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TABLE OF CONTANT

CHAPTER 1 INTRODUCTION ………………………………………………………1-2

1.1 INTRODUCTION

CHAPTER 2 MARKET POTENTIAL…………………………………………….….3-4

2.1MARKET POTENTIAL 3

2.2 SEGMENTATION BY END USER APPLICATION AND ANAYLASIS OF

CORRUGATED BOX PACKGING MARKET 4

2.3 GEOGRAPHICAL SEGMENTATION OF THE CORRUGATED BOX

PACKGING MARKET COMPETITIVE LANDSCAPE 4

2.4 THE KEY VENDOR IN THE MARKET 5

CHAPTER 3 BASIS AND PRESUMPTIONS………………………………………...6

3.1 BASIS AND PRESUMPTIONS 6

CHAPTER 4 TECHNICAL ASPECTS……………………………………………....7-8

4.1 PROCESS OF MANUFACTURING 7

4.2 OPERATION 7

4.3 PLANT & MACHINERY 8

4.4 ADVANTAGE 8

CHAPTER 5 LAND AND UTILITIES………………………………………..………9

5.1 LAND 9

5.2 UTILITIES 9

5.3 IMPLIMENTATION SCHEDULE 9

CHAPTER 6 ASSUMPTION………………………………..………………..………10

6.1 ASSUMPTION 10

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CHAPTER 7 FINANCIAL ASPECT………………………………………………11-13

7.1 FIXED CAPITAL 11

7.1.1 MACHINERY AND EQUIPMENT 11

7.2. WORKING CAPITAL (per month) 12

7.2.1. PERSONAL 12

7.2.2. RAW MATERIAL 12

7.2.3. UTILITIES 12

7.2.4. OTHER CONTINGENT EXPENCES 13

7.2.5. TOTAL RECURRING EXPENDITURE (per month) 13

7.3. TOTAL CAPITAL INVESTMENT 13

CHAPTER 8 FINANCIAL ANALYSIS ………………………………………….14-15

8.1. Cost of Production (per annum) 14

8.2. Turnover (per annum) 14

8.3. Net Profit (per annum) 14

8.4. Net Profit Ratio 14

8.5. Rate of Return 15

8.6. Break-even Point 15

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CHAPTER 1

INTRODUCTION

Packing, in a way represents the extent of industrialization of a country. The more industrially

advanced , the more advanced is its state of packaging. Estimates indicate that packaging

represents 5% of total cost and prevents loses to the tune of 20%. Corrugated boxes have made

significant strides in packaging either as a primary pack, secondary pack or as a transport

container. Corrugated boxes have successfully replaced other packaging and are now being

widely used for packaging fruits, vegetables, canned foods, chemicals, pharmaceuticals,

electrical appliances, garments etc.

Corrugated fiberboard is a material consisting of a fluted corrugated sheet and one or two flat

linerboards. It is made on "flute lamination machines" or "corrugators" and is used in the

manufacture of shipping containers and corrugated boxes.

The corrugated medium and linerboard board both are made of kraft containerboard,

a paperboard material usually over 0.01 inches (0.25 mm) thick. Corrugated fiberboard and

paperboard are sometimes called corrugated cardboard, although cardboard might be any

heavy paper-pulp based board.

Corrugated Paper boxes are extensively used in the packaging of industrial as well as consumer

goods. In some of products like crockery, electronic items, automobile components, glass and

cigarettes, pharmaceuticals, soaps & cosmetics, biscuits, hosiery, toys, rubber & rubber

products, refrigerator, cooler & fans, proper type of packaging becomes very important.

Several properties and characteristics can be measured for corrugated board. Included are;

Edge crush test

Burst strength

Flat crush test

Bending resistance

Impact resistance

Cushioning, shock absorption[4]

Tear resistance

Grammage (mass per unit of area) for components and for combined board

4

Corrugated fiberboard has a higher stiffness (resistance to bending) than flat fiberboard of

equal mass, especially parallel to the corrugations. This can be explained by the Theorema

Egregium. The pleated board is roughly isometric to a flat plane, which has a Gaussian

curvature of 0. Since the material is curved in one direction, perpendicular to the pleats, it must

remain flat in the direction parallel to the pleats.

