Business Plan

QUASAR PLASTICS
Quality at the BEST

Rajnish Chaubey
IBMR Bangalore

[year- 2008-2010]
“This is business plan is submitted to the IBMR Bangalore as a part of
curriculum.”

Submitted by:
Rajnish kumar Chaubey
PGDM (2008-2010)

TABLE OF CONTENT
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EXECUTIVE SUMMARY………………………………………………………………………………………………………….4

COMPANY OVERVIEW…………………………………………………………………………………………………………..5

MISSION………………….………………………………………………………………………………………………………………….5

MARKET AND PRODUCT……………………………………………………………………………………………………………..6

OBJECTIVE…………………………………………………………………………………………………………………………………..6

KEY TO SUCCESS..………………………………………………………………………………………………………………………..6

PRODUCT AND SERVICE DESCRIPTION…………………………………………………………………………………..7

MARKET COMPARISON………………………….……………………………………………………………………………………7

POSSIBLE OBSTACLES…….………………………………….………………………………………………………………………..7

INDUSTRY AND MARKET PLACE ANALYSIS………….………………………………………………………………….9

INDUSTRY ANALYSIS……………………………………………………..…………………………………………………………….6

MARKETPLACE ANALYSIS…………………………………………………………………….……………………………………..6

CUSTOMER ANALYSIS…………………………………………………………………………………………………………….…11

COMPETITOR ANALYSIS……………………………………………………………………………………………………………12

MARKETING STRATEGY………….……………………………………………………………………………………………12

PRODUCT SERVICE STRATEGY..…………………………………………………………………………….………………….13

PRICING STRATEGY…………………………………………..………………………………………………………………….…13

DISTRIBUTION STRATEGY…………………………………………………………………………………………………………13

ADVERTISEMENT AND PROMOTION STRATEGY……………………………………………………………………….13

SALES STRATEGY………………………………………………………………………………………………………………………13

SALES FORECAST………………………………………………………………………………………………………………………13

DEVELOPMENT ………………………………………………………………………………………………………………….14

DEVELOPMENT STRATEGY….…………………………………………………………………………………………………….14

MANAGEMENT…….…………………………………………………………………………………………………………….15

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OPERATIONS….…………………………………………………………………………………………………………………..16

SCOPE OF OPERATIONS……………………………………………………………………………………………………..…….20

SUPPLY CHAIN………………..…………………………………………………………………………………………………………21

PROCESS FLOWCHART………………………….………………………………………………………………………………….22

GANTT CHART………………………………………………………………………………………………………………………….23

FACILITY LAYOUT……………………………………………………………………………………………………………………..24

FINANCIAL STATEMENT………………………………….…………………………………………………………………..25

STARTUP EXPENCES…………………………………………………………………………………………………………………25

INCOME STATEMENT……………………………………………………………………………………………………………….26

BALANCE SHEET……………………….…………………………………………………………………………………………….…27

BREAK EVEN POINT………………………………………………………………………………………………………………….28

APPENDIX………………………………………………………………………………………………………………………….29

Bibliography ………………………………………………………………………………………………………………………33

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 Executive summary
Plastic is the basic need of our day to day life. During recent years the plastic
industry has grown with a substantial growth rate. This growth is driven by three
sectors viz packaging, infrastructure and agriculture. There are the various
verities of plastics out of which PVC (Polyvinyl chloride) and PET (Polyethylene
terephthylene) plastics have their considerable contribution. PET plastics are
generally used in the manufacturing of beverage bottles for the packaging and
PVC plastic is used in the production of household plastic materials. The growing
utilization of plastics in industrial and consumer applications and surrounding
solid waste recycling, has led to an increased demand for recycled plastic resins
and products.

We the Quasar plastics provide a wide range of plastic solutions for household
and raw material for packaging of various companies. As a part of our ongoing
efforts to exploit this opportunity we will recycle the plastics and then produce
kitchen ware items and other related plastic material. We will also sell the
recycled plastics to the companies in the plastic business. We will have a
recycling plant along with the production unit. The raw material will be procured
from the waste collectors. The raw material will be post consumed beverage
bottles and other soft plastic materials

Our main focus is our industrial customer whom we will sell PET bottles and PET
flakes. It will contribute more than 60% of our sales. We will also focus on the
household plastic business which is the part of our portfolio. The initial set up
cost will be Rs 34, 40,000.

Quasar plastics will be a solution proprietorship business run by the promoter

Rajnish Kumar Chaubey who is a MBA graduate with finance and marketing as
specialization.

