Business Plan on

PARIWARTAN NEPAL PRIVATE LIMITED

Submitted to
Bharat Singh Thapa
Course Facilitator
Apex College
Pokhara University

Submitted for the requirement of the course

‘Business Development Plan: Graduate Seminar’.

Submitted By
Prasanna Poudel
Section Name: Nirvana
Examination Roll Number: 13220346

25 Feb. 2015
Kathmandu, Nepal
 Declaration

I, the undersigned declare that this business development plan entitled, Business Plan on
Pariwartan Nepal Private Limited, is a result of my own study/ research carried out in the
year 2014/15. It has not been previously submitted to any other university or any other
examination (s).

Signature

_______________

Prasanna Poudel

Date: 2015-02-25

Apex College

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 ACKNOWLEDGEMENT

I take this opportunity to express my sincere appreciation to the people without whose
support I would have faced insurmountable obstacles in preparation of this business
development plan.

Firstly, I would like to express my profound sense of gratitude to Mr. Bharat Singh
Thapa, Course facilitator, for providing me great attention and time. I really appreciate
his guidance and thankful for it.

I would also like to thank Ms. Namrata Mainali, Mr. Sunil Basnet for furnishing me
with valuable information that was critically needed for undertaking this work.

Finally, I would like to thank friends and families for their inspiration and support during
the preparation of this report.

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Table of Contents
EXECUTIVE SUMMARY ............................................................................................... ix

SECTION I ......................................................................................................................... 1

INTRODUCTION .............................................................................................................. 1

1.1 Background ............................................................................................................... 1

1.2 Vision, Mission and Objective .................................................................................. 2

1.2.1 Vision.................................................................................................................. 2

1.2.2 Mission ............................................................................................................... 2

1.2.3 Objectives ........................................................................................................... 2

1.3 Location and Premises .............................................................................................. 2

1.4 Keys to Success ......................................................................................................... 2

SECTION II ........................................................................................................................ 4

PEOPLE AND ORGANIZATION ..................................................................................... 4

2.1 Management team ..................................................................................................... 4

2.2 Managerial and technical competency ...................................................................... 4

2.2.1 Manager .............................................................................................................. 4

2.2.2 Factory Supervisor .............................................................................................. 4

2.2.3 Accountant .......................................................................................................... 4

2.2.4 Designer .............................................................................................................. 5

2.2.5 Waste Sorter ....................................................................................................... 5

2.2.6 Machine Operator ............................................................................................... 5

2.2.7 Labor ................................................................................................................... 5

2.3 Organization chart ..................................................................................................... 5

2.4 Future planning ......................................................................................................... 6

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SECTION III ....................................................................................................................... 7

INDUSTRY AND OPPORTUNITY .................................................................................. 7

3.1 Industry and Business Outlook ................................................................................. 7

3.2 Competitive Analysis ................................................................................................ 9

3.2.1 Industry rivalry ................................................................................................... 9

3.2.2 Threat of potential entrant ................................................................................ 10

3.2.3 Bargaining power of consumers ....................................................................... 10

3.2.4 Bargaining power of supplier ........................................................................... 10

3.2.5 Threats of substitute.......................................................................................... 10

3.3 SWOT Analysis....................................................................................................... 10

3.3.1 Strengths ........................................................................................................... 10

3.3.2 Weaknesses ....................................................................................................... 10

3.3.3 Opportunities .................................................................................................... 11

3.3.4 Threats .............................................................................................................. 11

3.4 Approval and licensing............................................................................................ 11

SECTION IV .................................................................................................................... 12

MARKETING PLAN ....................................................................................................... 12

4.1 Marketing Research................................................................................................. 12

4.2 Market Segmentation .............................................................................................. 13

4.2.1 Market segmentation for dolls .......................................................................... 13

4.2.2 Market segmentation for bags .......................................................................... 14

4.3 Target Market .......................................................................................................... 14

4.4 Positioning Strategy ................................................................................................ 15

4.5 Product Strategy ...................................................................................................... 15

4.6 Pricing ..................................................................................................................... 16

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 4.6.1 Markup pricing ................................................................................................. 16

4.6.2 High low pricing method .................................................................................. 16

4.7 Distribution.............................................................................................................. 16

4.7.1 Zero level channel ............................................................................................ 17

4.7.2 Producer-retailer- customer .............................................................................. 17

4.8 Promotion ................................................................................................................ 17

SECTION V ...................................................................................................................... 20

FINANCIAL PLAN.......................................................................................................... 20

5.1 Start-up Costs and Financial Structure .................................................................... 20

5.1.1 Start-up Cost ..................................................................................................... 21

5.1.2 Financial Structure ............................................................................................ 21

5.2 Sales Forecasting ..................................................................................................... 22

5.3 Pro-forma Income Statement .................................................................................. 23

5.4 Pro-Forma Balance Sheet ........................................................................................ 24

5.5 Pro-forma Cash Flow Statement ............................................................................. 25

5.6 Investment Appraisals ............................................................................................. 26

5.7 Key Financial Matrices/Ratios ................................................................................ 27

SECTION VI .................................................................................................................... 28

OPERATIONAL PLAN ................................................................................................... 28

6.1 Production/Operation Process ................................................................................. 28

6.1.1 Waste collection ............................................................................................... 28

6.1.2 Waste sorting .................................................................................................... 29

6.1.3 Waste cleaning .................................................................................................. 29

6.1.4 Molding (For plastic) ........................................................................................ 29

6.1.5 Conversion into cottons .................................................................................... 29

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 6.1.6 Designing .......................................................................................................... 30

6.1.7 Cutting and sewing (For bags).......................................................................... 30

6.1.8 Cutting, inserting cotton into dolls body and sewing (For dolls) ..................... 30

6.1.9 Packaging.......................................................................................................... 30

6.2 Inventory Management ........................................................................................... 30

6.3 Quality Assurance and Control ............................................................................... 32

SECTION VII ................................................................................................................... 33

CRITICAL CRISKS: IDENTIFICATION, EVALUATION AND MITIGATION ........ 33

7.1 Critical Risk Factors ................................................................................................ 33

7.2 Evaluation of Critical Risk Factors. ........................................................................ 33

7.3 Contingency Plan and exit strategy ......................................................................... 33

Annexure .............................................................................................................................. I

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List of Figures

Figure 1 Organization Chart ............................................................................................... 5

Figure 2 Waste composition ............................................................................................... 8
Figure 3 Porter's Five-Force Model .................................................................................... 9
Figure 4 Marketing Segmentation for dolls ...................................................................... 13
Figure 5 Marketing Segmentation for bags ...................................................................... 14
Figure 6 Forecasted sales revenue .................................................................................... 22

