business plan ( water lifting machine)-libre

Green Technology Pvt. Ltd.

Department of Finance Jagannath University 1 | P a g e

Date of Submission: 15th April, 2012.

Team Members

Md. Mazharul Islam

Khadizatuz Zohara

Md. Mukhlesur Rahman

Business Plan

Team Name : Finance Interface

Plan : Water Lifting Machine



Submitted To:

Suborna Barua Lecturer Department of Finance Jagannath University, Dhaka.

Submitted By:

Md. Mazharul Islam Id No: 091541 B.B.A, 3rd Batch (3rd Year, 2nd Semester) Session: 2008-2009

Department of Finance Jagannath University, Dhaka.

Course Name: Entrepreneurship Development

Course Code: FIN - 3208



Sl. No. Name Roll No. Total Marks

01. Md. Mazharul Islam. 091541

02. Khadizatuz Zohara. 091526

03. Md. Mukhlesur Rahman. 091587

Group Members of Finance Interface



Letter of Transmittal 15th April, 2012

Suborna Barua Lecturer Department of Finance Jagannath University, Dhaka.

Subject: Submission of a proposed business plan.

Dear Sir,

We have completed this business plan as part of our course “Entrepreneurship

Development (FIN 3208)”. The business plan has been compiled as per your

requirements. It gives us immense pleasure to tell you that working on this business

plan has given us a wide range of exposure.

The business plan is based on the knowledge, experiences and the skills that we have

acquired studying the course, Entrepreneurship Development.

We are thus submitting this business plan with the hope that it lives up to your

satisfaction. However we would be glad if you enlighten us with your thoughts and

views regarding the business plan. In addition, if you wish to enquire about any of the

aspects of the business plan, we would be glad to answer your queries.

Thank for your cooperation. Sincerely

Md. Mazharul Islam ID: 091541 Department of Finance Jagannath University, Dhaka.



Name Page No

Part - I Executive Summary 6

Part - II

Business Idea 7

Detailed Business Plan 7-8

Market Potential 8

SWOT Analysis 9

Manufacturing plan 10

Competitor analysis 10

Marketing Plan 10-12

Management Team 12

Resource Requirement 13

Implementation Plan 13-14

Risk Assessment 15

Financial Plan 16-17

Part-III Appendix 18-21

Table of Contents



Our beautiful country Bangladesh has a good opportunity to be a developed country.

Agriculture is our main weapon for the countries overall development. Agriculture

covers majority portion of our total GDP. Agriculture and irrigation, these two are

uttered at a same time, as they are closely related. Rainfall and deep water are the

main sources of irrigation. But due to climate change rainfall and due to scarcity of

electricity and high cost of electricity deep water cannot be used properly. For this

every year large area of cultivable land remains unused.

In our country there are almost 4 million shallow machines are being used to lift

water. But due to excessive load shedding and high price of diesel our poor farmer‟s

dream to produce good paddy hampers again and again. In our estimation we can sell

40000 machines within 4 or 5 years. We analyze that we can sell this machine to our

neighbor countries and African countries where farmer cannot irrigate their land

easily due to electricity and diesel problem. To run this machine 2 or 3 people are

needed that‟s why it can create huge employment opportunity.

Why we chose manual?

There are currently many businesses offering high tech electronic shallow machine in

our country. But the point to be considered these machines is dependent on power

supply. And power in our country is rarely found. Green tech‟s marketing strategy is

to provide such a machine which will be operated without using any electricity but

using manpower that will provide employment opportunities also, farmers who work

for instance, will be in a tensed free position without caring for electricity supply

about their irrigation .Green Technology offers manually operated irrigation machines

which don‟t need any power supply, providing the flexibility of using to the farmers.

Our clients are the farmers who usually do not get power supply as there is a dearth of

electricity and high cost of diesel, at the moment they need to irrigate their lands. We

also have the Technology to use this machine by power of wind and solar. But cost of

the machine will rise

Executive Summary



Today world‟s key person gives more emphasis on PEST-G, here G means

environmental friendly business. Our targeted product is environmental friendly. At

present common shallow machine emit huge amount of carbon dioxide. But our

machine is free from this curse. By using this machine we can save huge amount of

foreign currency which is used to import diesel, create employment opportunity,

reduce production cost of agricultural product and sell save carbon dioxide to abroad

countries.

