Cake Box Production - molhr.gov.bt · This report is a detailed feasibility study on the production...

Cake Box

Production

Cake Box Production 2017

1 Compiled By iBEST Consultancy Services

1 Executive Summary

This report is a detailed feasibility study on the production of cake box in Bhutan. The

proposed business of cake packaging box should be produced with the help of cardboard paper.

However, the idea is not only limited to cake packing box. The whole idea of business is

producing standard packing boxes for various products, viz., cake and gift boxes.

The report presents in detail the justification of the project, market analysis of cake boxes,

resources required, and technology used, plant location, implementation of the project, cost

presentation and financial analysis.

(i) Justification of the Project: It's very essential and high time that we produce our

own boxes since there is huge demand for the cake boxes with the increasing number

of bakeries and confectionaries.

(ii) Market Analysis: Till date, there has not been any business firm producing

packaging boxes with proper handles and decorations. Moreover only few local

suppliers of cake boxes while rest of the suppliers are from India.

(iii) Resources required: The main raw material for production of cake boxes is kraft

papers which will be imported from the neighboring country. Apart from this, the unit

requires skilled workers for designing and making the cake boxes. The primary

product for this proposed business should be cake boxes however it should also

produce gift boxes to supplement the business.

(iv) Technology required: Die cutting machine and printing machine is required for this

business.

(v) Plant Location: Most of the towns have either one or maximum two bakeries in their

area however, Thimphu itself has more than 50 bakeries. Therefore, upon considering

the availability of huge number of bakeries and confectionaries in Thimphu, thus the

proposed business should rent one unit of house in the outskirts of Thimphu to avoid

the noise of machineries and disturbance to its neighbor. The proposed business

should have well equipped production unit and office attached as well

(vi) Environmental Aspects: The Kraft papers are usually easily decomposable and bio-

degradable.



(vii) Implementation of the Project: The implementation of the project will take 12

months including pre-project activities.

(viii) Cost Presentation and Financial Analysis:

Fixed Cost Nu. 10,55,665

Working Capital Nu. 1,78,461

Total Investment Nu. 12,24,126

Break Even Point (BEP) 10,65,835 units

Return on Investment 66%

Payback Period 2 years and 3 months

The total projected cost of the proposed business is BTN. 12,34,126 which consist of a startup

cost of BTN.10,55,665 and a working capital of BTN 178, 461.

The business achieves more than 66% ROI from its first year of production alone because the

total investments includes only one month of operational cost. And there is increment in ROI

every year.

The business has good demand and it should only get better over the period of time with increase

in time. One third of country's population resides in Thimphu, thus, production house has huge

responsibility delivering quality product and scope in curving the market demand.

The sources of finance for the proposed business are as follows:

REDCL (Rural Enterprise Development Corporation Limited, former BOIC)- which

mainly supports production and manufacturing units and this proposed business falls

under the production unit. Therefore, the fund needed for the proposed business can be

availed from the support of REDCL.

Others source of finance is mentioned below;

Loden

Self-funding

Banking institutions at the average rate of 12%.



Table of Contents

1 Executive Summary ................................................................................................................. 1

1.1 Business Model Canvassing ............................................................................................. 5

2 Justification of the project ....................................................................................................... 6

2.1 The need of the project ..................................................................................................... 6

2.2 Economical basis .............................................................................................................. 7

2.3 Competition Analysis ....................................................................................................... 7

2.4 Critical Success Factor ..................................................................................................... 7

3 Market Analysis ....................................................................................................................... 8

3.1 Demand vs. Supply .......................................................................................................... 8

3.2 Pricing and Marketing Strategies ..................................................................................... 9

3.3 Competitiveness of the project ....................................................................................... 10

3.4 SWOT Analysis.............................................................................................................. 10

3.5 Special attributes desired by target customers ............................................................... 11

3.6 Assessment of Comparative Advantage ......................................................................... 13

4 Resources ............................................................................................................................... 13

4.1 Sources of raw material .................................................................................................. 13

4.2 Assess the availability of manpower & skills ................................................................ 13

5 The plant ................................................................................................................................ 14

5.1 Choice of the technology................................................................................................ 14

5.2 Source of technology ...................................................................................................... 14

