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BUSINESS PLAN Report
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Entrepreneurship
Project
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INSTITUTE:
Acknowledgement
Up &
Above Every thing All Gratitude To Allah Almighty , The Beneficial, The
Merciful.
We
Dedicate our little effort to Almighty Allah , who give
us courage & Potential .
We Would like to thanks our parents & respected Sir Yawar
Abbas , Dr.
Khalil-ur-Rehman &Dr. Baber Sher Ali.
For Their Inspirational Guidance Interest
& Couraging Attitude during our Research.
EXECUTIVE SUMMARY
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Company – Samana Pvt. Limited
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SAMANA,
is a unique herbal product company in Pakistan
Gemmo + Homoeo. And our product is
available on Pakistan Tibbi Dawakhana in Faisalabad
In Management SAMANA Herbal Company is found by Dr.
Khalil-ur-rehman and Dr. Babar Sher. They have a lot of research and experience
on herbs.
Mr. Adnan Younas, Chief Executive Officer,
is an excellent addition to SAMANA based on his leadership, managerial and
technical skills, which will help catapult SAMANA to unlimited heights in
sales, by maintaining a stable company and work environment.
All the funds are invested in
this business is equity based. As it is a small size business so no funds were
required from outside. In the start of business our total investment was Rs. 700,000.
In Financial Projections we expect a strong
rate of growth at the start of our operations. Below are the expected
financials over the next three years. The Founder expects that the business
will expand during the first three years of operation. Mr. Adnan Younas intends
to implement marketing campaigns that will effectively target wealthy
individuals, celebrities and businesses in Punjab ,
within the target market.
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2011
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2012
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2013
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Projected Sales
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63504
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66679.2
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70013.2
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Desired Ending Inventory
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27216
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28576.8
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30005.6
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Available for
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90720
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95256
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100019
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Less:
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Beginning Inventory
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25920
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27216
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28576.8
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Budgeted Production Required
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64800
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68040
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71442
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Assumptions:
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1. From 70% sales in 2010, Sales are
expected to increase by 5 % every next year.
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We
have calculated Payback
period
for this project will return initial
investment in 3 years. Then
calculating the Net Present Value i.e:
Rs.11, 209.92 its positive
figure shows that it should be accepted for future sponsorship.
In Target Market we are targeting
all the age and income groups who want remedy from cough and digestive disease
without any side effects.
Then Risk Assessment for company as well as for every department is there along with their Contingency
Plan.
Harvesting Strategy shows company
concern towards its liquidation.
If
the business is not going to be successful, Mr. Adnan Younas may seek to sell
the business to a third party. Most likely, the Company will hire a qualified
business broker to sell the business on behalf of SAMANA.
Contents
Executive summary......................................................3
Introduction...................................................................6
Environmental
& Industrial Analysis..........................10.
Description
of Venture..............................................................18
Production
Plan............................................................................22
Operational
Plan...................................................................................25
Marketing
Plan..............................................................................................28
Objectives
Positioning
Tactical Plans
Marketing Budget
.
Organizational
Plan..............................................................................................35
Financial Plan ………………………....................................………....................44
Profit
& Loss Accounts
Balance
Sheet
Cash Flow
Statements
Forecasting
Budgets
Capital
Budgeting
Net Present Value
Payback Period
Risk
Assessment & their Contingency Plans…....…..........................................59
Company Specific Risk
Departmental Risk
Harvesting
Strategy.....................................................................................…..63
Transfer
of assets
Continuity
of Business Strategy
Successors
Appendices…………...............................……………………………........……….65
Questionnaire
CV’s of the Management
References……………………………………………..................................……….76
Introduction
Name & addresses of Business:
§ Business name:
SAMANA
Herbal Company
§ Products
name:
Herbix (cough tablets)
Skittlez (Digestive tablets)
· Address;
Bio chemistry lab. University of Agriculture Faisalabad
PRINCIPALS OF THE BUSINESS:
TEAM
DESCRIPTION:
There are number of people who work
for “SAMANA” include key personnel’s & other supporting staff members.
NATURE OF BUSINESS:
Our Product:
The products we are dealing in, are
purely natural. ‘Herbix’ and ‘Skitllez’ these products are approved
by various scientific test and trials
Purpose:
These are quality chewable herbal products offering
complete health care satisfaction for varying individuals.
