Business Plan Enterprenuership Final

8/6/2019 Business Plan Enterprenuership Final

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GROUP MEMBERS

PROJECT

Business Plan (Entrepreneurship)

SUBMITTED TO

Miss. Afia Khalid


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EXECUTIVE SUMMARY

The purpose of this project is to make a plant that have the capacity to make the dates able toreach the consumer hygienically healthy, fresh and packed. Pakistan is ranked as fifth all overthe world in the production of dates. Pakistans annual production of dates in around 650,000tones. But most of the part of it is wasted just because there is no as such resources to make itssure to reach it to the consumers inside the country and export it. The proposed project is aboutestablishing a Dates Processing & Packaging plant. The Dates processing project is aiming atvalue addition, to increase the quality and shelf life of Dates. Its processing includes fumigation,

sorting washing, drying, grading and finally packaging. The entire process flow is suggested tobe semi automatic requiring both skilled and unskilled workers. The proposed project has marketedge of supplying hygienically treated Dates to various parts of the country and also has anexport potential. Further value addition to processed Dates could be done through glazed orstuffed with nuts/sweets, chocolate, and especially designed packaging has an additionalmarketing edge. Dates processing unit established in trading hub will also provide services toother traders/exporters of Dates; this is another aspect of this establishment as service provider tothird party.

Our objective is to provide fresh, healthy and hygienically packed dates to our consumers so thatwe can make our consumers more satisfied and healthy. Our mission is to maximum utilizationof dates in order to decrease the wastage rate of dates in the country, as most of the percentage ofdates in the areas of Punjab, sindh, Baluchistan and NWFP have been wasted just because of theabsences of date processing plants. Also our mission is to export the dates all over the world inorder to participate in the economy of the country. As dates are mostly produced in the hot areasand deserts so the countries where the production of dates is naturally not possible and it isexpensive to produce it artificially there is always a need for the dates so we can export the datesto such countries. Traditionally the Dates from Balochistan and other parts of the country aredistributed through a well established network of dry fruits mandies without any treatment,which incumulates huge loss inform of taste, shape and unhygienic conditions. Whereas proposed facilityencourages processed and hygienically packed Dates that will not only enhance the shelf life,minimize losses and will fetch good profits. The main success factors for the facility areavailability of raw material at low prices, little competition as no such facility is present in theDates producing areas, and hygienically treated, packed and high Quality Dates will bring morerevenues from exports and even from the local market.


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COMPANY SUMMARY

(1) COMPANY OWNERSHIP:

The company will be of equity financing. The company

will issue its shares in the market in year 0. The company will be the mixture of both debt

and equity. The equity part will be of 60% and the debt part will be of 40%.

(2) STARTUP PLAN:

The company will be having initial public offering before the

company starts its operations in order to gain the capital. The company will be public limited

company. To start the company operations the organization will gain capital be selling shares

to the investors that means they are making them partners in the company.

(3) COMPANY LOCATIONS AND FACILITIES:

The company will be located in

Baluchistan near Gawadar port that will give us competitive edge on other companies. The

competitive advantages that will be of this location are;

a) Availability of raw material ( As Gawadar is in Baluchistan and Baluchistan is the only

province in Pakistan that have 50% of date production of Pakistan and there is only one

company operating there so raw material will be available very easily and cheaply)

b) Coastal belt and development of Gawadar port deep sea port that will benefit to export

our products of different countries through ships.

c) Acecess to central Asian countries, Gulf states and other neighboring countries.

d) Hardworking labour is there in Balochistan and near Gawadar port.

e) Industrial zone having all the basic infrastructure.

f) Flexible Government policies.


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PRODUCT DESCRIPTION

The product will be in the form of dry dates which will be packed in the plastic bags in order to

prevent it from moisture. After packing the product in to the plastic bags it will be further packed

in the boxes of different designs and sizes (1kg, 2kg, 5kg etc) based on consumers demand. After

packing the product the product into the final shape it will be delivered to the consumer.