Since plastic material does not carry any brand name so it will give us an addition
benefit in long term to establish our brand name. To exploit the market we will
use penetration pricing as our marketing strategy and utilize our stringent
distribution network and strong industrial relationship.

As a future plan in coming years we will increase the variety of plastics like LDPE
(Low density polyethylene) and HDPE (High density polyethylene). By doing this
we will be able to produce plastic carry bags and raw material for production for
plastic chairs and tables and other fiber based products.

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 COMPANY OVERVIEW
Quasar Plastics provide a wide range of plastic solutions for households and raw
material for packaging to the various companies. Allahabad is the place where
the facility will be established and other operation will commence.

We will collect the plastic garbage like consumer beverage bottles, plastic bags
from various garbage stores and then our recycle unit will process it which
eventually be used for the production of finished goods.

The plastic garbage we are getting as raw material has two components one is
PVC (Polyvinyl chloride) and other is PET (Polyethylene terephthylene ). Firstly
the whole garbage is melted and then PVC and PET are separated from each
other by froth flotation technique.

We will create a plant (actual facilities to be shared with the recycling unit) to
manufacture extruded plastic flakes (purified plastic). The extruded plastic is then
molded in the various products.

We will produce two types of replay plastics

 PVC( Polyvinyl chloride)

 PET( Polyethylene terephthylene )

Mission Statement
Quasar Plastics

 Strive to provide the excellent plastic solution to the customers at

competitive prices.
 Continually expands our range of products.
 Is poised to service both large and small customers.

Markets and Products

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The plastic products usually do not carry a brand name so intruding in the
business like plastic will not be too hard with low price strategy. The population of
Allahabad and the cities around it like Varanasi, Gorakhpur, Johnpur is around
3Cr. and this area is basically comprises of low to middle income group families
so they focus on plastic products rather than fiber since it is a cheaper. Hence it
is huge market to exploit.

From Allahabad city 500 tons of solid waste is produced from that 15tons of
plastic bags and around 7 tons of plastic bottles is generated per day. So the
supply of raw material will be continuous.

Apart from this we will sell raw material for packaging to the various small
companies in this area. Around 30 small and medium scale companies are
working in this region. So a large amount of industrial customer is also available.

There are two folds of products that we are providing one is industrial and other
is household.

Objectives
 Develop a business that survives on its own cash.
 Create a company which exceeds customer satisfaction level.
 Expand the service to whole UP in first five years and then to Delhi.
 Extending the services to electronic component manufacturing companies
for production of capacitors printed circuit boards etc.

Key to success:

The main keys to the success of the Company are:

 Secure Supply- Contract for supply of post-consumer bottles and post-

industrial manufacturing waste for PET raw material feed stock.
 Satisfy our customer so that we can retain them
 Maintain low overhead and operating costs
 Provide better prices than all our competitors

Product and services

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We will provide a wide range of plastic products for households and raw material
for packaging.

The recycled plastic is processed to Polyethylene Terephthalate (PET). PET is a

thermoplastic polymer viscous of polyester family. The biggest property of this
compound is it transparent. This is the reason why it is used for packaging. Apart
from this PET have good strength, ductility, stiffness and hardness. After the
recycling process completed an extruded plastic is generated. Plastics extrusion
is a high volume manufacturing process in which raw plastic material is melted
and formed into a continuous profile.

The products we are producing are

 Cleaned and recycled plastic flakes of PET and bottles, recovered from
post-consumer beverage bottles. (this PET will work as raw material for
packaging to various firms, not for the end user)
 Household finished plastic goods. We are manufacturing plastic tubes of
various diameter, plastic kitchen ware. ( for the end user)

PET flake will be sold to thermo formers (those who mold plastic sheets into
usable products) primarily to be used to produce high-visibility packaging. And
also to the beverage companies for packaging.

Recycled plastic is widely used in mainstream construction products such as

damp proof membrane, drainage pipes, ducting and flooring. Bins, street signs
and planters are frequently made from plastic. They are cost competitive and
resistant to damage. Local authorities and schools are able to demonstrate
recycling in action by specifying recycled products

High strength PET is used in the clothing, furnishings, tyre cord and technical
textiles

Apart from PET the household plastic will be directly sold to the end customers.
In day to day life plastic items like water bottles, shop case scrubber etc is
frequently used. So there is a big demand of these in local market.

Market comparison

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While quality and delivery are important factors to our potential clients, price is
most often the determining factor in a buying decision. Good-quality packaging
products manufactured from recycled (less expensive) resins, as close as
practical to the end customer's operations, will be most competitive and achieve
a significant market share. These factors have helped to determine the business
parameters of Replay Plastics.