5.3 Rate of consumption of power, fuel, utilities & consumables ....................................... 15

5.4 PRODUCTION PROCESS ............................................................................................ 16

5.5 Man power requirement and organization chart ............................................................ 17

6 Plant Location & Infrastructure with layout .......................................................................... 18

6.1 Raw material Availability .............................................................................................. 18

6.2 Availability of Electricity ............................................................................................... 18

6.3 Communication facilities & Presence of approach road ................................................ 18

7 Project Implementation Schedule .......................................................................................... 18

8 Financial Analysis ................................................................................................................. 19

8.1 Total Project capital Costs.............................................................................................. 19



8.2 Working Capital Costs ................................................................................................... 20

8.3 Cost of Production per unit ............................................................................................ 21

8.4 Human Resource cost ..................................................................................................... 21

8.5 Marketing Cost ............................................................................................................... 21

8.6 Project profit and Loss Statement .................................................................................. 22

8.7 Projected Cash flow statement ....................................................................................... 23

8.8 Projected Balance sheet statement ................................................................................. 24

9 Financial Ratio analysis ......................................................................................................... 25

9.1 Interest on loan ............................................................................................................... 25

9.2 Break Even Point ............................................................................................................ 25

9.3 Return on Investment ..................................................................................................... 25

9.4 Net Present Value ........................................................................................................... 26

9.5 Internal Rate of Return ................................................................................................... 26

10 Final Finding and Recommendation .................................................................................. 27

11 Conclusion ......................................................................................................................... 28



1.1 Business Model Canvassing

Key Partners

Shanghai kuko

packing

machinery

co.,ltd based in

China

Shubam

enterprise based

in Jaigoan India.

James Gui

Wuhan Hasary

Equipment Co.

Limited in

China,

Banks

REDCL

Loden

Key Activities

Production of

cake box and

gift boxes

Supply of

cake boxes

and gift boxes

Marketing

Value

Propositions

Durable

and

reusable

product

Portable

packaging

is provided

Customer

Relationship

In-person

Telephone

Stores

Shops

Customer Segments

Bakeries

Cafes and

restaurants

Key resource

Designers

Machine

Operator

Skilled

workers

Channels

Online and

offline medias

Local TV

Channels

Cost structure

Raw materials

Equipments

Salaries

Marketing

Revenue Streams

Market dependent

Volume dependent

Fixed Price



2 Justification of the project

2.1 The need of the project

Till date, there has not been any business firm producing packaging boxes with proper handles

and decorations. Moreover, only few local suppliers of cake boxes while rest of the suppliers are

from India.

The systematic recycling of paper creates job opportunities, reduces the load on the landfill,

increases material efficiency and reduces the dependency on imports. This would ensure a better

flow of revenues inside Bhutan and serve as a catalyst for economic growth based on available

resources. It's very essential and high time that we produce our own boxes since there is huge

demand for the cake boxes with the increasing number of bakeries and confectionaries.

Similarly, no high technology needs to be adopted to produce the said product.

The need for the professional packaging for cakes and junks foods has reached the optimum

level based on the number of consumers and the food habits of young generations. Good packing

box adds value to the product and most of the time its about packaging more than the main

product.

Global packaging, by type — 2012

Total market size = US$400b Paper and board 34% Glass 11% Others 12% Flexible plastic

10% Beverage cans 6% Rigid plastic 27% Source: EY analysis

The above Pie chart shows that the paper and board are widely used for packaging in the globe

compared to other types like flexible plastics, glass, and rigid plastics.



2.2 Economical basis

The project would help the country in realizing one of the pillars of GNH, i.e., self-reliance since

the company can help the government in reducing the imports from the other country and help in

economic development through its functions and activities. The business should create

employment opportunities with our very own product and curve the rupee crunch.

Annually every single confectionary places the demand of 25,000 units of packing boxes and

with few local producer of the product in the country, it is impossible to meet the said demand

thus, ultimately huge import from the neighboring countries. Likewise, Thimphu itself has

demand of 1,250,000 units annually but few producers could meet only 100,000 units with other

remaining shops opting to purchase the neighboring countries. The production house should

supply to other parts of Bhutan and ease the availability boxes at their door steps.

