pak recycling pvt(ltd)

Pak Recycling Pvt (Ltd)

Pak Recycling Pvt (ltd)Never refuse to reuse

University of the Punjab Gujranwala Campus,

Gujranwala

Academic Year

2012-2016

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Pak Recycling Pvt (ltd)

Never refuse to reuse

By

Ayesha Mushtaq BB12007

Tahira Ayub BB12015

Fazeela Mushtaq BB12020

Farwa Yousaf BB12027

Zubaida Abaidullah BB12061

Submission Date: 8-12-2015

Supervisor: Mr. Naveed Iqbal Chudhary

Copyrights 2015

All rights reserved, no part of this report documentation may be reproduce, stored in retrieval system, or transmitted in any form or by any means without prior permission of University of Punjab Gujranwala Campus.

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Executive Summary

Pak recycling Pvt (Ltd), Head office at Industrial estate no 2. It is a startup company that will collect all used goods like plastic bottles, old jeans, used tires, wood, plastic bags etc for household solutions. Converting the waste into useful products, expanding business in the local and regional communities. It is owned by 5 members, and is in the process of choosing a legal business form.

The Pak Recycling Pvt (Ltd), will produce jewellary box, coin collection box, kitchen wearing products, home decoration, bags by using the plastic bottles, nuts, a metal rod and old jeans. Company involves the process of collection of raw material, cleaning, molding & shaping, coloring and painting, packaging and delivering. The Company needs skilled, semi-skilled and un-skilled workers to perform the different activities of the business. The company’s marketing strategy is designed carefully to develop a strong relationship with customers and reputation of the company.

We are committed to provide the innovative products by reusing the used waste material that is consistent with the environmental safety and public health. We strive to achieve the highest stander of “Stylish Design” by perfecting the concept of style, interface, and finishing of each of our product. We are committed to contributes to national and social development through job creation, tax payment, and promotion of cultural and welfare programs. We strive to prevent environmental pollution and imply all measures necessary to conserve precious natural resources.

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Table of contents Pak Recycling Pvt (Ltd)…………………………………………………..2

Executive Summary……………………………………………………....3

Business Description……………………………………………………..5

Company Description……………………………………………………7

Environmental Analysis………………………………………………....8

Marketing Strategy……………………………………………………...9

Management…………………………………………………………...13

Financial projection……………………………………………………17

Appendices……………………………………………………………29

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Business Description

The name of company is Pak recycling Pvt(Ltd).It will collect all used goods like plastic bottles, old jeans, used tires, wood, plastic bags etc for household solutions. kangni wala road is the place where we collect all used materials and other operations will be taken there.

We will collect all these materials and then recycle it until our recycling unit converts them in to the very useful things, which can be used for various purposes. We will establish a facility outlay, from where our customers will purchase our products or order us to recycle the products according to their specifications, whatever they want .Our target customer is the general public.

Objectives

Create a company that provides the customer satisfaction

Create a company that provides customers not only the product but also the benefits that customers valued

Develop the company that grows on its own assets

Expand the business in Gujranwala division in first 3 years, and then to whole Punjab

Do not waste the used goods, recycle them into the valuable products

Reasons for setting up

Everyone should know the importance of used goods. There are many ways to recycle/reuse them into multiple products for many purposes, such as decorate the homes, for kitchen purpose, for wearing, for lawn sitting etc. One of our friends was going to a morning walk, when he noticed that people were throwing their garbage, there was a huge amount of plastic bottles may be they were beverage lovers. But they don’t know how they can use these bottles for various purposes. From there we get the idea of recycling and reuse them. When we were working on that thing, suddenly an idea come into our mind we should recycle/reuse all the used things.

So we start searching the people, market, internet and the media. We noticed that many people love to decorate their homes, for kitchen purposes, lawn sittings,

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hanging clothes etc.so an idea come into our mind that we should target that group of people, who are much founded of decorating their homes.