Possible obstacle

The product is completed and ready for the market launch. The possible
obstacles are

Unavailable or scarce raw material stock for production

 Replay is confident that it has secured good availability of low cost post-

consumer PET bottles (feed stock) derived from post-consumer beverage
bottles. It may be possible that we would not get desired raw material.

Company may not meet environmental standards

This environmentally-favorable venture provides for the development of

technically feasible and economically viable solutions to PET plastic
beverage bottle recycling, as well as environmentally aware in-house re-
use practices which filter and return nearly all of the process water to the
production lines

Industry and marketplace analysis

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Industry analysis

Plastic recycling is an industry in itself in India. According to the Crisil research

7360 companies are working in this industry with a turnover of Rs 9200 Crore
provides employment to 3.5 million people. In India per capita plastic
consumption in lowest in the world. The per capita consumption is just one fifth of
world average which is 5kg. the domestic demand of plastic has grown by 9%
and reached to 4.5MMT in year 2005.The GDP has grown during this period at
6.3% and plastic industry 1.3 times of GDP. According to the Crisil report the
demand of plastic by 2012 will be around 12MMT. The plastic consumption in
India is booming. Demand for commodity plastics is growing at the rate of 15%
per year. .India holds immense potential for the use of plastic in the infrastructure
and agriculture. In case of packaging industry we are using more plastic than the
developed countries. The growth is driven in three major sectors – infrastructure
which is 13%% of the total, packaging is 15% of the total and 10% for plastic
consumer durables. It is projected that the plastic waste generation will reach the
will reach the level of 1.6 million tons annually.

India produces 5600 tons of plastic waste per day.

Region wise and polymer wise turnover of recycling industry in Rs.Crore

Region PVC PET

West 156 383
East 75 86
North 338 158
South 111 139
Total 680 766

Each region is specialized in one type of plastic viz south: PET; north: PVC;

The current plastic recycling rate is estimated as 60% by Plastic India

Foundation. One estimate is that about 20,000 microenterprises are engaged in
reprocessing and recovery of plastic waste in addition to 180,000 of various
sorting and washing units, 60% of which are unregistered .Delhi alone has
estimated 53,400 units and Delhi and Bombay together process over 50% of
India's waste plastics.

STRUCTURE OF THE PLASTICS INDUSTRY

The following pattern is likely to be general but there will be some variation from
country to country.

Raw Material Producers

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These are chemical and petroleum companies who produce "virgin" plastic
(sometimes called resin or polymer) in huge quantities. The main influence they
have on the recycler is to fix prices and availability of virgin materials. Virgin
material is delivered in powder or pellet form, in plastic or paper sacks of around
20 kilos weight, in large cardboard drums that hold many times that quantity or
even by road tanker.

Compounders
These specialist companies, usually small, stock various polymers and provide
the manufacturers of plastic goods with technical advice and the most suitable
materials or mixtures for each individual need. The compounder is often the best
market for the recycler because he possesses superior technical knowledge and
has a large volume throughput of virgin material, in which small percentages of
reclaim will reduce cost without seriously affecting the quality required by the
molder.

Stockists
These warehouses stock polymers and compounds but neither manufacture
themselves, nor provide a compounding service. They may be agents or
subsidiaries of the producer companies or departments of companies concerned
with the supply of other materials such as chemical, rubber or paper. They may
be willing to stock reclaim alongside virgin materials, especially if these are in
short supply.

Specialist Manufacturers or Molders

These buy their raw materials from compounders. If they do their own
compounding, or if the material is used as produced and does not need
compounding, they may buy direct from stockists or producers. They are
specialists in plastics and do not perform other types of manufacturing. They may
be an attractive market to the recycler because they operate at high volume, but
rarely have as much flexibility to vary product quality as molders who know,
accurately, the final market for the product.

Other Manufacturers
Many companies are not plastics specialists but employ molding operations in
the manufacture of some other product. For example shoe and boot makers use
plastics extensively and may carry out the various plastics molding operations in
the same production sequence as the work in leather, canvas, rubber etc. Many
manufacturers use plastic packaging machinery at the end of a production
operation.

Fabricators
These firms cut and join sheet, rod or extrusion to manufacture a variety of
products. They have no opportunity to use reclaim. Machinery and Tool Makers
11 | Q u a s a r P l a s ti c s
One other sector of the plastics industry justifies mention although not customers
for reclaim. The makers and suppliers of plastics manufacturing machinery, tools,
moulds and dies are well informed about who does what, who makes what and
who uses what within the local plastics industry. They may advise who is likely to
buy material.