COMPETITIVE COMPARISON

The top ten countries producing dates are Egypt, Iran, Saudi Arabia, UAE, Pakistan, Iraq,

Algeria, Sudan, Oman, Libya and others. Outside the country worldwide the competition is much

stronger as compare to inside the country. In Pakistan there are only three date processing plants

working so they form an oligopoly situation which makes competition much easier.

SALES LITRATURE

The total trade in Dates is more than half a billion dollars . This figure is not very big, yet thehistorical pattern shows an increasing trend of trade in Dates. The world wide demands for datesmakes this fruit an attractive option to grow, process and export. Looking at the major buyingcountries in 1999, INDIA was the largest importer with market share of 30%. All the major importersfall in the category of developed countries with exception of India, Pakistan and Bangladesh.Although Pakistan is the fifth largest producer of Dates yet it is among the importers list just due tolack of modern production techniques, well organized post harvest management and processing

facilities. Pakistan appeared on the map of date exporting countries in the beginning of 80s in the lastcentury. Major buyers of Pakistani Dates include Canada, SA, Germany, UK, Denmark, Australia,India, Bangladesh, Nepal, Sri Lanka, South Africa, Dubai, Japan, China, South Korea and NorthKorea etc. Pakistan produces more than 600,000 metric tonnes of Dates and is among the top 5producers of Dates in the world and can supply both dry and fresh Dates. Pakistans total export ofDates has crossed US$ 36 million in 2006-07. The export data shows that Pakistans fresh Datesexport is very small compared to dried Dates. There is a big gap between production and exportfigures. Pakistan on an average export 10 % of Dates production and 90 % crop production is eitherconsumed locally or wasted. This means that export of Dates can be increased through modern Datesprocessing lines, post harvest management and handling practices.

Exports From Pakistan

Year Fresh Dates (TONNES) Dried Dates (TONNES)

2003-2004 4654 728172004-2005 3353 67791

2005-2006 2645 62784

2006-2007 4108 79946

2007-2008 4023 85326


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Major dates importing countries

Name of

countries

2006

(thousand metric tones)

2007

(thousand metric

tones)

2008

(thousand metric

tones)

World 556 655 478

Australia 3.7 5.3 4.1

Bangladesh 13.4 19.2 15.0

Canada 5.7 5.2 4.0

China 4.1 6.5 6.6

Hong Kong 4.5 3.8 5.9

France 22.8 20.8 23.5

Germany 6.1 6.0 6.5

India 244.0 238.2 192.6

Indonesia 9.0 10.0 13.3

Italy 6.2 6.1 6.4

Malaysia 10.0 13.8 2.8

Niger 5.8 9.0 8.6

Pakistan 30.6 23.0 29.5

Russian

Federation

2.8 5.2 8.8

Spain 4.9 5.0 5.3Sri Lanka 7.9 14.5 10.0

Turkey 5.4 3.7 8.5

UAE 100.0 180.0 43.9

UK 10.1 13.5 10.4


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the month of Ramzan Muslims consume dates more. Also dates are consumed by Muslims isSaudi Arabia in the duration of haaj and Umra. As India is the biggest Importer of dates, Indiaannually imports around 200 thousand metric tons of dates and the second biggest importer ofdates is United Arab Emirates which annually imports around 120 Thousand metric tons ofdates. So focus will be on these countries globally.

TARGET MARKET SEGMENT STRATEGY

Dry or soft Dates are used directly or with fillings of almonds, walnuts, candied orange and lemonpeel. They are used in Arab breads, cakes and other dessert items. Recent innovations includechocolate-covered Dates and products like sparkling Dates juice, used in some Islamic countries, forspecial and religious occasions such as Ramadan. The overall market share of Pakistani Dates in theworld is around 18%, which is a huge proportion. Dates grown in Pakistan have a huge national andinternational market demand regardless of the fact that major share of our export fetch low value

because of substandard, irregular processing and lack of value addition. The target market will besegmented according to the demand of the dates. As dates are mostly consumed on the religiousevents so our focus will be on the countries where there are consumers of dates on religiousevents after that further secondary focus will be on the countries where there is a normal need orthe consumers consumes dates in daily routine etc.