List of Table

Table 1 Start-up Cost ........................................................................................................ 21

Table 2 Financial Structure ............................................................................................... 21
Table 3 Pro-forma Income Statement ............................................................................... 23
Table 4 Pro-forma Balance sheet ...................................................................................... 24
Table 5 Pro-forma Cash flow Statement ........................................................................... 25
Table 6 Investment Appraisal ........................................................................................... 26
Table 7 Key Ratios............................................................................................................ 27
Table 8 Closing stock........................................................................................................ 31

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 EXECUTIVE SUMMARY

Pariwartan Nepal aims to promote social entrepreneurship by managing textile wastes

and plastics produced in the Kathmandu Valley. The company employs socially
backward women in the production process. These women prepare handmade dolls and
bags from textile and plastic wastes and the company sells those products in the market.
The company will be formally registered in the name of “Pariwartan Nepal Private
Limited”. Company's factory and office will be located at Kageshowori-Manohara
Municipality ward no-10, Kathmandu. The factory premises will cover 1 ropani of land.

The founder and owner of Pariwartan Nepal is Mr. Prasanna Poudel. Mr. Poudel is an
MBA from Apex College. Previously, he was engaged with various NGO and INGOs.
The manager of the company is also an MBA graduate with 5 years of experience in
related business field. Similarly, the designer is fresh college graduate of fashion
designing. The accountant and factory supervisors are BBA graduate with 2 years of
work experience. The is rising awareness, of reuse and recycle, among public along with
rising population, ultimetly producing waste, there is high prospect of growth for
company established with the aim of environment conservation by recycling waste. The
type of industrialisation and urbanisation inside kathmandu valley generate the sufficient
waste needed for successful operation of the company. Government of Nepal along with
different NGO and INGOs and very few private firms are practising in the the field of
textile waste management where are there are some companies which are successfully
running cycling business of plastics.

Pariwartan Nepal will come up with two different products, namely bags and dolls, made
up of textile waste. Each of the products will use 60% waste as product ingredient. The
target market for dolls will be kindergarten, baby day care, and primary schools.
Similarly, for fancy bags, female students will be the target market. Positioning statement

ix
or tagline of Pariwartan Nepal will be: “Change?? Yes we can.” As Promotional
strategy, the company will use Pull Strategy, which involves promoting heavily to end
users and consumers to create a demand. And for the distribution through retailers it will
use both pull and push strategy.

The total initial investment will be of Rs 6792750. The initial investment consists
purchase of fixed asset worth Rs 6,457,750.00 and pre operating expenses worth Rs
335,000.00. The profitability ratios of the company are in increasing trend. NPV, IRR
and ratios shows the promising investment opportunity in the business. The production
process starts with the collection of textile and plastics waste. For waste collection,
Pariwartan Nepal will use three different techniques via Rag pickers, Waste collection
containers and Waste collection program. After the dolls and bags are made from the
production department, the factory supervisor and designer are responsible for quality
control. They will see individual product before leaving for delivery. The responsibility
during this process is to see whether the bags are usable or nor, to inspect if there exist
any production defects and to check whether the other purchased accessories are inserted
in right way or not. And for dolls, they will see the body architecture, check whether
body parts are rightly placed or not, whether the decoration in properly made or not.

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 SECTION I

INTRODUCTION

1.1 Background
Industrialization has become an important factor to the development of a country‟s
economy, through the establishment of plants and factories. However, the waste or by-
products discharged from them are severely disastrous to the environment consists
various kind of contaminant which contaminate the surface water, ground water and soil.
There are number of reasons the waste are not safely treated. It is very essential to
understand the impacts of industrial waste to the environment (freshwater, seawater,
land). The industrial discharge carries various types of contaminants to the river, lake and
groundwater. The quality of freshwater is very important as it is highly consumed by
human for drinking, bathing, irrigation etc. The presence of contaminants from industrial
contaminant within the water may reduce the yield of crops and the growth of plant and it
will harmful to the aquatic living organism too.

With rapid urbanization and centralized migration in the Kathmandu Valley, especially in
the Capital, the waste produced by Kathmandu Valley residents has almost doubled in
recent times. According to Solid Waste Management Technical Support Centre, about
1,435 metric tons of waste is daily produced in the Kathmandu valley. Known for its
cultural heritage, it has been overwhelmed with serious environmental problems.
Spontaneous urbanization, rising human growth, increased polluting vehicles and
industries, centralized development activities, etc., have been gradually degrading the
living environment in the capital city. The consequences of these practices have resulted
in continuous damage to city‟s cultural heritage, and rapid loss of agricultural
lands. Rapid environmental degradation in the valley has resulted in a gradual loss of
city‟s landscape and urban environment. Hence, realizing this fact, the company
Pariwartan Nepal aims to promote social entrepreneurship by managing textile wastes
and plastics produced in the Kathmandu Valley. The company employs socially

1
backward women in the production process. These women prepare handmade dolls and
bags from textile and plastic wastes and the company sells those products in the market.
The company will be formally registered in the name of “Pariwartan Nepal Private
Limited”.

1.2 Vision, Mission and Objective

1.2.1 Vision
To be leader in solid waste management by empowering local.

1.2.2 Mission
To be socially-oriented and to contribute to the well-being of society by eliminating
negative environmental impact.

1.2.3 Objectives
The objectives of Pariwartan Nepal are as follows:

 To help in solid waste management and preservation of environment.

 To empower females of deprived sectors.
 To promote social entrepreneurship in Nepal.
 To earn profit and recurring revenue.

1.3 Location and Premises

Company's factory and office will be located at Kageshowori-Manohara Municipality
ward no:10, Kathmandu. The factory premises will cover 1 ropani of land.

1.4 Keys to Success

Pariwartan Nepal has determined the keys to success in the waste management field

 Environmental Responsibility

Ensuring the collection and management of solid waste in an environmentally sound

manner and in accordance with regulatory requirements.

2
  Continuous Improvement

Focusing on improving the organization‟s efforts through coordination, participation, and

education with various stakeholders and organizations.

 Integrity

Acting in an honest, ethical, professional, and respectful manner with each other and
community, taking personal responsibility, and being accountable for achieving results.

 Teamwork

Promoting unity and cooperation among staff, as well as with our community,
contractors, and stakeholders, to meet our purpose of achieving the mission, vision, and
objectives.

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 SECTION II

PEOPLE AND ORGANIZATION

2.1 Management team

The founder and owner of Pariwartan Nepal is Mr. Prasanna Poudel. Mr. Poudel is an
MBA from Apex College. Previously, he was engaged with various NGOs and INGOs.
He also possesses the commercial banking experience. During his engagement in NGO
and INGO, the desire to get involved in social entrepreneurship aroused in him. The
manager of the company is also an MBA graduate with 5 years of experience in related
business field. Similarly, the designer is fresh college graduate of fashion designing. The
accountant and factory supervisors are BBA graduate with 2 years of work experience.

