Assignment 3: Group Assignment

Module Title and Code: Entrepreneurship (EDP101)

Business Plan on Vermic

Submitted to

Module Tutor- Mrs. Kinley Yangdon

Gedu College of Business Studies

Submitted by:
Group 7
4th Marketing ‘B’
Tshering Wangchuk 03190408

Tenzin Dorji 03190361

Sawan Rai 03190286

Ngawang Tenzin 03190493

Mumta Ghalley 03190492

Sangay Dem 03190273

Samjana Gurung 03190501

1
`‘````````````````````````````````````````````````````````````````````````````

DECLARATION FORM
Module Code: EDP101 Module Name: Entrepreneurship
Module Tutor: Mrs. Kinley Yangdon Type of Course Work: Group assignment
Date of Submission: 11 June 2022

We hereby declare that this academic work is our own and those derived from other sources have
been appropriately acknowledged. We understand that if found otherwise, our academic work
will be cancelled and no mark will be awarded besides the legal consequences.

For Module Tutor

Marking Criteria/ Q. No. Marks Assigned Marks Secured

1. ……………………………………………………… ( ) ( )
2. ……………………………………………………… ( ) ( )
3. ……………………………………………………….. ( ) ( )
4. ………………………………………………………...( ) ( )
Total Marks

Comments: ……………………………………………………….
……………………………………………………………………..
Signature of Module Tutor

Table of Contents
Acknowledgment..........................................................................................................................4

2
Introduction..................................................................................................................................4
Marketing Plan............................................................................................................................9
1.1. Description of product(s)..................................................................................................9
1.2. Target market segments..................................................................................................11
Segment............................................................................................................................11
Features............................................................................................................................11
1.3. Target market area.........................................................................................................12
Segment............................................................................................................................12
Area...................................................................................................................................12
Reason..............................................................................................................................12
1.4. Demand analysis............................................................................................................13
1.8. Project's marketing strategies.....................................................................................13
1.8.1. Product strategy...................................................................................................13
1.8.5. Location of outlet..................................................................................................15
1.8.6. Layout of the outlet...............................................................................................16
1.9. Forecast of sales.........................................................................................................17
1.10. Non-current assets for marketing............................................................................18
The depreciation rates are charged according to Income Tax Act of Kingdom of Bhutan 20011.11.
Total
marketing expenses 18
Production and Technical Plan.....................................................................................................20
2.1. Production facility location and description.....................................................................20
2.2. Methods/Processes involved...........................................................................................20
2.3. Production schedule.......................................................................................................21
2.6. Plant capacity and capacity utilization.............................................................................22
2.7. Raw material requirements and cost................................................................................24
2.7.1. Direct material requirements................................................................................24
2.8. Direct labour requirements and cost................................................................................26
2.9. Factory overheads..........................................................................................................27
2.10. Total production cost and unit production cost..............................................................30
Organization and Management Plan.............................................................................................31
3.1. Form of business...........................................................................................................31
3.2. Business name and logo.................................................................................................32
3.3. Capability profile of project proponents...........................................................................32
3.4. Organizational structure.................................................................................................33
3.5. Descriptions of key positions and responsibilities.............................................................35
3.6. Recruitment, selection and training of staff......................................................................36
3.6.1 Recruitment strategy................................................................................................36
3.6.2 Selection strategy.....................................................................................................36
3.7. Cost of personnel for administration................................................................................37
3.8 Non-Current assets required for office administration...........................................................37
3.9. Maintenance and repairs.................................................................................................37
3.10. Office layout..............................................................................................................38
3.11. Pre-operating activities and expenses...........................................................................38
3.12. Total organization and management expenses...............................................................40
Financial Plan.............................................................................................................................41
4.1. Projected Cost Sheet......................................................................................................41

3
 4.2 Total project cost...............................................................................................................42
4.3 Financing Plan...................................................................................................................42
4.4 Security for Loan...............................................................................................................42
4.5 Loan Repayment Schedule..................................................................................................43
4.6 Projected Statement of Comprehensive Income................................................................44
4.7 Projected Cash Book..........................................................................................................45
4.8 Projected Statement of Cash Flows......................................................................................46
4.9 Projected Statement of Financial Position............................................................................48
4.10 Break-even point..............................................................................................................49
4.11 Payback Period................................................................................................................50
4.12 Net Present Value............................................................................................................50
4.13 Profit Margin...................................................................................................................51
Conclusion.................................................................................................................................53

Acknowledgment

4
Like a map which enlightens its viewers with the entire path and routes that could deliver a person to
his destination with the assurance of safe journey, a business plan shows the people the necessary and
vital decisions and actions to be taken in every steps in the formation and operating of a business,
detecting and removing any potential threats that could hinder the continuity of a business.
The group would like to extend its heartfelt gratitude to the following people who made the project
interesting, successful and most importantly a realistic work that has left an unforgettable impression
in the hearts of all the members of our group. Firstly, sincere thanks goes to our module tutor
Mrs.Kinley Yangdon for assigning us with the project which we are positive that it would prove to
play a greater role in the later part of our lives. Ma’am also assured the progress of the project in its
rightful path by providing us with creative guidance eventually leading to a fruitful project. Secondly,
our gesture of appreciation goes to our friends without whom the commencement of the project would
not have been possible. It was their ideas and assistance that assisted the piling of the project’s content.
Lastly the group would like to express a unanimous appreciation to the entire individual associated
with this project; the ones who aided us complete our project, gifting us with an admirable and
beautiful piece of work.