This is our first step to enter into the market. Our main target is to conduct research

and development activities to invent new Technology. Our role here is to assist, to

fulfill the dream of the inventor. We green Technology believe that if we able to

create a flat form for the inventor then Bangladesh will also get successful scientist

like Bilgets, TATA, etc.

We want to produce those types of products that not only help the human being but

also ecological systems of our environment. That‟s why we like to say our name

Green Technology.



A retired school teacher named Md. Afaz Uddin invented this machine. To invent this

machine he has used scraped chain of bicycle, bearing, 3 wheel‟s ring etc. those

materials are usually available in local markets. We have got the idea from him.

To operate this machine we need physical power. This is same as riding bicycle. To

make this machine cost about 4000 tk (normally used shallow machine cost 15000-

20000 tk) our product main characteristic is that it will cost only one time with no

extra variable cost. Furthermore operation cost is 30-40% less than common machine.

Business Idea



Legal structure:

Legal structure states that what type of the company will be. It is very imperative to determine the company‟s actual structure. There are several types of organization structures e.g. sole proprietorship business, partnership business, corporation, joint venture etc. Our company is production oriented and we have come in conclusion to set up business “Production of water lifting machine” on corporation. Some key merits attract us to gear up the business on corporation figure the merits we found are…………….

Limited liability of stockholders

Ability to attract new capital

Ability to continue long period of time.

Transferable ownership

Less complexity in profit distribution.

Business Type:

Our operation is to production/assembling water lifting machine. We will always try to distinguish our machine production from the currently used machine by analyzing some vital advantages which encourage us to think further more.

Goals and Objectives:

Producing cheap rated machine available for use.

Hundred percent environments oriented.

Saving electricity.

Preserving Co2 ratio.

Attracting foreign investment.

Making innovative young generation.

Earning foreign currency.

Attracting govt. for encouraging further research.

Detailed Business Plan



Product/Service:

The image of our product is given below

Customer benefits:

We designed our product to help the customer by reducing their production cost. It will be about 5 times less expensive than those currently used machines. It is also very easy to use, just like to operate a rickshaw van. We have planned to operate the machine by solar power and power of wind. Govt. has taken initiative to encourage the people to use solar electricity hasted of normal electricity.

Patent/ Trademark:

There will be a trademark of our business; here the business will be patented soon.



In our country there are almost 4 million shallow machines are being used to lift

water. But due to excessive load shedding and high price of diesel our poor farmer‟s

dream to produce good paddy hampers again and again. In this situation we are going

to offer such a machine which will be operated without using any electricity but using

manpower that will provide employment opportunities also, farmers who work for

instance, will be in a tensed free position without caring for electricity supply about

their irrigation. Green Technology offers manually operated irrigation machines which

don‟t need any power supply, providing the flexibility of using to the farmers. We also

have the Technology to use this machine by power of wind and solar. But cost of the

machine will rise. Another plus point of our product is it is environmental friendly.

Considering all the expediency of this machine it has enough market potential.

Market Potential



Strengths Weakness

Environment Friendly. It requires manual executions to operate.

No electricity is needed. Comparatively slow than electronic shallow machine.

Less cheap than electronic machine.

A very new concept of irrigation.

lower production (crops) threats cost

Threats Opportunities

Competitors with electronic shallow machine

It can be used through solar or wind power

As a new product in the market, that it can hardly capture the market share.

exporting opportunities to African countries

Opportunity to sell carbon as it does not emit carbon.

People may not want to work manually while they have other options.

Technical development can be done through expertise assistance

Supply chain:

Our supply chain system consists of four elements starting with suppliers of our

product‟s raw materials and finally ending with our final target customer via Grameen

bank. Here we have made an option for our target customer to buy our product on

credit. Obviously there will be a dedicated marketing team working almost all around

the country for direct selling.