(1) MARKET NEEDS:

Mostly we see that dates are consumed on religious events of Muslimsand hindus so dates are mostly consumed on religious events. The consumption of dates otherthan religious events is less as compare to the religious days. So we in future will createartificial needs in consumers like kids and others by producing chocolate covered datestoffees, dates flavored milk and other products.

(2) MARKET TRENDS: Pakistan is the 5th major date producer and fourth largest date exporter of theworld. Major buyers of Pakistani Dates include India, Canada, USA, Germany, UK, Denmark,Australia, Bangladesh, Nepal, Sri Lanka, South Africa, Dubai, Japan, China, South Korea, NorthKorea etc.

(3) MARKET GROWTH:

As dates are mostly consumed by countries which celebrate religiousevents like India, Saudi Arabia, UAE etc. the major importers of dates all over the world areIndia and UAE. But other countries are participating as well like Bangladesh, china, Hongkong, France, Germany and others. So in future the demand of dates will be grown globally

as well as nationally because most of the dates of Pakistan are in the raw form which are notpacked and processed well so the health conscious buyers do not buy it and use the importedones. So if the quality and health conscious consumers get packed and hygienically healthyproduct locally then they will consume it and market will grow.

INDUSTRY ANALYSIS


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There are few countries that play a major role in the production of dates and furtherpurification shows that there are few of them that actually exports their dates worldwide.In Pakistan there are three main date processing plants working which are not enough tocompletely consume the whole dates of Pakistan. So there will be an oligopoly situationnationwide. As for the international competition there are few countries that export their

dates all over the world which are not enough to fulfill the need of dates.

(1) INDUSTRY PARTICIPANTS:

There are only three date processing plants workingin Pakistan. Three processing plants are as follows.

a) Dhakki date processing plant in D.I Khan( NWFP)The production capacity of this plant is 2000 tons of raw dates in 120 working days ina year that means one ton per hour.

b) Khairpur date processing plant in Sindh

The production capacity of this plant is 2000 tons of raw dates in 120 working days.

c) Turbat date processing plant in BalochistanThe production capacity of this plant is 2000 tons of raw dates in 120 working days.

(2) DISTRIBUTION PATTERN:

(3) COMPETITION AND BUYING PATTERN:

The annual production of dates inPakistan is around 496,576 tons per year. There are three date processing plantsworking in Pakistan that have the production capacity of 2000 tons in 120 workinghours. So the total production capacity of these three plants in combine makes only


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6000 tons. The remaining 488,576 tons are either wasted or consumed locally in rawform or exported in raw form which doesnt give much profit. So competition inPakistan is not very strong. On the other hand if we talk about the buying patterns wesee that mostly dates are consumed in countries where Muslims are more. Like India,Saudi Arabia, UAE, Bangladesh, Russia etc. So the dates consumption depends upon

the religious events more.

(4) MAIN COMPETITORS:

Our major competitors in Pakistan are only 3 datesprocessing plants working also the local exporters that are exporting dates in rawform. But their ratio is almost equal to none as compare to the annual production.Internationally our competitors will be the countries that are exporting dates all overthe world. But again there are few countries that produce dates and export it. So theirratio as compare to the production and consumption is very less.

STRATEGY AND IMPLEMENTATION SUMMARY

(1)Strategy Pyramids:

Our main strategy is to emphasize on the production of more hygienic, well packed and healthy

dates to become more competitive. In a sense, we will be pioneering a relatively new market, so

deviating from the strategy is not an option.