Introduction

5
In today's fast-paced world, there are several business challenges at various phases. Market
advancement has been limited as a result of increased rivalry, forcing every organization to do more
with fewer resources. Customers expect outstanding products, services, and experiences, so
maintaining a competitive, long-term position has been an ongoing challenge for any firm. The battle
for talent is never-ending, with fierce inter-firm rivalry for skilled and capable workers. On the flip
side, with all those business challenges, our country still provides us with a very broad opportunity in
terms of agribusinesses which includes forestry, animal husbandry, farming, fishery and many more.
Agriculture is quite profitable and demanding as it significantly plays a major role in contributing to
the country’s economy but the work in progress requires passion and dedication.
As a result, we have decided to start a vermin-compost company. We chose to commence this business
with the reasons to reduce the organic waste across the country and further utilize in making compost.
Subsequently, producing our end product fertilized soil in order to support improved farming, which
helps in improving water retention, increase the nutrient content and reduces the need for fertilizers
and pesticides. In addition, we all know that during the recent times many of them are fond of organic
vegetables, fruits and the organic products as they are not produced by using harmful chemical
substances that is organic farms where they use these naturally produced compost our company will
supply.

Executive summary

6
Vermic is a partnership form business involving seven members with an initial business capital of
2,500,000. The profit earned shall be distributed among the members according to the positions and the
loss will be borne by all the members jointly. We will personally finance our business with a sum of
Nu.1, 500,000 and the remaining balance of Nu.1000, 000 shall be availed through Bhutan
Development Bank Limited.
The proposed business will be dealing with the production and distribution of vermicompost fertilizer
in Thimphu, CNR and Mongar at the initial stage of business. The sources of raw material i.e., soil,
organic wastes, water, worms and compost bins will be acquired from within the country and the
business will be set to commence at an outlet rented in CFM and Mongar Gyalpozhing as the location
is suitable for marketing our products as the market is very near to that location. The target customers
of the business include the individuals at the household level, farmers and the students of CNR
College. The success of our business shall be signified through the reduction in cost incurred each year
in comparison to the revenue generated.
The project is estimated to sell 50-90 metric tons of vermic fertilizers annually amounting to
Nu.2,500,000 as revenue in the first year and for the subsequent year, it is forecasted to earn a certain
percentage of profit more than the previous year with subsequent employment of workers with gradual
expansion of the business.
Being a monopoly business, the business is reduced with the burden of having to face the competitors
in the country but gradually as new entrants taking the same line of business comes up, and the foreign
business producing such product may even pose potential threats to our business but having the
attributes and elements to succeed, we are optimistic that this business will be a success as the years go
by.

Background

7
We, a group of seven, have chosen to start a Vermi-composting company. Agriculture has a significant
role in Bhutan's economy, as we have discovered. Accordingly we will establish our major outlet at
Mewang Gewog, Simu, and Thimphu Dzongkhag. Furthermore, we are gradually establishing
commercial branches across the country. It will also be quite handy for us because one of us owns the
land where we will start our business. Because environmental protection is one of the pillars of GNH,
our government makes a concerted effort to keep the environment clean. As a result, we will directly
supply our product Vermi-compost to the government, allowing the government to provide organic
fertilizer to farmers in order to support improved farming and harvest. We will also supply our goods
to adjacent communities through merchants, wholesalers, and our own factory, which will help us
reduce transportation costs. We will sell our product to farmers, educational institutions, gardeners,
and homes around the country once it is ready for sale.
Our company's overall cost is Nu. 2.5 million. The capital of our partners will be our first source of
funding. Upon calculating the total cost of our business, we have decided to raise Nu.1.5 million from
partners, with each partner contributing Nu.214285.72 and the remaining Nu.1 million being raised
through a loan from the Loden Foundation and BDBL. We are confident that we will receive complete
support, making Loden Foundation and BDBL as our significant partners.
Partners:
1. Tshering Wangchuk
2. Tenzin Dorji
3. Sawan Rai
4. Ngawang Tenzin
5. Mumta Ghalley
6. Sangay Dem
7. Samjana Gurung

Business Profile Overview

8
 Business Logo

Name of the proposed business Vermi-compost

Proposed business type Partnership
Proposed financing Partners contribution –
Nu.1.5million(Nu.214285.72 each)

Loan – Nu. 1million

Location of proposed business Mewang Simu, Thimphu

Estimated project cost Nu.2,500,000 to 3,00,000
Staff strength Non staff and working staff
Owner Details:
1. Name: Tshering Wangchuk
CID: 10101002479
Address: Bumthang

2. Name: Tenzin Dorji

CID: 1060500667
Address: Thimphu

3. Name: Sawan Rai

9
 CID: 11211001208
Address: Thimphu

4. Name: Ngawang Tenzin

CID: 11407000168
Address: Thimphu

5. Name: Mumta Ghalley

CID: 11303004982
Address: Phuntsholing
6. Name: Sangay Dem
CID: 108110002385
Address: Paro

7. Name: Samjana Gurung

CID: 11308005635
Address: Gelephu

Marketing Plan

10
1.1. Description of product(s)

Vermicomposting is the process by which earthworms are used to convert organic materials (usually
wastes) into organic fertilizer known as vermin-compost. Vermi-compost is the product of the
decomposition process using various species of worms, usually red wigglers, white worms and other
earth worms to create a mixture of decomposing vegetable or food waste, bedding materials and
vermin-cast.
Varieties - There will be only one variety of the product.
Size and shapes - Our product vermi-compost will be sold in weight system (Kg or g) depending on
the needs of the customers and various packaging will be made available due to the product being sold
in terms of weights.
Special features – vermi-compost has been shown be richer in many nutrients than compost produced
by other composting methods and chemical fertilizers.

As we proceed with our business, we will try to make our products in package system so as to export it
to other countries or enter into international markets.

Product sample

11
1.2. Target market segments

Segment Features
Includes farmers of all income group

individual

Households having kitchen garden

individual

- The college focuses on agriculture-based research

- Product can be used for research and development.

Institution (CNR)

12
1.3. Target market area

Segment Area Reason

-largest vegetable market
-more number of customers
Centenary Farmer’s Market including customers from other
Thimphu western dzongkhags.
-presence of farmers

College of Natural Resources -students and institution as a

whole

Lobesa

Town area -farmers of eastern part of the

country
-connects almost 5 dzongkhags
Mongar of the eastern region

Assumption:
The target market is selected based on the location from which we can reach out to wide range of
customers.