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CHAPTER 2

2.1:- MARKET POTENTIAL

With the steady rise in the industrial production, the demand for corrugated paper boxes

increasing every year. These boxes have got distinct advantages such as light in weight, easy

to fabricate as per required specifications. The corrugated papers and boards may also find

market in the rural areas for packing of fruits, vegetables & eggs.

The corrugated box industry is an inevitable part of manufacturing sectors which rely heavily

on ample corrugated packaging for finished goods transportation and handling. Despite this

importance, the Indian corrugated box industry has faced numerous challenges and hurdles in

its growth pace due to the very nature of the industry comprising thousands of small players

running manual/semi-automatic plants to cater to the needs of local nearby industries.

However, the tide of liberalization and globalization has brought new ray of hope for Indian

manufacturers who are now more willing to upgrade technology and turn into completely

automatic lines capable of faster, quality driven and economical production.

Market analysis of corrugated box packaging

Technavio’s market research analyst predicts the global corrugated box packaging market to

grow at a CAGR of around 5% during the forecast period. The increased demand from the e-

commerce industry is driving the growth of this market. Online retailers use different types of

corrugated boxes based on the kind of product transported to ensure the safety of the products.

Effective packaging is fast becoming one of the key business requirements in the e-commerce

marketplace.

The growth of the processed food industry is also expected to contribute to the market growth

during the forecast period. The packaging of processed food requires secure and flexible

packaging material, which is convenient to the customer and also ensures product safety. As

consumers look for convenient, easy-to-use, and lightweight packaging, innovative

paperboard packaging solutions are being developed by packaging manufacturers to tap the

growing organized retail and processed food market.

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2.2:- Segmentation by end-user application and analysis of corrugated box packaging

market

Food and beverage products

Electronic goods

Personal and household care goods

Glassware and ceramics

Paper products

Chemicals

Textile goods

Other non-durable goods

The food and beverage products segment dominated the corrugated box packaging market

during 2015 with a market share of 42%. The increased demand for processed food products,

especially in Latin America is driving the growth of this segment. This report anticipates this

segment to retain its market leadership and reach a market value of around USD 32 billion by

the end of 2020.

2.3:- Geographical segmentation of the corrugated box packaging market

Americas

APAC

EMEA

The Americas accounted for 41% of the market share during 2015 and is expected to reach a

market value of around USD 31 billion by the end of 2020. The growth of the e-commerce

industry in this region has been driving the market growth. The US is the largest market for

corrugated boxes in this region due to the increase in cross-border trade and huge demand for

online shopping.

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2.4:-Competitive landscape and key vendors

The market is highly fragmented with the presence of numerous local and international

suppliers. Vendors in this market compete on the basis of product differentiation, portfolio,

and pricing. Companies are expanding their business by setting up new manufacturing plants

and launching new products in the emerging markets. Market analysts anticipate a stiff pricing

competition among vendors during the forecast period owing to the influx of new providers in

this market.

2.5:-The key vendors in the market are -

Mondi

Georgia-Pacific

International Paper

Roch-Tenn

Smurfit Kappa

The other prominent vendors in the market include Archis Packaging, Bates Container, Bio-

PAPPEL SAB de CV, Carter Holt Harvey, Clarasion, DS Smith, Dunapack Packaging, Emin

Leydier, Europac Group’s Packaging Division, Induspac, Interstate Resources,

MeadWestvaco, PCA, Sonoco Products, and U.S. Corrugated.

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CHAPTER 3

BASIS AND PRESUMPTIONS

The estimates are drawn for a production, capacity generally techno economically viable for

model type of manufacturing activity. The information supplied is based on a standard type of

manufacturing activity utilizing conventional technique of production and optimum levels of

performance. The costs in respect of machinery and equipment’s, raw materials and selling

prices of the furnished products etc. are those generally obtaining at the time of the preparation

of project profiles and may vary depending upon various factors. Whereas some names of

manufacturing/supplies of machinery and equipments, raw material are indicated at the end of

profile, these are by no means exclusive or exhaustive.

