Tender Coconut

Business Module
This is a startup module which mainly focus on Traditional Tender
Coconut business.
Normally in every city the Tender coconut (TC) is sold by normal
retailers at basic price to the consumers. The journey of Tender
Coconut is still traditional till date. It begins with the farmer who sale
the TC to wholesaler/ distributor and then the wholesaler/ distributor
sale it to the retailer and then finally the consumer consumes the
product. It is a perishable product and the transport services are really
fast by default from the beginning.
Here is a plan to carry forward this traditional business into a modern
business. Here the business moto is to penetrate market by suppling
organic TC to shops at daily basis near hospitals, schools, colleges
which can may increase the demand of the product in near future. The
plan will be executed in the cities like Pune, Mumbai, Delhi, Bangalore,
Kolkata, Bhubaneswar, Chennai where people were ready to spend for
organic beverage rather than in cold drinks.
The product will not be modified nor will be added with any chemicals,
it will be 100% organic and genuine. The business will deal directly
with the farmers to avoid the wholesaler/ distributor charges. After
collecting the TC directly from the farmers, it will be transported with
local transportation to the nearest factory. Here as mentioned cities
in the above paragraph would be having a factory in each city where
the product can go through the branding & packaging procedure and
then the product will be distributed through the cold drink’s
distributor in the city locally. Shops nearby hospitals, schools &
colleges will be the main target, here the company will provide the
shopkeepers TC stand which will be fridge shaped and can hold a
minimum stock of 30-50 TC at a time in exchange of small amount of
money. 2nd target is malls & food courts of the targeted cities, in every
mall & food court there would be vending machines of TC which will
definitely boost the sale.
At first 1000 shops will be targeted in those cities near to hospitals,
schools, colleges and 50 malls & food courts. Every shop will be given
target of 300 TC sales per month and each mall & food court would be
installed with 2 vending machines which can easily sale 2000-3000 TC
per month.
Motive of business is customer satisfaction with minimum profit.

Here is a rough estimation of the business plan……

In the whole calculation process, I’ll be considering high cost of
production to reduce the profit.
Let the CP of 1 TC would be Rs. 15-18 (let’s consider it Rs.18 for
minimum profit calculation).
Let the CP of 1 TC = Rs. 18
Let the Transportation charge in each TC = Rs. 2
Let the Factory overhead in each TC = Rs. 3
Let the Packaging charge in each TC = Rs. 2
Let the Advertisement charge in each TC = Rs. 1
________
So Total cost of production of 1 TC = Rs. 26
Each shop and mall & food courts would be given a target of sale 10
and 100 TC per day.
1 shop + 1 mall & food court = 10 TC + 100 TC per day
1000 shops + 50 malls & food courts = 10,000 TC + 5000 TC per day
Every day the number of TC sale would be 15,000.
CP of 1 TC = Rs. 26
CP of 15000 TC = Rs. 3,90,000
Here in the factory the product would be cleaned, would be packed
with attractive cover, a clamp to open, straw, labeling, etc. manually
or automatically (according to the cost).
Now after production cost, again comes transportation (from factory
to shops and malls & food courts)
Let the cost of 1 transportation vehicle for 1000 TC = Rs. 2,500
15000 TC transportation charges = Rs. 37,500 per day.

So now Cost of Production for 15000 TC per day

= Rs. 3,90,000 + Rs. 37,500
= Rs. 4,27,500 per day
Cost of production for 1 TC = Rs. 28.5

Now let us consider the sale price of 1 TC = Rs. 42-45

GST for FMCG perishable products is 12% so now the GST on daily
sales of 1 TC would be = 12% of (42-45) = Rs. 5.04 - 5.4
let us consider Rs. 5.3 GST in each TC.
GST for 15000 TC = Rs. 80000 (Rs. 75600 – 81000)
(let us consider the GST for 15000 TC = Rs. 80000 to minimize the
profit)
GST for 1 TC = Rs. 5.3
The Profit in 1 TC = Sale Price – (Cost of Production + GST)
= Rs. 45 – (28.5 + 5.3)
= Rs. 8 - 11 approx. (Rs. 11.2 accurate)
(So, the Profit in 1 TC if the Selling price is Rs. 42 – 45 = Rs. 8.4 – 11.2)

The Shopkeeper should be rewarded for selling the TC’s.