Underneath this strategy, our main tactics are utilizing industry experience, advanced technicalknowledge based assets, and unparalleled communication and educational skills.

Our industry experience will aid us in understanding the customer and the customer's customerto bridge the communication gap between the manufacturer and customers. We will stay activein other various trade organizations to build and maintain relationships throughout the industry.We will constantly maintain our presence by targeting customers based on health first andtechnological skills second.

Our communication skills will be extremely important in educating the customer on how toutilize the new type of processed and healthy dates we have built. Customers will also stay incontact with the company so that all kind of feedback will be taken and product will be changedaccording to their will.

(2) Value Proposition:

One of our major value propositions is that DATES processing plant will have already spent themoney, time, and resources to develop a sophisticated behind-the-scenes approach to the


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Dates processing plant will begin by targeting small- to medium-sized businesses in the Pakistan.

The first task is to convince customers of the benefits and needs of processed dates. This will be

accomplished by aggressively pursuing interaction and relationships with business professionals

who would profit from using this service. Once a strong image is established, dates processing

plant will use similar strategies to market its services to larger corporations in PAKISTAN and

other areas of expansion.

(1)Positioning Statement:

For manufacturers and distributors of dates who intend to stay competitive by automating theselling transaction, DATES PROCESSING PLANT offers very specialized, industry specificexpertise. As in PAKISTAN there is not any such kind of selling of dates which are packed sohygienically. Customers will attract to this by their own selves. And this will a good advantage todistributors.

(2)Pricing Strategy:

Prices for using processed dates are comparable to those of other selling dates. A customerwill pay Rs.60 per unit for 1st year with growth rate of 5% per annum. The prices reflect the

quality of the dates, processing and packaging.

PRICE WORKING SHEET OF DATES (Rs./1 KG)

Detail dates/unit (Rupees)

Cost of dates 35

Processing/Labour 6

Transportation

Packing material 17

Misc. Costs 2

FOB Rs. 60

(3)Promotion strategy:


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Following initial promotional activity through advertisements in newspapers, magazines, and

on television and radio, dates processing plant will significantly reduce its promotional

efforts in the hope that word-of-mouth will attract potential clients. Promotional activity will

still be utilized through these media outlets, but only minimally.

(4)Marketing Programs:

Our most important method of gaining recognition throughout the industry will be networkingwith key executives through current relationships. We do not believe that a major advertisingcampaign will bring major inquiries on our services. However, we will run some ads inautomotive trade magazines to at least get our name out in the industry. Our annual budget formagazine advertising will be no more than Rs.30,000 We will plan to run a small ad everyquarter in two automotive journals: one focused on manufacturing and one focused on

distributors.

SALES STRATEGY

As the todays world is focusing more on health and becoming health conscious that is why there

is a great need of hygienic food and PAKISTAN has not any such kind of dates processing plant.

we continue to focus on a growing presence in the community and advertising heavily

throughout the community. we will focus our attention on becoming the recognized provider of

fresh and healthy dates.

(1) Sales forecast:

As dates are consumed by most of the countries that celebrate religious events and it is consumed

by other countries that do not produce dates so if the dates are well packed and well finished then

most of the consumers will buy it. So sales will grow almost 1% per year.

(2) Sales Programs:

We do not want to run any promotions or discounts at this point. There is little point in offering

discounts or free services to a virtually untapped market. As mentioned previously, our discounts

will occur if there is added business or a long-term relationship is established.

