OFFER DOCUMENT - Bhutan crowdfunding

Offer Document of Bhutan Alternatives

OFFER DOCUMENT

Subscription Opening Date Subscription Closing Date Allotment Date

17th July 2019 17 October 2019 19th October 2019

Promoter: Leki Dawa

Firm name: Bhutan Alternatives

ISSUE OF NU 8,340,000 at 30% EQUITY SHARES ISSUED AT A FACE VALUE OF NU

10 PER SHARE AGGREGATATING TO 834,000 SHARES


Contents 1. GENERAL INFORMATION ...................................................................................................... 3

2. VISION ........................................................................................................................................... 3

3. MISSION ........................................................................................................................................ 3

4. HISTORY OF THE BUSINESS .................................................................................................. 3

5. BUSINESS PROCESS .................................................................................................................. 4

5.1. Technology & Process .............................................................................................................. 4

5.2. Sales Process .............................................................................................................................. 6

5.3. Customer Segments .................................................................................................................. 6

5.4. Target Market ............................................................................................................................ 7

5.5. Marketing Strategy ................................................................................................................... 7

6. INVESTMENT OBJECTIVES ..................................................................................................... 8

7. RISK FACTORS ............................................................................................................................ 9

8. CAPITAL STRUCTURE .............................................................................................................. 9

9. MANAGEMENT ........................................................................................................................... 9

10. EXISTING SHAREHOLDING PATTERN ........................................................................ 10

11. EMPLOYEE DETAILS............................................................................................................ 10

12. FUTURES PROSPECTS ......................................................................................................... 10

13. LITIGATION ........................................................................................................................... 10

14. FINANCIAL INFORMATION ............................................................................................. 11

DECLARATION...................................................................................................................................... 13


1. GENERAL INFORMATION

Name of the Company: Bhutan Alternatives

License Number: 1032865

TPN No: BAB16719

Address: Post Box No. 1868, LM2 Building, Thori Lam, Lower Motithang

Office: 02-339761 Mobile Number: 17128455

Email: [email protected]

2. VISION

To be a reliable customer-oriented business driven by a strong commitment to uphold

the social and environmental causes in the community; and

Sustainable utilization of e-Waste resources available in the country with

eco-friendly technology.

3. MISSION

Strive to inculcate a sense of positivity among the consumers on the use of eco-friendly

manufactured products through quality assurance and rigorous awareness on the

need to recycle and reuse e-waste.

4. HISTORY OF THE BUSINESS

According to the State of Environment Report 2016, Waste Management is a major

emerging environmental issue. Bhutan Alternatives is a ‘Social Entrepreneurship’

with a motto of attaining “Zero-Waste” through maximizing resource recovery for

creating sustainable waste management system and protects the unique ecology.

Bhutan Alternatives (BA) is a small yet vibrant e-Waste management project which

was initiated with a goal for sustainable utilization of toner cartridge in the country.

This waste management scheme helps to prevent environmental degradation caused

by the disposal of such wastes. Broadly, BA is governed by 3Es that stands for

Economic Sustainability, Environmental Friendly, and Generation of Employment.

The company was established with broad objectives considering the importance of

environmental conservation and to create awareness among people about sustainable

mailto:[email protected]


utilization of e-Waste in the country. BA is a one-stop firm to purchase eco-friendly,

high quality and affordable electronic gadgets. It also serves as an alternative means

to reduce landfills and dumping in the country.

BA Toner and Cartridges are ‘high-quality product (s)’ manufactured with the help

of an advanced cutting-edge technology and sophisticated equipment. The key and

primarily used technologies/equipment are Toner and Cartridge Cleaning Machine,

Toner Filling Machine and Quality Control Machine. Every BA Toner and Cartridges

bears the ‘Trademark’ which is officially approved and ratified by the Department of

Intellectual Property, Ministry of Economic Affairs.

Majority of By-products of the Toner and Cartridges have long life spans and those

damaged are effectively refurbished and consumed in the Final Product.

5. BUSINESS PROCESS

5.1. Technology & Process

a. The Cartridge is brought to the factory for visual

inspection and testing of components;

b. Defective components are replaced by new ones with

characteristics similar to OEM (Original Equipment

Manufacturer) specifications;

c. Cartridges are reassembled;

d. Specific toner powder is filled;

e. The cartridge is tested by the Production Department

for print quality and proper functioning;

f. The Cartridge is dispatched to the Quality Control for

approval and further testing; and,

g. Once Quality Control passes, cartridge goes for final

packaging.