Let the Profit margin for the shopkeeper in each TC = Rs. 4 – 6
There would be some criteria for the shopkeepers…
- If the shopkeeper sold less than 300 TC per month then the profit
for each TC = Rs. 3.5 per TC
- If the shopkeeper sold more than 300 TC per month then the
profit for each TC = Rs. 4 per TC
- If the shopkeeper sold more than 500 TC per month then the
profit for each TC = Rs. 4.5 per TC
- If the shopkeeper sold more than 700 TC per month then the
profit for each TC = Rs. 5 per TC
- If the shopkeeper sold more than 1000 TC per month then the
profit for each TC = Rs. 5.5 per TC
- If the shopkeeper sold more than 1200 TC per month then the
profit for each TC = Rs. 6 per TC
So the ultimate profit in 1 TC = Rs 2 – 7 approx.
(Rs. 2.4 – 7.2 accurate)
The above calculation is for sale of 10000 TC by shopkeepers per day.

For the next 5000 TC the vending machines would be installed so there
would be no profit sharing with sellers, only the amount of rent,
electricity charges, maintenance charges.

Profit in 1 TC (5000 TC) from vending machines = Rs. 8 approx.

(Rs. 8.2 – 11.2 is the accurate profit per TC when SP per TC is Rs. 42 -
45, let us calculate by minimizing the profit as Rs.8 profit per TC)
So, profit in 5000 TC per day = Rs. 5000 X 8 = Rs. 40,000 per day
Profit in 1,50,000 TC per month = Rs.12,00,000 per month
(in these 50 malls & food courts the minimum number of vending
machines in each would be 2).
Let the electric bill, rent & maintenance charges of 100 vending
machines
= Rs. 6,00,000 per month approx. (earning from 1 mall or food court
is Rs. 30,000 per month, let the rent and electricity be Rs. 10,000 per
month and Rs. 2000 maintenance so... Rs. 12,000 X 50 malls & food
courts = Rs. 6,00,000 accurate)
So, profit in 1,50,000 TC of vending machines per month
= Rs. 12,00,000 – 6,00,000
= Rs. 6,00,000 per month

So, the ultimate profit in 1 TC = Rs 4

(The profit is calculated as minimum but it can range Rs.4 – 6.5 per TC
sold through vending machines)
The above calculation is for Vending machine’s 5000 TC per day.

Expense in 15,000 TC per day = Cost of Production + GST + seller profit

and vending machine charges (considering the minimum profit by
considering Rs. 5 profit share of the shopkeeper per TC it sold)
= 15,000 (28.5 + 5.3) + (5 X 10,000)
= Rs. 5,57,000 Per day
Expense in 4,50,000 TC per month = Rs. 5,57,000 X 30
= Rs. 1,67,10,000 Per month

If the sale price of 1 TC = Rs. 42

(SP is considered least to minimize the profit)
Then, Selling of 15,000 TC per day = Rs. 15,000 X 42
= Rs. 6,30,000 per day
Selling of 4,50,000 TC per month = Rs. 6,30,000 X 30
= Rs. 1,89,00,000 per month

So, the Estimated Profit on 15000 TC per day

= Rs. 6,30,000 – 5,57,000

= Rs. 73,000 per day

Estimated Profit on 4,50,000 TC per month

= Rs. 1,89,00,000 – 1,67,10,000

= Rs. 21,90,000

So, Estimated Ultimate Profit per TC = Rs. 4.8

In the above business module, the calculation of profit is minimized in

all possible ways. So, the Profit can range from Rs. 20,00,000 –
30,00,000+ per month for 4,50,000 TC.

Yes, there is uncertainty in business and there is a chance to face worst

scenario in the market. So, whatever the profit may be... 15% of the
profit would be always preserved for contingent situations. If the
profit of the month is Rs. 20,00,000 then the amount preserved will
be Rs. 3,00,000.
After a rough business estimation lets figure a rough amount of
Factory Overheads in details….