Marketplace analysis

Various overseas players wish to explore the Indian market and invest in
opportunities thrown open by the country, projected to be world number 3 in
plastics consumption by 2010.As shown above the north region of India is
specialized in recycling of PVC. So there is a great scope of PET recycling.
Apart from this the other

 A huge market with full of opportunity.

 Absence of standard product and service

 Well connected with other rural areas

 Having good transportation facility

Customer analysis

Since we are new player in the market so we need to make some stringent
strategies to penetrate market and grab customers. The customers of the plastic
industry are scattered due to lack well known brand names. So our first priority
will be to accumulate the defused customers.

The direct customers are the customers whom we are selling our product
regularly. So for us households whom we are selling plastic goods and
companies who are getting raw materials for packaging are direct customers
(PET bottles). So only in Allahabad around 20,000 families are our direct
prospective customers and in terms of business to business market around 20
small and medium scale companies are our direct customers

Apart from them there are few small companies which are giving compounding
services. They use to collect various types of plastics flakes along with the virgin
plastic and suggest customer (companies) in choosing appropriate plastic. An
Asha enterprise is one compounder whom we will sell our plastics.

12 | Q u a s a r P l a s ti c s
Competitor analysis

In plastic manufacturing market there is no specific brand name is existing so the

market is flooded by small companies which are in this business. So they are our
biggest direct competitors.

As we are also not alone as a supplier of PET to the companies as raw materials
there are many companies in this region which are supplying PET. Indira Plastics
is one of them who is currently selling all types of plastics items. So in case of
business to business market they are our direct competitors. Kanpur is plastic
recycling city of UP. The direct threat we will also have is with the companies
operating in Kanpur. But as the distance between Kanpur and Allahabad is
600km as well as the road is not in good condition, so it will not affect much.

Marketing strategy

The Company has chosen to focus on the production of plastic packaging

materials from recycled post-consumer beverage bottles. we have identified a
significant available market in the eastern part of UP. All of our initial marketing
strategy will be to secure contracts in that segment, and after reaching full
planned capacity, look to grow in concert with that segment and related markets.
We see little need at present for further market research and development, and
will focus on continually updating our production technology in an effort to remain
in the forefront of our chosen marketplace.

Product/ service strategy

The packaging companies require high quality and highly transparent PET
bottles. The companies which are producing mineral water will reject PET bottles
with even a small impurity/ opaqueness. So we the Quasar Plastics provide high
end PET flakes for the perfect packaging.

Quasar Plastics will apply recycling and extrusion technology managed by

decades of industry specific expertise to create a competitive advantage for its
clients. These processes will produce clean, cost-efficient, recycled raw material
for manufacturers of thermoform, laminate and other high value-added products,
and high strength packaging strapping for shippers of large products and pallets,
thereby reducing costs and creating a clear pricing edge among their
competitors.

Plastic bags and plastic sheets are now in high demand. And this demand is
driven by continuously increasing promotional activities.
13 | Q u a s a r P l a s ti c s
Pricing strategy

As plastic products do not carry any brand name so only pricing and distribution
strategies will works to achieve competitive edge. The pricing strategy we will
use is penetration pricing. The price of all household plastic goods we will sell will
be lower than the market price. Also for the PET flakes and bottles the price will
be lower than the competitors. A lower price enables me to get contracts of PET
bottles and sheets from various companies.

In case of kitchenware and other household products we will provide combo

offers and discounts which a common customer expects.

Distribution strategy

As I described before that firstly we will target Allahabad city and villages close to
it. We will have a distribution center in the Allahabad city which continuously
maintains the supply of goods. So the household plastics will be sold through
small local grocery shops from which the customers can get them easily. Apart
from this we will hire street hawkers who will roam around the city and sell the
goods door to door.

PET bottles will be stored in warehouse which is close to the facility itself. The
sales people will directly contact to the companies which require these bottles for
packaging and look for the contracts. In city as stated above that we will have a
distribution center, from that center we will distribute to whole sellers.

Advertising & promotion strategy

As I described we are in both B2C and B2B so for this we will use two different
promotional strategies. For B2C business we will use flyers which will have full
detail of our product range, price, combo offers and discounts. These flyers will
circulate through the newspapers across whole city. For B2B business we will
promote through online social media and we will also develop our website
through which enable us to widely spread our contact among various companies.
the site will have full details of product which are available for companies as well
as end user.

Sales strategy

The strategy of sales effort will be to convert potential and first time customers
into long term customers. Our sales strategy is totally based upon the distribution
channel and the pricing strategies. We will have a distribution centre in the city
that will take care of sales of household and also supply products to the
wholesalers. We will also give the industrial customers a facility to order the
products through our website which will help them in reducing the delivery time.