2.3 Competition Analysis

As per the survey made, there are only handful of businesses that produces and supplies cake

packaging boxes. It is known that most of the suppliers are from India. For now, Druk Menjong

Fabric Unit is the only production house producing cake packing boxes which is located at

Babesa. With only one player in the market there is huge shortage of supply thus enabling the

new entrant in the market. There is no question competition since the single seller is not being

able to meet the demand.

2.4 Critical Success Factor

The critical success factors for the proposed business are as mentioned below:

Constant supply of board paper: For the proposed business to grow and succeed there

must be constant supply of cardboard paper which is essential for making the product.

Location: The location for the proposed business should be in the Serbithang area since

there is huge space required for the setup of business and the house rent are quite lower

compared to the ones in the towns.



3 Market Analysis

3.1 Demand vs. Supply

There are more than 50 numbers of bakeries in Thimphu and yet only few suppliers of cake box

in Thimphu. One of the competitors, Druk Menjong Fabric Unit located at Babesa is said to

have received more demand from the customers about 25,000 units from each and they are able

to produce 100000 units monthly. Thus from here one can clearly understand that there is more

demand than the actual supply. Thimphu has the highest number of population in the country and

the number of pastries shop, bakeries, cafes and hotels has also increased. There is a huge market

demand for the cake boxes and gift boxes in Bhutan. The demand in the country is currently met

by supplies that are imported from India, resulting in a significant outflow of Rupee. Thus the

proposed business should aim in reduction of imports from neighboring country. The firm should

also bridge the gap between demand and supply in the market.

List of Bakeries in Thimphu

SL.No Name of confectionery & Bakeries in Thimphu Location

1 Coffee culture Changlam squre

2 Tshernyen Bakes Changangkha, Lhaki Lam

3 Café Himalaya & Bakery Karsang Building, chorten Lam

4 Om Bakery Near Sabji Bazar

5 Sky Bakery Babesa

6 Dorji Bakery Phendey Lam

7 Busy Bean Café Hotel Pedling Building

8 Jichu Drakey Bakery Above Kelki School

9 Swiss Bakery Chorten Lam

10 Asha Bakery Olakha Lam

11 Lama Bakery Norzin Lam

12 Big Bakery Kawajangsa

13 Art Café Doebum Lam

14 Lhazey Confectionery & Bakery



15 Jigme selden Bakery

16 Rabkar sweet shop

17 Woeseling Bakery Opposite to main traffic

3.2 Pricing and Marketing Strategies

The existing price for the various shapes of cake boxes in the market ranges from Nu.1.5-12.5

depending upon the shapes and sizes. However, the price of the proposed business would be

charged on average of Nu. 5 per box. In addition to it the proposed business should have

handmade gifts which should be priced at Nu. 15. The price of gift wrappers made with plastics

in the market is priced at Nu.10. However, the proposed business should be having handmade

gift boxes with special designs at reasonable prices. The products should be marketed with the

help of print Medias such as Yeewong magazine and Kuensel.

To attract the customer, the proposed business should determine its selling price by following

penetration pricing method. After comparing the price at which the competitor sells its product in

the market, the average price for the proposed business should be for its products at:

Price according to the sizes:

Sizes available Nu. Per piece

1x1 2.5

2x2 3.5

4x4 4

6x6 5.5

8x8 6.5

10x10 7

12x12 8

15x15 8.5

However, the average price has been taken as shown below for the cake box;

SL.No Product Price

1 Cake Boxes Nu.5

2 Gift Boxes Nu.15



3.3 Competitiveness of the project

The market still has very less number of cakes packing box production in Bhutan. On an average,

the existing selling price ranges from BTN to 6 for the 8*8 size. The proposed business provides

product at comparatively low compared to its competitor. However, the existing products are

plain and no handles to carry but the product of the proposed business should have proper

handles to carry and attractive.

Unique selling Proposition: The proposed business provides a wide range of goods varied in

sizes, shapes and most importantly easy to carry with proper handles on it. It also has labeling on

the product bearing brand name and trademarks.