SWOT Analysis

Suppliers of

Raw materials

Green

Technology

Grameen

Bank

Final

consumers



As it is a new product in market so there is no direct competitor. But we will take

concerns about our indirect competitor of electronic shallow machines suppliers.

Unique Value Proposition: Unique value propositions for our business are:

1. Round the Clock Irrigation Facilities: Green Technology Pvt. Ltd introducing in Bangladesh for the first time which will ensure 24 hour water supply as farmers can do their work without any disturbance.

2. Cost Benefit: where the traditional sallow machine costs 20000 or above, we will charge 5000 for our machine.

3. Alternative of Sallow Machine: Since the price of sallow machine in four times higher than our machine‟s price, and it doesn‟t use electricity so it can be a best alternative of sallow machine

Marketing plan

Raw materials (parts

& Equipments

Assembled in

plant

Quality

check

Delivered to

marketing

team

Manufacturing plan

Competitor analysis



Marketing strategy: In Bangladesh there are about 80% of people live in rural areas who are directly and indirectly involved with agriculture. Our overall marketing strategy will be to sell as many products as possible to the farmers at an affordable price and thereby build a large market of water lifting machine for future revenue. Using the unique value proposition, we want to ensure a more customer focused marketing approach. Side by side traditional distribution channels our company will build a Door-to-Door marketing network. Our marketing strategy will inform the farmers about our product benefits and will turn them into our actual customers. To implement this our regular promotional activities will include time to time seminars in the village, TV commercials and also distribution of calendars to farmers. Community radio. Promotional activities will also be done through Grameen Bank‟s channel, Using ministry of agriculture‟s channel, Advertise on TV.

Here the Distribution channel

Market segmentation and targeting:

We decide to form a selling team. They will go to the village and make familiar to the

farmer about the machine and convince them to purchase it. We also planned to export

the machine in India and African countries. As in those countries, farmer are very

poor and they also incapable to irrigate their land for electricity and power problem.

Features:

Cost effective.

Manual operation (No electricity is needed). Low operating cost.

Selling up facility. Cheap accessories.

Price: We can charge 5000 or above as commonly use shallow cost 20000 or above.

Green tech Marketing

team

Final

consumer

Grameen

Bank



Sales Strategy: Since this is a new technology in the field of agriculture, we will sell our products to the farmers of the village who are directly involved with agriculture. So Green technology will build its own distribution network through a group of “Sells Service Team”. Who will sell our products and will also provide after sales service to our customers. Green technology will have a large „sales service team‟ comprised of permanent employment employees. Casual workers will also be hired on need.

Branding Strategy: Being the first company to provide such cost effective and user friendly water lifting machine, Green Technology will strive to be a customer preferred and trusted brand in the market. Our promotional campaign wound be focused on “producing the crops at minimum costs.” Farmers are not been able to get their cost of producing crops because of their high cost of production. At this point we will focus on the immediate need of using our water lifting machine which can be a solution of high production cost of farmers specially in summer season. Using it farmers can minimize their costs and increase their production of crops and can earn more profit. By selling it to farmers Green technology can strengthen its brand image.

Management Team

The management team of Green Technology is very crucial to its operational

efficiency which reflects the strategic decision making as well. Our company has three

operations units: Factory Unit, Marketing, Sales & Service Unit and Administration

Unit. All units will be managed through a three tier management mechanism: (i)

Strategic Decision Making Level, (ii) Operational Decision Making Level and, (iii)

Execution Level.

Strategic Decision Making Level: Broad of directors and operational head of Factory

Unit, Marketing, Sales & Service Unit and Administration Unit together will form this

tier of management. This level will take strategic decisions.

Operational Decision Making Level: This level will include all the operational

heads and the operational heads and supervisory level of employees of Factory Unit,

Marketing, Sales & Service Unit and Administration Unit. They will make operational

decisions and plans for executing the strategic decisions.