Providing Solutions:
Our
product provides solution for cough, bad cold and for digestive purpose.
Suppliers/Raw
material:
These are
made from herbs which are grown domestically.
Names and address:
The
supplier is located in Chiniot Bazar & some herbals are bought from
northern areas if needed.
Process Plant:
Bio
chemistry Laboratories, UAF, Faisalabad
Finished Product:
Afterwards
these are processed and used for making chewable tablets.
Distribution
Uniqueness:
The
sole distribution of medicine is done through direct marketing and sourcing.
STATEMENT OF
FINANCE REQUIRED:
Investment Rs…700,000
SOURCES:
1.
Equity
Rs
700,000
2. Debt financing not
required initially. Completely self financed.
STATEMENT
OF CONFIDENTIALITY:
“SAMANA herbals will not release any information regarding
herbs and formulas without being informed or written consent or under
compulsion of legal process. Information will be released only on ‘need to know
basis’, except where otherwise required by law.”
ENVIRONMENTAL AND
INDUSTRIAL ANALYSIS
1.
FUTURE
OUTLOOK & TRENDS:
· Environmental Analysis;
Ø PEST- EL Analysis
..Political:
Political factors of provincial
federal government or district government have no great impact on company.
..Economical:
The
economic environment affects the expenditures of both producers & consumers
because of inflationary period in economy.
..Social:
Social
factors do not massively affect the company’s sales over time. Demographics
affect the market segmentation policies & create increased diversity
problems.
..Technological:
With
passage of time, company needs to adapt to new techno machines and equipment
for providing better products.
..Environmental:
Natural
environment has direct impact on company because company requires herbs for
manufacturing different products.
§ Industry analysis
The herbal or ‘Unani’ or Greco–arab system of medicine is a growing
industry worldwide. Global sales of herbal products now exceed a staggering
US$40 billion a year. Pakistan Indus valley civilization. This traditional medicine sector
has become an important source of health care, especially in rural and tribal
areas of the country. Most of the medicinal plants are found in the temperate
climates and subtropical forests of northern Pakistan CAM (
complementary and alternative medicine) .
Ø
Industry Participants
v
spiritual
healers
v
clergymen
v
Hakeems
v
Homeopaths
v
Unani (Greco–arab) healers
v
Bonesetters
v
Many
quacks.
Ø Distribution Patterns
SAMANA will
make a significant profit through the delivery of top-of-the-line professional
products. The company will see profit within the first year due to beneficial
word-of-mouth advertising and referral networking. The company expects to
double its clientele every six months, for the first 18 months
SAMANA intends to build a sales team that will be
tasked with generating sales leads on a regional and national basis. They will
also be responsible for establishing connections with retail outlets.
A key factor in the success of SAMANA will be its
distribution. The company plans to use the following retail distribution
channels:
- Department
stores
- Internet
store
SAMANA plans to use a direct sales force, retailers
to reach its markets. These channels are most appropriate because of time to
market, reduced capital requirements, and fast access to established
distribution channels.
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Company
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Customers
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Retailer
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Wholesaler
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Stockade dealers
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Zonal offices
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Ø
Competition and Buying Patterns
The key element in
purchase decisions made at Coaching Company client level is trust in the
professional reputation and reliability of the professional development
firm.
Competitors range from
major international name-brand to tens of thousands of individuals. One of
SAMANA Company's challenges will be establishing itself as a real
professional development company, positioned as a relatively risk-free
corporate purchase.
When dealing with the
small or entrepreneurial business market, cost or price will be one of the
greatest obstacles company will face. It will be up to company to assist its
clients in the discovery of how much it may cost them NOT to pursue
professional development and establish company as the most effective solution
to their challenges.
With time,
reputation and referrals will allow for a steady stream of new clients as well
as regular price increases. This is not a business to build brand as much as it
is to build reliability.
SWOT
Strengths
§ A
tasty tablet maintains the water-electrolyte balance, and acts as an instant
source of energy for the body.
§ Strong
R&D department to develop new and efficient products.
§
It
acts as a supplement and enhances resistance towards diseases.
§
It
is recommended by doctors for all ages of people.
Weaknesses
§
Less
advertisement.
§
No
services in remote areas
§
Less
number of products
§
Less
established market or product development
§
Lack
of strengths and strategies
OPPORTUNITIES
§
As
tablet is inexpensive compared to other, it can generate huge demand and the
revenue accordingly.