3.4 SWOT Analysis

Strength

Less competition

Low machinery requirement

Availability of Labor locally

Presence of the raw materials supplier

Central and accessible location

Weakness

Slow market penetration

Existence of suppliers

Opportunities

Potential to create employment

opportunities

Possible business expansion to other

regions

Threats

Availability of packaging box in bakeries

already

Entrance of similar businesses

Analysis

The strength of the business lies in having the less competitors, low machinery requirement,

availability of labor locally, presence of the raw materials supplier and central and accessible

location. It has some weaknesses such as existence of suppliers who are mainly the Indian

suppliers, and there is huge volume of imports from India. However, this business will capitalize

the market by introducing boxes of unique and proper handles to carry.

The proposed business has the potential to create employment opportunities and in future the

business aims to expand its business in other regions as well. The only threat to this business is

the existing packaging boxes in the market, and it should be overcome by providing unique

selling proposition.



3.5 Special attributes desired by target customers

Portability

The special attributes that this proposed business provides to its target

customers is comfort that is they can to take it anywhere.

Figure 1: brown Cardboard cake box

Design

The proposed business also offers special design which is appealing to

the customers especially the youngsters.

Figure 2: White cardboard cake box



Other samplers of cake Box

Heart Shapes Cake box Window cake box

Gift- cake box white handles cake box



3.6 Assessment of Comparative Advantage

a) Abundance of Hydroelectric Power

Bhutan is an energy surplus state. 97% of its energy is obtained from hydro power. During

the summer months Bhutan exports quite a bit of electricity to India. Total exports to India

were Nu. 10,633.639 million for 2013 – 14. The cost of electricity is lower than many

power deficient economies.

b) Availability of raw materials

The raw materials needed for this business is card board paper which can be procured from

Indian suppliers.

4 Resources

4.1 Sources of raw material

Inventories and the other miscellaneous items would be purchased from the local retailer of

Phuentsholing, which is located in the border part of the country; while for the raw materials that

is paper for making cake boxes should be purchased from the Indian suppliers and it should be

purchased in rolls.

4.2 Assess the availability of manpower & skills

The proposed business requires skilled labor and machine operator for operating the machine and

others for making the various shapes and designs of the box. Highly skilled personnel are also

required for making the secondary product, the handmade gift boxes.



5 The plant

5.1 Choice of the technology

For the production of the cake boxes, the proposed business has the die cutting machine which

cuts the roll of the cardboard paper into various required shapes. The business also has the

printing machine for printing logos and contact details on the box which serves as the indirect

marketing for the particular bakery or any other firm.

5.2 Source of technology

The machineries on the cake packaging box production would be brought from dealer of Alibaba

as follows:,

Shanghai kuko packing machinery co.,ltd

E-mail: [email protected] Add: No. 658-E, Qiangye Rd, Songjiang District, Shanghai, 201602, China

Tel: +86-(0)21-6974 6020#802 Fax: +86-(0)21-6221 9769

Shubam enterprise located in Jaigaon, Phuntsholing.

The main raw material is the kraft paper which should be

used for making cake packing boxes. It will be purchased

from Indian Suppliers.

Supplier Detail:

Navbharat Industries

Janmesh N. Thaker (Partner)

Flat No. 2, Ground Floor, Mangesh Krupa CHS, Datta Mandir Cross Road Near Datta Mandir,

Dhanukarwadi, Kandivali West,

Mumbai - 400067, Maharashtra, India

mailto:[email protected]

tel:+86%2021%206974%206020

tel:+86%2021%206221%209769



5.3 Rate of consumption of power, fuel, utilities & consumables

Technical Parameters

Valid Size 1200*1200mm/1200*2400mm/1300*2500mm (single laser head)

Laser Tube Type CO2 Sealed Laser Tube

Laser Power 300W (work bidirectional with two laser heads) /400w

Cutting Speed 18m/min

Power Supply 220V 10A

Cutting Width 0.3-3mm(optional)

Max. Thickness 25mm

Color Separation Yes

Cutting Precision ±0.02mm

Image Form PLT, EPS, BMP, DXF

Control System: Movement Control Board/CNC

Transmission Ball screw

Driving System big motor

Air Feed Means Air

Applicable industries

1. Widely used in package and printing industry for different template making.

2. This equipment can be used to cut die board for carton box, label, cartoon, cards etc.

3. Applicable materials include plywood, plastic, organic materials, and other non-metal materials.



5.4 Production process

The production process and the recipes for both the products are same. The process is given

below:

Die cutting machine

Paper Roll

Final cake Box

Figure 1.1 Production process of a cake box

Description: The process for making cake box is simple. Firstly, the cardboard paper roll should

be cut into the required shapes with the help of die cutting machine. Then the next step is, it

should be further made into box shape with the help of some labors and then finally it should be

made into the cake box.



