity 15000 15000 15000 15000 15000 15000 180000 180000 180000

Tel. Bill 2000 2000 2000 2000 2000 2000 24000 24000 24000

Internet 2000 2000 2000 2000 2000 2000 24000 24000 24000

Consumables 10000 10000 10000 10000 10000 10000 12000 12000 12000

Raw Material:

Paper 37500 45000 52500 60000 67500 71250 761250 855000 855000

Ink 20000 24000 28000 32000 36000 38000 406000 456000 456000

Misc. 12500 15000 17500 20000 22500 23750 253750 285000 285000
Salaries and
Wages 31000 31000 31000 31000 31000 31000 372000 372000 372000

Selling Exp. 400 450 450 500 500 600 6500 7200 7200

Maintenance 5000 5000 5000 5000 5000 5000 60000 60000 60000

Total 175400 189450 203450 217500 231500 238600 2579500 2755200 2755200

Total for 4 hubs 701600 757800 813800 870000 926000 954400 10318000 110208000 11020800

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 REVENUE REALISATION
FOR HUBS HEAD OFFICE COST
Products M1 M2
STATEMENT
M3 M4 M5 M6

Capacity M1 M2 M3 M4 M5 M6 Year 1 Year 2 Year 3

Utilisation 50% 60% 70% 80% 90% 95%
Capacity
Business 50% 60% 70% 80% 90% 95%
Utilisation 437500
Cards 525000 612500 700000 787500 831250
Rental 3750050000
LetterHeads 50000 4500050000 50000 50000 52500
50000 600000 600000
60000 600000
67500 71250
Annual
Utilities: 262500
Reports 315000 367500 420000 472500 498750
BindingPower 12500 6000 6000 15000 6000 6000 6000 17500
6000 720002000072000225007200023750
Total (Each
Phone 1000 1500 3000 5000 5000 5000 60000 60000 60000
hub)Internet 7500001000 1000 9000001000 1000 1000 1050000
1000 1200000
12000 1350000
12000 1425000
12000
TotalMobile 6000 6000 6000 6000 6000 6000 72000 72000 72000
Revenue (4
hubs) 3000000 3600000 4200000 4800000 5400000 5700000
S and D:
Petrol 10500 31500 52500 409500 630000 630000
We presume that the revenues
Train Travel 500 1000 1500 1000 500 3500
remain stable after 6 months.
Incentive Kitty 10000 10000 10000 90000 120000 120000
Marketing 5000 15000 20000 20000 20000 200000 240000 240000
REVENUE FOR 4 HUBS
Year 1 6,09,00,000
Salaries 12000 63000 126000 177000 301000 441000 3766000 5292000 5292000
Year 2 6,84,00,000
Year 3 6,84,00,000
Stores & 5000 5000 5000 5000 5000 5000 60000 60000 60000
Supplies
Maintenance 5000 5000 5000 5000 5000 5000 60000 60000 60000
Consumables 5000 5000 5000 5000 5000 5000 60000 60000 60000

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Total 91500 148500 223500 301500 446000 606500 5465000 7278000 7278000

COST OF STATIONERY
TO BE SOLD
Year 1
Month No. of Business Units Amt. Cost
1 30 8000 240000
2 50 8000 400000
3 100 8000 800000
4 300 8000 2400000
5 600 8000 4800000
6 900 8000 7200000
7 1200 8000 9600000
8 1500 8000 12000000
9 1800 8000 14400000
10 2100 8000 16800000
11 2400 8000 19200000
12 2700 8000 21600000
Total 10,94,40,000
Year 2
2700 * 12 8000 25,92,00,000
Year 3
2700 * 12 8000 25,92,00,000

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REVENUE GENERATION FROM STATIONERY
SALES

No. of
Month Companies Total Expected Revenues

1 30 3,00,000
2 50 5,00,000
3 100 10,00,000
4 300 30,00,000
5 600 60,00,000
6 900 90,00,000
7 1200 120,00,000
8 1500 150,00,000
9 1800 180,00,000
10 2100 210,00,000
11 2400 240,00,000
12 2700 270,00,000
Total 13,68,00,000
Reasons for increase - 6 promoters carrying on marketing operations
initially

270,00,000 *
Year 2 12 32,40,00,000
270,00,000 *
Year 3 12 32,40,00,000

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ESTIMATES OF PROFITABILITY
OF OFFICE SOLUTIONS LTD.
YEAR ENDING FY1 FY2 FY3

Expenses -
Rentals 1970000 1970000 1970000
Raw Material
a. Paper 3045000 3420000 3420000
b. Ink 1624000 1824000 1824000
c. Misc. 1015000 1140000 1140000
d. Cost Of Stationery 10,94,40,000 25,92,00,000 25,92,00,000
Selling Expenses:
Travel exp. 40000 28800 28800
Petrol 409500 630000 630000
Incentive Kitty 90000 120000 120000
Marketing 200000 240000 240000

Consumables 540000 540000 540000

Utilities
a. Electricity 792000 792000 792000
b.Telephone Bills 146500 154000 154000
c. Internet 108000 108000 108000
d. Mobile 72000 72000 72000
Stores & Spares 60000 60000 60000

Salaries & Wages 45,30,000 69,96,000 69,96,000

Repairs & Maintenance 300000 300000 300000

Total Expenses 124382000 277594800 277594800

Sales -
a. Hubs 6,09,00,000 6,84,00,000 6,84,00,000
b. Office Stationery 13,68,00,000 32,40,00,000 32,40,00,000
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 Gross Profit 60900000 68400000 68400000

Term Loan Repayment 1000000 1000000 1000000

Int. On Term Loan 404000 404000 404000
Depriciation 953000 953000 953000

Operating Profit 58543000 66043000 66043000

Sales tax 9885000 19620000 19620000
Corporate tax 19514333.33 22014333.33 22014333.33
Net profit 39028666.67 44028666.67 44028666.67

DSCR 28.76% 32.32% 32.32%

Security margin 189.83%

RATIOS

Name of Value Year 1 Year 2 Year 3

Ratio
Debt : 0.6 : 1
Equity
Security 189.83 %
Margin
R.M. to 58.23% 67.68% 67.68%
O.P.
Wages to 2.29% 1.78% 1.78%
Sales
O.P. to 29.6% 16.87% 16.87%
Sales
DSCR 28.63 : 1 32.4 : 1 32.4 : 1
Payback 3 years
Period
Breakeven 2 months

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CONCLUSION

An innovative plan to organise the

sector which lacks organised working
in each segment of its working, makes
this business proposal a very profitable
prospect boasting a Debt Equity Ratio
of 0.6:1 and a DSCR of 28.63:1, 32.4:1,
32.4:1 in the first 3 years of its
operations, a breakeven period of 2
months and most importantly the
emphatic increase in its capacity
utilisation over the first 6 months
enabling it to leverage maximum

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advantage of the requirements of big
corporates.

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