Products and services

Our company will use the plastic bottles, plastic rappers, old jeans, wood, used tires etc. And process them into various stages until they convert into the final form. By recycling that material, we will produce the following products

1. Jewellary boxes

2. Jeans bags & shoes

3. Roped tyre table

4. Coin collection boxes

5. Home decore products

6. Kitchen wears products

7. Wood hanging racks

Vision:Being the largest firm to provide the best solution of used waste material.

Mission:To provide the innovative products by reusing the used waste material that are consistent with the environmental safety and public health

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Company description

We will form the private limited company. Initial investment required is 1 million. The total number of members will be 5.All the members will equally invest into the company. The name of company will be Pak Recycling Pvt (Ltd).The head office will be located at GT road near Chand Da Qila. The production unit will be located at kangni wala road. There will be 5 units in the factory.

1. Cleaning

2. Cutting

3. Molding

4. Painting

5. Packaging

There will be 5 departments in the Pak Recycling Pvt (Ltd).

1. Production department

2. Sales department

3. Finance department

4. Research & development department

5. Human resource department

The company will provide a wide range of products for household solutions. We will produce the jewelry box, coin collection box, kitchen wearing products, home decoration, by using the plastic bottles, nuts and a metal rod. We will produce the jeans bags and shoes by using old jeans. Many people love their jeans but when the trend changes, and the jeans become old they want to go along the new trend. But they don’t want to throw their old jeans. So it’s a chance for those jeans lovers that they can use their jeans for many purposes.

We will produce tyred table, by using the used tyres.

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Environmental Analysis

Political Factors

Rules and regulations of Government of Pakistan can affect the recycling business. Average 50% of the total solid waste is collected from different cities of the Pakistan and in the comparatively clean cities that ratio is 75%. Govt. imposes the condition on locally collection of the used waste material for the sake of the export of waste material and only the govt. representatives are allowed to collect the waste material so that condition affect the availability of the used waste material or any law pass by the legislation that affect the recycling business in a negative way. To protect the environment from the used waste govt. starts the waste material management projects under its own supervision then it can also affect the recycling business.

Economic Factors:

Economic factors such as inflation rate, interest rate and income level can also affect the business. An increase in the inflation rate can also cause the increase in prices and decrease in the purchasing power of the customers. An increase in interest rate can also cause the increase in the cost that can lead to increase in prices. Income level of the localities also affects their purchasing power and their attitude toward the product.

Social Factors

Social factors define the taste, culture, values, norms social status and the attitude of the society. When launch the product these factors are studied carefully to target the particular segment. When selecting the segment we must need to identify the segment specific people attitude and interest toward the art and décor. People concern for environmental protection and attitude toward the green products also matters a lot.

Technological Factors

Use the modern technology for the cleaning, cutting and molding of the waste material to convert it into the new product and use the technology that can not harm the environment. Use the electronic media, print media (newspaper, magazines, pamphlets etc) for the advertisement of the product. Social media can also use for the advertisement and online selling of the products.

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Marketing Strategies

Overall Marketing Strategy:

The company has chosen to focus on recycling of plastic bottle, old jeans and used tyres etc and their packaging. We have identified a significant available market in Gujranwala Pakistan. All of our initial marketing strategy will be to secure contracts in that segment, and after reaching

full planned capacity, we look to grow in concert with that segment and related markets. We see little need at present for further market research and development, and will focus on continually updating our production technology in an effort to remaining the forefront of our chosen marketplace.

Product and Service Strategy:

For a small business to succeed, it must offer products and services that provide superior benefits when customers compare them side-by-side to the benefits provided by competitors’ products or services.

By adopting recycling program we can protect the environment by using waste material into final products and it is having valued for those people who do not want to throw their old or used things into the bucket.

The company will require plastic bottles, wood, old jeans, used tyre. The products will be offer in different colors and different sizes with high quality.

The products we are producing are:

1. Jewelry boxes in multi colors and different sizes

2. Jeans bags & shoes in different sizes

3. Roped tyre table for household & office use

4. Coin collection boxes for kids

5. Home decor products

6. Kitchen wears products

7. Wood hanging racks

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We will offer free home delivery in case of online purchase.