2.2 Managerial and technical competency

2.2.1 Manager
The manager is responsible for the administration of the business. The manager looks
after the overall operation of the business, such as marketing and distribution, human
resource management etc and will take important decisions of the business. He/she is
responsible for market research and all other marketing related activities. Other
employees including accountant and designer should report him/her.

2.2.2 Factory Supervisor

The duties and responsibilities of factory supervisor include inspection and supervision of
labor, waste sorter, and machine operator. These employees should report him/her before
making any decisions.

2.2.3 Accountant
The accountant is responsible for looking after the finance of the store. Duties and
responsibilities of accountant include recording transactions, maintaining journal, ledger,
cash receipts, processing payments etc.

4
2.2.4 Designer
The major tasks of designer include designing eye-pleasing bags and dolls of latest trend.

2.2.5 Waste Sorter

The responsibility of waste sorter is to segregate the collected waste into plastics and
textiles. Later the sorter is responsible to sort plastics based on color and textile based on
the design of designer. The sorter is also responsible for cleaning the waste from waste
treatment site inside factory.

2.2.6 Machine Operator

Machine Operator is responsible for operating the molding and textile-crushing machine.
He/she primarily looks after the functioning and condition of machine. If any part of
machine dysfunctions, the operator should report to the factory supervisor.

2.2.7 Labor
Labors are socially backward female of nearby locations. They make the dolls and bags
as per the instruction of designer.

2.3 Organization chart

Figure 1 Organization Chart

Founder

Manager

Factory
Accountant Designer
Supervisor

Waste Machine
Labors
Sorter Operator

5
Pariwartan Nepal is headed by the owner, to whom the manager needs to report.
Accountant, Factory supervisor and designer need to report the manager. And, all other
human resource including waste sorter, machine operator and labors are under factory
supervisor in the organizational hierarchy.

2.4 Future planning

After five years of operation, company aims to open another factory in Pokhara and
Dharan. Further, company plans to engage into food waste in near future. Similarly, the
company is planning to tie up with NGOs to promote its bags in market.

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 SECTION III

INDUSTRY AND OPPORTUNITY

3.1 Industry and Business Outlook

Rapid and uncontrolled urbanization, lack of public awareness, and poor management by
municipalities have intensified environmental problems in towns in Nepal, including
unsanitary waste management and disposal. The solid waste management (SWM) has
become a major concern for municipalities and the country as a whole. The
environmental problem caused by improper solid waste

Management in the expanding cities is one of the most urgent improvement issues for the
government of Nepal and the stakeholders. The environmental implication of solid waste
management failure has resulted in the decline of health and hygiene conditions of a
growing population. Nepal and especially the capital Kathmandu are today going through
rapid changes and the urbanization is going fast. The urbanization result in more waste
and concurrently the development result in new life patterns, standard of living and
attitudes change the composition. New industries are erected that changes the waste
composition to include more and more hazardous waste.

The situation in Kathmandu is not representative for whole Nepal but if the developing
problems that are connected with solid waste are not taken care of further urbanization
will most likely give similar scenario in other growing cities.

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Waste composition

Figure 2 Waste composition

Textiles,rubber Others
Metals leather 5%
2% 3%
Glass
3%

Paper
9%

Organic waste
Plastics 66%
12%

Source: Asian Development Bank

The waste composition analysis of Kathmandu valley indicates that the highest waste
fraction is organic matter (66%), followed by plastics (12%), paper and paper products
(9%), others (5%), and glass (3%). Metal, textiles, and rubber and leather each accounted
for 2% or less. The content of major reusable and recyclable materials (i.e.,plastic, paper
and paper products, metal, glass, rubber and leather, and textiles) comprised 29% on
average.

The is rising awareness, of reuse and recycle, among public along with rising population,
ultimetly producing waste, there is high prospect of growth for company established with
the aim of environment conservation by recycling waste. The type of industrialisation and
urbanisation inside kathmandu valley generate the sufficient waste needed for successful
operation of the company.

8
Government of Nepal along with different NGO and INGOs and very few private firms
are practising in the the field of textile waste management where are there are some
companies which are successfully running cycling business of plastics.

3.2 Competitive Analysis

Figure 3 Porter's Five-Force Model

3.2.1 Industry rivalry

Very few businesses and NGOs are operating on the waste management field in
Kathmandu valley. All these companies and NGOs will be rivals for Pariwartan Nepal.
However, the intensity of rivalry will not be very high as Pariwartan Nepal will
differentiate itself from other business with its concepts of reuse and upcycling.

9
3.2.2 Threat of potential entrant
Due to the nature of business, waste management, low economics of scale, cost
disadvantages among competing products from China and capital requirement the threat
of potential entrants is relatively low.

3.2.3 Bargaining power of consumers

The bargaining power of consumers is relatively high for the product of Pariwartan Nepal
as consumer as there are similar low cost Chinese products. Even the product switching
cost is low.

3.2.4 Bargaining power of supplier

As the company is using primarily using wastes and trashes as the raw material for its
production, process the bargaining power of supplier is low. Even for cover of dolls and
other accessories, the bargaining power of supplier is low because of high competition
among the suppliers.

3.2.5 Threats of substitute

Threat of substitute product is high in this business. As bags and dolls are not basic goods
substitute product can ruin the company's business. Customers may choose other types of
bags and instead of dolls they may choose other decorative or entertainers for their kids.

3.3 SWOT Analysis

3.3.1 Strengths
 Trained and motivated workforce
 Strong Business concept for conservation of environment and upliftment
of marginalized group of people
 Eye pleasing designs from expert designer
 Promising location of business

3.3.2 Weaknesses
 Inefficient waste collection system
 Low market coverage
10
3.3.3 Opportunities
 Easy availability of raw material
 Rising awareness among public
 Positive impact on environment
 Availability of assistance from both government agencies and NGOs.

3.3.4 Threats
 Negative reaction from neighboring community

3.4 Approval and licensing

The company will be formally registered in the name "Pariwartan Nepal Private Limited"
under The Companies Act, 2063 (2006), Section 3 to 5 in the Office of the Company
Registrar.

Further, the company will obtain license to work on solid waste management from
Kageshwori-Manohara Metropolitan under the Solid Waste Management Act 2068.