13
1.4. Demand analysis

Potential
buyers and Usage rate (Nu) Quantity demanded
number of
buyer Product Volume Value (Nu.) Volume Value (Nu.)
Thimphu 5270 vermin-compost 50 50 263500 13175000
CNR 50 vermin-compost 30 50 1500 75000
Mongar
22905 vermin-compost 40 50 916200 45810000

Total
120 150 1181200 59060000

Assumption:
 The total Bhutanese population as per PHCB 2017 is 681720 from which economically active
population is 477204 (70% of total population). So, to derive the number of framers we have
taken 6% of the economically active population which accounts to 28,225.
 To calculate the potential number of buyers from Thimphu we have taken 19% of 28,225 and
for Mongar we have taken 81% of 28,225.
 For CNR, the estimated number of students taking organic agriculture and agriculture course
every year is 50. So, to calculate the potential number of buyers we have taken the total number
of students.

1.8. Project's marketing strategies

1.8.1. Product strategy

Vermi-compost will be the very first manufacturing business in the country. The product holds a very
unique feature of being rich in nutrients that are not available in other compost and chemical fertilizers.
The product itself being organic in nature speaks about quality of the product. For the easy access to
the customers the products would be made available at frequently visited places such as CFM and an
additional of delivery services will be introduced after studying the requirement of the customers.

1.8.2. Distribution strategy

To make our products available to the customers, we will make best use of the areas that are popular
among the people or the customers. We will have outlets in the main distribution centers which
will cater to the needs from different places as well. For instance, having an outlet center in
Mongar dzongkhag will reach out to the farmers and households of the eastern dzongkhags.

14
 The following are the strategies adopted to promote our business/product:
1. Creating awareness- we aim to promote our products using various social media platforms such
as Facebook and instagram. We will also promote our business by sponsoring to shows like
Pelden Drukpa and the voice of Kalapingka. Most of the small startups tends to lose their
customers as they fail to create awareness so our business is going to focus more on promotion.

2. Retaining loyal customers- customers play the most vital role in determining the success of a
business. So, we are going to retain our loyal customers by giving preference and discounts after
a certain amount of purchase is being made. We will also provide timely information to them
about the goods and offers during the seasons.

3. Teaching customers- one of the sources of revenue generation for our business is by providing
training/ teaching customers on how to make their own fertilizers. In this way we are able to
promote our business and at the same time teach them why they should buy/use our products.

1.8.3. 1.8.4. Price strategy

The pricing strategy that our business will adopt is cost-oriented pricing strategy where we will set
particular level of gross margin that will produce a desirable profit level. Gross margin is the
difference between how much our product will cost and the actual price at which we sell.

15
1.8.5. Location of outlet

Our first outlet will be located at Khasadrapchu, Thimphu where our factory is located. We have
agreed Thimphu as our outlet because of the present of Centenary Farmer’s Market. Our largest
number of customers is at Thimphu so, it gives us advantage for quick delivery.
Our outlet consist of an office for the CEO and three department’s offices and a conference room.
Right beside the conference room we have the storage room where we will be storing the packages
which are yet to be delivered.
The vermi compost farm will few meters in the right from the office.

16
1.8.6. Layout of the outlet
Our second outlet will be located at Mongar where it connects almost five dzongkhags of the eastern
region.

17
1.9. Forecast of sales

Sales Value

Product Year 1 Year 2 Year 3

Vermin-compost 8859000 10187850 11716027.5

Assumptions:
The sales forecast is calculated based on the demand. To forecast the sales for the first year we
calculated 15% on the total demand i.e. 59,060,000 (59,060,000*15%), for second year we
have increased the sales by 5% of on the first year sales and for the third year we took 8% of
the second year sales.

18
1.10. Non-current assets for marketing

Purchase Price in Nu.

No of Deperciatio
SI. Description of (a) Depreciatio
Asset Specification n per year in
No assets n rate (b)
s Price per Nu. (a/b)
unit Total Cost
Mahindra Bolero
Mahindra Camper SC 4WD
1 Bolero 1 BSIII 2 STR 607990 607990 15% 91198.5
Panasonic KX-
TS880MXBD Corded
2 Telephone 2 Landline Phone 1430 2860 100% 2860
Lenovo 81WQ, 15.6"
3 Laptop 2 4GB RAM 32500 65000 15% 9750
Wooden Chair and
4 Furniture 3 Table 15000 45000 10% 4500
Made from Cement
and sand for vermi-
5 Decompose Bin 2 composting 15000 30000 3% 900
  Total   750850   109208.5
Inventory 140000

Assumption

 Price of the Lenovo Laptop is from Zala.bt

 Price of the Bolero is taken from Mahindra Vehicles latest price issued by
Singye Agencies
 The Furniture’s price is taken from Bjay Trading which is located in
Jaigoan
 The price of the telephone is taken from Rishab InfoTech which is located
in Jaigoan
 The decompose bin will be constructed by Construction Association of
Bhutan

The depreciation rates are charged according to Income Tax Act of Kingdom of Bhutan 2001

19
1.11. Total marketing expenses

Expenses Year 1 Year 2 Year 3

1.Salary of Driver 150000 150000 153000

2. Advertisement 40000    

3. Fuel 24000 24000 24000

4. Telephone Bill 15000 15750 16537.5

5. Miscellaneous Expenses 20000 20000 20000

Total expenses before Depreciation 249000 209750 213537.5

7.Depreciation 105674 105674 105674

Total expenses 354674 315424 319211.5

Assumptions:

 Salary of driver per month is calculated as 15000 with 0.02% increase in the salary in the third
year according to job performance.
 Other expenses are taken based on assumption

20
 Production and Technical Plan

2.1. Production facility location and description

The production facility for our business will be located at Thimphu, khasadrapchu. The significance of
choosing this location is because it is easy to get raw materials.
Some of the advantages for choosing this particular location are:
1. Easy access to raw materials such like:
*Water supply
*Organic waste such as animal excreta, kitchen waste, farm residues and forest litter.
2. It is the largest distribution channel(less transportation cost).
3. We have planned to do business on the land of Mumta which is located at Thimphu, khasadrapchu.
4. It will be a source of outlet
5. Availability of water supply through the stream which is right next to the land (free of cost).