STRATEGIC ALLIANCE


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Description Cost/Sq.ft Area In Sq.ft Total Cost (Rs)

Office Building(12*14 per

room)*3

2,000 504 1,008,000

FumigationRooms

1,260 1,300 1,638,000

Warehouse 1,000 1,000 1,000,000

Processing Hall/Building

1,260 1,300 1,638,000

Total 5,284,000

(3)Office Vehicle:

Desription Qty Cost/Unit Total Cost (Rs)

Shahzor 1 1,200,000 1,200,000

Registration 24,000 24,000

Total Cost 1,224,000

PROJECT COST:

Capital Investment Rs. In Actual

Land 2,000,000

Building/infrastructure 5,284,000

Machinery And Equipment 9,345,000

Office Equipment 51,000

Furniture fixture 102,000

Office Vehicle 1,224,000

Pre Operating Cost 136,800Total Capital Cost 18,142,800

Working Capital Rs. In Actual

Raw Material Inventory 1,150,000

Upfront Insurance Payment 528,450

Cash 500,000Total Working Capital 2,178,450


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Total Investment 20,321,250

PROJECT RETURNS:

ProjectIRR 33%Payback 4.38 Years

CAPITAL STRUCTURE OF THE PROJECT:

Initial Finance Amount


Equity 60% 12,193,276

Long term Debt 40% 8,127,974

PROJECTS FINANCIAL STATEMENT

Key Variables

Total Investment InProject

20,321,250

Equity 60% 12,193,275

Debt 40% 8,127,974

Lease 0% -Interest Rate 20%

Total No OfEmployees

17

Year 1 Year 2 Year 3 Year 4 Year 5

FCF ToEquity

(1,599,262) 391,586 3,381,431 4,631,091 7,015,727

FCF Tofirm (283,953) 3,953,477 5,847,358 7,166,222 9,633,903

ProfitMargin OnSales

-3% 6% 11% 16% 20%

Return OnInvestment

-5% 11% 23% 36% 47%


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Equity Project

IRR 38% 33%

MIRR 27% 22%Pay Back Period(years)

4.54 4.38

NPV @16% 29,454,218 @12% 39,870,422

INITIAL INVESTMENT

Capital Investment Rs. In Actuals

Land 2,000,000

Building/Infrastructure 5,284,000

Machinery And Equipment 9,345,000

Furniture And Fixture 102,000

Office Vehicles 1,244,000

Office Equipment 51,000

Pre Operating Cost 136,800

Total Capital Costs 18,142,800

Working Capital Rs. In Actuals

Raw Material Inventory 1,150,000

Upfront Insurance Payment 528,450Cash 500,000

Total Working Capital 2,178,450


Initial Financing Rs. In Actual

Debt 8,127,974

Equity 12,193,275

INCOME STATEMENT

Year 1 Year 2 Year 3 Year 4 Year 5

Revenue 20,700,000 25,657,500 30,401,250 35,837,175 42,056,273


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CGS 15,066,150 17,750,609 20,006,734 22,447,348 25,085,658

