PROJECT FEASIBILITY REPORT ON MANUFACTURING

AND SELLING OF BIODEGRADABLE BAGS.

A project submitted in partial fulfillment of the

requirements for the award of the degree of

BACHELOR OF BUSINESS ADMINISTRATION

BY

JAYENDRA KASHYAP (BBA/4537/16)

ATULYA HS (BBA/4538/16)

PRASHANT YADAV (BBA/4539/16)

RIA SHARMA (BBA/4540/16)

KARNIK SHARMA (BBA/4541/16)

DEPARTMENT OF MANAGEMENT

BIRLA INSTITUTE OF TECHNOLOGY

MESRA-835215, RANCHI, NOIDA CAMPUS

2018
 CERTIFICATE OF APPROVAL

The foregoing project entitled “Project Feasibility Report on Manufacturing &

Selling of Biodegradable bag”, is hereby approved as a creditable study of
research topic and has been presented in satisfactory manner to warrant its
acceptance as prerequisite to the degree for which it has been submitted.

It is understood that by this approval, the undersigned do not necessarily endorse

any conclusion drawn or opinion expressed therein, but approve the project for the
purpose for which it is submitted.

(Internal Examiner) (External Examiner)

(Director)
 ACKNOWLEDGEMENT

It gives us immense pleasure to present this Project Feasibility Report on

Manufacturing & Selling of Biodegradable bag. This project is the result of time,
efforts and knowledge contributed by various members. It was the great experience
for us as in this we got the opportunity to learn and experience the business world.
No work can be carried out without the help and guidance of various persons. We
are happy to take this opportunity to express our gratitude to those who have been
helpful to us in completing this project report. They have been the source of guide
and motivation for the completion of project.
We would like to thank our mentor RACHNA PRATIK for giving valuable time,
advice, assistance which has helped us to gain practical and theoretical aspect of
the project.
 CONTENT

CHAPTER 1: INTRODUCTION

CHAPTER 2: TECHNICAL FEASIBILITY

CHAPTER 3: MARKET FEASIBILITY

CHAPTER 4: FINANCIAL ANALYSIS

CHAPTER 5: CONCLUSION

BIBLIOGRAPHY/REFRENCES
 CHAPTER-1

INTRODUCTION
1.1 INTRODUCTION

Today’s consumer driven society demands plastic for the manufacture of millions of
products. Packaging materials largely contribute to the high demand for plastics. Our
fast paced lifestyles demand convenience and single serving, pre-packaged foods.
The manufacture of cost effective packaging that adequately protects the product is
made possible by plastic. Plastic is made from crude oil, a non-renewable resource.
Although the plastic we use can be recycled, the amount of solid waste generated by
plastic is becoming a problem.
Many farmers use blankets of biodegradable plastic made from petroleum to cover
their fields and increase their product yield. Biodegradable plastic produced from
natural resources degrade completely, while current polymers leave residues. The
medical industry uses large amounts of one-time use products every day. Plastic
gloves and other hygienic products are not recycled and are thrown into landfills. In
the United States, there is a growing interest in using biodegradable plastics for
compost bags. These bags would replace paper and plastic bags. Not only would the
yard waste inside the bag be biodegradable, but the bag would also degrade.

1.2 OBJECTIVES

To expand the market size by making aware about environment friendly bags.With
the increase in global warming and pollution in the region we together collectively
take an initiative to reduce to protect our surrounding and our mother earth.

Introduction

Opportunity rationale- India is the third largest plastic consumer in the world, with a
total consumption of plastics of about four million tons and resulting waste about two
million tons. Demand for the bio plastics is increasing since past decade due to
growing awareness concerning environmental conservation boost the overall
biodegradable packaging market.