2.2. Methods/Processes involved

6 Steps to Vermi-composting

Step1: Find a spot for the Compost Bin

The compost bins location is crucial. We have to place the bin in a shady area. We don't want the
worms to overheat or be exposed to too much light.

Step 2: Buy and Prepare the Bin

Drill holes for air circulation and drainage around the cement bin (too few or too many holes can be a
bad thing, so we decided to keepthetotalnumberat20). We are going to make cement bin that is opaque
rather than clear, as the worms require darkness inside.

Step 3: Add Food and Wait

We will wait for a week after adding a little food and a little scoop of soil.
Step 4: Add Worms
Then we will add earth Worms. Moreover, they will breed inside the bin

Step 5: Feed the Bin

We will feed the bin with organic waste which will further help in producing a fertilized
compost.

21
Step 6: Harvest the Castings
To harvest the castings, we will get another container and a plastic bag with holes cut into it.
Then we will Place the bag over the top of the new container, and make sure its taught over the
opening. After that, put the new container in the sun and then put the compost in the plastic,
gradually the worms will burrow through the holes and into the new container because they
don’t want to be out in the sun.

2.3. Production schedule

Particulars Year 1 Year2 Year 3

Production volume needed to cover up 177180 203757
projected sales
234321

3962 4557
Production volume needed for inventory
5240
level

Total Production
181142 208314 239561

2.4. Non-current asset requirements and cost

Sl Descriptio Purchase price in Estimated Depreciation

No n of Assets No. Nu. life in per year in
of Specifications (a) years / Nu. (a/b or
units Price per Total Depreciation Depreciation
Unit cost Rate (b) Rate* Price)
Mahindra Mahindra Bolero camper
1
Bolero 1 SC 4WD BSIII 2 STR 607990 607990 15% 91198.5
Panasonic KX-
2 Telephone TS880MXBD Corded
2 landline phone 1430 2860 100% 2860
Decompose Made from cement and
3 Pit 2 sand 15000 30000 3% 900
640850 94958.5

22
2.5. Sources and terms of acquisition of non-current assets

Asset Sources Terms of acquisition

Mahindra Bolero Singye Agencies, Thimphu Cash

Zala.bt, Cash
Laptop
Bijay Trading, Jaigaon Cash
Furniture
Telephone Rishab Infotech, Jaigaon Cash

Compost Bin Construction association of Cash

Bhutan

Assumptions:
We will purchase Mahindra Bolero from Singye Agencies which is located at Thimphu, Laptop from
the new online business named Zala.bt.
The furniture and the telephone will be purchased from Bijay Trading and Rishab Infotech which are
both located in Jaigaon, India.
We will purchase the non-current asset in cash basis.

2.6. Plant capacity and capacity utilization

Year Production Volume (tons) Capacity and Utilization

1 177180 68.74%

2 203757 79.05%

3 234321 90.91%

To fine the capacity utilization rate, we used the following formula;

Capacity Utilization Rate = 𝐴𝑐𝑡𝑢𝑎𝑙 𝑜𝑢𝑡𝑝𝑢𝑡/ 𝑀𝑎𝑥𝑖𝑚𝑢𝑚 𝑃𝑜𝑠𝑠𝑖𝑏𝑙 𝑜𝑢𝑡𝑝𝑢𝑡 * 100
The maximum possible out is assumed as 120 tonnes.

23
 The actual output for the 1st year is 50 tonnes and the capacity utilization in percentage will be
41.66%.
The actual output for the 2nd year is 75 tonnes and the capacity utilization in percentage will be
62.5%.
The actual output for the 3rd year is 90 tonnes and the capacity utilization in percentage will be
75%.

2.7. Raw material requirements and cost

 Water supply
 Organic waste
 Earth worm
 Land
 compost bin

2.7.1. Direct material requirements

Inventory to cover
sales volume   material inventory Total
DIRECT Rat Rat Rat
MATERIALS e e e
REQUIREME per per per
NT unit unit unit
(Nu. (Nu. (Nu.
Qty ) Price Qty ) Price Qty ) Price Qty Amount
Year 1 17718 620130 396 138687. 2311.4 18120 6342298.
0 35 0 2 35 2 66 35 5 9 6
20375 713149 455 159490. 75.9 2658.1 20839 7293643.
Year2 7 35 5 7 35 3 4 35 7 0 4
23432 820121 524 183413. 87.3 3056.9 23964 8387690.
year 3 1 35 9 0 35 8 3 35 0 8 0

Assumption: the prices and rate for water supply is nil as its available free of cost. Additionally, we
will approach the Thimphu Thromde for the organic waste and with free of cost.

24
2.7.2. Annual cost of direct materials

Particular Year1 Year2 Year3

Purchases 6342299 7293643 8387690
Plus:      
Inventory, beginning 0 634230 792787
Equals      

Total cost of materials available

6342299 7927873 9180477
Less:      

Inventory(Closing Stock) 10% of total

634230 792787 918048

Cost of materials used

5708069 7135086 8262430

The key resources of our Vermi-compost business is organic waste, earth worm and soil. So, to ensure
the supply of organic waste throughout the year we are going to ask help from Thimphu Thromde.
Hence Thimphu Thromde will be the major source where we can supply organic waste with any
obstacle.

2.7.3. Sources and availability of direct materials

Direct materials required for our business are earthworm, organic waste, soil, water supply and
compost bin will be available within the locality. Raw material supplies will be available throughout
the year as organic waste will be produced by the citizen of the country and moreover water supply is
not a major problem in our country. The earthworm will be raised in large quantity properly so that the
production will be done regularly.

25
2.8. Direct Labour requirements and cost

The labour requirement are four which includes one earthworm specialist to take care of the red
earthworms and three works who will be in charge in feeding the worms and adding the soil
and watering them. Moreover, they also have to work in packaging, loading and delivery.