Gross Profit 5,633,850 7,906,891 10,394,516 13,389,827 16,970,614

General

Administration

And SellingExpense

AdministrationExpense

1,254,000 1,316,700 1,382,535 1,451,662 1,524,245

UtilitiesExpense

76,800 84,360 92,670 101,805 111,846

Travelling AndCommunicationExpense

228,000 239,400 251,370 263,939 277,135

Office VehiclesExpense

244,800 269,280 296,208 325,829 358,412

Office Expense 45,600 47,880 50,274 52,788 55,427PromotionalExpense

103,500 128,288 152,006 179,186 210,281

InsuranceExpense

528,450 475,605 422,760 369,915 317,070

Professionalfees

20,700 25,658 30,401 35,837 42,056

DepreciationExpense

1,336,400 1,336,400 1,336,400 1,336,400 1,336,400

AmortizationExpense

27,360 27,360 27,360 27,360 27,360

MiscellaneousExpense

621,000 769,725 912,038 1,075,115 1,261,688

Subtotal 4,486,610 4,720,655 4,954,022 5,219,835 5,521,921

Operating

Income

1,147,240 3,186,236 5,440,494 8,169,992 11,448,693

Other Income 5,000 3,916 20,251 39,505 53,666

EBIT 1,152,240 3,190,152 5,460,745 8,209,497 11,502,360

InterestExpense

1,695,302 1,476,855 1,145,012 830,448 452,972

EBT (543,062) 1,713,297 4,315,733 7,379,049 11,049,388

Tax - 257,452 949,461 1,623,391 2,430,865

Net profit/Loss

After Tax

(543,062) 1,455,845 3,366,272 5,755,658 8,618,523

BalanceBroughtForward

- (543,062) 912,783 2,139,528 3,947,593

Total ProfitAvailable For

(543,062) 912,783 4,279,055 7,895,186 12,566,116


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Appropriation

OwnersWithdrawls

- - 2,139,528 3,947,593 6,283,058

Balance CarriedForward

(543,062) 912,783 2,139,528 3,947,593 6,283,058

BALANCE SHEET

ASSETS:

(1) Current Assets

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

Cash and Bank 500,000 - 391,586 1,633,490 2,316,988 3,049,547A/R - 1,701,370 1,905,103 2,303,784 2,722,127 3,201,101

Finished goodsInventory

- 655,050 741,987 836,102 937,911 1,047,965

Equipment spareparts inventory

- - - - - -

Raw materialInventory

1,150,000 1,428,656 1,696,644 2,004,560 2,357,773 2,762,334

Prepaid Insurance 528,450 475,605 422,760 369,915 317,070 264,225

Total Current Asset 2,178,450 4,260,681 5,158,080 7,147,851 8,651,869 10,325,281


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(2) Fixed Asset

Land 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000

Building/Infrastructure 5,284,000 5,019,800 4,755,600 4,491,400 4,227,200 3,963,000

Machinery And

Equipment

9,345,000 8,410,500 7,476,000 6,541,500 5,607,000 4,672,500

Furniture AndFixtures

102,000 91,800 81,600 71,400 61,200 51,000

Office Vehicles 1,224,000 1,101,600 979,200 856,800 734,400 612,000

Office Equipment 51,000 45,900 40,800 35,700 30,600 25,500

Total Fixed Assets 18,006,00

0

16,669,60

0

15,333,20

0

13,996,80

0

12,660,40

0

1,1324,000

(3) Intangible Assets:

Pre operation cost 136,800 109,440 82,080 54,720 27,360 -

Total intangibleassets

136,800 109,440 82,080 54,720 27,360 -

Total Assets 20,321,25

0

21,039,72

1

20,573,36

0

21,199,37

1

21,339,62

9

21,649,281

(4) Liabilities And Shareholders Equity:

Current liabilities

A/P - 1,254,506 1,484,791 1,686,378 1,905,953 2,144,998

Short term Debt - 1,099,262 - - - -

Total Current

Liabilities

- 2,353,768 1,484,791 1,686,378 1,905,953 2,144,998


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(5) Other Liabilities:

Deferred Tax - - 257,452 1,027,950 1,027,950 1,027,950

Long Term Debt 8,127,974 7,035,740 5,725,058 4,152,240 2,264,858 -

Total Long-term

Liabilities

8,127,974 7,035,740 5,982,510 5,180,190 3,292,808 1,027,950

(6) Shareholders Equity:

Paid Up Capital 12,193,275

12,193,275

12,193,275

12,193,275

12,193,275

12,193,275

Retained Earnings - (543,062) 912,783 2,139,528 3,947,593 6,283,058

Total Equity 12,193,275

11,650,214

13,106,059

14,332,803

16,140,868

18,476,333

Total Capital And

Liabilities

20,321,25

0

21,039,72

1

20,573,36

0

21,199,37

1

21,339,62

9

21,649,281


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CASH FLOW STATEMENT

(1)Operating activities

Net profit - (543,062) 1,455,845

3,366,272

5,755,658

8,618,523

Add: DepreciationExpense

- 1,336,400 1,336,400

1,336,400

1,336,400

1,336,400

Amortization Expense - 27,360 27,360 27,360 27,360 27,360

Deferred Income tax - - 257,452 770,498 - -

A/R - (1,701,370)