1.3 SCOPE
India is the third largest plastic consumer in the world, with a total
consumption of plastics of about four million tons and resulting waste about
two million tons. Biodegradable bags are eco-friendly that are manufactured by
using natural resources. Demand of biodegradable bags is increasing since past
few years due to growing awareness concerning environment conservation.
Biodegradable bags are currently used most in packaging, however it has the
potential to be used in any application that controversial plastics are used.
Large international companies are making the move to start using bioplastics as
their packaging.
Demand for the bio plastics is increasing since past decade due to growing
awareness concerning environmental conservation. Increased in consumer
preference towards biodegradable materials coupled with the growing
environmental concern is expected to boost the overall biodegradable
packaging market.
According to the report In terms of revenue, the global bioplastic packaging
market is expected to grow to US$ 25,395.8 million by 2025 from US$ 4,399.7
million in 2017. Also, in terms of volume, the global bioplastic packaging
market is estimated at 1,047.5k Tons in 2017, growing at a CAGR of 18.1% to
account for 3,953.0k Tons in 2025. Source-
https://www.marketwatch.com/press-release/bioplastic-packaging-market-to-
2025---global-analysis-and-forecasts-2018-08-29
Biodegradables bags have taken up nearly 10-15% of the total plastics market
in the world today and is poised to increase to 25-30% by 2025.
 CHAPTER 2
TECHNICAL FEASIBILITY

BIOTRA : YOUR FRIENDLIEST PARTNER IN LIFE

Vision :- “To be a part of each and every households

by reserving nature for our children”

Mission :- To understand the connection of health of

our mother earth and Bio carry bag by being a better
steward for our environment
2.1 DESCRIPTION OF THE PRODUCT
Biodegradable plastic bags are created using materials that will allow the bags
to completely decompose after a period of time. Most biodegradable plastic
bags are said to decompose in three years, although many completely
disintegrate in less time. The bags leave no discernible trace and are
completely harmless to the environment. Biodegradable plastic bags require
two key elements in order to decompose. The bags need to be exposed to
oxygen and light. Therefore, biodegradable plastic bags do not start to
decompose from the date of manufacture, only after they have been exposed
to light and air. Many retailers and businesses have embraced the use of
biodegradable bags. While there are many real benefits, there are also a
number of concerns that still need to be addressed.

2.2 USE OF THE PRODUCT

 Waste reduction
 Energy saving
 Environmental friendly
 Packaging and wrapping
2.3 MANUFACTURING PROCESS
Step 1- Gather raw Materials which includes including potato, natural starch,
vegetable oil, vinegar, and flower oil.

Step 2- The Extrusion Process

1) Acquired raw materials like potato,vinegar,water,oil

2) Raw material being added into extruder to make the process of palletisation with
the help of desired heating temperature.
3) Cooling of the product is done pulling extrudate through water bath
4) A set of cooling rollers is generally used in the sheet extrusion process to cool
sheet as it exits the extruder

Once the product has cooled, it can be spooled, or cut into lengths for later use.

Step 3 - Sealing and bag making Process.

After the roll of sheets acquired we will cut those sheets on the required size of the
bag to carry 2-3 kgs , it is being done through bag cutter which cuts exactly of the
same size .
 Gather Raw Materials
from Nearby Farmers

Extrusion process

sheet making and

cutter

2.4 OFFICE AND FACTORY SIZE

2500 sq.ft at Dadri, uttarpradesh

2.5 PRODUCTION SCHEDULE (EXPECTED VOLUME FOR THE

GIVEN PERIOD)
It is expected that our company will receive about RS10 lakh orders for one
biodegradables bags in the first year.

2.6 SELECTION OF MACHINERY AND TOOL

STARCH SHEET EXTRUDER
sheet extruder machine uses
 High efficient extruding,
 excellent exhausting capability,
 good feeding function,
 high power saving
 multi-functional applications are the main advantages of this machine.

Commercial Carry Bag Making Machine

our machine equips computer orientation,
 photocell tracking, and
 touch screen operation
 adopts high wave band ultrasonic.
2.7 SITE PLANNING
. Following factors are considered before selecting a location

 Availability of Raw Materials

 Proximity to Market

 Infrastructural Facilities

 Government Policy

 Availability of Manpower

 Availability Of Utilities

 Political conditions

2.8 OFFICE LOCATION

DADRI (UTTAR PRADESH)

DISTANCE FROM RAW MATERIAL - 10 km

2.9 OFFICE LAYOUT DESIGN
(1) Offices
(2) storage
(3) Washroom
(4) Manufacturing unit

2.10 COST OF ERECTION OF THE PROPOSED BUILDING AND

LAND IMPROVEMENTS
Rent of building Rs 50000
2.11 STUDY OF AVAILABILITY OF RAW MATERIALS AND
UTILITIES
All the raw materials are available from the farmers of nearby villages. Electricity
and water resources are also available at the plant location.