The production process of BA printer cartridges is simple and effective by applying

scientific technology and manpower expertise and knowledge.

Most of the raw materials needed for production are sourced from the country through a

collection of used printer cartridges from offices, DNP auction yard, and others. For

instance, OPC drum is recoated here at the firm station and memory chip resetting too is

done here. The Firm does not import raw materials unless necessary.


Some of the important imported raw materials and equipment are as follow:

Toner Powder for all brands;

Toner Cleaning Machine;

Toner Powder filling machine;

The Firm designed cartoon;

Quality Testing Printers;

Sealing Machine;

Air Bags and Packing Plastics; and,

Chip resetting machine.

At the initial stage, we distributed more than 500 numbers of printer cartridges as

promotional products to offices and business entities in the country.

Secondly, a short marketing video was aired in BBS for a week.

Lastly, in order to take our products to the customer, we participated in government,

corporate and private office tenders and currently, we have a good market share and

customer portfolio as of March 2018.


5.2. Sales Process

We provide advantageous services to the customers. This includes our company

offering free printer maintenance services to core customers twice a year. We also

provide free door-to-door delivery services to the customers. Even though a

thorough post-testing is conducted, some products are found to have a defect. If

such a problem occurs, our company provides a guaranteed replacement for all

brands of cartridges. If it meets the conditions and policies of our company, we

provide full maintenance or replacement to any damages to the printer caused by

our product. The customers can also return the products if the product is not up

to their satisfaction, within our first 30 days Return Policy from the date of

purchase. The products are fully refundable. Our company also provides easy

and hassle-free modes of payment for the utmost convenience for the customers.

5.3. Customer Segments

Undoubtedly, one of the most comfortable strategies for Bhutan Alternatives,

introducing new products into existing market mirrors the market development

strategy. Even if it appears to be an easier strategy to implement, it doesn’t come

without challenges. Developing new products may require new skills and

continual tweaking until success is achieved. However, we find it safer since we

don’t have any competitors for the Project in the locality up till now.

The principal advantage of our company is that there is no existence of a similar

type of business in the country. Thus, making complete use of our advantage, we

provide quality products with excellent services which help us gain huge market

popularity and help the company remain formidable in the face of an uprising of

competitors in the future.

Notwithstanding, the major threat in future would be the establishment of an

identical venture with big financial advantages.

As well, an Original Equipment Manufacturer’s vision in introducing various

product services with environmental-friendly technology and their strict

enforcement of Intellectual Property Rights are future experiments. Conversely,

the commitment and patience it takes to stick with a goal and then see it all the


way to the end are not trivial. It takes courage, faith, and a little goal setting know-

how to keep the good feelings coming.

One of the most important factors to achieve these goals is a strong

partnership with government bodies, stakeholders and involvement of

communities through the formation of youth self-help groups after the

establishment of Regional Offices at East, Central and Southern parts of the

country;

Customer care and service delivery is another factor which will enable to

achieve the goals; and,

A dedicated, sincere, hardworking and well trained/organized manpower.

In a nutshell, the future identity, intrinsic value, utilitarian value, personal

control, and social support, etc. are the fuel that keeps the business moving

forward.

5.4. Target Market

Since the products and services of our company have reached out to customers

all over the nation, we will further work on gaining more customers. In order to

do that, we will reach out to every single government offices, NGOs,

Organizations, Institutions, and Schools that are in the country. With increasing

the services of our company by providing remanufacturing of not only cartridges

but also refurbishing of laptops, computers, washing machines and so on, our

target customer base will increase ranging from offices and organizations to

individual levels.

5.5. Marketing Strategy

The marketing strategy is the core of the main strategy:

Emphasize high value and high-quality product services;

Build a relationship-oriented business;

Focus on municipalities, government, corporate, private offices and

business entities; and

Distribution of promotional products to all potential customers.

Our promotion and marketing strategy will be two-fold; the first phase was

focused on an initial operation of six months, and the second phase of promotion

deals with the long-term goals of the firm.