§
Population
is increasing by a considerable rate per year, giving us another opportunity to
increase our market share.
§
SAMANA
has a supreme brand image in people’s mind, it can go for line extension and
enter other different category
THREATS
§ The biggest threat for SAMANA has
always been the competitors in the industry.
§ the biggest threat
for SAMANA has always been the competitors in the industry
§ prices and
inflation rate is increasing day by day, this reduces the purchasing power of
the customers and lower income groups could find it difficult to afford
chewable flavored tablets which would directly leave negative impact on the
revenue
§ people are
convinced more towards allopathic products than herbal
§ forests are
becoming damage, which will reduce the availability of required quality herbs
§ technology
advancement
§ transportation
problems
Ø Target Market:
Primary
Target Market:
§
Consumer
of all ages
Secondary
Target Market:
§
Male
§
Female
§
Children
§
All
people who are health conscious
§
Anyone
having cough or bad cold.
2. Competitors:
Main
competitors in the industry will be
·
Hamdard,
·
Dabur,
·
Qarshi,
·
Safi
·
Lasani
ANALYSIS
OF COMPETITORS:
Although
industry is growing, it exists in a dynamic and competitive environment. In
order to improve profitability, many companies are restructuring to create
healthy organizations and adopt new technologies.
In a market where consumers are
barraged by advertising and marketing campaigns delivering an onslaught of
lifestyle and fashion messages, a brand name is a powerful weapon. Brands
have become an increasingly significant factor. Established brand names, with
their quality image, make the experience easier and faster for many consumers.
For manufacturers, brands build consumer loyalty, which translates into repeat
business.
The company's name, SAMANA, is a
competitive advantage in itself. The name is not attached to any particular
group of customers and it allows entry into different segments of the industry.
Another competitive advantage is the company's marketing strategy. Through the
use of celebrities, advertising, promotion, and giveaways, the company is able
to develop its presence in the market. Although the company uses retailers to
sell its line, most of the marketing and advertising is done in-house.
3. Market segmentation:
·
Geographical
On the basis of area SAMANA launched its products in
Lahore Faisalabad Islamabad Karachi
·
Demographic
Demographically SAMANA consider only
income group of middle class and lower middle class. Gender wise it is for both
female and for all age groups.
·
Psychographic
It targets the customers who are
health conscious and wanted products with no side effects.
4. INDUSTRY & MARKET FORECASTS:
The industry of herbal products is increasing. As
allopathic products have so many side effects, but herbal products have no any
kind of side effect, which is the main reason of its growth in future.
DESCRIPTION OF VENTURE
VISION STATEMENT:
“By maintaining our service
standards we see our idea will expand and we will surely touch the horizons of
success. We will establish our current business strong and then we will include
other businesses complimenting our way. We will deliver better quality &
memorable experience for customers.”
"SAMANA is an organization of
professional entrepreneurs committed to serve community, our aim is to bring
you a fine quality chewable herbal products that offer the complete health care
satisfaction for varying individuals in cough and bad cold, as these products
are result of scientific tests and trials."
QUALITY
STATEMENT:
The brands with which we are
dealing are the largest selling who is offering products in every range. We
have selected esteemed quality brands so that high quality is guaranteed.
GOALS &
POTENTIALS OF BUSINESS
The future goal is to aggressively develop and
market a complete range collection to consumers. The company intends to market
its line as an alternative to existing lines and differentiate
itself through its marketing strategies, exclusiveness, and brand
awareness. SAMANA’s intends to build on its core portfolio of products and
overcome any obstacles by using the company's expertise in the industry.
Every man who
knows attractiveness & effectiveness of herbs will be our potential
customer sales are highly expected due to the idea’s uniqueness.
Profit potential
is high profit would be as more than anyone.
1. PRODUCTS
SAMANA products will be priced at affordable end to
reflect the quality and exclusiveness associated with the brand. The company
will use high-end materials such as herbs and flavors. When a mark up is placed
on products, customers are willing to pay the premium because of the perceived
value and quality guarantee that comes with all products.
2. SIZE OF BUSINESS
Now the SAMANA is operating in a medium size
business. Almost 100 employees are working under the SAMANA's umbrella. Economic
environment don’t affect so much on us because the change in income will
increase our profit and the consumers spending patterns will remain the same
due to our social value and norms. The size of the business will definitely
expand.