2.8.1. Direct labour requirements

No. of Monthly
Job Title worker Qualification/ experience salary/
s benefits Monthly
SL.NO Labour cost
1 Labour 6 No qualification required 10500 63000

2 3 years’ experience in relevant

Earthworm Specialist 2 field and having degree certificate 14500 29000
           
  Total 8   25000 92000

Assumptions:
Minimum wage rate is expected to be given at rate 450-500 per day during National Assembly
01/19/2019 by the Prime Minister Lotay Tshering. Assuming that we are going to work instead of
recruiting more employees thereby reducing the direct labour requirement and cost incurred.
Average monthly salary of labour and earthworm specialist will be nu.10000 and nu.12000
respectively, which will be inclusive of housing, health and other benefits

26
2.8.2 Direct labour cost

Year Total direct Labour per year

1 1104000

2 1104000

3 1104000

Total 3312000

Note; we can ensure skilled Labour in right post through their interviews and their work experience.
Total Labour cost in 3 years incurs Nu.3312000 so, we have to try to curve the Labour
Cost as much as possible and aim to maximize the profit.

2.8.3 Availability of direct labour

At least one specialist will be pooled and selected from job interview and market search. The person
will be selected mainly on the basis of his/her experiences in earthworm rising of earth and who is
specialist in anything related to earthworm and a minimal qualification of degree.

2.9. Factory overheads

Fuel
Cleaning materials
Health and safety products
Spare parts
Packing materials

27
2.9.1. Indirect materials

Particular Price Year 1 Year 2 Year 3

Fuel   24000 24000 24000

Cleaning Materials 5000 10000 10000 10000

Spare parts 20000 40000 40000 40000

Health and Safety products 150 7500 7875 8268.75

Water tank (1000L) 8000 40000    

Packing materials (bags) 100 22500 23625 24806.25

Cost of Indirect Materials   144000 105500 107075

2.9.2. Indirect labour

Job title no. of personnel Monthly salaries Year 1 Year 2 Year 3

Watchman 1 9000 108000 108100 108200

Cleaner 2 17000 204000 204000 204000

Total 312000 312100 312200

Assumption:
Since the workers are going to get more experienced and specialized year by year we are going to
increase the salary by 100 as increment respectively.

2.9.3. Other indirect costs

28
 Particulars Year 1 Year 2 Year 3

  Cost Total cost Cost Total cost Cost Total cost

1. Electricity 1250 15000 1250 15000 1250 15000

2. Insurance 1083.333 13000 1083.333 13000 1083.33 12999.96

Total Before Depreciation - 28000 - 28000 - 27999.96

4. Depreciation - 94958.5 - 94958.5 - 94958.5

Total Indirect Costs   122958.5   122958.5   122958.5

2.9.4. Total factory overhead costs

Particulars Year 1 Year 2 Year 3

Indirect materials 144000 105500 107075

Indirect Labour 312000 312100 312200

Other Indirect cost 122958.496 122958.496 122958.46

Total 578958.496 540558.496 542233.46

2.10. Total production cost and unit production cost

29
 Direct
Yea materials Direct Labour Total Factory Total
r cost cost overhead costs production cost Unit Production cost

1 5708069 1104000 578958.5 7391027.303 147.8205461

2 7135086 1104000 540558.5 8779644.504 175.5928901

3 8262430 1104000 542233.46 9908663.058 198.1732612

Organization and Management Plan

30
3.1. Form of business

Partnership business

Vermicomposting is increasingly being adopted by businesses, institutions, farms and

municipalities for managing organic waste and the reason behind it is because our business is a
partnership business formed by a written/legal agreement among seven partners. Each partners
have contributed Nu.25, 00,000 as an initial business capital which in total, it was Nu.
1,500,000 however we are going to avail the remaining balance of Nu.10, 00,000 from Bhutan
Development Bank Limited.
As in agreement, the profit and loss shall be shared equally.

The reason behind choosing Partnership is

- Collaboration: A partnership offers the advantage of allowing the owners to draw on the resources
and expertise of the co-partners unlike sole proprietorship. With partners, sharing the responsibilities
lightens the workload which makes running business easier.

-Easy Formation - A partnership is fairly simple to establish and run as it doesn’t require registration or
incorporation.
- Sharing of Risk - In the partnership, the risk is equally shared among the partners
No statutory Audit - There is no requirement of statutory Audit in partnership hence the books of
account cannot be audited.
Winding up- Since the business is formed by partners, it is simple in winding up as well. Partners in
partnership firm can enter into dissolution deed anytime or according to the partnership deed.

So hereby we concluded that partnership is much easier and less burden for our business as we can
easily make decisions, the losses are shared equally so is RISK.

31
3.2. Business name and logo

Our business name is Vermic which means worms.

This logo defines how an earthworm can break down the brown and green manure to extremely
potent organic fertilizer which is rich in nutrients as well as microorganisms that promotes
plant immunity and soil aeration.

3.3. Capability profile of project proponents

The one who is into worm farming or breeding the worms and uses it for the conversion of waste
products into nutrient-rich material which will ultimately fertilize the soil is called as Vermiculturist,
and that is who we are.
Mumta Ghalley is one of the vermiculturist, known as vermiculture experts. Her partners are
undergraduate of Gedu College of business studies, and they all have a basic knowledge of science and
agriculture which helps them in understanding the job of it, this job is generally an outdoor job that
requires fieldwork which they are expert in.
Each of her partners have their individual work such as
Tshering Wangchuk - His job is to rear earthworms in the worm bin. Earthworms are all one required
for the production of vermicompost
Tenzin Dorji - His work is to ensure a regular supply of food and other organic wastes into the worm
bin; thus, this helps to ensure a proper outflow of vermicompost required by the vermiculture expert.
- Samjana gurung - Her job is to prepare the worm bin appropriately because the worms are cultivated
inside worm bins.

