Professional Documents
Culture Documents
Plastic Bags
Plastic Bags
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Operations Management
Business Plan:
Manufacturing of Plastic Bags
Submitted By:
Chetan Godbole
Dhaval Patel
Dipanjan Dey
Joshi Aniket
04BS0554
04850674
04850698
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Acknowledgements
Any project requires amount of insights & information. Any
information is critical and important. Not only the
information, but also a roadmap to travel with that piece of
information
This project
is no
different.
Infact this project mandated a lot of access to Plastic
industries as we visited PLASTIVISION 2004. We express
our sincere gratitude to organisers of PLASTIVISION
2004. We also express our sincere gratitude towards Mr.
Vijay Kedia of Allied Plastics who guided us throughout
this project
And we thank Prof. Suhas Rane for giving the oppurtunity
to enhance our knowledge about preparation of business
plan.
TABLE OF CONTENTS
Sr No.
Pace
4
Particulars
1 Company Information
Product Details
,.
Market Research
7
10
Product Details
12
3 Process Details
15
. Process flow
. Cost of machines
. Process flow diaQram
16
18
1
23
4 Project Plan
"
. Project plan
. Quality and quantity of manpower
. Financial anlysis and BEP
-
- Wages
- Working capital
- Assets
- BEP
24
29
30
31
32
33
34
34
35
36
. selection of location
. Layout
37
38
Chapter
Company Information
Company Information
Name
Board of Dir
Product Portfolio.
Factory Location
Kutch (Gujarat)
Chapter 2
Product Details
is
expected to grow from 5.8 billion today to over 8 billion in about twenty
years. Constraints on availability of natural materials will progressively
increase. Demand for synthetic alternatives like plastics will, therefore,
continue to rise. And new frontiers in materials science will come up with
better performing plastics to meet exacting applications.
In India, applications of plastics have permeated deep into our lives.
Increasing population, rising disposable incomes and eagerness to
improve quality of life will lead to unprecedented spurt in demand. India
today is nation of avid shoppers.
Enormous opportunities
opportunity.
focus will be on
stronger markets like India. The Indian plastics industry today faces
intense competition from companies that are globally consolidated. They
have the advantage of economies of scale, have access to contemporary
technology and enjoy a low cost position. What it boils down to is that we
must be prepared to have the competitiveness
intensively competitive global environment.
to
perform
in an
THE OPPORTUNITY
The global plastics industry has a size of about one trillion US dollars.
The Indian plastics industry, with about 4 billion USdollars in revenues, is
just 0.4% of the global plastics industry. It is a mere 1.2% of our CDP as
against 3.7% of CDP of the global plastics industry. The per capita
consumption of plastics in India is only 2.4 kg as compared to a world
average of 16 kg and China's 9 kg.
If we aspire to match the word average per capita plastics consumption,
Indian demand will leap to 16 million tonnes from a mere 2.5 million
tonnes.
The Indian plastic industry has enormous opportunities in satisfying
consumer needs in virtually every sector, particularly household goods,
packaging, automotive, appliances, agriculture and construction.
It took India 30 years to consume the first million tonnes of plastics. The
second million tonnes were consumed only in 5 years. Today we are
consuming 2.5 million tonnes a year and racing to 7 million tonnes a year
by the year 2007. However, it would be still lower than China's current
consumption of 10 million tonnes.
All this makes it obvious that plastics have a great future in India. The
fundamentals
plastic consumption
and
CHALLENGES
Market Research
Data gathering
We have made visit to exhibition
"Plastvision-2004"
where lots of
potential of
and
10
.
.
outperforming
GDP.
.
.
.
Substitutes:
Major substitutes are:
. Paper bags - it is non durable bag. Only advantage it is
biodegradable and cheap
. Cloth bag - costly compared to plastic bag. But it is durable and do
not get damaged very often.
Environmental implications:
Due to plastic's non-biodegradability, government has tried to ban the
usage of plastic bags. But problem lies in the practices followed by the
people. Government need to educate the people about how to use and
dispose off the plastic garbage. Because plastic is recyclable and do not
harm environment if used proper disposing practices. And for the benefit
of environment and in public interest government has banned the
production of polythene bag having thickness of less than 20 myc.
11
Product Details
Side seal-soft loop handle bag
Specifications:
Standard size: 1. 15 x 18 + 3
2. 18 x 22 + 3
Standard Gauge: 50 myc to 62.5 myc
Materialused: LDPE
Type of handle: Soft loop / flexiloop
Patched handle carrier bag
(;
'...,.