14 | Q u a s a r P l a s ti c s
To market the products, the Company will use a number of sales agents/brokers.
They have a customer base of their own, having developed successful
relationships with their client over the years. Their customer base is currently
demanding product so they can expand upon their current base. Of course, they
will expand that to new customers when product is available.

If the Company grows faster than its prime customer base, additional capacity
may be developed. We will identify additional prospective customers who can be
attracted for our products.

Marketing & sales forecast

The first month prior to the opening will be used to get the new office in order, set
up appointment and begin marketing activities. In the first month we will focus on
the generating public visibility. The sales forecast is based on the assumption
that we will sell all of the highest volume PET bottles that we can produce.
This flake will be sold to other manufacturing companies. Recycling industry is
growing with 15-20% each year. So we can assume that we will grow with at
least 20%. There is a continuing strong demand for flake and extruded
products made from recycled PET.

Sales forecast
year 1 year 2 year 3 year 4
Annual sales 1620000 2106000 2737800 3559140
Monthly sales 135000 175500 228150 296595
PET Sales 94500 122850 159705 207617
Household items 40500 52650 68445 88978.5

Development

The development of Quasar plastics required to accomplish a series of action

and formalities. Since we are new in the market we kept our production is low
initially, as demand will increase the production will be enhanced respectively.
15 | Q u a s a r P l a s ti c s
Now we are recycling and producing only two types of plastics i.e. PVC and PET,
as we grow we will produce a wide the range of plastics and its finished product. .
The development process involves following steps:

 Legal formalities
 Office/business setup
 Future offerings and expansion plan

Development strategy

In future we are looking for the production of a variety of plastic. These plastics
will be

 LDPE ( Low density polyethylene)

 HDPE ( High density polyethylene)

LDPE plastic is used in the production carry bags and other plastic sheets as well
as cling wrap, car covers, squeeze bottles, liners for tanks and ponds, moisture
barriers in construction. And HDPE plastics are used in production of freezer
bags, water pipes, wire and cable insulation, extrusion coating.

Our development strategy will base on timely completion of the establishment of

the business centre with low execution cost. Our strategy will focus not only the
current uninterrupted production of PVC and PET and acquisition of customer as
fast as we can, but we will also look for the future expansion plan and execution
strategy.

Our future development strategy will focus on to chart out a careful plan for the
future expansion and growth of our business. The development strategy will
address following issue:

 How will we expand our services?

 Which are the new areas we will include to provide our services?
 What will be the format of the business

Our development strategy will address all those above mentioned point. As
we will grow and our earning will increase, we will produce more of PVC and
PET as well as expand in new area. We have a development strategy to
expand our facility size in order to meet the production size.

16 | Q u a s a r P l a s ti c s
 Management

The company will be managed by promoter and six supporting staff.

Rajnish Kumar Chaubey, a MBA graduate with specialization in Marketing and

Finance is the owner and promoter of Quasar Plastics. He has intensive
17 | Q u a s a r P l a s ti c s
knowledge and vast understanding in financial areas like Risk and Return
management, Investment portfolio and Capital Budgeting, which undoubtedly will
be of intense help in the business. Apart from this he also has a good knowledge
of chemicals and their properties

Marketing skills like convincing power, negotiating ability, creating promotional

strategies and sales skills will all be extremely helpful in taking the business a
long way and will prove intensely valuable to take Quasar Plastics to flaring
heights.

Thus with such potential skills, and other qualities like efficient interpersonal
skills, leadership skills and decision making quality, aptly makes him the best
promoter and eligible founder and owner of Quasar Plastics

Along with promoter five more employees will work for the accomplishment of
companies’ objective. One supervisor will work on the facility along with two
supporting staff. Supervisor who will work upon the facility does not need to be a
chemical engineer a simple technician has experience on working upon the
facility can be able to do this.

Job description

Process No of employees Proficiency

Sorting 2 unskilled
Belt Conveyer 1 semiskilled
PET Separator 1 semiskilled
Packaging 4 unskilled

Operations

The operations is defined as the process used to deliver your products and
service to the customer market place and also include manufacturing
transportation logistics travel and after sales services.

The facility is located at outside the city. Facility is divided in two parts
18 | Q u a s a r P l a s ti c s
  Recycling and Production unit
 Warehouse

The facility is located in an area of 3000 sqft..Apart from these two units there
will be an office which will look for the perpetual supply of required raw material
and also take care about the outbound logistics. The production capacity is
80kg/hr.