Pricing Strategy:

Pricing strategy is combined with other marketing principals such as product, price, place, promotion. Pricing strategy is the most important component of marketing mix because through this strategy company can generate revenues.

Plastic products or recycling of waste material products do not carry any brand name. So, pricing strategies will works to achieve competitive advantage. Pak Recycling Company will adopt the penetration strategy to increase sales and market share. The prices of all products we will sell will be lower than the market price. Pak-Recycling Co. will set the prices lower than the market. A lower price will enable our company to attract the customers. By adopting penetration strategy we can generate greater sales and can establish our products in the market more quickly.

Distribution Strategy:

Distribution means how you will transfer their products to the end users. Distribution strategies depend on the type of product.

Distribution options include:

Manufacturer to consumer

Manufacturer Agent consumer

Manufacturer retailer consumer

Manufacturer whole seller retailer consumer etc

Pak Recycling Company will distribute their products through retail channel and these stores will sell it to the end consumers. We will sell our products to the stores where everything is available like kitchen ware products, decoration pieces etc.

Retail store’s owner will directly contact to our company and can place their orders according to the customer’s specifications.

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Advertising and Promotional Strategy:

Promotion is the method you use to spread the word about your product or service to customers. Advertising is a form of communication designs to persuade potential customers to choose your products or service over that of a competitor.

The objectives of advertisement are:

Make your business and product name familiar to the public

Create goodwill and build a favorable image

Educate and inform the public

Offer specific products or services

Attract customers to find out more about your product or service

We will use two different strategies to promote our products. Firstly we will use bill boards, magazines and newspapers to advertise our products. Secondly we will promote our products through online social media and we will also develop our website through which enable us to widely spread our contact among various customers.

Sales Strategy:

The strategy of sales effort will be to convert potential and first time customers into long term customers. Our sales strategy is totally based upon the distribution channel and the pricing strategies. To market the products, the Company will use a number of sales agents/brokers. They have strong relations with owners of retail stores to sell the company products over the years. The purpose of having brokers or wholesalers is to know about the needs of customers through retail stores. They will expand that to new customers when product is available.

If our company grows faster then we will increase our production capacity. We will identify additional prospective customers who can be attracted for our products.

Development Strategy:

In future we are looking for a variety of products made by waste material. Our strategy will focus not only the current production acquisition of customer as fast

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as we can, but we will also look for the future expansion plan and execution strategy.

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

How will we expand our products and services

Which are the new areas we will include to provide our products

What will be the format of the business

Our development strategy will address all those above-mentioned point. As we will grow and our earning will increase, we will produce more products as well as expand in new area. We have a development strategy to expand our facility size in order to meet the production size and we will recycle products according to customer’s need.

Competitor Analysis:

A competitive analysis is a critical part of the company marketing plan.

The ultimate objective of competitor analysis is to know enough about a competitor to be able to think like that competitor so the firm's competitive strategy can be formulated to take into account the competitors' likely actions and responses.

In recyclable products manufacturing market there is no specific brand name exist so small companies that are in this business flood the market. So they are our biggest direct competitors. As we are also not alone in manufacturing products by waste material there may be many companies in this region that are doing the same business so they are our competitors.

Market Segmentation:

Market segmentation is one of the oldest marketing tricks in the books. With the customer population and preferences becoming wider, and the competitive options becoming more available, market segmentation has become critical in any business or marketing plan. In fact, people launch products keeping the market segmentation in mind.

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There are three ways to classify what the customer wants. It is known as needs wants and demands. However, to decide the needs, wants and demands, you need to carry out segmentation first. And in segmentation, the first step is to define your target audience. Who would want your product and whether it falls in the needs segment, the wants segment or the demands segment. Once you decide the product you are going to make, then you decide on the market segmentation. The target customer of the Pak-recycling company is the general public. We will target the customers who do not want to purchase expensive things but want to buy things which are reasonable and looking perfect for home decoration and for kitchen use. And also those people who want to purchase online products or prefer to go in retail stores for shopping.