5.5 Man power requirement and organization chart

Proprietor

The project has a good employment potential for skilled workers, which would be employed in

the production unit. Beside the project would generate employment potential in marketing .The

project would thus create opportunities for the employment.

Production Administration and Marketing

Section Accounts department

Machine

Accountant cum

manager Marketing

operator – 1

-1

executive – 1

Skilled workers

– 5



6 Plant Location & Infrastructure with layout

6.1 Raw material Availability

Unlike the other businesses the proposed business does not require much raw materials rather it

only requires the cardboard paper and it could be easily procured within the country.

6.2 Availability of Electricity

Abundance of Hydroelectric Power as Bhutan is an energy surplus state. 97% of its energy is

obtained from hydro power. During the summer months Bhutan exports quite a bit of electricity

to India. Total exports to India were Nu. 10,633.639 million for 2013 – 14. The cost of electricity

is lower than many power deficient economies.

6.3 Communication facilities & Presence of approach road

Since the location of the proposed business is right in the capital city, there is the reach of

various facilities which includes both the communication facilities and road connectivity.

7 Project Implementation Schedule

PROJECT TIMELINE

Activities

2017

1st Month 2nd Month 3rd Month 4th Month 5th

Month

Feasibility study and

development of the

project proposal

If the project is going

to be funded:

Purchase of

Machineries and

Installation

Purchase of

Inventories and Start

of Production



8 Financial Analysis

8.1 Total Project capital Costs

PARTICULARS

Forex.

Domestic

Total Cost

Remarks

Component Component

Production Unit (Security Deposit) 16,000 16,000

Plant & Machinery

Cake box cutting machine 715,000

printer machine 162,000

Installation Cost 30,000

Total 907,000 907,000

Miscellaneous Fixed Assets:

Office Furniture 42,000

Worker's Uniform 1,250

Tools 415

Stationary 6,000

Computer 50,000

Telephone (Fixed line) 5,000

Electrical Fittings 8,000

Total Cost 112,665 112,665

Preliminary Expenses 20,000 20,000

Total Project Startup Cost 1,055,665



Note: Since the proposed business should rent a house, the security deposit is taken into

consideration

The cost breakdown for the cost of construction, labor cost and details of the miscellaneous

fixed assets are attached in the annexure.

8.2 Working Capital Costs

WORKING CAPITAL

Particulars Monthly Yearly

Advertising 500 6,000

Bank Charges - -

Credit Card Fees - -

Delivery Expenses 1,500 18,000

Inventory Purchases 49,746 596,952

Miscellaneous - -

Office Expenses 1,000 12,000

Payroll 50,000 600,000

Payroll Taxes - -

Professional Fees - -

Rent or Lease 8,000 96,000

Subscriptions & Dues - -

Supplies - -

Taxes and Licenses 29,215 350,579

Utilities & Telephone 500 6,000

Others: 38,000 456,000

Loan Principle

Total 178,461 2,141,531



8.3 Cost of Production per unit

Year 1 Year 2 Year 3 Year 4 Year 5

Total Units

374,400

411,840

453,024

498,326

548,159

Cost of Production

1,791,405

1,911,900

2,042,525

2,184,195

2,337,915

Unit Cost of

Production

4.78

4.64

4.51

4.38

4.27

8.4 Human Resource cost

MANPOWER COST

Particulars Monthly Year 1 Year 2 Year 3 Year 4 Year 5

Direct Labor

31,000

372,000

390,600

410,130

430,637

452,168

Salary &

Allowances

19,000

228,000

239,400

251,370

263,939

277,135

Wages

3,000

36,000

37,800

39,690

41,675

43,758

Total

53,000

636,000

667,800

701,190

736,250

773,062

8.5 Marketing Cost

The cost of marketing the products is Nu. 6000 on a yearly basis which should be done

through print Medias like Yeewong magazines and social media.