Our customer behavior is largely attracted by cultural
factors which is already develop and are penetrated in the roots.
3. OFFICE EQUIPMENT & PERSONNELS
The
company's management philosophy is based on responsibility and mutual respect. An
environment and structure that encourages productivity and respect for
customers and fellow employees.
PRODUCTION
PLAN
Production Department:
Production Department
is basically working on
·
Arrange raw
material.
·
R & D
supervision.
·
Identify
and search their supplies.
·
By using latest
technology finalize the product.
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Assumptions:
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1. Working time of machine is
supposed to be 8 hours / day.
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2. Company is supposed to make its sales up to
70% depending upon product
Nature
& strong Advertisement.
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Basic / Actual Data:
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Production Plan
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Tabs.
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Production /min =
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90
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So Production /60 min or 1 hour =
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5400
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If plants working time is 8 hours
then production =
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43200
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Cost Of Production:
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Rs.
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Per unit cost =
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1
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Total Cost of Production / 8 hour
=
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43200
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2
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Sales Volume:
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70 % sales unit =
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30240
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sales Price
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2
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Total Sales %70
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60480
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OPERATIONAL PLAN
Activities
of the Departments
HR Department:
·
Hiring and firing of the staff.
·
Training and Development of employees.
·
Ensuring the learning, productivity and
efficiency of the employees.
·
Compensations and rewards through a
transparent appraisal system.
Financial
Department:
·
Cost allocation for purchase of raw
material
·
Plan whether to achieve economies of scale
or not.
Marketing
Department:
·
Identify the target market and their
needs.
·
Promotional activities i.e. advertisement.
·
Distribution of goods to its target market
in time.
·
Packing, labeling and pricing of goods
manufactured.
Production Department:
·
Arrange raw
material.
·
R & D
supervision.
·
Identify
and search their supplies.
·
By using
latest technology finalize the product.
Operational Plan
MARKETING
PLAN
1. Marketing
objectives:
·
Customer satisfaction.
·
Capture herbal chewable market in Faisalabad
·
Provide permanent solution for cough and
digestive problems.
·
Increase our distribution.
·
Quality leader in Faisalabad
2. Positioning:
We
positioned our self on the basis of “product differences”.
As
we have product which is the mixture of Gemmo+Homoeo. That our competitors do not
have. In Pakistan France Germany
3. Tactical plans:
Ø Product:
o Product features:
·
Herbix :
An excellent remedy for Cough, Cold,
Throat infection, Bronchitis, Sore Throat, and Vomiting.
·
Skittlez :
To improve digestive ability and remedy
for Flatulence, Abdominal pain, Constipation, Cholera, Hyper Acidity.
o Product Quality:
Our products are totally natural,
fresh and damp proof.
·
Herbix :
Punica Granatum, Phyllanthus Emblica,
Trachy spermum, Terminalia Belerica, Carum Carvi, Cassia Senna, Cajnus Cajan,
Mentha Piperita, Ammonium Chloride, Habiscus Rosasinancis, Black Salt.
·
Skittlez :
Glycyrrhiz Glabra, Gallspistacia, Nabat,
Shakr-e-Taghal, Starch, Menthol.
o Product design:
For the convenience of our customers we
develop two different designs for our both products.
·
Herbix
in round shape.
·
Skittlez
in oval shape.
o
Brand:
a.
Brand name:
“SAMANA”
b.
Sign:
c.
Logo:
SAMANA
d.
Slogan:
“A
Gemmotherapeutic way of Treatment”.
o
Association:
We
create word association for our products. This is also showing our uniqueness.
That is: “Gemmo”
o
Labeling:
In
labeling we wrote following things.
Brand
name, brand label, care label, features label, price label, logo, slogan,
expiry dates, trade mark, bar code identification.
Ø Price:
Cost price:
·
Herbix = 1 Rs/ tablet
·
Skittlez = 1 Rs/ tablet
Herbix:
·
2 Rs/ tablet
·
Pack of 8 pieces = 16 Rs
·
Box of 10 packs = 160 Rs
Skittlez:
·
2 Rs/ tablet
·
Pack of 8 pieces = 16 Rs
·
Box of 10 packs = 160 Rs
Herbix:
·
3 Rs/ tablet
·
Pack of 8 pieces = 24 Rs
·
Box of 10 packs = 240 Rs
Skittlez:
·
3 Rs/ tablet
·
Pack of 8 pieces = 24 Rs
·
Box of 10 packs = 240 Rs
Ø Place:
We
are using selective strategy for distribution of our product. As our product
are available only on Herbal stores in Faisalabad
Tibbi Dawakhana
Ø Promotion:
1.