First Phase of Promotion

To assist with rapid market entry to ensure an early and sustained profit;

Publicity: Broadcast in Newspapers and national television about Bhutan

Alternatives as an attempt to lend great credibility and be an excellent way

to let all target markets know about the news and innovative business;

Advertising: Utilized direct mail and face to face promotional strategies to

raise awareness about our product services in the target markets;

Internet: Have a heavy content website geared towards educating potential

customers about the benefits of our product services. All business

literature, cards, and brochures will include on our website with email and

contact information; and,

Alliance: Intended to form an alliance with parts and accessories

manufacturer for easy supply and with other business entities dealing with

toner cartridge supply to supply and distribute our products.

Second Phase of Promotion

To ensure long-term growth and help propel us towards achieving our

goals;

Publicity: As the business grows and expands we will continue to seek

publicity through news media to tout our successes;

Advertising: We will continue to make face to face contact with customers;

Internet: We will continue to have a comprehensive website. The website

will be updated to provide responses to Frequently Asked Questions and

evaluate the viability of having target clients advertise on our website and

conversely, we will evaluate the viability of advertising on our target

clients websites ( if applicable); and,

Alliances: We will continue to seek mutually beneficial and complementary

alliances with manufacturers and business entities wherever applicable.

6. INVESTMENT OBJECTIVES

Particular Amount (In Nu)

1. Procurement of Addition machinery Equipment 4.3 Million

2. Procurement of Raw Materials 2.3 Million

3. Marketing & Distribution 0.81 Million

4. Capacity building 0.93 Million


7. RISK FACTORS

Some of the important risk factor determining environment and culture of the firm

are:-

Identical competitors in future is a risk for the firm however it is assumed

that with wide market share, customer portfolio, financial stability over the

years would provide firm an extra edge over the competitors; and,

Lack of financial support is a major risk to the firm as of now for its growth

and product development.

It is assumed both political instability and import ban can never happen in future

because of good governance under benevolent leadership of His Majesty the King and

ever friendship between the India and Bhutan. Otherwise, such risk would jeopardize

the primary functioning of the firm.

8. CAPITAL STRUCTURE

Particular Total (In Nu)

Current paid-up capital 5,951,184

Additional issue size to the investors 8,340,000

Projected Capital 14,291,184

Total market cap @ Nu.10 per share 22,631,184

Offered equity to Investors @face value Nu 10 834,000

9. MANAGEMENT

I am Leki Dawa from Samcholing village under Goshing gewog in Zhemgang

dzongkhag. I completed my higher secondary school from Damphu High school year

1997. I have diploma in civil engineering from Kanyaur Polytechnic, Kolkata, India.

Since then I worked with NGO for last seven years and worked three years in private

construction company as project engineer Further, I have also undergone various

training in leadership Management in Thailand, Waste management and bio-gas

course in Nepal and Eco-friendly building construction India. And undergone

training for refurbishing printer cartridge in china about 3 month. Later August, 2015,


I started the first ever E- waste recycling business in Bhutan known as Bhutan

Alternatives.

10. SHAREHOLDING PATTERN

Sl.No. Name of Company/Associates Shareholding No of shares

1 Bhutan Alternatives 70% 1,946,000

2 Crowd funding 30% 834,000

11. EMPLOYEE DETAILS

12. FUTURES PROSPECTS

a. Printer on Rent;

b. Product Export; and,

c. Online (International Platform)

13. LITIGATION

The business has been in the market for more than three years. Till date the business

has no litigation and is running successfully in the market.


14. FINANCIAL INFORMATION

14.1. Profit and Loss Account Projection for 5 years in Nu. (Million)

14.2. Cash Flow Projection for 5 years

Actual

2018 1st Year 2nd Year 3rd Year 4th Year 5th Year

Sales Revenue 11,425,527 20,770,620 23,886,213 27,469,145 32,962,974 39,555,569

Less:

Direct Expenses 4,869,140 9,522,000 9,998,100 10,498,005 11,022,905 11,574,051

Administrative expenses 3,499,749 3,235,000 3,332,050 3,432,012 3,534,972 3,641,021

Salary and Allowances 3,726,000 3,912,300 4,107,915 4,313,311 4,528,976

Depreciation 273,470 918,470 918,470 918,470 918,470 918,470

Total 8,642,359 17,401,470 18,160,920 18,956,402 19,789,658 20,662,518

Gross Profir/(Loss) 2,783,168 3,369,150 5,725,293 8,512,743 13,173,316 18,893,051