The operations will be based upon JIT i.e. just in time. We will have contracted
with the suppliers who can supply the raw material as quickly as we want. The
raw material contains post consumer beverage bottles and other plastic
materials. The bottles and other plastic material that can be recycled have a
specific sign from which it can be identified that it can be recycled or not.

The plastic is then transferred to respective unit to be recycled because PET and
PVC cannot be recycled simultaneously due to their different properties. There
will be two units running parallel to each other. On unit will recycle and produce
PVC plastic and other will perform the same for the PET plastic.

The recycled PVC is then moved for the plastic injection molding unit in the
various shapes. Since there are a variety of product is being produced so the
preference will be given to that product whose demand is high. All the products
will not be produced each and every day. There will be different products which
will be produced on different day according to the demand in market.

After the recycling process is completed one part of PET flake is moved to the
warehouse according to the demand of raw material which different companies
need and other part will move for the molding in bottles.

The recycled PET flake is then heated and made the viscous solution of it. The
PET resin is then feeded to the molder and molder will give it various shape
bottles. And then it left for drying. Those products which further need for
processing like buckets, the handle will be inserted after the bucket is dried.

Stages of Recycling and Production

The process of recycling of waste plastics into products of varying usefulness

involves the following essential steps:

 Sizing / Chipping
 Cleaning
 Segregation.
 Agglomerating / Colouring
 Extrusion / Palletisation
 Fabrication into end Product.

19 | Q u a s a r P l a s ti c s
 Chipping:

The plastics waste is then required to be properly sized so that those may be
fed into the extruders for processing and palletizing. The sizing operation
depends on the type and shape of the waste plastics.

During this process, attention is required to separate any powdery material

from the sized / chipped plastics.

Segregation:

Certain polymeric materials are compatible with each other at all proportions.
For example LDPE and Lldpe are generally compatible to each other at all
proportions.

The advanced technology of separating / segregating different types of waste

plastics involves ‘Floatation Process’. In this process the property of the
varying densities of different plastics is made use of for segregating different
types of plastics.

However in the Indian Context, this separation or segregation process, in

many cases, are done by manual process utilizing the availability of cheap
and expert labor force. In case the waste is contaminated with embedded
metals, proper method of separating the metals / other contaminants is
required.

Cleaning:

The scale of cleaning depends on the type of waste. Whenever a cleaning

operation is involved, it is to be ensured that the water or any other cleaning
material used, should be discharged after ascertaining that the discharge
does not contain any objectionable substance. A proper Treatment Device
may have to be deployed – like a water treatment plant / effluent treatment
plant. For drying, a suitably designed drier is used.

Many industries situated outside the metropolises, use open space for natural
drying of the cleaned waste.

20 | Q u a s a r P l a s ti c s
 Agglomerating / Colouring

In the next operation the sized plastics waste is mixed with colour master
batch in high-speed mixers / agglomerators and the output is ready for
extrusion into pellets.

Extrusion / Palletisation

This is the most important part of the process wherein the sized / chipped
plastics are plasticized and granulated to make the plastics material ready for
fabrication next.

The type and size of the Extruder depend on the type and volume of the
plastics waste.

Fabrication into end Product

Finally the reprocessed plastics granules are used as raw material for
producing end products using similar fabrication machines like Injection
Molding / Extrusion etc., depending upon specific requirement.

Scope of operations

Now presently our production capacity is 200kg/day from which in initial stages
we are utilizing around 50% of it. As the business expands we will reach to
optimum capacity utilization. We are expecting that we will start producing more
advance plastics in the fourth year of our operations and accordingly the sales
will increase and the facility will have to be expanded.

Supply chain

In the city there are various small post consumer plastic bottle collectors. To
make a continuous supply of raw material we will have four suppliers with us.
There will be one permanent supplier which will continuously supply the raw
material. In case of excess demand other suppliers will be taken into
consideration. The transportation cost will be covered by supplier only. The
finished product will be stored in the warehouse and according to the demand it
will be send to city distribution centre. The distribution center will directly sell the
finished household plastics as well as to the small shops.

21 | Q u a s a r P l a s ti c s
Our average daily demand of raw material is 300kg and the lead time we will
keep lead time of 6hrs. We keep a safety stock of 50 kg. So the reorder point is
given by

Reorder point= average daily uses x lead time + safety stock

Reorder point = 300 X .25day + 50

= 125 kg.

So at each and every day we will have minimum of 125kg (safety stock+ reorder
point) of raw material in our inventory.

This means that when the raw material level reaches to 125kg we will place the next
order. The difference time in which we will place the order and receive the order is the
lead time which is 6hrs.