Execution Level: This tier will be comprised of the supervisors, first level employees

and workers of the company



Estimated start up cost (2 month to start up)

Particulars Total

Preliminary Expenses 1,000,000

Land 11,000,000

Factory building 3,550,000

Factory furniture 300,000

Office building 5,000,000

Office Fixtures and furniture 2,500,000

Decorating and re-modeling 200,000

Installation of fixture and equipment 500,000

Total estimated cash for startup: 24,050,000

Resourcing: Under resourcing phase following resources will come under

consideration.

Cash: In this phase the estimated start up cost of first year will be BDT 24,050,000.

This cash will be collected from equity capital and long term loan. This is a private

limited company. Three of our group members will invest 8,000,000 each. And to

collect the rest of the capital we will try to find some institutional investors like GAZI

group, RFL, RAHIMAFROOZ etc. If required further capital then we will take loan

from Krishi bank and SME loan from commercial bank at lower interest rate as it will

helps to reduce production cost of agricultural products.

Human Resource: For running the operation Green Technology will recruit personals

including permanent and casual. The desired human skills and qualities are available

in the local human resources.

Implementation Plan

Resource requirements



MD

Production

Assemble

Quality Control

MGT

People

Complain

Remuneration

R&D Marketing

R&D

Sales &

Peomotion

After Sale

Service

CEO

Here the organizational chart:

Facility Resourcing: All the facilities required including the infrastructure

development for starting the commercial operation will be ensured locally. The

factory of our products will be located at Jessore in our 6 hectare leased land. Other

resources like technology and other machineries and materials are easily available in

the local market. We also take the opportunity of Benapol port to collect the raw

material of our product if needed.



New business always starts with new risk. We have also analyzing the potential risk

related to the Green technology Ltd. the Risk factors are,

Risk Factors Strategies to Minimize Risk

Competitor

There are no direct competitor in

our business, sallow machine

producers and sellers are the

indirect competitors of our

business. Since the process of

making water lifting machine is

quite simple and easy it may be

copied by others and competition

may arise.

Customer oriented marketing

and distribution and rapid

expansion.

Economical Risk

If the producers and sellers of

sallow machine can be able to

reduce their production cost

supplies sallow machine at lower

price than ours our business may

get a big shock.

Since our production cost is

nearly 30% to 40% less than

the production cost of sallow

machine because here local

instruments are used and it is

not so easy to reduce sallow

machine‟s cost of production.

Another plus point of our

machine is its operation cost

is also less than other

machines.

Operational Risk

Production and plant

machineries may go out of

operation which may affect the

system.

All the equipments are easily

available in the market.

Repairing may not take long

time.

Risk Assessment



Revenue Projection: The sales forecast has been made based on the current market

demand and existing market growth trend. According to the forecast Green

Technology Pvt. Ltd will be reaching the following sales level in the concerned years:

Revenue Source 2013 2014 2015 2016 2017

Selling Units 10000Units 17000Units 21000Units 33000Units 40000Units

Sales Revenue 50,000,000 85,000,000 105,000,000 165,000,000 200,000,000

Income Statement: The projected income statement for the first five years is shown

below. We will start with a profit of BDT 715,500 which will be reached to BDT

23,157,771 in the fifth year.

Projected Income Statements

Particulars 2013 2014 2015 2016 2017

Sales Revenue 50,000,000 85,000,000 105,000,000 165,000,000 200,000,000 Less: COGS 40,000,000 68,000,000 84,000,000 132,000,000 160,000,000 Gross Profit 10,000,000 17,000,000 21,000,000 33,000,000 40,000,000 Less: Operating Expense: Admin. Expenses 1,810,000 1,888,000 1,966,000 2,044,000 2,122,000 Selling & Distr. Expenses 4,236,000 4,447,800 4,659,600 4,871,400 4,147,200 EBIT 3,954,000 10,664,200 14,374,400 26,084,600 33,730,800 Interest(15%) 3,000,000 2,970,716 2,937,038 2,898,310 2,853,772 EBT 954,000 7,693,484 11,143,362 23,186,290 30,877,028 Tax(25%) 238,500 1,923,371 2,785,840 5,796,573 7,719,257 Net Income 715,500 5,770,113 8,357,522 17,389,717 23,157,771

Balance Sheet: The accounting period is January to December. The summarized

balance sheet for five years is shown below. Detailed balance sheet is in the appendix.