11
 SECTION IV

MARKETING PLAN

4.1 Marketing Research

Very few businesses and NGOs are operating on the waste management field in
Kathmandu valley. All these companies and NGOs will be rivals for Pariwartan Nepal.
However, the intensity of rivalry will not be very high as Pariwartan Nepal will
differentiate itself from other business with its concepts of reuse and upcycling. There are
very less organization that provides vocational trainings to women and offer them job as
well while working on waste management.

There is the huge scope of recycled and upcycled products in the national as well as
international market. On the top of that the business of non-profitable and social
organization that works for the welfare of society and people goes really well due to the
emotional attachment of the people. Once the people will know about the objective of the
company, company can attract huge number of customer segment. With rapid
urbanization and centralized migration in the Kathmandu Valley, especially in the
Capital, the waste produced by Kathmandu Valley residents has almost doubled in recent
times. According to Solid Waste Management Technical Support Centre, about 1,435
metric tons of waste is daily produced in the Kathmandu valley. Due to the nature of
business, waste management, low economics of scale, cost disadvantages among
competing products from China and capital requirement the threat of potential entrants is
relatively low. The bargaining power of consumers is relatively high for the product of
Pariwartan Nepal as consumer as there are similar low cost Chinese products. Even the
product switching cost is low. As the company is using primarily using wastes and
trashes as the raw material for its production, process the bargaining power of supplier is
low. Even for cover of dolls and other accessories, the bargaining power of supplier is
low because of high competition among the suppliers. Threat of substitute product is high
in this business. As bags and dolls are not basic goods substitute product can ruin the

12
company's business. Customers may choose other types of bags and instead of dolls they
may choose other decorative or entertainers for their kids.

4.2 Market Segmentation

4.2.1 Market segmentation for dolls

Company will segment its doll market based on demographic segmentation and the
frequency of purchase.

Figure 4 Marketing Segmentation for dolls

Kids

Demographic Youth

Market Mums
Segmentation for
dolls

Interior Designers
Purchase
frequency
Kindergarten, baby
day care and
primary schools

For the purpose of effective marketing, the market of dolls will be segmented under
demographic segment and under purchase frequency segment. Under demographic
segment, key segment will be kids, youth and mums. Similarly purchase segment will
include the group of interior designers and kindergarten, baby day care and primary
schools.

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4.2.2 Market segmentation for bags
For shopping bags, the mass marketing will be done. And for fancy bags market will be
segmented based on the demography.

Figure 5 Marketing Segmentation for bags

Female

Gender

Male
Market
segmentation for Demographic
bags
Students

Profession

Professional

The market segments for bags will be male, female, students and professionals based on
demographic segmentation.

4.3 Target Market

Target Marketing involves breaking a market into segments and then concentrating your
marketing efforts on one or a few key segments. The target market for dolls will be
kindergarten, baby day care, and primary schools. Similarly, for fancy bags, female
students will be the target market.

14
4.4 Positioning Strategy
Positioning defines where your product (item or service) stands in relation to others
offering similar products and services in the marketplace as well as the mind of the
consumer. Pariwartan Nepal will position itself as a brand that cares the environment and
deprived members of the society. Positioning statement or tagline of Pariwartan Nepal
will be: “Change?? Yes we can.” People who need bags and dolls will remember us for
the unique design and qualitative products and our commitment to environment and
society.

4.5 Product Strategy

Pariwartan Nepal will come up with two different products made up of textile waste.
Each of the products will use 60% waste as product ingredient.

Bag

A. Reusable shopping bag

Shopping bags are medium sized bags, typically around 10-20 liters, which will be used
by grocery shoppers to carry home their purchases. With the expert designers and
specially trained worker, Pariwartan Nepal will produce the reusable shopping bags with
the use of waste such as textile, leather and thick plastics.

B. Fancy bag

Fancy bags are made of waste materials that are collected by „ragpickers‟. During the
production process, the waste will be cleaned and fabricated into new products.
Pariwartan Nepal will use the concept of „upcycling': waste materials are refabricated into
new products with a higher value.

Doll

Dolls will be produced with different designs, shapes and sizes targeting the different age
groups of customers. The interiors of doll body will be filled with the cotton made from
the waste and the external cover will be purchased from market. Pariwartan Nepal will
produces 3 types of dolls:

15
 A. Animal them
This will includes the doll with the appearance of animals like bear, dog, rabbit,
elephants etc.

B. Baby theme
This will include the baby boy doll and baby girl doll
C. Religious theme
This category will include the dolls with the appearance of different gods like
Ganesh, Shiva etc. Further Santa clause will be produced from august to
November.

4.6 Pricing
A pricing strategy takes into account segments, ability to pay, market conditions,
competitor actions, trade margins, and input costs, amongst others. It is targeted at the
defined customers and against competitors. Pariwartan Nepal will follow two type of
pricing strategy for its products.

4.6.1 Markup pricing

For dolls and shopping bags, Pariwartan Nepal will use the markup pricing. 20% of
markup will be added to cost incurred while producing the product.

4.6.2 High low pricing method

For fancy bags, high low pricing method will be used. High price will be charged for the
fresh designed bags and later when the bag's popularity has passed, they will be sold to
the customers by giving discounts.

4.7 Distribution
Pariwartan Nepal will use two modes of distribution channels.

16
4.7.1 Zero level channel
A state of art website will be built in order to transact directly with customers via
internet. Customer will visit Pariwartan Nepal's website and place the order and our staff
will promptly deliver the goods inside and within the periphery of ringroad. Delivery cost
will be charged to the customer according to the distance from our location.

Similarly, direct marketing will be done at kindergarten, baby day care, and primary
schools.

4.7.2 Producer-retailer- customer

Another distribution channel will consists of retailer in between customer and us.
Company will place products in the renowned shopping malls and departmental stores
within Kathmandu valley.

4.8 Promotion
As Promotional strategy, the company will use Pull Strategy, which involves promoting
heavily to end users and consumers to create a demand. And for the distribution through
retailer it will use both pull and push strategy.

Major Promotion Strategy

 Retailer empowerment:

It will provide a handsome amount of margin for our retailers which will induce retailer
to sell more number of products. Retailer will take initiation to sell our product while
applying this strategy.

 Press conference:

The company will organize a press conference during our inauguration program.
Inauguration program will create awareness among the society about our company and
products. It will inform our mission, vision and objectives among the participants during
the program.

17
Further, it will inform the participants about our production process which will upcycle
the plastics and textile wastes into useful and decorative goods. Our contribution towards
the environment and society will be emphasized during the programme.

 Expos and tradeshows

Pariwartan Nepal will participate in the expose and tradeshows related to Nepalese
handicrafts and production. It will promote the product by establishing stall and will
always communicate our consciousness for well being of society and environment.