Corrugated board can be classified as under :

1. Single faced corrugated Board (2 ply)

2. Double faced corrugated Board (3 ply or single wall)

3. Double wall corrugated Board (5 ply or double wall)

4. Triple wall corrugated Board (7 ply)

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CHAPTER 4

TECHNICAL ASPECTS

4.1. Process of Manufacturing

Calculation has been based on single corrugated sheet pasted with one sheet of craft paper.

Two paper reels are run together on corrugated machine. One layer of paper becomes

corrugated after passing through the heated fluted rolls and other is brought in contact with

the former having been glued at the tips. These two get pasted together and are wound in rolls.

These will be procured on job work. By cutting this roll with board cutters and gluing the

corrugated side on pasting machine. A double face board is produced by the 3rd ply of paper

over it. This board is kept under a sheet pressing machines for some time for setting of wet

glued sheets. Similarly board to board can be pasted to form thicker board i.e. 5 Ply, 7 Ply

and 9 Ply etc.

4.2:-Operations

The process of manufacturing boxes or containers constitutes five operations.

1. Slitting or longitudinal Cutting

2. Creasing

3. Slotting

4. Flap or Corner Cutting

5. Stitching

After passing the sheet through these operations, a Box or a Container is ready.

Slitting and Creasing operations can simultaneously be carried over a 4-bar Rotary

Cutting Machine & Creasing Machine. The trimmed and creased sheet is slotted and

flap cut on an Eccentric Slotter Machine. Finally, it is either stitched over a Stitching

Machine or glued/taped manually. For Partition boxes, the half slotted boards are

used, which can conveniently be produced over a Partition Slotter Machine.

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4.3:-Plant & Machinery

The main items of the machinery required for the manufacture of Corrugated Boxes are given

below:

I. One 4-Bar Rotary Cutting & Creasing Machine, 75” Size

II. One Eccentric Slotter Machine, 75” Size

III. Two Stitching Machines

i) One 36” arm, Angular head

ii) One 36” arm, Straight head.

IV. One Partition Slotter, Automatic Machine

V. One Single Slotting Machine, 12” Size

4.4:-Advantages

The Corrugated Boxes have the following advantages:

1. Effective cushioning materials.

2. Light weight (freight advantage)

3. Easy to fabricate

4. Easy for storing

5. Easy for disposal

6. Pilfer-proof

7. No strapping necessary

8. Articles kept dust free after sealing

9. Can be made water resistant

10. Printing & Advertising advantage

11. Desired in Export Market

12. Eliminates dependency on natural wood

13. Recyclable

14. Expedites production due to on line conveyor packing.

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CHAPTER 5

Land and Utilities

5.1:- Land

An area of 2000 sq.ft is required for this project.

The space can be arranged on lease.

The rent is assumed at Rs. 16000 p.m and advance will be about Rs. 1.60 lakhs.

5.2:- Utilities

Power: The power requirement is 15 KW.

Water : Water is required for human consumption only.

Manpower: Labour requirement of the unit is estimated as follows.

5.3:- Implementation Schedule

The machines are available from supplier within one month’s period. The project can be

implemented within a month period.

IMPLEMENTATION SCHEDULE

Quotation period _ 10 days

Provisional registration _ 10 days

Sanction of loans _ 2 months

Delivery and erection of machine, _ 1 month

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CHAPTER 6

Assumptions

• The unit would work for 300 days on single shift basis. The unit can generate 300 MT

boxes per annum.

• The selling price is assumed as Rs.52000/- per MT.

• Capacity utilization is assumed at 60%, 70% and 80% for first three years.

• Raw Materials cost is assumed at Rs 110.39 lakhs per annum.

• Power charges works out to Rs.1.80 lahs- per annum.

• Wages & Salaries works out to Rs. 9.21 lakhs per annum.

• Repairs & Maintenance is assumed at Rs.2000 p.m

• Depreciation calculated @ 15% on Plant & Machinery on WDV method.

• Selling, General & administrative expense is estimated at Rs.20,000 per month.

• Interest on TL is provided at 12% p.a. on reducing balance.

• Interest on Working Capital is calculated at 12% p.a.

• Income tax is provided at 33.99% on profit.

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CHAPTER 7

FINANCIAL ASPECT

7.1. Fixed Capital

Land &Building: Covered area of 200 sq. ft. & uncovered area of 50 sq. ft. on rent.

An area of 2000 sq.ft is required for this project.