As discussed earlier the TC from the farmer would be directly

transported to the factory where the product would be prepared for
sale in the growing market. So, the factory would be installed just near
to the city according to the price of the place. If got a cheap
accommodation for factory inside or heart of the city then the
factories will be installed inside the city.
Let the factory holds 15 manual machines or automatic machines
(according to the cost).
If 1 coconut takes 1 minute to get ready for sale then 15,000 TC would
take =
1 TC – 1 minute – 1 machine
15,000 TC – 15,000 minutes – 20 machines
So, it would be taking nearly 12 – 14 hours for preparing 15,000 TC
per day.
As discussed earlier…
the Factory overhead in each TC = Rs. 3
the Packaging charge in each TC = Rs. 2
the Advertisement charge in each TC = Rs. 1

So, Factory Overheads for 15,000 TC = Rs. 15,000 X 3

= Rs. 45,000 per day
Factory Overheads budget per month = Rs. 45,000 X 30
= Rs. 13,50,000 per month
Let’s create 2 batches of 7 hours shift for workers per day which will
complete the minimum target production of 15,000 TC per day.
For 20 machines there would be 20 workers in a batch and 40 workers
in 2 batches.
It can be from 6:00 AM – 1:00 PM and then 2:00 PM – 9:00 PM
Let the monthly salary of each worker for 7 hours per day for 30
months = Rs. 15,000
So, monthly salary of 40 workers for working 7 hours per day for a
month = Rs. 15,000 X 40
= Rs. 6,00,000 per month
For these 2 batches of workers 2 superintends as well as 2 more IT
employees were required for the management.
Let the salary of these 4 employees = Rs. 1,00,000
So, total salary of 40 workers and 4 employees
= Rs. 6,00,000 + 1,00,000
= Rs. 7,00,000 per month

Remaining factory overheads = Rs. 13,50,000 – 7,00,000

= Rs. 6,50,000
The remaining factory over heads would be used for other expenses
such as electricity bill, rent, machine maintenance, for the
application/ website maintenance, etc. for day-to-day expenses.
Here the Application/ website is for the shopkeepers who will use it
for placing orders or cancellation for next day and for vending
machines sensors would be installed inside to track how many TC were
remaining at the end of the day which will help to take decision when
to refill the vending machines with sufficient TC.
(The vending machine will be having a capacity of 50 TC at a time).
After a rough Factory Overheads estimation lets figure a rough
amount of Investment in details…
Let the price of 1 machine for worker = Rs. 15,000 – 20,000
(Let’s consider Rs. 20,000 per machine)
So, Price for 20 machines for workers = Rs. 20,000 X 20
= Rs. 4,00,000

Let the price of 1 TC stand for the shopkeeper = Rs. 3000

(which would can have max capacity of holding 40 TC)
Price of 1000 TC stands for shopkeepers = Rs. 3000 X 1000
= Rs. 30,00,000

Let the price of 1 Vending machine = Rs. 50,000

So, price for 100 Vending Machine = Rs. 50,000 X 100
= Rs. 50,00,000

Now for continuing the flow of business, the business should purchase
TC from the farmers at a cheap price to earn more profits.
As discussed earlier, Rs. 20 is the CP of each TC including transport
charges to the factory.
If 15,000 TC is target sales per day then the Amount required for
purchasing 15,000 TC = Rs. 20 X 15,000
= Rs. 3,00,000 per day
Amount required for a month to purchase TC = Rs. 3,00,000 X 30
 = Rs. 90,00,000

So, for Initially starting the project the

business needs an amount of
= Price of machines for packaging + TC stands + Vending Machines
+ Some investments to purchase TC from farmers of a month
= Rs. 4,00,000 + 30,00,000 + 50,00,000 + 90,00,000

= Rs. 1,84,00,000
Let’s consider it Rs. 2,00,00,000 budget
for the startup in one city. As because
while starting a new business there are so many hidden non visible
investments which will be added on after starting the business.

Watch this video for better understanding - Tender Coconut