8.6 Project profit and Loss Statement

INCOME STATETMENT PROJECTION FOR 5 YEARS

YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

Revenue

2,736,000

3,009,600

3,310,560

3,641,616

4,005,778

Cost of Goods Sold

1,004,952

1,055,200

1,107,960

1,163,358

1,221,525

Gross Profit / (Loss)

1,731,048

1,954,400

2,202,600

2,478,258

2,784,252

Expenses

562,450

583,150

604,885

627,707

651,669

Net Operating

Income / (Loss)

1,168,598

1,371,251

1,597,716

1,850,552

2,132,583

30% BIT on NOI

350,579

411,375

479,315

555,166

639,775

Net Income / (Loss)

after BIT

818,019

959,875

1,118,401

1,295,386

1,492,808



8.7 Projected Cash flow statement


Beginning Cash

Balance

-

526,104

997,004

1,606,900

2,373,274

Accts. Rec.

Collections

273,600

300,960

331,056

364,162

400,578

Loan Proceeds

1,234,126

Sales & Receipts

2,462,400

2,708,640

2,979,504

3,277,454

3,605,200

Total Cash

Inflows

3,970,126

3,009,600

3,310,560

3,641,616

4,005,778

Available Cash

Balance

3,970,126

3,535,704

4,307,564

5,248,516

6,379,052

Advertising

6,000

6,300

6,615

6,946

7,293

Delivery

18,000

18,900

19,845

20,837

21,879

Inventory

Purchases

596,952

626,800

658,140

691,047

725,599

Office

12,000

12,600

13,230

13,892

14,586

Payroll

600,000

630,000

661,500

694,575

729,304

Rent or Lease

96,000

100,800

105,840

111,132

116,689

Taxes &

Licenses

350,579

411,375

479,315

555,166

639,775

Utilities &

Telephone

6,000

6,300

6,615

6,946

7,293

Other:

456,000

478,800

502,740

527,877

554,271

Subtotal

2,141,531

2,291,875

2,453,839

2,628,416

2,816,688

Capital

Purchases

1,055,665

Loan Principal

246,825

246,825

246,825

246,825

246,825

Subtotal

1,302,490

246,825

246,825

246,825

246,825

Total Cash

Outflows

3,444,022

2,538,700

2,700,664

2,875,242

3,063,513

Ending Cash

Balance

526,104

997,004

1,606,900

2,373,274

3,315,538



8.8 Projected Balance sheet statement

Projected Balance Sheet For 5 Years


Assets

Cash & Bank

526,104

997,004

1,606,900

2,373,274

3,315,538

Accounts Receivable

273,600

300,960

331,056

364,162

400,578

Prepaid Expenses

66,000

Other Current Assets

Total Current Assets

865,704

1,297,964

1,937,956

2,737,436

3,716,116

Net Fixed Assets

841,215

692,766

544,316

395,866

247,416

Other Assets

Total Assets

1,706,920

1,990,730

2,482,272

3,133,302

3,963,532

Liabilities &

Capital

Accounts Payable

(98,400)

290,379

870,220

1,591,090

2,470,724

Total Current

Liabilities

(98,400)

290,379

870,220

1,591,090

2,470,724

Long-Term Notes

Payable

987,301

740,476

493,650

246,825

(0)

Total Long-Term

Liabilities

987,301

740,476

493,650

246,825

(0)

Total Liabilities

888,901

1,030,855

1,363,870

1,837,915

2,470,724

Net Profit

818,019

959,875

1,118,401

1,295,386

1,492,808

Total Capital

818,019

959,875

1,118,401

1,295,386

1,492,808

Total Liabilities &

Capital

1,706,920

1,990,730

2,482,271

3,133,302

3,963,532



9 Financial Ratio analysis

9.1 Interest on loan


Interest 137,782 113,476 86,088 55,226 20,450

Loan Principle 191,648 215,953 243,342 274,204 308,979

Loan Balance 1,042,478 826,525 583,183 308,979 0

EMI 329,429 329,429 329,429 329,429 329,429

9.2 Break Even Point

BREAK EVEN X BREAK EVEN Y LABEL

919,840 6,721,908 break even unit =919840

UNIT COST = TOTAL SALES/TOTAL UNITS

Total sales Total Units

2,736,000 374,400 7

9.3 Return on Investment

RETURN ON INVESTMENT

Product Year 1 Year 2 Year 3 Year 4 Year 5

Cake box 64% 76% 89% 103% 118%

Gift box 58% 68% 80% 92% 106%

Total ROI 122% 144% 168% 195% 225%



9.4 Net Present Value

Number of Years

0 1 2 3 4 5

Net Cash Flow

(1,234,126

)

