POSITIVE N95 MASKS

AMIT SHET
19MBA003
PROJECT PLANNING

MBA

KOUSALI INSTITUTE OF MANAGEMENT STUDIES, KUD

 BUSINESS PLAN
Positive- N95 MASKS
Tss road
sirsi
 INTRODUCTION
N-95 respirators and surgical masks (face masks) are examples of personal protective
equipment that are used to protect the wearer from airborne particles and from liquid
contaminating the face. The N95 masks are specially designed to filter out at least 95% particles
from breathing in including dust and molds. A medical N-95 respirator consists of multiple
layers of nonwoven fabric, often made from polypropylene. The two outward protective layers
of fabric, covering the inside and outside of the mask are created using spun bonding. Between
the spun bond layers there’s a pre-filtration layer, which can be as dense as 250 g/m2 and the
filtration layer. The pre-filtration layer is usually a needled nonwoven fabric material. The last
layer is a high efficiency melt-blown electrets (or polarized) nonwoven material, which
determines the filtration efficiency. This project profile has been prepared to promote and
encourage the existing as well as budding entrepreneurs to setup a manufacturing facility to
produce N-95 Mask and cater to the demand of N-95 masks keeping in view the emerged
growing need during the present pandemic days because of COVID-19. It also aims at to create
the job for the migrant laborers .

NATURE OF BUSINESS :
The demand for N-95 masks has increased rapidly, with the sudden outbreak of global
pandemic COVID-19 across the globe. With the rapid surge in the patient pool around the
world, due to infectious disease such as COVID-19, is boosting the growth of the market.
Increasing demand for N95 masks across the world due to shortage of masks, further fuelling
the growth of the market. In addition to this, with the outbreak of the Corona Virus, the
demand is up to 100 times higher than regular demand in the world. In the countries like India
there is a ample need of such product both at the Healthcare units as well as other Industrial
units and organization to provide protection from the air transmitted nano-particles .
It’s important to note that not all N95 respirators are designed for medical applications; some
are manufactured for industrial use. Medical N95s are single-use products regulated as class II
products under the FDA (Food and Drug Administration) and NIOSH (the National Institute for
Occupational Safety and Health).

It should also be noted that recent reports from Healthline and the CDC show that masks
featuring valves or vents are more likely to spread infection. The masks will provide the same
protection for the wearer as an unvented mask, but the valve does not block viruses from
coming out, which can enable someone unaware they are infected to spread the virus to
others. It's also important to note that a face shield without a mask is equally able to spread the
virus.

N95 respirators work by filtering out particles thanks to the structure of their nonwoven
material. Particles get trapped as they are forced to make twists and turns through the dense
network of the material’s fibers, which are as thin as a single micron. Masks also have
electrostatically charged material to further attract particles. As particles build up, the mask
becomes a more efficient filter. However, the buildup also makes the mask more difficult to
breathe through, which is why the masks and filters are made to be disposable

. N95 MASKS MANUFACTURING PROCESSS

It is proposed to produce the N-95 Masks through an automatic plant having

different arrangements. It would be a servo motion with PLC control to execute
automatic production from raw materials of 3 to 6 layers to finished product output. A
series of operations will be taking place viz. Unwinding the roll, Ultrasonic
compounding, Nasal strip inserting, folding, Pre-press compounding, Ultra sonic
 compounding, rolling and cutting. The Ear belt of the Mask is automatically
transported to the attachment area of the manufactured mask body to the inclined
connecting station on the conveyor system. The ear belt with fixed size is attached by
ultrasonic welding