32
- Sangay Dem - Her job is to make sure that the bedding is suitable for the worms to survive as in the
litter must be moisturized; otherwise, the earthworms can die in dry conditions.
-Ngawang Tenzin - His responsibility as a vermiculturist is to package the vermicompost properly for
sales. Organic fertilizers tends to lose their value if they get exposed to harsh weather conditions.
Hence, proper packaging and storage are the most crucial.
And lastly Sawan Rai- He is the head of the marketing department, his job is to reach out the
vermincompost to potential customers and interested buyer and make a demo of the product.

3.4. Organizational structure

33
3.5. Descriptions of key positions and responsibilities
Administrative department
- Administrative Officer should be responsible for providing the administrative support to the
business, duties include
-Organizing company records.
-overseeing department budgets
-Maintaining the office supplies

Finance Officer- they are responsible for overseeing the data collection and then help make sense of
the available information, generating the kind of data-driven insights that all modern businesses need
to compete

HR officer- His responsibility is to appoint a right person for the right job, and ensure that there are
structured onboarding procedures in place. It is also to make sure that the business lives up to its values
by hiring people that align with the company’s vision.

Operational Department
- Operational Officer is responsible for managing part or all of the daily operations of a company,
they mainly have to stay focused on the daily operations and strategies of the company.

-Production Officer is responsible for getting involved with the planning, coordination and control of
producing of vermicompust. They have to make sure that the goods and services are produced
efficiently and that the correct amount is produced at the right cost and level of quality

Customer Service is the provision of service to customers before, during and after the purchase of any
product. They have to make sure that the customer’s feedback are being heard because a good
customer service benefits the business or companies as it will produce satisfied customers.

Marketing Department
Marketing officer is responsible for driving growth, alongside the head of sales. They main work
deals with direct user acquisition through means such as advertising.

34
 3.6. Recruitment, selection and training of staff

3.6.1 Recruitment strategy

3. Vermicomposting is one of the eco-friendly processes, and many organization are showing
interest towards vermiculture technology and overall it can benefit country in a long run.
4.
5. To attract is to let people know about your business, we are going to publish about it either in
print media or visual media, go to camping and explain people how beneficial it is and how
profitable it is however make it viral as far as possible so that people can apply for it.

3.6.2 Selection strategy

6. Eligibility Criteria - There is no need for formal education to become a vermiculturist,
7. But if you want to apply in other organization which deals with vermincompost, then the
candidate has to be either 10 or 12 passed out as a minimum eligibility.
8. -Much better if the candidate is from a biology related program.
9.
10. -A vermiculturist however is a professional who is also known as a worm farmer. So in order to
select the right person for the right job, we have to see whether the certain candidates are
vermiphobic or allergic to living organisms or not, if yes then they will be rejected right away
since vermincomposting is all related with soil. He/she must be familiar with the agriculture
environment and must have an independent thinking and decision making abilities.

3.6.3 Training strategy

The Head of the department will call the vermiculture experts from India and organize a
training program where they will start off by explaining what really vermicompost is and then,
explain them about earthworm biology for better understanding, teach them how to build and
manage a worm bin and harvesting the compost and lastly troubleshooting which means it
helps in balancing worm bin.

35
 3.7. Cost of personnel for administration

Job title no. of personnel Monthly salaries Year 1 Year 2 Year 3

Watchman 1 9000 108000 108100 108200

Cleaner 2 17000 204000 204000 204000

Total 312000 312100 312200

3.8 Non-Current assets required for office administration

Purchase Price in
No of Nu. (a) Depreciation
SI. Descriptio Depreciatio
Asset Specification per year in
No n of assets n rate (b)
s Price per Total Nu. (a/b)
unit Cost
Lenovo 81WQ, 15.6"
1 Laptop 1 4GB RAM 607990 607990 15% 91198.5
Panasonic KX-
TS880MXBD Corded
2 telephone 2 landline phone 1430 2860 100% 2860

3 furniture 3 Wooden table and chair 15000 45000 10% 4500

655850 98558.5

3.9. Maintenance and repairs

We don’t have much of a non-current assets which requires a lot of our attention, however
assets such as laptops or any electronic machines, if it incase gets damaged within one year, we
can use our warranty but if not, we will contact the appropriate person to resolve the issue,
overall we will clean and examine each non-current assets and keep them up to date to avoid
the future consequences.

3.10. Office layout

36
 Finance office Customer service Production office Marketing office
office

HR office Operational office

Male Toilet
Conference Hall
Female Toilet

Administrative Vermic specialist

Office

Entrance

3.11. Pre-operating activities and expenses

37
 Activity Months Cost
1 2 3 4 5 6 7 8 9 10 11 12
1. Business plan 15000 0 0 0 0 0 0 0 0 0 0 0 15000
preparation
2. Business registration 0 2500 0 0 0 0 0 0 0 0 0 0 2500

3. Loan application and 0 0 500 0 0 0 0 0 0 0 0 0 500

approval
7. Trial production 0 0 0 0 0 5000 0 0 0 0 0 0 5000

9. Recruitment and training 0 0 0 0 0 0 0 0 0 5000 0 0 5000

of personnel
10. Obtaining samples 0 0 0 0 0 0 0 0 0 0 0 500 500

TOTAL 28500

3.12. Total organization and management expenses

38
Items Year 1 Year 2 Year 3
Salaries for Partners 848400 848400 848400
Stationery and Other supplies 10000 10000 10000
Voucher Expenses (telephone) 6000 6000 6000
Electricity and water 5000 5000 5000
Renewable of Permits and license 15000 15000 15000
Staff training and development 10000 10000 10000
Fuel 24000 24000 24000
Repair and maintenance 5000 5000 5000
donation 0 0 0
8.Miscelleneous 15000 15000 15000
Total before Depreciation and pre-operating expenses

938400 938400 938400

9.Depreciation 105674 105674 105674
10.Pre-operating expenses 28500    
Total 1072574 1044074 1044074