402,821

501,772

613,379

738,996

880,110

Accumulated

Cash Flow

(1,234,126

)

(831,305)

(329,533)

283,846

1,022,842

1,902,952

Payback Period 2 Years and 9 Months

9.5 Internal Rate of Return

Net Present Value (NPV) 1,058,826

Internal Rate of Return (IRR) 35%



10 Final Finding and Recommendation

Packaging plays a significant role in bakery products in increasing its durability, preventing

mechanical damages, marketing, nutrition value and displaying food safety related warnings.

People all around the world prefer deserts despite their age gap and keeping that on account our

business aims to provide attractive and durable packaging box for those bakery products. It’s not

only about the durability and eye catching designs but for those businesses that are into selling

bread, cake, or bakery, delicious package designs should definitely get hungry buyers to buy.

Bhutan has limited population strength and our business ought to provide to our valued

customers, the finest packing boxes varied in sizes, shapes, and color.

Paper cake box is healthy, fashionable and also it can keep your product fresh. It’s perfect for

any occasion, whether bakeries, cafes, supermarkets or wedding, etc. It is quick and easy to

assemble. We use eco-friendly natural paper material. Also we can customize logo, color and

size for paper cake box as per their need and preferences.

For a business to run smoothly and boost up its sales, the location of the business plays a vital

role in here. Therefore, the location of our business would be Thimphu only, with aim to attract

the bakery shops and other customers of largely populated area in the country. Gradually our

business aims to expand to other region as well.

The total projected cost of the proposed business is BTN. 1,036,425 which consist of a startup

cost of BTN.893, 725 and a working capital of BTN 142,700. The proposed business should rent

one unit of house near Serbithang area in Thimphu because it should be perfect location since the

area isn’t densely populated and the noise of machinery would not be much of a disturbance to

its neighbor. The proposed business should have its production unit and office attached as well.

The primary product for this proposed business should be cake boxes however it should also

produce gift boxes.

The project has estimated to produce and sell 3200 units in total. It should produce 1500 of cake

boxes, 700 of gift boxes and 1000 of Pop-corn boxes during its first year which has its total

sales worth of BTN 1,800,000. In the fifth year it aims to achieve total sales worth BTN

2,635,380. The estimated profit for this business is 9.27 %



11 Conclusion

The project is feasible since: The Internal Rate of Return of the project is 35%, significantly

higher than the bank return rate of 12%. Hence, the project is deemed financially viable. The

NPV of the project is positive (Nu. 1, 03, 7827) during the first 5 years of operation

considered. This implies that the project generates sufficient funds to cover all its cost,

including loan repayments and interest payments during the period.

The project has huge scope from both the financial and market aspects. There are no

obligations from legal and environment sector. Looking at the current scenario the demand

should only increase over the period of time and business has ample scope where ever we

place the production house. However, Thimphu has be selected as the location for business

since maximum of the bakeries and confectionaries are established in the capital.

Machines and equipment would be the challenging part of the startup phase since it has to be

brought either from India or china. In doing so there is huge lead time gap and logistic

challenges usually faced by the promoter. Likewise, promoter has to build the networks for

collecting the raw material in making hard board paper. Printing add the additional value and

selling point thus for decorative printing the business needs good printing machine.

Current trend shows that the only local production house is not being able to meet the

demand and about 70% of the supply comes across the border. Thimphu has the major share

of the market and due to insufficient supply most of confectionaries import from India. So,

the new entrant would curve the shortage of production and also benefit the society

economically and financially.



12 References CSI Report 2014, Department of Cottage and Small Industry, Minstry of Economic Affairs,

Royal Government of Bhutan (2014)

www.alibaba.com

www.indiamart.com

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