22 | Q u a s a r P l a s ti c s
 Process flow chart

Gantt chart

23 | Q u a s a r P l a s ti c s
As it is an assembly line the output of one stage is feeded to the input of next stage. The
whole process will run in series format. That is the reason why no parallel process is
mentioned in the gantt chart.

Facility Layout

24 | Q u a s a r P l a s ti c s
25 | Q u a s a r P l a s ti c s
Financials
The startup cost of our business is as follows:

Start-up
Requirements  Amount
Start-up Expenses  
Legal 6,000
Stationery 500
Business Cards 500
Initial Mailing 100
Process Funding 400
Office Equipment 2,500
Total Start-up Expenses 10,000
   
Start-up Assets  
Cash Required 1,00,000
Other Current Assets 0
Long-term Assets 33,30,000
Total Assets 34,30,000
   
Total Requirements 34,40,000

26 | Q u a s a r P l a s ti c s
Income statement

The projected income is as shown below it shows that first year we will end
up with loss but from second year we will start making profits.

Particulars YEAR 1 YEAR 2 YEAR 3 Year 4

162000
net sales 0 2106000 2737800 3285360
cost of good sales 891000 1158300 1505790 1806948
gross margin 729000 947700 1232010 1478412
operating expenses:        
admin exp. 3000 3150 3308 3473
Advertisement 6000 7200 8640 10368
Salaries 192000 211200 232320 255552
Transportation 96000 105600 116160 127776
Maintenance 15000 15750 16538 17364
Electricity 4800 5040 5292 5557
Telephone 10000 11000 12100 13310
Legal exp. 10000 1000 1000 1000
Insurance 20000 20000 20000 20000
Rent 24000 26400 29040 31944
other exp 6000 6600 7260 7986
  386800 412940 451657 494330
EBITDA 342200 534760 780353 984082
less depreciation 303000 272700 245430 220887
EBIT 39200 262060 534923 763195
Less interest paid 175550 165061 153243 139926
EBT -136350 96999 381680 623269
tax @ 30% 0 29100 114504 186981
PAT -136350 67899 267176 436288

Balance sheet
27 | Q u a s a r P l a s ti c s
The projected balance sheet of four years is as follows:

Sources of Funds Year-1 Year-2 Year-3 Year-4

Capital        
Owner's capital 1930000 1930000 1930000 1930000
Surplus -136350 -68451 130274 765287
         
Net worth 1793650 1861549 2060274 2695287
Long Term loan        
Loan 1417302 1324116 1219111 1100789
Current Liabilities        
Creditors 70500 56722 68066 81680
         
Total liabilities 3281452 3242387 3347451 3877756
Application of fund        
Plant & M/C 3030000 2727000 2454300 2208870
Less depreciation 303000 272700 245430 220887
  2727000 2454300 2208870 1987983
Land 300000 300000 300000 300000
Actual Fixed Asset 3027000 2754300 2508870 2287983
Current Assets:        
Inventory 97200 315900 410670 821340
Bank 10000 40000 100000 100000
Debtors 147252 132187 117911 232703
Advance to suppliers’ 0 0 210000 335730
Investment       100000
Total Assets 3281452 3242387 3347451 3877756

Break Even Point

28 | Q u a s a r P l a s ti c s
   Amount in
VC   Amount in Rs FC Rs 
  Admin 3000
other exp 6000 Interest 175550
advertisemen
transportation 96000 t 6000
telephone 10000 Insurance 20000
wages 119250 Salary 192000
carriage inward 238500 Rent 24000
power 119250 maintenance 15000
raw material 414000 depreciation 303000
  Legal 10000
total 1003000 Total 748550
contribution 617000  
   
pv ratio 0.3808642  
   
BEP units 1965398.703 135000
BEP SALES 15 in months  
 
  1.21 In years  
     
As the BEP is 15months it means that at 15th month we will be in a trade off
total expenses and revenue.

Appendix
Annuity table:
29 | Q u a s a r P l a s ti c s
 total loan
amt.= pmt[1-1/(1-i)^n]/i
n is number of years
i is interest rate
#####
loan amount 1500000 #
#####
interest rate annually 0.12 #
21520.6
pmt = 21521 4

balance Annual
month EMI Interest principle O/S interest
1 21521 15000 6521 1493479  
2 21521 14935 6586 1486894  
3 21521 14869 6652 1480242  
4 21521 14802 6718 1473524  
5 21521 14735 6785 1466738  
6 21521 14667 6853 1459885  
7 21521 14599 6922 1452963  
8 21521 14530 6991 1445972  
9 21521 14460 7061 1438911  
10 21521 14389 7132 1431780  
11 21521 14318 7203 1424577  
12 21521 14246 7275 1417302 175550
13 21521 14173 7348 1409954  
14 21521 14100 7421 1402533  
15 21521 14025 7495 1395038  
16 21521 13950 7570 1387468  
17 21521 13875 7646 1379822  
18 21521 13798 7722 1372099  
19 21521 13721 7800 1364300  
20 21521 13643 7878 1356422  
21 21521 13564 7956 1348466  
22 21521 13485 8036 1340430  
23 21521 13404 8116 1332313  
24 21521 13323 8198 1324116 165061
25 21521 13241 8279 1315836  
26 21521 13158 8362 1307474  
27 21521 13075 8446 1299028  
28 21521 12990 8530 1290498  