 Awareness Program

The company will organize awareness program among college students for environment.
During the program, insights will be provided on how social problems can be converted
to business motive. Basically, the three objectives of the awareness programs are:

o To collect textile waste from college students.

o To promote the company and products via dolls and bags among college
students.
o To induce social entrepreneurship among college students.

 Direct marketing (For Dolls)

Kids are our prime consumer for dolls. Thus primary schools, kindergarten and child
cares can be the potential buyers for dolls as they can buy dolls in large number for the
children‟s. Thus, the manager will visit different childcares, primary school, and
kindergarten in order to inspire the owner of those institutions to purchase dolls for their
class rooms.

 Tie up with leading noodle (For Dolls):

It will tie up as a gift partner brand with leading Noodle Company in Nepal. The Noodle
Company will list our doll brand in some of their gift coupon, which will be put inside

18
the noodle packet. The objective of the tie up is to induce demand for the dolls while
giving opportunity to experience product.

 Online promotion

Profile will be created on Facebook, twitter and YouTube where it will be updating
customers about new product and designs. The company will gift dolls and bags for those
customers who are heavily engaged on our Facebook page.

 Magazines and FM

Advertisements will be given on renowned magazines for fancy bags. And company will
also sponsor FM program and provide dolls and bags as gift for one lucky caller.

19
 SECTION V

FINANCIAL PLAN

5.1 Start-up Costs and Financial Structure

This section consists of the financial plan of Pariwartan Nepal Pvt. Ltd. It includes start-
up cost and financial structure of the company. It includes projected income statement
and projected balance sheet for next five years. The key financial assumptions on which
this financial plan based are as below:

 Sales revenue increases by 20% per annum

 Salary increases by 20% per annum
 Repair and maintenance increases by 10% per annum
 Water, stationary, fuel, marketing expenses, electricity expenses increases by 10%
per annum
 Purchases increases by 10% every year
 Transportation increases by 20% every year
 Direct labor increases by 10% each year
 Manufacturing overheads increases by 10% each year
 Sundry creditor is 20% COGS
 Sundry debtors is 50% of sales revenue
 Dividend paid in year 3 is 20% of Profit after tax
 Dividend paid in year 4 is 30% of Profit after tax
 Dividend paid in year 5 is 50% of Profit after tax

20
5.1.1 Start-up Cost
Table 1 Start-up Cost

Start-up Cost

Particulars Annexure Amount

A Purchase of Fixed Assets 1 6,457,750.00

B Pre operating expenses 2 335,000.00

Total 6,792,750.00

The total start up cost will be of Rs 6,792,750.00. The initial investment consists
purchase of fixed asset worth Rs 6,457,750.00 and pre operating expenses worth Rs
335,000.00. The details of fixed assets and pre operating expenses are shown on annexure
1 and annexure 2 respectively.

5.1.2 Financial Structure

Table 2 Financial Structure

Capital Structure

Share Capital 4,900,000.00

Long term Loan 2,100,000.00

Total 7,000,000.00

A sum of NPR 7,000,000.00 is needed to start Pariwartan Nepal Private Limited. Out of
NPR 7,000,000.00, the owner will contribute 70% of capital i.e. 4,900,000.00 and

21
remaining 30%, i.e. 2,100,000.00 will be borrowed from commercial bank at the rate of
12% per annum.

5.2 Sales Forecasting

Figure 6 Forecasted sales revenue

Chart Title
20,000,000

18,000,000

16,000,000

14,000,000

12,000,000

10,000,000
Series1
8,000,000

6,000,000

4,000,000

2,000,000

-
Year 1 Year 2 Year 3 Year 4 Year 5

Company is expecting to earn the sales revenue of Rs 90, 66,000 from first year of sales.
The sales growth rate is expected to increase by 20% from second year to fifth year. The
sales revenue of first year is shown on annexure 3. The forecasting is based on the recent
economic outlook of the country and the political situation is expected to be stable and
positive towards private business.

22
5.3 Pro-forma Income Statement

Table 3 Pro-forma Income Statement

Pro-forma Income Statement

An
nex
Particulars ure Year 1 Year 2 Year 3 Year 4 Year 5

Sales revenue 3 90,66,000 1,08,79,200 1,30,55,040 1,56,66,048 1,87,99,258

Cost of Goods
sold 4 (53,53,500) (59,32,350) (64,48,785) (70,25,504) (76,70,262)

Gross profit 37,12,500 49,46,850 66,06,255 86,40,545 1,11,28,995

Operating
expenses 5 (14,05,000) (15,93,300) (18,12,430) (20,67,873) (23,66,140)

Depreciation
expense 6 (9,65,150) (8,19,580) (6,96,005) (5,91,094) (5,02,021)
Preliminary
expense written
off 7 (67,000) (67,000) (67,000) (67,000) (67,000)

Interest 8 (2,52,000) (2,12,333) (1,67,905) (1,18,147) (62,417)

Profit before tax 10,23,350 22,54,637 38,62,915 57,96,431 81,31,417

Income tax @
25% (2,55,838) (5,63,659) (9,65,729) (14,49,108) (20,32,854)

Profit after tax 7,67,513 16,90,978 28,97,186 43,47,323 60,98,563

Dividend (5,79,437) (13,04,197) (30,49,281)

Profit after
dividend 7,67,513 16,90,978 23,17,749 30,43,126 30,49,281

On the opening year company is expecting to earn Rs 7, 67,513 as net profit after tax. For
two years of operation, company will not provide any dividend and in third year 20%
dividend will be provided to owner and for fourth year cash dividend will be 30% and

23
fifth year 50% cash dividend will be provided. Each items of the income statement is
detailed on the mentioned schedule.

5.4 Pro-Forma Balance Sheet

Table 4 Pro-forma Balance sheet

Balance sheet
Particulars Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

Capital and
Liabilities

Capital 49,00,000 49,00,000 49,00,000 49,00,000 49,00,000 49,00,000

Retained
Earnings - 7,67,513 24,58,490 47,76,239 78,19,365 1,08,68,647
12% Long
Term Loan 21,00,000 17,69,440 13,99,212 9,84,557 5,20,143 -
Sundry
Creditors 25,500 28,050 30,855 33,941 37,335

Tax payable 2,55,838 5,63,659 9,65,729 14,49,108 20,32,854

Total Capital
and Liabilities 70,00,000 77,18,290 93,49,412 1,16,57,380 1,47,22,557 1,78,38,835

Assets

Fixed Assets 64,07,750 54,42,600 46,23,020 39,27,015 33,35,921 1,08,33,900

Current
Assets:

Inventories 1,29,500 1,42,450 1,56,695 1,72,365 1,89,601

Sundry
Debtors 3,77,750 4,15,525 4,57,078 5,02,785 5,53,064
Cash and Bank
Balance 2,57,250 15,00,440 39,67,417 69,82,592 1,06,44,486 62,62,271
Fictitious
Assets
Preliminary
expense 3,35,000 2,68,000 2,01,000 1,34,000 67,000 -

Total Assets 70,00,000 77,18,290 93,49,412 1,16,57,380 1,47,22,557 1,78,38,835

24
The total asset, on the opening day, is Rs 70, 00,000 and the total equity capital is Rs 49,
00,000. Similarly, long term loan is Rs 21, 00,000 and it is to be paid within five years.
The rate of interest is 12% per annum. Each item of balance sheet is detailed on the
related annexure.