Financial Plan

39
4.1. Projected Cost Sheet

Year 1 Cost Year 2 Cost Year 3 Cost

Particulars
Total Unit Total Unit Total Unit
Direct Material
5708069 31.51 7135086 34.25 8262430 34.49

Direct Labour 1104000 6.09 1104000 5.30 1104000 4.61

Direct Expenses   0.00 0 0.00 0 0.00

Prime Cost 6812069 37.61 8239086 39.55 9366430 39.10

Add:   0.00   0.00   0.00

Factory 578958.49 540558.49
overhead 6 3.20 6 2.59 542233.46 2.26

Works Cost 7391027 40.80 8779645 42.15 9908663 41.36

Add:   0.00   0.00   0.00

Office &
Administrative
Overhead 1072574 5.92 1044074 5.01 1044074 4.36

Cost of Service 8463601 46.72 9823719 47.16 10952737 45.72

Add:   0.00   0.00   0.00

Marketing
Overhead 354674 1.96 315424 1.51 319212 1.33
Cost of
Sales/Revenue 8818275 48.68 10139143 48.67 11271949 47.05

Profit 40725 0.22 48707 0.23 444079 1.85

Sales/Revenue 8859000 48.91 10187850 48.91 11716028 48.91

4.2 Total project cost

Project Cost Components Amount

Capital Expenditure 2047550

40
 Pre-operating Expenses 28500

Working Capital:  

Direct Labour cost 1104000

Direct Material 5708069

Marketing Overhead 354674

Factory Overheads 578958

Organization and Management Overhead 1072574

Less: Sales 8859000

Total Project Cost 2035325

4.3 Financing Plan

We contributed Nu.100, 000 each from 7 partners and it totalled to Nu. 700,000 and borrowing an
amount of Nu.2, 047,550 from BDBL at 12.3% interest rate.

4.4 Security for Loan

In case if we fails to pay the principle amount as well as the interest rate to BDBL loan we borrowed,
we will keep collateral as bolero and all our non-current assets.

4.5 Loan Repayment Schedule

41
 Loan Amortization Summary for 3 Years
Ending Balance
Annual (Beginning
Beginning Annual Interest Total Annual
Year Principal Balance - Annual
Balance Amount (A) EMI (A+B)
Amount (B) Principal
Amount)
1 2,047,550 251,849 320,389 572,238 1,727,161
2 1,727,161 212,441 359,797 572,238 1,367,364
3 1,367,364 168,186 404,052 572,238 963,312

The loan summary of Vermic business is shown in the above table

4.6 Projected Statement of Comprehensive Income

42
 Particulars Year 1 Year 2 Year 3
Revenue 8859000 10187850 11716027.5
Net Revenue 8859000 10187850 11716027.5
Less: Direct Operating Cost      
Direct Labour 1104000 1104000 1104000
Direct Material 5708069 7135086 8262430

Gross Profit 2046931 1948764 2349598

Less: Indirect Operating Cost      
Factory Expenses 578958 540558 542233
Marketing Expenses 249000 209750 213538
Organisation & Management Expenses 258870 263650 269650
Operating Profit 960103 934805 1324177
Depreciation 302726 302726 302726
Pre-operating Expenses 28500 0 0
Net Profit Before Interest & Tax 628877 632080 1021451
Less: Interest 251,849 212,441 168,186
Net Profit Before Tax 377029 419639 853266
Less: Tax (30% BIT) 113109 125892 255980
Net Profit After Tax 263920 293747 597286
Note; 30% BIT as per the rules on Income Tax Act of Kingdom of Bhutan 2001

During the first year we accomplished net profit of Nu. 263,920, but in the second year we achieved
net profit of Nu. 293,747 and in the third year we got a net profit of Nu. 597,286.

4.7 Projected Cash Book

Particulars Year 1 Year 2 Year 3

43
 1,296,25 1,532,93
Beginning cash balance - 6 2
RECEIPTS:      
8,859,00 10,187,85 11,716,02
Sales/Revenue 0 0 8
1,050,00
Equity contribution 0 - -
2,047,55
Fixed investment loan 0 - -
11,956,55 11,484,10 13,248,96
TOTAL RECEIPTS 0 6 0
       
PAYMENTS:      
28,5 28,5 28,5
Pre-Operating Expenses 00 00 00
2,047,55
Capital Expenditure 0 - -
6,812,06 8,239,08 9,366,43
Direct operating cost 9 6 0
1,086,82 1,013,95 1,025,42
Indirect operating cost 8 8 1
251,8 212,4 168,1
Interest on loan 49 41 86
320,3 359,7 404,0
Loan principal repayment 89 97 52
113,1 125,8 255,9
Tax (BIT) 09 92 80
10,660,29 9,951,17 11,220,06
TOTAL PAYMENTS 4 4 8
       
1,296,25 1,532,93 2,028,89
ENDING CASH BALANCE 6 2 2

4.8 Projected Statement of Cash Flows

Particulars Year 1 Year 2 Year 3

I. CASH FLOW FROM OPERATING      

44
ACTIVITIES
263 293 59
Profit After Tax ,920 ,747 7,286
Add: Non-Operating and Non-Cash
Expenses      
302 302 30
Depreciation ,726 ,726 2,726
2
Pre-Operating Expenses 8,500 - -
113 125 25
Provision for Tax ,109 ,892 5,980
251 212 16
Interest Expenses ,849 ,441 8,186
960 934 1,324
  ,103 ,805 ,177

Less: Non-Operating and Non Cash Income - - -

Operating Profit Before Working Capital 960 934 1,324
Changes ,103 ,805 ,177
Add: Increase in Current Liabilities &
Decrease in Current Assets - - -
960 934 1,324
  ,103 ,805 ,177
Less: Decrease in Current Liabilities &
Increase in Current Assets - - -
960 934 1,324
Cash Generated From Operations ,103 ,805 ,177
113 125 25
Less: Income Tax Paid ,109 ,892 5,980
Net Cash Flow From Operating Activities 846 808 1,068
(A) ,994 ,914 ,197
       