Specifications:
Standard size: 1. 15 x 18 + 3
2. 22 x 18 + 3
3. 24 x 18 + 3
Standard Gauge: 45 myc to 50 myc
Material used: LDPE
Type of handle: Patch
12
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bag
Specifications:
Standard size: 1. 10 x 15 x 18
2.11x17x21
3.12x19x23
Standard Gauge: 20 myc to 25 myc
Material used: White HDPE
Type of handle: Vest style
13
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Specifications:
14
Chapter 3
Process Details
15
Process Details
Raw materials
HOPE(High Oensity Poly Ethylene), LOPE,PP, PE is commonly used as raw
materials to make plastic bags. HOPE,LOPEare used for making ordinary
shopping bags or T-shirt bags. PP is primarily utilized in transparent and
luxurious packing of stationeries and clothes.
Extrusion
Extruders manufacture plastic film for making plastic bags. Clients need
to specify extruder parameters for film width, thickness, and productivity
according to clients manufacturing schedules. Specifications of extruders
differ in the size of air rings and dies.
Printing
There are two kinds of printing
machinery--flexographic
and roto
16
Punching
Some models have punching units included. Without a punching unit on
the machine, operators need a punching press to make handles on plastic
bags.
Recycling
During the above processes, clients will see some waste from extruders,
printing machines, bag making machines and punching press. Clients can
use recycling machines to convert the waste into recycled raw materials
and plastic film.
Facilities required and their approximate cost:
Major facilities required for Plastic industry is raw material and
machineries and electricity. Electricity is second biggest contributor in
cost after raw material.
Machineries required as per the process explained above are:
. Blending machine
. Extruder
Recycling machine
17
Serial no.
Machine Name
Cost ( Rs. )
45000
Blending machine
Extruder(2 machines)
Printinq machine - Flexoqraphic
3
4
5
6
130000
350000
500000
1000000
1500000
makinq machine
7
2200000
Recvclinq machine
computers
Furniture and fixtures
50000
9
10
70000
400000
18
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Flexographic
Printing machine
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Chapter 4
Project Plan
23
Project Plan
We are planning our project in three different phases.
Phase 1:
Initially in first six months, we are going to manufacture Patch handle
bag. For that we need the following machineries:
. Blending machine
. Extruder
.
.
.
.
in
Till this expansion one extruder will be able to produce the input for bag
making machine.
24
Phase 3:
After one year in the business we will have some loyal customers. We will
be recognized in the industry. Therefore we will go for another
expansion. This time we will go another specialty of bag ie pouch.
We will purchase the following machines for further expansion:
. Combined pouch making machine
. Loop sealing machine
Phase 4:
We are planning to add one pouch making machine as it is out most
profitable product. We need to increase one operator and helper we do
not additional extruder machine as we have spare capacity.
Production and sales: Phase 1:
In phase 1, we are having only one bag making machine installed.
We have calculated the production of that Machine
Machine Speed: 80 bags/ min.
Operational efficiency: 85 %
Approximate weight of one bag: 1g
Production of machine / hr in kg: 80 x 1 x 60 x .85 = 4.08 kg/hr
Production in first phase: 4.08 x 24 x 6 x 26 = 15275.52 kg.
4.32 kg/hr
16174.08 kg.
Rs. 70/-
Sales: 16174.08 x 70
1132185.6
6.73 kg/hr
25197.12 kg.
1763798.4
2895984
3965270.4
4.56 kg/hr
34145.28 kg.
.'
I
~
for year:
2390169.6
~
~
27
3732019.2
+ 4811788.8
After second year of business we will have our full planned capacity. We
will try to achieve 95 % operational efficiency from every machine.
Therefore for third year the production is as follows:
Machine
Production
95 %
Total sales
34145.22
24,37,972.99
56309.76
37,32,019.2
76826.88
69,14,41 9
1,33,70,532
Forth year, we will try to work on 100 % efficiency. And followin'g are the
sales figures:
Machine
I Production
@ Sales
I
95 %
Total sales
34145.22
price/k
Rs. 71.4
24,37,972.99
56309.76
Rs. 71.4
40,18,140.67
76826.88
Rs.96.9
74,44,524
I Production
@ Sales
I
95 %
34145.22
24,86,732.45
56309.76
Rs. 72.828
40,98,503.49
153653.76
Rs. 96.9
1,48,89,049
Total sales 2,14,74,285
Total sales
price/k<
Rs. 72.828
28
~
~
~
.
.
.
~
I
.