5.5 Pro-forma Cash Flow Statement

Table 5 Pro-forma Cash flow Statement

Cash Flow Statement

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

Cash flow from
operating
activities

Net Income 7,67,513 16,90,978 23,17,749 30,43,126 30,49,281

Depreciation 9,65,150 8,19,580 6,96,005 5,91,094 5,02,021

Income tax
payable 2,55,838 5,63,659 9,65,729 14,49,108 20,32,854
Increase in
inventory (1,29,500) (12,950) (14,245) (15,670) (17,236)
Increase in
receivable (3,77,750) (37,775) (41,553) (45,708) (50,279)
Increase in
payable 25,500 2,550 2,805 3,086 3,394
Preliminary
expense written
off 67,000 67,000 67,000 67,000 67,000

Income tax paid (2,55,838) (5,63,659) (9,65,729) (14,49,108)

Total 15,73,750 28,37,205 34,29,831 41,26,307 41,37,928

Cash from
Investment
Purchase of Fixed
Assets (64,07,750) Nil Nil Nil Nil (80,00,000)

Total (64,07,750) - - - - (80,00,000)

25
Cash from
financing
Activities
Issue of share
capital 49,00,000
Issue of 12%
Long Term Loan 21,00,000
Payment of long
term loan (3,30,560) (3,70,228) (4,14,655) (4,64,414) (5,20,143)
Preliminary
expense (3,35,000)

Total 66,65,000 (3,30,560) (3,70,228) (4,14,655) (4,64,414) (5,20,143)

Cash from all

activities 2,57,250 12,43,190 24,66,977 30,15,176 36,61,894 (43,82,215)

Beg balance - 2,57,250 15,00,440 39,67,417 69,82,592 1,06,44,486

End Balance 2,57,250 15,00,440 39,67,417 69,82,592 1,06,44,486 62,62,271

5.6 Investment Appraisals

Table 6 Investment Appraisal

Investment Appraisal
Year Cash Flow Discounted Cash Flow Cumulative DCF
0 (67,42,750) (67,42,750) (67,42,750)
1 15,00,440 13,04,730 (54,38,020)
2 24,66,977 18,65,389 (35,72,631)
3 35,94,613 23,63,516 (12,09,115)
4 49,66,091 28,39,378 16,30,264
5 66,67,066 33,14,710 49,44,974
Total PV 1,16,87,724
NCO -67,42,750
NPV 49,44,974
Discounted Payback Period 3.43
IRR 36%

26
The company‟s Net Present Value is Rs 49, 44,974. The discounted payback period
according to forecasted income statement and forecasted balance sheet will be 3.43 years
and Internal Rate of Return is 36%. Since the company have positive NPV and IRR is
36%, the prospect of company is profitable for investment.

5.7 Key Financial Matrices/Ratios

Table 7 Key Ratios

Financial Ratio Analysis

First Second Third Fourth Fifth
Financial Ratio Year Year year Year Year
Liquidity Ratio
Current Ratio 7.14 7.65 7.62 7.63 3.38
Quick Ratio 6.68 7.41 7.47 7.52 3.29
Assets Management Ratio
Inventory Turnover Ratio 41.34 41.65 41.16 40.76 40.45
Fixed Assets Turnover Ratio 1.67 2.35 3.32 4.70 1.74
Debt Management Ratio
Debt-Asset Ratio 0.23 0.15 0.08 0.04 0.00
Debt-Equity Ratio 0.31 0.19 0.10 0.04 0.00
Profitability Ratio
Net Profit Margin (%) 8.47 15.54 22.19 27.75 32.44
Return On Assets (%) 9.94 18.09 24.85 29.53 34.19
Return On Equity (%) 13.54 22.98 29.94 34.18 38.68

The current ratio of company is 7.14:1 in the first year of operation and in the fifth year
the ration will decrease as the cash is invested for establishing factory in Dharan and
Pokhara. Similarly, the profitability ratios of the company are in increasing trend. The net
profit margin is in increasing trend and the company will attend 32.44% net profit in the
fifth year. On the first year, Return on Asset is 9.94% and it will be 34.19% in the fifth
year. After the debt will be paid in fifth year, the company will be debt free.

27
 SECTION VI

OPERATIONAL PLAN

6.1 Production/Operation Process

6.1.1 Waste collection

The production process starts with the collection of textile and plastics waste. For waste
collection, Pariwartan Nepal will use three different techniques and they are as follows:

Rag pickers
Waste collection containers
Waste collection program

Rag pickers

Rag pickers will be the primary source for collection of waste used during the production
process. Company will motivate the rag pickers by paying extra price for their collection.
Company‟s vehicle will reach each collection center early in the morning for collecting
those wastes.

Waste collection containers

The company plans to maintain waste collection containers on different location of

Kathmandu valley while coordinating with Kathmandu Metropolitan office. The purpose
of such collection containers will be to collect waste on the source in minimum cost. Our
waste collection vehicle will collect those wastes each day early in the morning.

Waste collection program

It will coordinate with different social clubs, NGOs, schools and office for conducting
waste collection program. The aim of program is to collect bulk amount of waste from

28
the local community, offices and schools. These programs will be organized on periodical
basis.

6.1.2 Waste sorting

After the collection is made, waste collection vehicle will bring it to our factory site. Now
the primary sorting of waste will be done.

A. Primary sorting

Under primary sorting, the collected waste will be divided into plastic and textiles. This
process will be carried out by trained waste sorter. The sorter will reject those wastes
which cannot be further processed. Those wastes will be carried to KMC waste collection
centre by our vehicle on the next day.

B. Secondary sorting

Here the textile waste will be categorized by the help of our expert designer. Textile
waste which can be used on manufacturing fancy bags will be put aside and other textile
waste will be put next side. For plastics, they will be sorted based on the colors.

6.1.3 Waste cleaning

The sorted waste will be preceded to treatment site. Here the textiles and plastics waste
are separately cleaned and treated for further processing.