30% BIT 834,950 1,010,745 1,717,588 2,553,823 3,951,995 5,667,915

Net Profit 1,948,951 2,358,405 4,007,705 5,958,920 9,221,321 13,225,136

Forecast for next 5 years


14.3. Balance Sheet Projection for 5 years

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

Net Cash flow from Operating Activities

Net Profit before Tax and Interest 3,369,149.77 5,725,292.77 8,512,743.22 13,173,315.87 18,893,050.70

Depreciation Charges 918,470.23 918,470.23 918,470.23 918,470.23 918,470.23

4,287,620.00 6,643,763.00 9,431,213.45 14,091,786.10 19,811,520.93

(Increase)/Decrease in Inventories -11,390.72 -11,504.62 -11,619.67 -11,735.87 -11,853.23

(Increase)/Decrease in Debtors -1,420,819.80 -467,338.95 -537,439.79 -824,074.35 -988,889.22

(Increase)/Decrease in other Current Assets -253,286.48 -150,445.01 -256,738.25 -415,257.93 -483,040.45

(Increase)/Decrease in TDS & Advance Tax.

(Increase)/Decrease in Loans and Advances

Increase/(Decrease) in Liabilities & Provisions 9,834.38 10,129.41 10,433.29 10,746.29 11,068.68

Net Cash Inflow/Outflow (-) from Operating Activities 2,611,957.38 6,024,603.83 8,635,849.03 12,851,464.24 18,338,806.71

Return on Investment/ Servicing of Finance

Interest Paid

Taxation -834,950.53 -1,010,744.93 -1,717,587.83 -2,553,822.97 -3,951,994.76

Capital Expenditure:

Fixed Assets Purchased -4,300,000.00

Fixed Assets Sold

Net Cash Outflow before Financing -2,522,993 5,013,859 6,918,261 10,297,641 14,386,812

Financing:

Increase in Share Capital 8,340,000.00

(Decrease)/Increase in Bank Loans -200,000.00 -200,000.00 -200,000.00 -200,000.00 -200,000.00

(Decrease)/Increase in Other Loans

Net Increase in Cash/ Bank Balances 5,617,006.85 4,813,858.90 6,718,261.20 10,097,641.27 14,186,811.95

Opening Cash & Bank 100,793.30 5,717,800.15 10,531,659.05 17,249,920.25 27,347,561.52

Net Increase in Cash/ Bank Balances 5,617,006.85 4,813,858.90 6,718,261.20 10,097,641.27 14,186,811.95

Closing Cash & Bank 5,717,800.15 10,531,659.05 17,249,920.25 27,347,561.52 41,534,373.47


DECLARATION

I/we, hereby declare and confirm that no information / material likely to have a bearing

on the decision of the investors in respect of the equity shares issued in terms of the offer

document has been suppressed/ withheld and / or incorporated in the manner that would

amount to misstatement / misrepresentation.

Particulars 2018 1st Year 2nd Year 3rd Year 4th Year 5th Year

Current Asset

Cash and Cash equivalent 100,793 5,717,800 10,531,659 17,249,920 27,347,562 41,534,373

Inventory 1,139,072 1,150,432 1,161,967 1,173,587 1,185,323 1,197,176

Sundry Debtors 1,694,773 3,115,593 3,582,932 4,120,372 4,944,446 5,933,335

Security Deposit 1,678,727 1,762,663 1,850,796 2,035,876 2,341,257 2,692,446

Other Current Asset 246,062 415,412 477,724 549,383 659,259 791,111

Non Curretn Asset

Property, Plant and Equipment 3,270,631 6,652,161 5,733,691 4,815,220 3,896,750 2,978,280

Total Assets 8,130,058 18,814,062 23,338,769 29,944,358 40,374,596 55,126,721

Current Liability

Sundry Creditors 327,813 337,647 347,776 358,210 368,956 380,025

Business income tax liability 834,951 1,010,745 1,717,588 2,553,823 3,951,995 5,667,915

other current liability 16,111 16,111 16,111 16,111 16,111 16,111

Non Current Liability

Loan 1,000,000 800,000 600,000 400,000 200,000 -

Equity

Owners Contribution 3,500,000 5,951,184 5,951,184 5,951,184 5,951,184 5,951,184

Investor 8,340,000 8,340,000 8,340,000 8,340,000 8,340,000

Retained Earnings 2,451,184 2,358,405 6,366,110 12,325,030 21,546,351 34,771,487

Total Liabilities and Earnings 8,130,059 18,814,092 23,338,769 29,944,358 40,374,597 55,126,722

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