. Production
manager
. Supervisor
. Storekeeper
. Workers
Total
Grand total
Year 1
S
Us
1
1
1
Year 2
S
Us
1
2
1
Year 3
S
Us
2
2
2
Year 4
S
Us
2
3
2
Year 5
S
Us
2
3
2
2
1
4
11
2
1
7
15
2
1
7
17
2
1
7
18
2
1
10
19
2
2
13
3
3
18
3
3
21
3
3
22
S = Skilled Employee
Us = Unskilled Employee
Machine name
Blending machine
Extruder
PrintinQ Machine
Bag making machine
. Operator
. Helper
Recycling Machine
Total
Grand Total
Year 1
S
Us
1
1
1
Year 2
S
Us
2
2
2
Year 3
S
Us
2
2
2
Year 4
S
Us
2
2
2
Year 5
S
Us
2
2
2
1
1
2
1
2
1
2
1
4
2
1
2
4
6
1
3
10
>
>
>
.
.
3
3
20
29
1
3
10
1
3
10
1
10
3
13
Financialanalysisand BEP:
Productionand Sales:
Year Two
Year One
Product Type
1st half
lind Half
15275.52
85
16174.08
90
1069286
1132186
Opening Debtor
Closing Debtor
Avg Debtor
Opening Debtor
/'
1763798
Closing Debtor
Avg Debtor
Year Four
34145.28
95
71.4
2437972.9M'"
3983617
406328.82
402345.216
34145.28
95
71.4
2437972.99
406328.832
406328.832
406328.832
34145.28
95
72.828
2486732.45
406328.832
414455.409
410392.12
Total
31449.6
70
2201472
0
366912
183456 .
34145.28
95
70'
2390169.6
366912
398361.6
382636.8
53314.56
25197.12
85
Year Three
Fig in Kg
oer year
Year Five
70
1763798
0
293966.4
146983.2
56276.48
90
70
3732019.2
293966.4
622003.2
457984.8
95
71.4
4018140.672
622003.2.
68739.84
85
95
6530284.8
0
1088380.8
544190.4
72783.36
90
95
6914419.2
1088380.8
1152403.2
1120392
56276.48
56276.48
95
72.828
71.4.
4018140.67 \4098503.49
669690.112
669690.112
683083.914
669690.1121 669690.112
645846.656
676387.013
669690.112
_5
/
Plastic pouch
Efficiency
Price
Sales
Opening Debtor
Closing Debtor
Avg Debtor
Total Sales
1069286
2895984
3965270
330439.2
1.252473.6
1384812
\2-f,,~"'V
30
153653.76
76826.88
95
96.9
7444524.67
1152403.2
1240754.11
1196578.66
95
96.9
14889049.3
1240754.11
2481508.22
1861131 .17
13370532.86
13900638.3
21474285.3
2168583.872
2272597.6
2947910.3
Year One
Particular
Year Three
Year Four
Year Five
INCOME
3965270.4
311895.7
4277166.1
12652473.6
I 32545
12685018.6
1370532.9
3351441.60
538080
13900638.3
21474285.3
13370532.9
13900638.3
21474285.3
8517120.77
755946
8883011.07
815436
9085995.78
876207
12942705.15
989790
169940
50000
6000
48000
546700
100000
8000
52000
571218
100000
10000
56000
668995
110000
12000
60000
976302
150000
15000
65000
4163461 .60
9979766.77
10435665.07
10813197.78
15138797.15
113704.50
2705251.83
2934867.79
3087440.56
6335488.13
84000
447000
5000
10000
50000
100000
20000
120000
132000
936750
6000
12000
59600
15000
20000
126000
Total FC
836000
-722295.50
Sales
Interest income
Total
EXPENDITURE
A
Variable Cost
Raw Material
Consumed
Waqes
Electricity @ Rs 3 per
Unit
Maintainance & Spares
Stationary
Telephone
Total VC
CONTRIBUTION
C
Fixed Cost
Salarv
Depriciation
Misc. Expenditure
License Fee
Insurance
PROFIT
31
186000
936750
7000
14000
55000
18000
20000
135000
253400
936750
8000
16000
50000
25000
20000
150000
282000
1266750
9000
20000
95000
30000
20000
150000
1307350
1371750
1459150
1872750
1397901.83
, ,
1563117.79
1628290.56
"
4462738.13
,.
RAW MATERIAL
I COST
Year Two
Year One
, Product Type
I -...
I
1st half
lind Half
15275.52
16174.08
LDPE Film
I
I
I
I
InventoryHolding
period
.