Particulars 2013 2014 2015 2016 2017

Total Liabilities 19,804,771 19,580,257 21,845,805 25,368,316 28,170,009 Total Capital 24,715,500 27,600,557 31,779,318 35,257,261 39,888,815 Total Liabilities and Capital

44,520,271 47,180,814 53,645,123 60,625,577 68,058,824

Total Current Assets

20,665,500 24,266,056 31,623,873 39,280,577 47,390,074

Total Net Fixed Assets

23,373,750 22,697,500 22,021,250 21,345,000 20,668,750

Total Assets 44,520,271 47,180,814 53,645,123 60,625,577 68,058,824

Financial Plan



Financial Ratios and Investment Return: The following tables features some important financial and investment return ratios.

Ratio Analysis 2013 2014 2015 2016 2017 Current Ratio 0 0 12.43 6.19 4.9956 Average Collection Period(Days) 36.5 36.5 36.5 36.5 36.5 Asset Turnover Ratio 1.12 1.80 1.96 2.72 2.94 Debt-to-Equity 0.80 0.71 0.61 0.54 0.47 Net Profit Margin 1.43% 6.79% 7.96% 10.54% 11.58% Return on Assets(ROA) 1.61% 12.23% 15.58% 28.68% 34.03% Return on Equity(ROE) 2.89% 20.91% 26.30% 49.32% 58.05%

Cash Flow Statement: The summarized cash flow statement for the first five years is

presented below. Detailed is in the appendix.

Particulars 2013 2014 2015 2016 2017

Total Inflow 89,000,000 97,881,000 121,651,112 184,302,634 222,758,520 Total Outflow 73,334,500 82,114,944 100,527,239 161,522,057 195,368,446 Cash in hand 15,665,500 15,766,056 21,123,873 22,780,577 27,390,074



Assumptions:

1. All calculations have been done on Bangladeshi currency, BDT. 2. All salaries and wages have been decided as per the ongoing market practice, a

fixed rate of BDT 5000 for sales and promotion managers. 3. 5% salary and wage increment on starting salary and wage have been assumed. 4. Interest on long term loan has assumed to be 15%. 5. For the second year retained earnings will be 100%, for next two year 50% and

after then it will be a fixed rate of 20%. 6. Other than salaries a fixed portion of administrative expenses is assumed BDT

250000. 7. Growth in sales is calculated on the basis of reasonable forecast. 8. Fixed asset‟s useful life is assumed to be 40 years. (except land) 9. Land‟s useful life is assumed to be 100 years. 10. Depreciation on fixed asset is calculated on the straight line method. 11. Life expectancy of the fixed assets has been assumed. 12. It is assumed that 10% of the sales will be on credit. 13. A/C Receivable will be received in the following year. 14. It is assumed that all the purchases will be on cash. 15. All the costs have been determined as per current market practice. 16. The corporate tax rate has been assumed to be 25%.

Details of Human Resources

Human resources Permanent Casual Labor(maker of water lifting machine)

40 (wage 2000) 10

Supervisors 3 (salary 4000) 2 Marketing managers 2 (salary 7000) 0 Asst. Marketing Manager 4 (salary 6000) 0 Administration Staff 20 (salary 4000) 0 Accountants 2 (salary 5000) 0 Operational Heads 4 (salary 10000) 0 Sales and promotion managers 50 (salary 5000) 13 Total 150

Appendix



Detailed Balance Sheets:

Particulars 0 year 2013 2014 2015 2016 2017 Liabilities Accruals 0 0 0 2,543,739 6,343,169 9,486,319 Long term loan(outstanding)

20,000,000 19,804,771 19,580,257 19,322,066 19,025,147 18,683,690

Total liabilities 20,000,000 19,804,771 19,580,257 21,845,805 25,368,316 28,170,009 Capital, Owners participation

24,000,000 24,000,000 24,715,500 27,600,557 31,779,318 35,257,261

Retained earnings

0 715,500 2,885,057 4,178,761 3,477,943 4,631,554

Total capital 24,000,000 24,715,500 27,600,557 31,779,318 35,257,261 39,888,815 Total capital &liabilities