ASSUMPTIONS :
Positive N95 a newly incorporated company proposes to set up a new project for the
manufacture of mask details of the project are as below:
While driving figures and projections in this project report, following basis and presumptions
have been made :
1) Implementation period is 1 year
2) Capacity utilization:
1st year = 60%
2nd year = 70%
3rd year = 80%
4th year = 90%
5th year =100%
3) Per day 1 shifts of 8 hours each
4) Working days in a month is 25 days
5) Land registration charges including stamp duty is 8%
6) Debt-Equity ratio is 70:30
7) Misc. FAs required are Office Furniture & Equipments worth Rs.1.2L
8) The cost of land and land development charges is estimated at Rs.30 lakh.cost of
construction of building is estimated at Rs 25 lakhs
9) The estimated cost of plant and machinery including electrical is Rs.1.98 crore.
10) Transport and erection of machinery is expected to cost Rs.2 lakhs.
11) Preliminary and pre-operative expenses are estimated at Rs.15 lakhs which include
interest on term loan payable during the period of implementation.
12) A contingency provision of Rs.10 lakhs is considered adequate.
13) The company proposes to approach a Financial Institution for availing a term loan of Rs.2
crore towards creation of fixed assets. The company had a preliminary discussion with the
Financial Institution and the institution has shown its willingness to lend term loan of Rs.2
crore for the project. It also indicated the term loan is to be repaid in a period of eight
years.
14) The sales turnover at 100% capacity utilization is estimated at Rs.10 crore..
15) The cost of raw material required for the first of operation is Rs.75 lakhs;
16) power and fuel expenses for the first year of operation are estimated at Rs.3 lakhs and
Rs.4 lakhs respectively; consumables will account for Rs.4 lakhs during the first year of
operation
17) wages and salaries for the first year of operation is Rs.3864000s and it is estimated to
increase at the rate of 10% every year
18) repairs and maintenance charges for the first year of operation is estimated at Rs.2 lakhs
and it is estimated to increase at the rate of 5% every year
19) factory supervision charges for the first year of operation is estimated at Rs.4 lakhs and it
is estimated to increase at the rate of 10% every year.
20) Depreciation will be provided on straight line method for the purpose of profitability
estimate and on written down value method for tax calculations. The applicable rates of
depreciation for profitability estimate, as per Schedule –XIV of the Companies Act are as
under;
21) Building 3.34%
22) Plant and machinery 7.42%
23) Miscellaneous assets 6.33%
24) The rates of depreciation for tax calculations, as per the Income Tax act are as under:
25) Building 10.00%
26) Plant and machinery 25.00%
27) Miscellaneous assets 10.00%
28) Administrative expenses for the first year of operation is Rs.10 lakhs and it is expected to
increase at the rate of 10% every year.
29) Selling expenses can be assumed at 3% of the sales turnover.
30) Rate of interest for term loan is 14% per annum and for working capital loan is 15% per
annum.
31) The company is required to hold two months stock of raw materials, three weeks stock of
goods in progress and one & a half months stock of finished goods. The normal duration
of accounts receivable (book debts) as per the practice prevailing in the industry is one
month. Trade credit is available on raw materials and consumables for a period of one
month.
32) The company has preliminary discussions with bank and the bank has in principle agreed
to sanction working capital loan to the company. It is learnt that the bank would insist a
margin of not less than 25.00% on the current assets to be brought in by the project
pro.moters to meet the working capital margin.
33) Applicable income tax rate is 30% on taxable income.
 FINANCIAL PROJECTIONS :
Total cost of the project
PARTICULARS amt (rs in lakhs )
Land 30
Building 25
plant and machinery 200
misc.fixed assets 1.2
preliminary , pre-operative capital issue expensess 15
Contingency 10
working capital margin 13613396.31
total cost of the project 41733396

Means of finance :

Particulars Amt
loanG term bank loan 29213377.2
owners contribution 12520018.8
short term bank loan 9551713.903
Total 51285109.9

Calculation of gross working capital

60 70 80 90 100
Period 1 2 3 4 5
raw materials 7500000 8750000 10000000 11250000 12500000
2 months 1250000 1458333.333 1666666.7 1875000 2083333.3
Wip (cop) 36900589.13 41881807.46 46921455 52025345.13 14583438
0.75 month 2306286.821 2617612.966 2932590.9 3251584.071 911464.9
finished
goods (cos) 40456875.95 45957753.76 51520712 57151929.2 17578237
1.5 month 5057109.494 5744719.22 6440089 7143991.15 2197279.6
trade (sales) 60000000 70000000 80000000 90000000 100000000
credit
1 month 5000000 5833333.333 6666666.7 7500000 8333333.3
gross working capital 13613396.31 15653998.85 17706013 19770575.22 13525411
Trade credit
raw
materials+consumables 7900000 13416666 15333333 17250000 19166666
1month 658333.3333 1118055.5 1277777.8 1437500 1597222.2
working capital margin
25% money 3403349.079 3913499.713 4426503.3 4942643.805 3381352.8
SHORT TERM BANK
LOAN 9551713.903 10622443.64 12001732 13390431.42 8546836.2
15% Interest 1432757.085 1593366.546 1800259.8 2008564.712 1282025.4

Calculation of cost of production and cost of sales

60% 70% 80% 90% 100%
1 2 3 4 5
raw materials 7500000 8750000 10000000 11250000 12500000
Power 300000 350000 400000 450000 500000
Fuel 400000 4666666 5333333 6000000 6666666
Consumables 400000 4666666 5333333 6000000 6666666
Wages 3864000 4250400 4675440 5142984 5657282
Maintenance 200000 210000 220500 231525 243101
Factory 400000 440000 484000 532400 585640
Depreciation 1616796.13 1616796.13 1616796.13 1616796.1 1616796.13
COST OF PRODUCTION 14680796.13 24950528.13 28063402.13 31223705 34436151.13
Administration 1000000 1100000 1210000 1331000 1464100
selling expenses 1800000 2100000 2400000 2700000 3000000
COST OF SALES 17480796.13 28150528.13 31673402.13 35254705 38900251.13