2.12 ESTIMATE LABOR REQUIREMENT AND THE

SUPERVISION REQUIRED
The team of labours consists of 8 members. They are required to be specialized
in this field with great experience in making biodegradable bags and requiring
lesser supervision.

2.13 COMPONENTS TO BE PURCHASED FROM OUTSIDE

Factory equipment requirements are
 Furniture
 Computer
 Telephone
 Printer
 Storing equipment
 Machinery
 CHAPTER-3
MARKET ANALYSIS
3.1 MARKETING DESCRIPTION

Biodegradable shopping bags are now making a trend these days.

Global warming, climate and environmental changes are just some of its
effects. Improper way of disposing wastes specifically plastic which is non bio-
degradable is a major problem of this world. Plastic accumulation in landfills
takes up valuable space and threatens the environment.
India is the third largest plastic consumer in the world, with a total consumption
of plastics of about four million tons and a resulting waste production of about
two million tons. Bioplastics are those plastic materials that are manufactured
by using natural resources. There are two categories of these plastics available
in the market—biodegradable bioplastics and non-biodegradable plastics.

Demand for bioplastics is increasing since past decade due to growing

awareness concerning environmental conservation, use of bio-based or natural
resources for manufacturing materials and formulation of various regulations
across countries for effective use of natural resources and waste management.

3.2 CHANNEL OF DISTRIBUTION

Distribution channel of Biodegradable bags will be through business to

business i.e bag will be sell to Distributor so that they can either sell it to
direct consumer.
 Point of
Producer Distributor
Sale

3.2 SWOT ANALYSIS-

Strengths-

 High profitability and revenue

 Low operational cost
 Accessibility to target market
 Availability of raw material
 Another key aspect is the rise of the middle class, which implies an increase
of the consumption market
 The country’s banking system is well developed, so we will not have problems
in the payment to the suppliers
 There are many reforms that support investment
 Our product is made from non-pollutant materials
 Good economic situation of the country despite international crisis.

Weakness-

 Low capital intensive industry attracts new entrants

 Inadequate technical expertise

 Awareness

Opportunities-
  By using effective marketing strategies this business can attracts more
growers and traders

 Growing market demand

 Beneficial for the environment

 National plans and projects regarding the environment

Threats-

 Competitors by other adversaries

 Government regulations and pricing policies

3.4 Environment:
In this day and age consumers are more concerned about their environmental
impact. One of the main reasons why bioplastics are becoming popular as an
alternative to petro plastics is the environmental advantages they offer:
1. made from renewable resources
2. lower carbon footprint
3. biodegradable
4. compostable

3.5 Market Feasibility

Currently, the bio-plastics carrier bags market is witnessing high demand across
various industries such as food and beverage, pharmaceuticals, automotive, retail,
health and personal care as they come in a wide range of attractive designs and
shapes. Increasing consumer demand for the eco-friendly plastic carrier bags has
led the plastic manufacturers to shift from traditional plastic bags to bio-plastic carrier
bags. Another significant factor that drives the bio-plastic carrier bags market is the
re-usability characteristic which is highly preferred by the consumers.
Government initiative towards purchasing eco-friendly solutions have further fuelled
up the demand for bio-plastic carrier bags market. Bio-plastic carrier bags market is
expected to grow significantly during the forecast period because of its increasing
usage in various industries as well as by the consumers.

3.6 MARKET SIZE

 According to a new report published by Allied Market Research, titled, "Bio
plastic Market” by Type and Application: Global Opportunity Analysis and
Industry Forecast, 2018-2024" the global bioplastics market was valued
at $21,126.31 million in 2018, and is projected to reach $68,577.25 million by
2024, registering a CAGR of 18.8% from 2018 to 2024. In 2017, the rigid
packaging segment accounted for approximately one-third share in the global
market in terms of value.