6.1.4 Molding (For plastic)

During this process plastics are molded into thick sheet, as per the requirement of
molding machine. The sheet will be of different colors as the plastics were sorted based
on the colors. Molding machine converts the plastics into thick sheet with the heat press.

6.1.5 Conversion into cottons

Here the textile waste which cannot be used for making bags will be converted into
cotton. The machine operator is responsible for making feeding the waste into machine
and delivering the resulting cotton to production department.

29
6.1.6 Designing
Here our expert designer will design the bags based on our available pieces of textiles
and colors of plastics. The designer is solely responsible for making the fancy bags. The
designer designs the bags with the mix of plastics and textiles. We will have a normal
design for shopping bags and extra pieces of designs will be made in every production lot
for fancy bags.

6.1.7 Cutting and sewing (For bags)

Now the labors will cut and sew the bags as per the design of designer. The designer and
factory supervisor will assist the labor in doing so. Both plastics and textile are used in
the process. During this process bags are decorated with the purchased required
accessories

6.1.8 Cutting, inserting cotton into dolls body and sewing (For dolls)
The cover of dolls will be purchased from the market. In this process the labors will be
responsible for cutting the cover according the design of dolls. Designer is responsible for
the dolls design. Manager will also assist in designing phase. After the piece of cover is
cut, the labor sews the periphery of doll and the cotton is filled inside the cover in order
to body architecture of dolls. Finally, it is sewed resulting into the finished dolls body.
The labor will again be responsible for decorating the dolls as per design.

6.1.9 Packaging
After the products pass the quality control, they are packed and ready for delivery.

6.2 Inventory Management

Inventory will be maintained according to the forecasted sales. The number of inventory
for first year will be according to the table and inventory for next year will increase in
accordance with sales forecast. The waste will be purchased and collected regularly so
inventory of raw material will be comparatively low.

30
 Table 8 Closing stock

Monthly Monthly
Name of Price produce sales Closing Closing
Product per Unit d Quantity stock Stock
Dolls
Animal
Theme
Small
Sized 300.00 400.00 350.00 50.00 15,000.00

Big Sized 450.00 400.00 350.00 50.00 22,500.00

God Theme -
Small
Sized 300.00 200.00 150.00 50.00 15,000.00

Big Sized 450.00 200.00 150.00 50.00 22,500.00

Small
Baby Theme Sized 200.00 300.00 250.00 50.00 10,000.00

Big Sized 450.00 300.00 250.00 50.00 22,500.00

Bags
Shopping
bags 40.00 1,000.00 950.00 50.00 2,000.00

Fancy Bags 1,000.00 200.00 180.00 20.00 20,000.00

Total 1,29,500.00

The company maintains Rs 1,29,500 as closing stock for the first year of operation and
company is expecting to maintain the inventory growth rate at 10%. 50 units of each
produced item are placed as inventory for the first year of operation except fancy bags. 20
units of fancy bags will be inventory for the first year.

31
6.3 Quality Assurance and Control
After the dolls and bags are made from the production department, the factory supervisor
and designer are responsible for quality control. They will see individual product before
leaving for delivery. The responsibility during this process is to see whether the bags are
usable or nor, to inspect if there exist any production defects and to check whether the
other purchased accessories are inserted in right way or not. And for dolls, they will see
the body architecture, check whether body parts are rightly placed or not, whether the
decoration in properly made or not.

32
 SECTION VII

CRITICAL CRISKS: IDENTIFICATION, EVALUATION AND

MITIGATION

7.1 Critical Risk Factors

There are various risk associated with the business. The risk can be both internal as well
as external. The risks are as follows:

Internal risks:

• Delay in opening of the company due to unavailability of bank loan, expert designer or
machine operators.

• There may be technical problem relating the machine and generators.

External risks:

• There may be risk from the political instability due to which it will hamper the business
operation.

• People may not accept the product made from waste

7.2 Evaluation of Critical Risk Factors.

The critical risk factors of this business are labor issue, suppliers issue and load shedding.
To operate business smoothly the relationship between management and labor is very
important. Due to the opposing interest between management and labor, business can
face different issue like protest, shutdown of work etc. Likewise, Supplier, including rag
pickers, is also very important for the company without them it is impossible to run the
business.

7.3 Contingency Plan and exit strategy

The contingency plans to minimize risks and difficulties are:

33
  Ensuring up to date legal obligation to mitigate non-payment risk.
 Aggressive promotional campaign if customer do not accept the products

In case the business does not turn out to be profitable within the five years term,
Pariwartan Nepal will exit from market by adopting following strategies.

 Put the company for acquisition

 Liquidate the asset to recover some portion of loss occurred
 The amount received from sale will help to minimize the losses to the
owners.

34
 Annexure

Annexure 1 Fixed Assets

Fixed assets
Particulars Quantity Price/Qty Amt.
Electronics
Laptop 1.00 40,000.00 40,000.00
Router-wifi 1.00 3,500.00 3,500.00
Telephone set with installation 1.00 3,750.00 3,750.00
Fan 1.00 2,500.00 2,500.00
Fax/copier/printer/scanner 1.00 20,000.00 20,000.00
Office equipments 10,000.00
Total (A) 79,750.00
Furniture
Sofa set 1.00 30,000.00 30,000.00
Revolving chairs 2.00 2,500.00 5,000.00
Showcase 2.00 25,000.00 50,000.00
Desks 2.00 5,000.00 10,000.00
Sit- on chairs 3.00 1,000.00 3,000.00
Chairs 10.00 1,000.00 10,000.00
Total (B) 108,000.00
Machinery
Textile waste cutting machine 1.00 500,000.00 500,000.00
High pressure water jet cleaning machine 1.00 100,000.00 100,000.00
Generator 1.00 2,000,000.00 2,000,000.00
Plastic Molding 1.00 500,000.00 500,000.00
Cleaner 1.00 500,000.00 500,000.00
Total (C) 3,600,000.00
Vehicles
Vehicle (Tata Ace) 1.00 2,500,000.00 2,500,000.00
Bike 1.00 120,000.00 120,000.00
Total (D) 2,620,000.00
Total Fixed Assets 6,407,750.00

I
 Annexure 2 Pre operating Expenses

Pre operating Expenses

Particular Amount
Registration charge 25,000.00
Feasibility 9,000.00
Consultancy fee 1,000.00
Initial HR development and training 100,000.00
Factory site construction 200,000.00
Total 335,000.00

Annexure 3 Sales Revenue

No Yearly
Monthly of Sales Annual
Name of Sales Monthly sales mont Quantit Sales
Product Price/ Unit produced Quantity hs y Revenue
Dolls
Animal
Theme
Small
Sized 300 400 350 12 4,200 12,60,000
Big
Sized 450 400 350 12 4,200 18,90,000
God
Theme
Small
Sized 300 200 150 12 1,800 5,40,000
Big
Sized 450 200 150 12 1,800 8,10,000
Baby Small
Theme Sized 200 300 250 12 3,000 6,00,000
Big
Sized 450 300 250 12 3,000 13,50,000
Bags