Through
public relations:
By giving free samples to our peers and
friends and also by telling about its
Germmo+Homoeopathic way of treatment, which is more effective than Homoeopathic
way.
2.
Advertisement
by:
a.
Bill boards
b.
Adds on cable in Faisalabad
a)
Bill
boards:
We
put 10*20 feet bill boards on different places of Faisalabad
b)
Adds
on cable:
We
are also using cable channels for the promotion of our product and it also give
knowledge about our products to our customers that how it is used and is
telling about its uniqueness and its features.
Marketing Budget
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Code
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Marketing
variables
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Budgeted
Expenditures Rs
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A
01
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Labeling
&packing
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47000
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A
02
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Promotional
Activities
Ø
Billboards(Tax + Rent)
Ø
Cable add (per 30 seconds on three channels)
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55000
24000
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A
03
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Launching
Expense
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23000
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Total Budgeted
Expense
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150,000
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ORGANIZATION PLAN
ORGANOGRAM
Business
Scale:
We are having a small size business, in which we have 30
employees. Our operations are initially in Faisalabad Division.
Business
Type:
SAMANA
is a sole proprietorship business. Professor Dr.Khalil-ur-Rehman is the owner
of this business.
Departments:
There are five following departments in our organization
structure.
·
Human
Resource Management Department.
·
Finance
Department.
·
Marketing
Department.
·
Research
& Development Department.
·
Production
Department.
Allocation of Budget
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Department
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Rs.
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HRM
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250000
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Marketing
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150000
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Finance
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60000
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Production
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90000
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R & D
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150000
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THE EXECTIVES
CHIEF EXECUTIVE OFFICER
J/D:
Age: 45
years.
Qualification: PhD in management.
Experience: 15-20 Years experience in multinational
companies.
J/S:
Analytical, decision making, strategy making, leadership,
challenging, risk taking.
GENERAL MANAGER
J/D:
Age: 35
Years.
Qualification: M.Phil in management
sciences
Experience: 10 years in
organized company
J/S:
Logical and critical thinking, organizing, planning and
managing and controlling operations.
HUMAN RESOURCE MANAGER
J/D:
Age: 27
years.
Qualification: M.Phil / MS.
Experience: 3 year experience.
J/S:
Negotiation, leading, controlling, motivating and well
organizing..
FINANCE MANAGER
J/D:
Age: 27
Years
Qualification: C.A.
Experience: 3 years in banking sector.
J/S:
Analytical, stress management and allocator of financial
management.
MARKETING MANAGER
J/D:
Age: 27 years.
Qualification: M.S in marketing.
Experience: 3 years in as sales manager.
J/S:
Persuasive skills, extrovert, aggressive, risk taker and
change management.
PRODUCTION MANAGER
J/D:
Age: 25
years.
Qualification: MBA /M COM
Experience: 3
years.
J/S:
Good in transaction management.
STAFF MANAGER
J/D:
Age: 25 years.
Qualification: Masters in management
sciences.
Experience: 3 years.
J/S:
Well conflict and negotiating manager, foresighted.
CREDIT RISK ANALYZER
J/D:
Age: 25
years.
Qualification: MBA Finance
Experience: 3
years.
J/S:
Analytical ability and innovator.
SALES AND ADVERTISING MANAGER
J/D:
Age: 25 years
Qualification: MBA Marketing
Experience: 3 years
J/S:
Having
good networking, innovative and extrovert.
FINANCIAL
PLAN
STATEMENT OF
FINANCE REQUIRED:
SOURCES:
1.
Equity
Rs
700,000
2.
Debt financing not required initially. Completely self
financed.
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YEAR
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Profit
and Loss Account
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2010
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For the
year ended June 30
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Rs.