3.7 Consumer acceptance

Surveys have shown that consumers are prepared to buy items containing or
wrapped in bioplastics based on their green environmental credentials. However, the
Waste and Resources Action Programme (WRAP) found that there is poor consumer
understanding with regard to the terminology and disposal of bioplastics..

3.8 Bio-Plastic Carrier Bags Market: Market Segmentation

Bio-plastic carrier bags market can be segmented on the basis of type of bio
plastic carrier bags, which include:

 Single-use bag
 Multiple-use bag
 Woven or non-woven bag
Bio-plastic carrier bags market can be segmented on the basis of application,
which include:

 Food & Beverage

 Pharmaceuticals
 Automotive
 Retail Stores
 Others

3. Market Players in Biodegradable bags globally

Market players for bio-plastic carrier bags market include

 Amcor,

 Mitsubishi Chemical Corporation,

 Plantic Technologies Ltd.

 BASF SE

 Biome Technologies PLC

 Corbion N.V

 NatureWorks LLC

 Metabolix Inc.

 Biopac, and Meredian Inc.

3.12 Local Market player in india :

Envy Green

Biogreen

Lithey ,

Bio Tec,

3.13 Analysis of past and present demand

In Asia, the biodegradable polymers growth is seen due to the restricted usage of
plastic bags by the government. However, biodegradable polymers consumption by
Asia has not improved as much as predicted.
According to the report in terms of revenue, current market value of biodegradable
bags exceeds $1.1 billion in 2018 and could reach $1.7 billion by 2023.
Demand for the bio plastics is increasing since past decade due to growing
awareness concerning environmental conservation. Increased in consumer
preferences towards biodegradable materials coupled with the growing
environmental concern is expected to boost the overall biodegradable packaging
market.
3.14 Major consumer of Biodegradable bags are:

 Traders, distributors, and retailers

 Shopkeepers
 Hospitals
 Hotel industry
 Garbage bag
 Packaging companies

3.15 Competitive position of the product

The technology provides an electric dissipative feature (suitable for electronic
wrapping) along with anti-static feature-dust repellent, oxygen barrier-corrosion
prevention, oil/grease resistance.
It has the ability to dissolve 100% in 80 degree Celsius of hot water and softens in
water at room temperature.
It carry the same weight as any other conventional bags with 60 microns of thickness
which will be efficient

Price per bag – RS 2.37

3.16 Publicity and Advertising:

Our main effort is to try to make our customers understand the quality of our
products compared to the competition. We will present them the truths and the
positive effect of these products on the environment, making them aware of the
benefits and the economic sanctions in case of not obeying the law. Our way of
acting will consist in introducing us as a biodegradable plastic commercialising
company, at a reasonable price and a common benefit: protection of the
For 2019 project, platform we intend leveraging on to promote and advertise are
 Encourage the use of word of mouth publicity from our prospective customers

 Leverage on the internet and social media platform to promote our business.

 Distribute our handbills in target areas in and around our neighbourhood

3.17 Quality and marketing practice of competitors
Local competitors like
Envigreen- 100% environmental friendly and has even promoted to loreal
Biogreen- 240 compostable
Lithey Inc- 16/bag dissolves in acid
Bio Tec bags 10/bag -export market is high

3.18 Marketing mix

Place- The factory where the biodegradable bags are manufactured should be close
the market. Thus, there will be easy availability of raw material as well as
transportation cost will be low.

Product- The biodegradable bags that we are going to offer will have different
models, designs and sizes. The basic product we manufactured are Shopping bags.
We must emphasise that the range of products will be extended once installed in the
sector, especially plastic bags for clothing shops, offering them a custom product.
The products offered are classified as a convenience good because they are daily
acquired, at a low price and with ease.