30 | Q u a s a r P l a s ti c s
 29 21521 12905 8616 1281882  
30 21521 12819 8702 1273180  
31 21521 12732 8789 1264391  
32 21521 12644 8877 1255515  
33 21521 12555 8965 1246549  
34 21521 12465 9055 1237494  
35 21521 12375 9146 1228348  
36 21521 12283 9237 1219111 153243
37 21521 12191 9330 1209782  
38 21521 12098 9423 1200359  
39 21521 12004 9517 1190842  
40 21521 11908 9612 1181229  
41 21521 11812 9708 1171521  
42 21521 11715 9805 1161716  
43 21521 11617 9903 1151812  
44 21521 11518 10003 1141810  
45 21521 11418 10103 1131707  
46 21521 11317 10204 1121504  
47 21521 11215 10306 1111198  
48 21521 11112 10409 1100789 139926
49 21521 11008 10513 1090277  
50 21521 10903 10618 1079659  
51 21521 10797 10724 1068935  
52 21521 10689 10831 1058103  
53 21521 10581 10940 1047164  
54 21521 10472 11049 1036115  
55 21521 10361 11159 1024955  
56 21521 10250 11271 1013684  
57 21521 10137 11384 1002300  
58 21521 10023 11498 990803  
59 21521 9908 11613 979190  
60 21521 9792 11729 967461 124920
61 21521 9675 11846 955615  
62 21521 9556 11964 943651  
63 21521 9437 12084 931567  
64 21521 9316 12205 919362  
65 21521 9194 12327 907035  
66 21521 9070 12450 894584  
67 21521 8946 12575 882010  
68 21521 8820 12701 869309  
69 21521 8693 12828 856481  
70 21521 8565 12956 843526  

31 | Q u a s a r P l a s ti c s
 71 21521 8435 13085 830440  
72 21521 8304 13216 817224 108010
73 21521 8172 13348 803876  
74 21521 8039 13482 790394  
75 21521 7904 13617 776777  
76 21521 7768 13753 763024  
77 21521 7630 13890 749134  
78 21521 7491 14029 735104  
79 21521 7351 14170 720935  
80 21521 7209 14311 706624  
81 21521 7066 14454 692169  
82 21521 6922 14599 677570  
83 21521 6776 14745 662825  
84 21521 6628 14892 647933 88957
85 21521 6479 15041 632892  
86 21521 6329 15192 617700  
87 21521 6177 15344 602356  
88 21521 6024 15497 586859  
89 21521 5869 15652 571207  
90 21521 5712 15809 555398  
91 21521 5554 15967 539432  
92 21521 5394 16126 523305  
93 21521 5233 16288 507018  
94 21521 5070 16450 490567  
95 21521 4906 16615 473952  
96 21521 4740 16781 457171 67486
97 21521 4572 16949 440222  
98 21521 4402 17118 423104  
99 21521 4231 17290 405814  
100 21521 4058 17462 388352  
101 21521 3884 17637 370715  
102 21521 3707 17813 352901  
103 21521 3529 17992 334910  
104 21521 3349 18172 316738  
105 21521 3167 18353 298385  
106 21521 2984 18537 279848  
107 21521 2798 18722 261126  
108 21521 2611 18909 242216 43293
109 21521 2422 19098 223118  
110 21521 2231 19289 203829  
111 21521 2038 19482 184346  
112 21521 1843 19677 164669  

32 | Q u a s a r P l a s ti c s
 113 21521 1647 19874 144795  
114 21521 1448 20073 124722  
115 21521 1247 20273 104449  
116 21521 1044 20476 83973  
117 21521 840 20681 63292  
118 21521 633 20888 42404  
119 21521 424 21097 21308  
120 21521 213 21308 0 16031

Bibliography

 Crisil report on plastic industry

 Plastic waste option for small scale recourse recovery by Inge
Lardinois
 Small scale recycling of plastic by- Jon Vogler

33 | Q u a s a r P l a s ti c s