RM Cost
Closing inventory
Opening inventory
Averaqe inventory'
31449.60
62.50
34145.28
62.50
34145.28
62.50
34145.28
62.50
34145.28
62.50
15.00
1965600.00
15.00
2134080.00
87701.92
80778.08
84240.00
2141003.84
12.00
2134080.00
70161.53
87701.92
78931.73
2116539.62
10.00
2134080.00
58467.95
70161.53
64314.74
2122386.41
6.00
2134080.00
35080.77
58467.95
46774.36
2110692.82
53314.56
55.00
56276.48
55.00
56276.48
55.00
56276.48
55.00
15.00
1385841.60
56952.39
0.00
28476.20
1442793.99
15.00
2932300.80
120505.51
56952.39
88728.95
2995853.92
12.00
3095206.40
101760.21
120505.51
111132.86
3076461.10
10.00
3095206.40
84800.18
101760.21
93280.19
3078246.36
6.00
3095206.40
50880.11
84800.18
67840.14
3061286.33
68739.84
50.20
72783.36
76826.88
153653.76
50.20
50.20
50.20
15.00
3450739.97
141811.23
0.00
70905.62
3592551.20
15.00
3653724.67
150153.07
141811.23
145982.15
3662066.51
12.00
3856709.38
126795.92
150153.07
138474.50
3833352.23
10.00
7713418.75
211326.54
126795.92
169061.23
7797949.37
3351441.60
8517120.77
8883011.07
9085995.78
12942705.15
3489172.08
8729408.95
243874.57
8855067.22
9033985.01
12969928.52
336046.74
296069.43
283675.73
0.00
40389.04
2046378.08
Purchase
Year Four
Total
80778.08
Year Three
Fig in Kg per
year
Year Five
HM HDPE Film
InventoryHolding
period
RM Cost
Closing inventory
Opening inventory
Averaqe inventory
Purchase
25197.12
25197.12
Plastic pouch
Polyester PET
Inventory Holding
period
RM Cost
Closing inventory
Opening inventory
Average inventory
Purchase
Total Cost
Total Purchase
Total RM inventory
68865.24
32
55.00
~
~
WAGES PARTICULARS
,
~
Particular
Year
One
Year
Two
Year
Three
Year
Four
Year
Five
I
~
~
Wages
A
Worker
Skilled
Unskilled
Store KeeDer
B
C
Supervisor
Production
D
Manaaer'
Total
Salary
A
B
C
Clerk
Accountant
Sales Person
Total
192000
43680
14400
144000
352800
68796
15150
151200
370440
72336
15900
158760
388962
75845
16700
166700
453600
79640
17550
175000
144000
538080
168000
755946
198000
815436
228000
876207
264000
989790
18000
30000
36000
84000
19800
33000
79200
132000
21600
74400
90000
186000
24000
78200
151200
253400
26400
86400
169200
282000
33
WORKING CAPITALCALCULATION
Year
lOne
Particular
Current Asset
A
B
I 330439.2 I
I
Current
Liability
A
Stock
Debtors
Raw Material
Finished Goods
(MTO
Cash and Bank
balance
Total CA
Three
I Year
I Year
Four
243874.57
336046.74
296069.43
250000
1878686.57
250000
2754630.61
250000
2818667.03
0
0
0
0
0
0
0
0
I 283675.73
260000
3491586
o.
0
3491586
I
Investment in ASSETS
Sr.
no
Particulars
1 Blending Machine
2 Extruder
3 Printing Machine - Flexographic
4 Printing Machine - Rotogravure
Patch handle bag making
5 machine
6 Vest type bag making machine
Combined pouch making
7 machine
8 Recycling machine
9 computer
10 Furniture and fixtures
Total Investment
Five
I 68865.24 I
Creditors*
Total CL
Net Workina Capital
Year 1
45000
65000
350000
500000
Year 2
Year 3
Year 4
Year 5
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1000000
1500000
0
0
0
0
0
0
0
0
50000
70000
400000
3980000
2200000
0
0
0
2200000
0
0
0
0
2200000
0
0
0
2200000
34
0
0
0
0
= ---------------------------------PN ratio
9972848.96
- ----------------------------
0.2309
43177366.11
Investment
6013804.00
3579382.00
875944.00
64036.00
2872919.00
P.V. of Investment
P.V. Factor
0.869
0.756
0.658
0.572
0.497
P.V. of Inv
5225995.68
2706012.79
576371.15
36628.59
1427840.74
9972848.96
So, we can conclude here that we will be able to reach break even in approximately 4
years.
35
.
.
)
>
>
>
>
>
~
~
~
~
~
~
~
>
~
~
>
>
Chapter 5
Location & Layout
>
,
>
~
~
>
.
36
.
.
!
I
Because of this location, we can get excise duty exemption of16% and
Sales tax exemption of 4%. So, this enables us to compete on cost
effective basis.
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