Pricing- The pricing of the bio-degradable bags will depend on the following points-

 Cost of raw materials

 Cost of developing and making bio degradable bags

 Cost of competitive products

 The market demand

Promotion - we will rather focus on the advertising and communication of our

company, making it recognizable through commercialisation actions. The actions
regarding the advertising and the recruitment of potential customers will be the
following ones:
 Webpage: the creation of a corporate website for those users that are
interested in contacting us or knowing about our company and products. The
website will be in English, because it attracts more attention, and with the
 option of selecting Hindi and Urdu. In addition, we will incorporate a section
for the management of orders that can help the users to buy online.
 We will write a cover letter including our email address, location and phone
number. Then, having established the contents, the next step will be sending
a catalogue with our products and prices.
 Commercial visits are very important and thus we will strive to contact the
potential customers by telephone for a posterior visit.
 CHAPTER – 4
FINANCIAL ANALYSIS
4.1Fixed Capital
s.no Item details Quantity Unit price Total amount
1 Machinery 7,50,000
1.1 Starch extruder 1 4,00,000

1.2 Sheet maker & cutter 1 3,50,000

2 Office equipments
2.1 AC 2 34,250 68,500
2.2 Table 5 5,000 25,000
2.3 Chair 10 2,500 25,000
2.4 Voip phone 3 1000 3,000
2.5 File cabinet 2 3,500 7,000
2.6 Laptop 1 30,000 30,000
2.7 Lightings 10 800 8,000
2.8 Photocopier 1 11,000 11,000
Total 1,77 ,500
3 Generator 1 3,00,000 3,00,000
Total 12,27,500

4.2Working capital
Sl Particulars Monthly Yearly
No
1 Staff Salary
Accountant 10000 120000
Sales & Marketing 10000 120000
Manager 25000 300000
 Peon 5000 60000
Technician 9250 111000
Skilled 12500 150000
Unskilled (2) 13750 165000
Total 85500 1026000
Working
Raw Materials 29167 350000
Rent 50000 600000
Utilities 6042 72500
Advertisement 4167 50000
Office Expenses 2000 24000
Transportation 4050 48600
Fuel 1950 23400
Total 97376 1168500

Working Capital
Staff salary + Utilities + Advertisement + office expense+fuel+transportation
85500 + 6042 + 4167 + 2000+4050+1950 = 103709* 12 = 12,44,508
Initial Working Capital Requirement
F.C + WC/12*3 = 1227500 + 12,44,508/12 *3 = 1227500 + 311127= 1538627
Rounded off to 1540000
Name Capital
Jayendra 308000
Atulya 308000
Prashant 308000
Ria 308000
Karnik 308000

Raw material
For 1 month
Particulars
Potato Rs 2 kg *4000 kg
Vinegar Rs 600*10 litre
Water Rs 800*1000
oil 10 litre =1000

Rent
Particular 2020 2021 2022
Rent 1,24,800 1,37,280 1,51,008

Transportation :
we require 65km*25+2000+400. We assume 2000 as loading and
unloading charges and labour cost

4.5 Profit and Loss Account

s.no Particulars 2019-20 2020-21 2021-22
A Net sales 4215750 4848112 5720772
B Expenses 7,76,000 8,53,600 9,38,960
C Gross Profit(A-B) 34,39,750 39,94,512 47,81,812
D Operating Expenses
Rent 600000 6,72,000 7,39,200
Utilities 72500 79750 87725
Advertisement 50000 52500 55130
Office Expenses 24000 26400 29040
Transportation 48600 53460 58806
Fuel 23400 25740 28314
Staff salary 6,00,000 660000 726000
 Depreciation 245500 245500 245500
Total 1664000 1815350 1969715
Net profit (C-D) 1775750 2179162 2812097
Les Tax 30% 532725 6,53,749 843629
s
Net profit 1243025 1525413 1968468

Cash flow statement

Particulars 2019 2020 2021
Capital Rs Rs Rs
Jayendra 3,08,000 3,08,000 3,08,000
Atulya 308000 308000 308000
Prashant 308000 308000 308000
Ria 308000 308000 308000
Karnik 308000 308000 308000