Depreciation
building 3292740 10% 329274 296346 266712 240041 216037
plant and machinery 20195160 25% 13171 118539 10669 9602 8642
misc fixed assets 131710 10% 5048790 3786592 2839944 2129958 1597468.71
5391235 4201477 3117325 2379601 1822147.71

Depreciation companies act

Building 3292740 3.34% 109978
plant and machinery 20195160 7.42% 1498480.88
misc fixed assets 131710 6.33% 8337.25
1616796.13
 Arrive at the profitability estimate for the project for a period of five years of operation.
Sales 60000000 70000000 80000000 90000000 100000000
cost of production 14680796.13 24950528.13 28063402.13 31223705 34436151.13
Less
Administration 1000000 1100000 1210000 1331000 1464100
selling exp 1800000 2100000 2400000 2700000 3000000
EBIT 42519203.87 41849471.87 48326597.87 54745295 61099748.87
Less
interest on loan 4089872.808 3471114.248 2765729.489 1961590.9 1044872.832
short term bank loan 1432757.085 1593366.546 1800259.834 2008564.7 1282025.427
EBT 36996573.98 36784991.08 43760608.55 50775139 58772850.61
30% TAX 9966640.532 10260093.06 12678023.9 15003700 17570249.71
EAT 27029933.44 26524898.01 31082584.64 35771439 41202600.9

EAI=loan amt / PVAFc@14%for 5

years
principle
year loan repayment schedule intrest@14% amt balance
0 8509576.81 0 0 29213377
1 8509576.81 4089872.808 4419704.002 24793673
2 8509576.81 3471114.248 5038462.562 19755211
3 8509576.81 2765729.489 5743847.321 14011363
4 8509576.81 1961590.864 6547985.946 7463377.4
5 8509576.81 1044872.832 7464703.978 -1326.61

TAX CALCULATION
PARTICULARS 1 2 3 4 5
EBT as / company act 36996573.98 36784991.08 43760608.55 50775139.29 58772850.61
add: deep as per co act 1616796.13 1616796.13 1616796.13 1616796.13 1616796.13
less: deep as per co act 5391235 4201477 3117325 2379601 1822147.71
taxable income 33222135.11 34200310.21 42260079.68 50012334.42 58567499.03
tax @ 30% 9966640.532 10260093.06 12678023.9 15003700.33 17570249.71
 PROJECTED BALANCE SHEET OF 5 YEARS
Particulars IP 1 2 3 4 5
Liabilities
Eq share
capital 12520018.8 15923367.88 16433519 16946522.13 17462663 15901371.58
R&S 27029933.44 26524898 31082584.64 35771439 41202600.9
Term loan 29213377.2 4089872.808 3471114.2 2765729.489 1961590.9 1044872.832
w.c loan 1432757.085 1593366.5 1800259.834 2008564.7 1282025.427
s.creditors 5000000 5833333.3 6666666.667 7500000 8333333.333
total 53475931.22 53856231 59261762.76 64704257 67764204.08
Assets
Gross Fas 27120000 27120000 27120000 27120000 27120000 27120000
Less: Acc Dep 1616796.13 3233592.3 4850388.39 6467184.5 8083980.65
Net FA s 25503203.87 23886408 22269611.61 20652815 19036019.35
inventory 8613396.314 9820665.5 11039346.64 12270575 5192077.799
S.Debtors 5000000 5833333.3 6666666.667 7500000 8333333.333
cash Balance 14359331.03 14315824 19286137.84 24280866 35202773.59
total 53475931.22 53856231 59261762.76 64704257 67764204.08

EVALUATION OF THE PROJECT :

Evaluation criteria: Net Present Value Method (NPV)

Required Rate Return = 20%

Initial cash outlay = 51285109.9 for 5 years (equity +short term loan)

Calculation of NPV
YEAR CFAT PVIF@20% PV OFC.F
1 27029933.44 0.833 27029932.61
2 26524898.01 0.694 26524897.32
3 31082584.64 0.579 31082584.06
4 35771438.97 0.482 35771438.48
5 41202600.9 0.402 41202600.5
GROSS PV 161611453
LESS :INVESTMENTS 51285109.9
NPV 110326343.1

The project can be accepted as its NPV is positive i.e., 110326343.1>0.