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Net sales
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60480
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70 %
sales @ Rs. 2
|
|
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Cost of
sales
|
30240
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|
30240
units @ Rs.1
|
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Gross profit
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30240
|
|
|
|
|
|
|
Distribution
costs
|
7000
|
|
|
70 % of
Rs.10000
|
|
|
|
Administrative
expenses
|
6300
|
|
|
70 % of
Rs.9000
|
|
|
|
Other
operating expenses
|
2180
|
|
|
|
|
|
|
Other
operating income
|
0
|
|
|
|
|
|
|
Profit from Operations
|
14760
|
|
|
|
|
|
|
Finance
costs
|
0
|
|
|
Profit before taxation
|
14760
|
|
|
|
|
|
|
Taxation
|
1476
|
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|
Profit after taxation
|
13284
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|
|
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|
Assumptions:
|
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1. Actual Sales are assumed to be
70%.
|
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2. Tax rate on sales assumed to be
10%
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3. Distribution cost = Rs.10000
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4. Administration Cost = 9000
|
|
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|
|
|
|
|
|
|
|
|
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Balance Sheet
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2010
|
|
As at June 30
|
|
|
|
|
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ASSETS
|
|
|
Non-current
assets
|
|
|
Land & Building
|
0
|
|
Plant & machinery
|
345,000
|
|
Furniture & Fixtures
|
25,000
|
|
Current assets
|
|
|
Stores and spares
|
200,000
|
|
Stock-in-trade
|
0
|
|
Trade debts
|
0
|
|
Cash in Hand
|
100,000
|
|
Cash at Bank
|
30,000
|
|
|
|
|
TOTAL ASSETS
|
700,000
|
|
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EQUITY
|
|
|
|
Share capital
|
|
|
|
Authorized capital
|
|
|
|
(30 June: ) 55,000 Ordinary shares of Rs. 10
each
|
0
|
|
|
|
|
|
|
Issued, subscribed and paid-up
capital
|
550,000
|
|
|
Reserves
|
0
|
|
|
TOTAL
EQUITY
|
550,000
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
Long term financing
|
0
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
Trade and other payables
|
150000
|
|
|
Accrued mark-up
|
0
|
|
|
Short-term Borrowings
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES
|
550,000
|
|
|
|
|
|
|
CONTINGENCIES AND COMMITMENTS
|
0
|
|
|
TOTAL EQUITY AND LIABILITIES
|
700,000
|
|
|
|
|
|
YEAR
|
|
|
Cash
Flow Statement
|
2010
|
|
|
For
the year ended June 30
|
Rs.
|
|
|
CASH FLOWS
FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
cash
generated from operations
|
0
|
|
|
Finance
cost paid
|
0
|
|
|
Income
Tax paid
|
-4080
|
|
|
Gratuity
paid
|
0
|
|
|
net
(increase) /decrease in long term loans
|
0
|
|
|
net (increase)
/decrease in long term deposits & prepayments
|
0
|
|
|
Net cash generated from/(used) in
operations
|
-4080
|
|
|
|
|
|
|
CASH FLOWS
FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
Proceeds
from property, plant & equipment
|
0
|
|
|
proceeds
from sale of investment
|
0
|
|
|
investment
made
|
0
|
|
|
Dividends
received
|
|
|
|
capital
expenditure
|
0
|
|
|
Net
cash used in investing activities
|
Nil
|
|
|
|
|
|
CASH FLOWS
FROM FINANCING ACTIVITIES
|
|
|
|
|
|
proceeds
from long term financing
|
0
|
|
proceeds
from issue of right shares
|
0
|
|
share
deposit money received
|
0
|
|
repayment
of long term financing
|
0
|
|
payment
of finance lease liabilities
|
0
|
|
short
term borrowings
|
0
|
|
dividends
paid
|
0
|
|
Net
cash used in financing activities
|
Nil
|
|
|
|
|
Net (decrease) / increase in cash and cash equivalents
|
-4080
|
|
|
|
|
Cash
and cash equivalents at beginning of the year
|
134080
|
|
|
|
|
Cash
and cash equivalents at end of the year
|
130000
|
Forecasting
budgets
Projected Manufacturing Budget
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
2011
|
2012
|
2013
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Projected
Sales
|
63504
|
66679.2
|
70013.2
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Desired
Ending Inventory
|
27216
|
28576.8
|
30005.6
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Available
for
|
90720
|
95256
|
100019
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Less:
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Beginning Inventory
|
25920
|
27216
|
28576.8
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Budgeted
Production Required
|
64800
|
68040
|
71442
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Assumptions:
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
1.