Shopping
bags 40 1,000 950 12 11,400 4,56,000
Fancy
Bags 1,000 200 180 12 2,160 21,60,000

Total 31,560 90,66,000

II
 Annexure 4 Cost of Goods sold

Particulars 1st year 2nd year 3rd year 4th year 5th year

Opening stock - 1,27,500 1,40,250 1,54,275 1,69,703

Purchases 15,30,000 16,83,000 18,51,300 20,36,430 22,40,073

Rent 12,00,000 12,00,000 12,00,000 12,00,000 12,00,000

Transportation and
wage 3,60,000 4,32,000 5,18,400 6,22,080 7,46,496

Direct labor 8,71,200 9,58,320 10,54,152 11,59,567 12,75,524

Manufacturing
Overhead 12,64,800 13,91,280 15,30,408 16,83,449 18,51,794

Less closing stock 1,27,500 1,40,250 1,54,275 1,69,703 1,86,673

Cost of goods sold 53,53,500 59,32,350 64,48,785 70,25,504 76,70,262

Annexure 5 Operating Expenses

Year 1 Year 2 Year 3 Year 4 Year 5
Operating expenses (Rs.) (Rs.) (Rs.) (Rs.) (Rs.)

Salary 6,00,000 720000 864000 1036800 1244160

Rent 72,000 72,000 72,000 72,000 72,000

Audit fee 20,000 20,000 20,000 20,000 20,000

Company renewal 30,000 30,000 30,000 30,000 30,000

Repair & maintenance 50,000 55,000.0 60,500.0 66,550.0 73,205.0

Water 22,000 24,200.0 26,620.0 29,282.0 32,210.0

Stationary 60,000 66,000.0 72,600.0 79,860.0 87,846.0

Fuel 24,000 26,400.0 29,040.0 31,944.0 35,138.0

Marketing expenses 5,00,000 5,50,000.0 6,05,000.0 6,65,500.0 7,32,050.0

Miscellaneous 15,000 16,500.0 18,150.0 19,965.0 21,962.0

Electricity 12,000 13,200.0 14,520.0 15,972.0 17,569.0

Total operating
expenses 14,05,000 15,93,300 18,12,430 20,67,873 23,66,140

III
 Annexure 6 Amortization of preliminary expenses

Amortization of preliminary expenses

Year Amount(Rs) Balance
3,35,000.00
1 67,000.00 2,68,000.00
2 67,000.00 2,01,000.00
3 67,000.00 1,34,000.00
4 67,000.00 67,000.00
5 67,000.00 -

Annexure 7 Long term loan and interest payment schedule

Year Payment Interest Principal Balance

1 582560.44 252000 330560.44 17,69,439.56
2 582560.44 212332.75 370227.69 13,99,211.87
3 582560.44 167905.42 414655.02 9,84,556.85
4 582560.44 118146.82 464413.62 5,20,143.23
5 582560.42 62417.19 520143.23 (0.00)

Annexure 8 Salary

Staffs Salary/Month No of month Total

Manager 30,000.00 12.00 3,60,000.00
Accountant/ Receptionist 20,000.00 12.00 2,40,000.00
Designer 20,000.00 12.00 2,40,000.00
Waste sorter 15,000.00 12.00 1,80,000.00
Machine operator 15,000.00 12.00 1,80,000.00
Factory supervisor 20,000.00 12.00 2,40,000.00
Total 6,00,000.00

IV
 Annexure 9 Rent

Factory Rent
Particulars Rent/Month Number of months Total
Factory Land 50,000.00 12 6,00,000.00
Factory Building 50,000.00 12 6,00,000.00
Total 12,00,000.00
Office Rent
Office 6000 12 72000
Total 72000

Annexure 10 Depreciation

Dep@20%
Electronics Year Beginning value Depreciation amt. Book Value
1 79,750.00 15,950.00 63,800.00
2 63,800.00 12,760.00 51,040.00
3 51,040.00 10,208.00 40,832.00
4 40,832.00 8,166.40 32,665.60
5 32,665.60 6,533.12 26,132.48

Dep@15%
Furniture Year Beginning value Depreciation amt. Book Value
1 1,08,000.00 16,200.00 91,800.00
2 91,800.00 13,770.00 78,030.00
3 78,030.00 11,704.50 66,325.50
4 66,325.50 9,948.83 56,376.68
5 56,376.68 8,456.50 47,920.17

Dep@15%
Machinery Year Beginning value Depreciation amt. Book Value
1 36,00,000.00 5,40,000.00 30,60,000.00
2 30,60,000.00 4,59,000.00 26,01,000.00
3 26,01,000.00 3,90,150.00 22,10,850.00
4 22,10,850.00 3,31,627.50 18,79,222.50
5 18,79,222.50 2,81,883.38 15,97,339.13

V
 Dep@15%
Vehicle Year Beginning value Depreciation amt. Book Value
1 26,20,000.00 3,93,000.00 22,27,000.00
2 22,27,000.00 3,34,050.00 18,92,950.00
3 18,92,950.00 2,83,942.50 16,09,007.50
4 16,09,007.50 2,41,351.13 13,67,656.38
5 13,67,656.38 2,05,148.46 11,62,507.92

Annexure 11 Manufacturing overheads

For 1
Manufacturing Overhead Month No of months Amount

Electricity 10,000.00 12.00 1,20,000.00

Salary of Machine Operator/ Waste
Sorter 15,000.00 12.00 1,80,000.00

Salary of Factory Supervisor 25,000.00 12.00 3,00,000.00

Water(3 jar/day @60) 5,400.00 12.00 64,800.00

Fuel 50,000.00 12.00 6,00,000.00

Total 12,64,800.00

VI
 Annexure 12 Direct labor

Packing
Sewing and and
Cutting feeding cotton loading Total wage
Name of Produced Wage Wage per
Product quantity per piece Wage per piece piece
Animal
Theme
Small
Sized 4,800 10 10 2 1,05,600
Big
Sized 4,800 10 11 2 1,10,400
God
Theme
Small
Sized 2,400 10 10 2 52,800
Big
Sized 2,400 20 22 2 1,05,600
Baby
Theme
Small
Sized 3,600 10 11 1 79,200
Big
Sized 3,600 10 15 1 93,600
Shopping
bags 12,000 10 5 1,80,000
Fancy
Bags 2,400 20 40 1,44,000

Total 8,71,200.00

VII