II. CASH FLOW FROM INVESTING
ACTIVITIES      
(1,391,
Purchase of Furniture 700) - -
(655
Purchase of Office Equipment ,850) - -

Sale of Furniture - - -

Sale of Office Equipment - - -

(28
Pre-operating Expenses Paid ,500)    
(2,076,
Net Cash Used in Investing Activities (B) 050) - -

45
       
III. CASH FLOW FROM FINANCING
ACTIVITIES      

Owner's Equity Contribution 1,050,000 - -

Raising of Loan 1,727,161    

Interest Paid (251,849) (212,441) (168,186)

Repayment of Loan - (359,797) (404,052)

Net Cash Flow From Financing Activities
(C) 2,525,312 (572,238) (572,238)
       
IV. NET INCREASE IN CASH & CASH
EQUIVALENTS (A+B+C) 1,296,256 236,676 495,960
V. BEGINNING CASH & CASH
EQUIVALENTS - 1,296,256 1,532,932
VI. ENDING CASH & CASH
EQUIVALENTS (IV + V) 1,296,256 1,532,932 2,028,892

46
4.9 Projected Statement of Financial Position

Items End of Year 1 End of Year 2 End of Year 3

CURRENT ASSETS:      
1,296, 1,532 2,028
Cash 256 ,932 ,892
1,296, 1,532 2,028
Total Current Assets 256 ,932 ,892
       
NONCURRENT ASSETS:      
Fixed Assets for Production and 1,391, 1,391 1,391
Marketing 700 ,700 ,700
655 655 65
Fixed Assets for organization ,850 ,850 5,850
2,047, 2,047 2,047
Total Noncurrent Assets 550 ,550 ,550
302 605 90
Less: Accumulated Depreciation ,726 ,451 8,177
1,744, 1,442 1,139
Book Value of Noncurrent Assets 825 ,099 ,374
3,041, 2,975 3,168
TOTAL ASSETS 081 ,031 ,265
       
LIABILITIES      

CURRENT LIABILITIES: - - -
       

Total Current Liabilities - - -

NONCURRENT LIABILITIES:      
1,727, 1,367 96
Fixed investment loan 161 ,364 3,312
1,727, 1,367 96
Total Noncurrent Liabilities 161 ,364 3,312
       
EQUITY:      
1,050, 1,050 1,050
Owner's Equity 000 ,000 ,000
263 557 1,154
Retained Earnings ,920 ,667 ,953
1,313, 1,607 2,204
Total Equity 920 ,667 ,953
3,041, 2,975 3,168
TOTAL LIABILITIES & EQUITY 081 ,031 ,265

47
4.10 Break-even point

BEP= (Fixed Costs)/ (Contribution Margin)

Contribution Margin = Sales – Variable Costs

Items Year 1 Year 2 Year 3

Fixed Costs:      
Office and Administrative Overhead 1072574 1044074 1044074

Marketing Overhead 354674 315424 319212

Total Fixed Cost 1427248 1359498 1363286

Variable Costs:      
Direct Labour 1104000 1104000 1104000

Direct Expenses 0 0 0
Total Variable Cost 1104000 1104000 1104000

Sales 8859000 10187850 11716027.5

Contribution (Sales - Variable Cost) 7755000 9083850 10612028

PV Ratio (Contribution / Sales) 87.5% 89.2% 90.6%

Breakeven Point (Revenue) 1630431 1524724 1505112

Projected Number of Participants 181142 208314 239561

Variable Cost Per Unit 6 5 5

Per Unit Sales 49 49 49

Breakeven Point (Unit) 33338 31176 30775

48
4.11 Payback Period

PBP= (Cost of Investment)/ Cash flow

Cost of Investment = Total Initial Investment

Pay Back Period in case of Uneven Cash Inflow = Completed Years + (Balance to be recovered / Cash
flow of that period)

Total Initial Investment 2,035,325

Year 1 Cash Inflow 11,956,550

Year 2 Cash Inflow 11,484,106

Year 3 Cash Inflow 13,248,960

   

Pay Back happens in year 0.2

Therefore, our business will take about 73 days to recover its cost incurred.

4.12 Net Present Value

Where C = cash flow, r = discount rate, n = year of

cash flow

C0 = initial investment

49
 Net Present Value Calculation

Discount Factor @ Discounted Cash

Year Cash Flows
8.72% Flows

0 11816456    
1 11956550 0.9198 10997563
2 11484106 0.8460 9715794
3 13248960 0.7782 10309876
Total Present Value of the Future Cash Inflows 31023233

Net Present Value 19206777

4.13 Profit Margin

Net Profit Margin = Revenue - Cost / Sales

Projected Net Profit Margin for 3 Years

Items Year 1 Year 2 Year 3
Revenue 8859000 10187850 11716027.5
Cost 2035325 2035325 2035325
Net Profit Margin 77% 80% 83%

The net profit margin in the first year is 77% which it shows that our business is doing well. During the
second year it shows improvement by 3% and also increase in third year by 3%.

50
4.14 Return on Investment
ROI= (Revenue-Cost)/Cost

Estimated Return on Investment for 3 Years

Items Year 1 Year 2 Year 3

Revenue 8859000 10187850 11716027.5

Cost 2035325 2035325 2035325

Return on Investment 335% 401% 476%

Return on investment is a ratio between net income and investment. By seeing the ROI of our business
Vermic it shows that for every investment we have invested there is more return on the investment
throughout the 3 years.

51
 Conclusion
It was a challenging progression until the end. From this project we learned that to become an
entrepreneur it is neither difficult nor easy. It is about having passions and determination to start a
business. Becoming an entrepreneur is about conceiving business ideas and then pushing it through to
a reality. Our company will emphasize on creating a healthy living standard in the society and across
the country. Furthermore, we will create job opportunities, reduce the food wastes, improve the quality
of food and help contribute in increasing the nation’s economy. Last but not the least; anyone can
become an entrepreneur because entrepreneurs are created not born. We had fun learning all the
processes and procedures because we felt like we are already an entrepreneurs.

52
53
54