From 70% sales in 2010, Sales are expected to increase by 5 % every next
year.
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capital Budgeting
|
|
|
Payback Period
|
|
|||
|
|
|
|
|
|
|
|
|
|
0
|
1
|
2
|
3
|
4
|
|
|
|
|
|
|
|
|
|
|
Cash flows:
|
-43200
|
13284
|
16006
|
18863
|
21864
|
|
|
|
|
-29916
|
-13910
|
-4953
|
16911
|
|
|
|
|
|
|
|
|
|
|
Payback Period
|
|
3 yrs or
|
3.226536773
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
1
|
2
|
3
|
4
|
|
|
|
|
|
|
|
|
|
|
Cash flows:
|
-43200
|
13284
|
16006
|
18863
|
21864
|
|
|
|
|
-29916
|
-13910
|
-4953
|
16911
|
|
|
|
|
|
|
|
|
|
|
Discount Rate 10%
|
|
0.909090909
|
0.826446281
|
0.751314801
|
0.683013455
|
|
|
Discounted Cash flows:
|
|
12076.36364
|
13228.09917
|
14172.05109
|
14933.40619
|
|
|
|
|
|
|
|
|
|
|
|
|
31124
|
17896
|
3724
|
|
|
|
|
|
|
|
|
|
|
|
Payback Period
|
|
3 yrs or
|
3.249380567
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
This
project will return initial investment in 3 years.
|
Net Present value
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
Discounted Cash
flows:
|
(43,200.000)
|
Rs12,076.364
|
Rs13,228.099
|
Rs14,172.051
|
Rs14,933.406
|
|
|
|
|
|
|
|
|
|
|
|
|
NPV
|
|
|
Rs11,209.92
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NPV of this
project is positive so it should be accepted for future sponsorship.
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profitability Index
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
Discounted Cash flows:
|
|
12076.36364
|
13228.09917
|
14172.05109
|
14933.40619
|
|
|
|
|
|
PI= PV of future
Cash flows/Initial Outflow
|
|
||||
|
|
|
=
|
54409/43200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
=1.25949
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 % is of return
of investment & 25.94 is the profit which this project will earn
|
|||||
|
|
|
|
|
|
|
|
|
Risk
Assessment & Management/ Contingency Plan:-
1.
Company Specific Risk
2.
Department Risk
Company specific Risk:-
Following
are the risk that can affect the company. These are explained below with their
contingency planning as well:
1. Country/Political Risk:
As our company’s production
place is provided by the Government
University
Planning towards Political
Risk:
If political stability and policies remains
same for large duration there will not affect on our company.
2.
Financial Risk:
As our company is
solely based on Equity so there is no financial risk that is based on high
financial leverage.
3.
Business Risk:
Industry & its environment
including the change of technology will affect our business.
Planning towards Business Risk:
We
will face this risk by making our business operations flexible, immediately
adopting any change in industry.
4. Inflation Risk:
Inflation Risk including
decline in purchasing power of consumer will affect our sales
Planning towards
Inflationary Risk:
Organization will focus on achieving economies
of scale & thus reducing its cost of production that result in decrease in
price for the consumer.
5. Market Risk:
Market Risk including recession, structural changes in economy and change in consumer preference will affect our business sales.
Planning towards Market
Risk:
Depending on our improved research & development in our
products features our business will overcome such risk.
Departmental Risk:
Following
are the departments of our Company and here are some risks involved regarding
their operations:
1.
Research & Development
2.
Finance Department
3.
Production Department
4.
Human Resource Department
5.
Marketing Department
1. Production
Department:
I.
Proper
Warehousing:
Planning:
Proper storage for our product will be
there at a specified temperature so that there should not be climate effect on
our medicine.
II.
Inventory
Management:
Planning:
Proper Inward (supplies) & Outward
(transfer to production process) Control will be there on our inventory.
III.
Product
Lifecycle.
Planning:
As
there are 4 phases of product i . e;
·
Introduction
·
Flourishing/Growth
·
Boom
·
Decline
(low Sales as low demand for product is there)
In
every stage we will follow hold strategy
there for a reasonable period, not following the sudden changes in every
stage.
2. Research &
Development:
I.