44,000,000 44,520,271 47,180,814 53,645,123 60,625,577 68,058,824

Assets Current assets Cash 44,000,000 15,665,500 15,766,056 21,123,873 22,780,577 27,390,074 Inventories 481021 217,258 0 0 0 Accounts receivable

0 5,000,000 8,500,000 10,500,000 16,500,000 20,000,000

Total current assets

44,000,000 21,146,521 24,483,314 31,623,873 39,280,577 47,390,074

Fixed assets Factory unit 14,478,750 14,107,500 13,736,250 13,365,000 12,993,750 Office unit 7,995,000 7,790,000 7,585,000 7,380,000 7,175,000 Preliminary expenses

900,000 800,000 700,000 600,000 500,000

Net fixed assets 23,373,750 22,697,500 22,021,250 21,345,000 20,668,750 Total assets 44,520,271 47,180,814 53,645,123 60,625,577 68,058,824



Detailed Cash Flow Statements

Cash Flow Statements 2013 2014 2015 2016 2017

Inflow Capital 24,000,000 0 0 0 0

Cash B/D 0 15,665,500 15,766,056 21,123,873 22,780,577

Sales Revenue 45,000,000 76,500,000 94,500,000 148,500,000 180,000,000

Receipt from A/C Receivable

0 5,000,000 8,500,000 10,500,000 16,500,000

Long Term Loan 20,000,000 0 0 0 0

Retained Earnings 0 715500 2885056 4178761 3477943

Total Inflow 89,000,000 97,881,000 121,651,112 184,302,634 222,758,520

Outflow Project Cost 24,050,000 0 0 0 0

Factory Overhead (cash) 40,000,000 68,000,000 84,000,000 132,000,000 160,000,000

Admin Overhead (cash) 1,810,000 1,888,000 1,966,000 2,044,000 2,122,000

Selling && Distribution Overhead (cash)

4,236,000 4,447,800 4,659,600 4,871,400 4,147,200

Interest Payment 3,000,000 2,970,716 2,937,038 2,898,310 2,853,772

Tax Payment 238,500 1,923,371 2,785,840 5,796,573 7,719,257

Distribution of Profit 0 2885057 4178761 13,911,774 18526217

Total Outflow 73,334,500 82,114,944 100,527,239 161,522,057 195,368,446

Cash in hand 15,665,500 15,766,056 21,123,873 22,780,577 27,390,074



Loan Repayment Schedule

Annual Payment 3195229.41; Date of Taking Loan : 01-01-2013; Annual

Installment : 1; Rate of Interest: 15%; Year: 20.

Year

Beginning

Amount

(1)

Periodic

Payment

(2)

Interest

Portion

(3)

Repayment of

Principal

(4)=(2)-(3)

Remaining

Balance

(5)=(1)-(4)

2013 20,000,000 3195229.41 3000000 195229 19804771

2014 19804771 3195229.41 2970716 224514 19580257

2015 19580257 3195229.41 2937038 258191 19322066

2016 19322066 3195229.41 2898310 296919 19025147

2017 19025147 3195229.41 2853772 341457 18683690

2018 18683690 3195229.41 2802253 392676 18291014

2019 18291014 3195229.41 2743652 451577 17839437

2020 17839437 3195229.41 2675915 519314 17320123

2021 17320123 3195229.41 2598018 597211 16722912

2022 16722912 3195229.41 2508436 686793 16036119

2023 16036119 3195229.41 2405417 789812 15246307

2024 15246307 3195229.41 2286946 908283 14338024

2025 14338024 3195229.41 2150703 1044526 13293498

2026 13293498 3195229.41 1994024 1201205 12092293

2027 12092293 3195229.41 1813843 1381386 10710907

2028 10710907 3195229.41 1606635 1588594 9122313

2029 9122313 3195229.41 1368346 1826883 7295430

2030 7295430 3195229.41 1094314 2100915 5194515

2031 5194515 3195229.41 779177 2418055 2776460

2032 2776460 3195229.41 416769 2776460 0

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