(203,733) (398,682) (418,343) (478,974)

Finished goodsinventory

- (655,050) (86,9370 (94,115) (101,809) (110,053)

Raw material inventory (1,150,000)

(278,656) (267,988) (307,916) (353,213) (404,561)

Advance insurancepremium

(528,450) 52,845 52,845 52,845 52,845 52,845

A/P - 1,254,506 230,285 201,587 219,574 239,045

Other liabilities - - - - - -

Cash provided byoperations

(1,678,450)

(507,027) 2,801,530

4,954,249

6,518,473

9,280,585

(2) Financing Activities:

Change in long-termdebt

8,127,974 (1,092,235)

(1,310,6820

(1,572,818)

(1,887,382)

(2,264,858)

Change in short-term debt

- 1,099,262 (1,099,262) - - -

Issuance of shares 12,193,275

- - - - -

Purchase of treasuryshares

- - - - - -

Financing activities 20,321,250

7,027 (2,409,943) (1,572,818)

(1,887,382)

(2,264,858)


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(3) Investing Activities:

Capital expenditure (18,142,800)

- - - - -

Investing activities (18,142,800)

- - - - -

Net cash 500,000 (500,000)

391,586

3,381,431

4,631,091

7,015,727

Cash balance broughtforward - 500,000 - 391,586 1,633,490 2,346,988

Cash available forappropriation

500,000 - 391,586

3,773,018

6,264,581

9,332,715

Owners withdrawals - - - 2,139,528

3,947,593

6,283,058

Cash carried forward 500,000 - 391,586

1,633,490

2,316,988

3,049,657

KEY ASSUMPTIONS

Cost of goods sold per unit of productionCGS 1 (Raw material/ unit) Rs.35

CGS 2 (Packing cost and fumigationoverhead per unit)

Rs.5

CGS Growth rate per annum 5%

Production related assumptions

Production capacity per year 600,000kg

Sale price per unit in year one Rs.60

Sale price growth rate per annum 10%

Production capacity utilization in 1st year 60%

Production capacity utilization growthrate

5%

Maximum production capacity utilization 95%

Economic related assumptions


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Inflation rate 10%

Wage growth rate 10%

Electricity growth rate 10%

Water price growth rate 10%

Financing assumptionsInterest rate on long-term debt 20%

Project debt component 40%

Project equity component 60%

Tax rate(15% sales tax+7% income tax) 22%

Required rate of return on equity 16%

WACC 12%

Owners withdrawals 50% of available cash

Expense assumptions

Administrative benefit expense 10% of administrative expense

Travelling expense 15% of administrative expenseCommunication expense 5% of administrative expense

Office vehicle running expense 20% of vehicle cost

Office expense 4% of administrative expense

Promotional expense 0.5% of revenue

Machinery and equipment insurance rate 5%

Office vehicle insurance rate 5%

Professional fee(legal audit etc) 0.1% of revenue

Bad debt expense 3% of revenue

Pre operational expense Rs.136,800

Depreciation Rates

Building and infrastructure 5%

Furniture and fixtures 10%

Machinery 10%

Office equipment 10%

Office vehicle 10%

Cash flow assumption

Accounts receivable cycle in days 30

Accounts payable cycle in days 30

Initial cash on hand Rs. 500,000

EXIT STRATEGY


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If the owner of the company wants to sell the company then the owner can sell thecompany to some of its relative or family member first. If he do not want to sell thecompany to some of its family members then he can ask the shareholders that ifanyone of them wants to buy the company or he can transfer its shares or the

ownership to someone who thinks that this project is beneficial for him in future.There are such companies too in the market who wants to buy some specific firmbecause they think that in future it will give benefit to them like the multinationalcompanies.

Date post:	07-Apr-2018
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Business Plan Enterprenuership Final

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