Testing
& Trial Stage:
Planning:
Costly testing of our product will have
large expenses so proper check & balance will be there, so that continuing
our testing & trial phase should be feasible for our company.
II.
Herbs
Alternative:
Planning:
Alternatives for those herbs that become rare or costly will be available there.
3. Finance Department
I.
Liquidity
Risk
Planning:
We will having our current assets liquid
by giving
·
Discount Offers to our Debtors
So that current assets should maintain
their liquidity.
II.
Working
Capital Management
Planning:
For
fulfilling the requirement of working capital needs we will have Short Term financing so that current
assets should match with current liabilities.
III.
Debt
Financing
Planning:
We will be having need for debt for growth
of our business, so company can either issue shares or getting loan from
financial institutions.
4.
Marketing Department:
I.
Distribution
Channels:
Planning:
We are only having some specific herbal distribution channels so dealing
with the competition we will start our direct distribution to avoid dependency
on these.
5. Human Resource:
I.
Labor
Availability:
Planning:
We will be having our product
manufacturing where cheap labor is there, to avoid expensive labor and cut down
our cost.
Harvesting Strategy
In
Harvesting Strategy we will be having:
1. Transfer Of Assets:
All the assets will be transferred
according to the shares of the partners at the time of liquidation.
|
Shares of Partners
|
Rs.
|
|
CEO
|
17%
|
|
General Manager
|
13%
|
|
Finance Manager
|
10%
|
|
Production Manager
|
10%
|
|
Credit Risk Analyzer
|
10%
|
|
Human Resource Manager
|
10%
|
|
Staff Manager
|
10%
|
|
Marketing Manager
|
10%
|
|
Sales Advertising
|
10%
|
2. Continuity of
Business Strategy:
I.
Retirement
of Partner:
· In
case of retirement of any partner Notice should be issued before 30 days of getting retired, as he is
not liable for fulfilling his duty after his retirement.
II.
Incoming
Partner:
·
Incoming Partner should be liable for
fulfilling his duty from the date of issuance of notice to all partners.
·
He (incoming Partner) should also be liable
to pay amount of Goodwill according to his share in the company.
III.
Death
of Partner:
In case of death of any partner, his
personal property will be considered to pay his liability; his share of profit
will be transfer to his successors.
3.
Successors:
· Creditors
· Debt
Holders
· Preferred
Shareholders
· Ordinary
Shareholders.
APPENDICES
QUESTIONNAIRE
Name: ----------------------- Profession:
-----------------------
Q1.
What is your qualification?
a)
Under Matric
b)
Matric
c)
Inter
d)
Graduation
e)
Master
Q2.
How much is your family monthly income?
a) Under 10000
b) 10000 to 20000
c) 20000 to 30000
d) 30000 to 40000
e) 40000 and above
Q3.
Which method of treatment you use for your health care?
a)
Allopathic
b)
Homoeopathic
c)
Herbal
d)
Gemmo +
Homoeopathic
e)
Others
Q4.
If you are using Herbal then which brand you will prefer?
a)
Hamdard
b)
Qarshi
c)
Samana
d)
Roots & Herbs
(R & H)
e)
Other
Q5. Have you ever used Samana?
a)
Yes (if yes then
continue)
b)
No ( if no then go
to question no. 11)
Q6.
Which factor motivates you to buy this particular brand?
a)
Advertisement
b)
Friend persuasion
c)
Group influence
d)
Medically
effective
e)
Others
Q7.Are you
satisfied with its solutions?
a) Extremely satisfied
b) Satisfied
c) Neither
satisfied nor dissatisfied
d) Dissatisfied
e) Extremely dissatisfied
Q8.
Do you use it because of its combination of Gemmo+Homoeo formula?
a) Strongly agree
b) Agree
c) Neither agree nor disagree
d) Disagree
e) Strongly disagree
Q9.
Do you agree that it is generally accepted as a Herbal product?
a) Strongly agree
b) Agree
c) Neither agree nor disagree
d) Disagree
e) Strongly disagree
Q10.
How would you rate Samana?
a)
Price
b)
Quality
c)
Quantity
d)
Packing
e)
Others
Q11.
Have you heard about Samana?
a) Yes
b) No
Q12.
What is the reason for not using this brand?
a) High price
b) Low quality
c) Unavailability
d) Group influence
e) Others
Q13. Your kind suggestions:
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Thanks
for your cooperation
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