The space can be arranged on lease.

The rent is assumed at Rs. 16000 p.m and advance will be about Rs. 1.60 lakhs.

7.1.1. Machinery and Equipments

S.No. Particulars Amount (Rs.)

i) Cutting machine 65,000

ii) Paper Pasting machine size 75" complete with motor 90,000

iii) Stapler 36” 45,000

iv) Testing Equipment, Physical Balance meter scales 15,000

v) Generator set 5 KVA 45,000

vi) 2 Bar Rotary machine for creasing & sizing 1,00,000

vii) Accentric Slotter 1,80,000

viii) Installation & electrification 54,000

ix) Officer furniture 76,000

TOTAL 6,70,000

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7.2. Working Capital (per month)

7.2.1. Personnel

S. No. Designation No. Salary (Rs.) Amount (Rs.)

1 Manager (self) 1 15,000 15,000

2 Production Supervisor 1 11,000 11,000

3 Salesman 1 9,000 9,000

4 Skilled workers 2 9,500 19,000

5 Unskilled workers 2 8,500 17,000

TOTAL 71,000

Perquisite@ 15% 10,650

Grand Total 81,650

7.2.2. Raw Material

S.No. Description Qty Rate Amount (Rs.)

1 Craft Papers 15 tons Rs.30/kg 4,50,000

2 Glue 1 ton Rs.10/kg 10,000

3 Staples wire etc. 500 kgs. Rs.40/kg 20,000

4 Packaging Material 20,000

TOTAL 5,00,000

7.2.3. Utilities

S.No. Description Amount (Rs.)

1 Power 2,000 units @ Rs.5/- per unit 10,000

2 Diesel 100 liter @ Rs.50 per liter 5,000

3 Water 500

TOTAL 15,500

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7.2.4. Other Contingent Expenses

S. No. Description Amount (Rs.)

1 Rent 15,000

2 Postage, stationery Telephone 1,000

3 Repair & Maintenance 2,000

4 Transport & Travelling 4,500

5 Consumable Stores 2,000

6 Corrugation charges @ Rs.5 per kg 70,000

7 Misc. Expenses 5,500

TOTAL 1,00,000

7.2.5. Total Recurring Expenditure (per month)

S. No Description Amount (Rs.)

1. Raw Material 5,00,000

2. Salary & Wages 81,650

3. Utilities 15,500

4. Other Expenses 1,00,000

Total 6,97,150

Say 6,97,000

7.3. Total Capital Investment

Total Fixed Capital Rs. 6,70,000

Total Working Capital (for 3 months) Rs. 20,91,000

Total Rs. 27,61,000

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CHAPTER 8

FINANCIAL ANALYSIS

8.1. Cost of Production (per annum)

S.No. Description Amount (Rs.)

1 Recurring Expenditure 83,64,000

2 Depreciation on Machinery & Equipment @ 10% 54,000

3 Depreciation on furniture @ 20% 15,200

4 Interest on capital investment @ 15% per annum 4,14,150

Total 88,47,350

8.2. Turnover (per annum)

Considering 2.5% processing wastage;

Total production = 175.5 tons

Wastage = 4.5 tons

Sales of 175.5 tons paper boxes @ Rs.56,000 per ton Rs. 98,28,000

Sales of 4.5 tons wastage @ Rs. 7,200 per ton Rs. 32,400

Total Rs. 98,60,400

8.3. Net Profit (per annum)

= Turnover – cost of production

= Rs. 98,60,400 – 88,47,350

= Rs. 10,13,050

8.4. Net Profit Ratio

Net profit per year

= X 100

Turnover per year

= X 100

= 10.3 %

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8.5. Rate of Return

Net profit per year

= X 100

Total Capital Investment

= X 100

= 36.7 %

8.6. Break-even Point

Fixed Cost Value (in Rs.)

Depreciation on Machinery @ 10% per annum 54,100

Depreciation on Furniture @ 20% per annum 15,200

Interest on total investment 4,14,150

Rent 1,80,000

40% of salary & wages 3,91,920

40% of other expenses 4,08,000

Total 14,63,370

B.E.P

Fixed Cost

= X 100

Fixed Cost + Net Profit

= X 100

= 59.1%