Total 15,40,000 15,40,000 15,40,000

Profit & 12,43,025 15,25,413 19,68,468

reserve
Rent payable 6,00,000 6,72,000 7,39,200
Total capital 3383025 37,37,413 42,47,668
and liabilities
Fixed Assets 982000 7,36,500 491000
Cash in hand 2401025 30,00,913 37,56,668
Total assets 33,83,025 37,37,413 42,47,668

Balance sheet for the year ending 2019

Liabilities amount asset amount

capital 15,40,00 Fixed assets 12,27,50

0 0
Add:net 12,43,02 Less:depreciatio 2,45,500
profit 5 n
rent 6,00,000 Cash in hand 2401025

Total 33,83,02 total 33,83,02

5 5

Balance sheet for the year ending 2020

Liabilities Amount asset amount

capital 15,40,00 Fixed assets 982000

0
Add:net 1525413 Less:depreciation 245500
profit
rent 672000 Cash in hand 30,00,91
3

total 3737413 total 37,37,41

3

Balance sheet for the year ending 2021

Liabilities Amount asset amount

capital 15,40,00 Fixed assets 736500

0
Add:net 1968468 Less:depreciation 245500
profit
rent 739200 Cash in hand 37,56,66
8

total 42,47,66 total 42,47,66

8 8

Cost/unit
F.C +V.C/ no. of units produced in a year
18,27,500+5,44,500/10,00,000
28,22,000/ 10,00,000= 2.37/unit
Per day production of bags= 3300/day

Fixed Cost
Particulars Year 1 Year 2 Year 3
Rent 600000 672000 739200
Salary 1026000 1128600 1241460
Depreciation 245500 245500 245500
Total 13,31,500 20,46,100 22,26,160

Variable Cost
Particulars Year 1 Year 2 Year 3
Raw Material 350000 385000 423500
Utilities 72500 79750 87725
Advertisement 50000 52500 55130
Transportation 48600 53460 58806
Fuel 23400 25740 28314
Office Expense 24000 26400 29040
Total 568500 622850 682515

No Of Units : 1000000
Contribution :
Year Sales Variable cost Contribution
(s-vc)
2019 4215750 568500 3647250
2020 4848112 622850 4225262
2021 5720772 682515 5038257

PV Ratio : contribution/sales
Year Contribution Sales Pv ratio
2019 3647250 4215750 0.86
2020 4225262 4848112 0.87
2021 5038257 5720772 0.88

4.4 Breaks Even Point

= Fixed cost ~(R/u – V/U)
4.2 – 0.56 = 3.64 = 547115/365 = 1498 units
4.8 – 0.62 =4.18 = 517942/365 = 1419 units
5.72 – 0.68= 5.04 = 465507 = 1275 Units

Particular 2019 2020 2021

Break even 1498 units 1419 units 1275 units

Gross profit ratio : gross profit/sales*100

Year Gross profit Sales percentage
2019 34,39,750 4215750 81.5%
2020 39,94,512 4848112 82.3%
2021 47,81,812 5720772 83.5%

Net profit ratio : net profit/net sales*100

Net profit Net sales Ratio Year
1243025 4215750 29.4% 2019
1525413 4848112 31.4% 2020
1968468 570772 34.4% 2021
4.8 Conclusion :
It says that our projected cash flows and balance sheet is
absolutely correct and in year 1 we have to produce 1498units
at least to earn profit which has been determined by break
even analysis.
Furthermore from all the above various ratios analysis and the
demand for bio bags is estimated to rise by around 15% in the
year 2019-20. We can conclude that the business of
manufacturing biodegradable bag will be profitable in the
upcoming 2-3 years.
BIBLIOGRAPHY

https://en.wikipedia.org/wiki/Biodegradable_bag
https://www.inkwoodresearch.com/reports/asia-pacific-biodegradable-plastics-market/
http://www.eai.in/solutions/market-research/bioplastics
https://www.thehindu.com/todays-paper/tp-national/tp-andhrapradesh/Starch-bags-an-alternative-
to-plastic-ones/article16186266.ece
http://www.prnewswire.co.in/news-releases/bioplastics-market-expected-to-reach-6857725-million-
by-2024-684279571.html
http://envigreen.in/products/