Management

Five Promoters will manage the Recycling Company. There will be five Managers and directors of recycling company who will manage the company and will brought capital to start a company.

All the promoters are expert in making Marketing strategies, negotiating with different people, having different sale skills that will be good for recycling business to run the business in the long way and in making prosperous health of the business.

Thus having these potential skills, and other qualities like efficient interpersonal skills, leadership skills and decision making quality, make them the best promoters and eligible founders and owners of Recycling Company.

We will manage the business in a good and better way to produce our goodwill among the customers so in this way our sales will increase day by day and company will make more progress in Recycling market.

Job description:

In operational department there will be 5 employees, who will be skilled and semi-skilled in their field. In that department, there will be various functions like cleaning, molding, shaping, coloring and packaging. In sales department, there will be 2 employees. Who will be skilled in marketing skills they will supply the products in different areas. They will collect all the information related to sales department from outsources. In research & development department there will be 1

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employee, who will be skilled. They will search the market trends and the customer needs. They will also provide different strategies and ideas about the product and the company development.

In Finance department, there will be 2 employees. Who will be skilled and will provide different finance strategies time to time. They will maintain the different records and accounts. They will also perform the analysis of the financial statements of the company. In Human resource department, there will be 1 employee. They will be involved in hiring & firing of the employees. They will also review the company’s current mission statement. They will also develop the strategies for the satisfaction and motivation of employees. They will also play an important role in the formulation and implementation of the strategies.

Figure #1

Work No of employees Proficiency

Operational department 5 Skilled & Semi-skilled

Sales department 2 Skilled

Research & Development

1 Skilled

Finance department 2 Skilled

HR department 1 Skilled

All the 5 departments will have their own single manager who will supervise all the department related activities and involved in planning, organizing, leading and controlling. For the security purposes two gate keepers will be hired.

Operations:

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

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The facility is located at outside the city. Facility is divided in two parts

Recycling and Production unit

Warehouse

Apart from these two units there will be an office that will look for the perpetual supply of required raw material and also take care about the required material.

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

After receiving raw material from the supplier we will produce different innovative and recycling products that will attract the customers to use those innovative, creative and new looking things that are prepared by using different types of waste material. After introducing new things to the customers we will introduce that things which demand will be high by the users and customers. There will be different products that will be produced on different day according to the demand in market.

Stages of Recycling and Production:

The process of recycling of waste plastics, woods and other waste materials into products of varying usefulness involves the following essential steps:

Collection of raw material

Cleaning

Molding & shaping

Coloring and painting

Packaging

Delivery

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These are the stages of our production and recycling business. There is also given a detail in the following paragraphs about our production and recycling system that we will use in our recycling business.

Collection of raw material:

In this stage of recycling and production we will collect the raw material from the suppliers who will provide us empty and wasted plastic bottles and other things that will be required for making innovative and new things in our recycling business.

Cleaning of raw material:

The second stage in our recycling and production business is the cleaning of that raw material that we have collected from our suppliers. Then after cleaning that material we will use that material in making new, pioneering and attracting things for those who are fond of decorating their houses, for kitchen purposes and also for many other purposes.

Molding and Shaping:

After collection and cleaning of raw material, the next stage that comes in our recycling and production system is to mold and give an innovative and attractive shape that is most wanted by the people for beautification of their houses, for kitchen purposes and also for many house hold purposes we will mold and shape that raw material which is wasted by the people.

Such as, different shapes of plastic bottles which are wasted by the people after using them so we will make best use of that squandered bottles with using different types of machinery and tools then after molding and shaping them into an innovative and attractive things we will provide that things to the people for decoration and different household purposes necessitated by the people.

Then after molding and shaping we will produce and make different types of products such as jewelry boxes, jeans bags & shoes, roped tier table, coin collection boxes, home decor products, kitchen wears products, wood hanging racks and also many other things that will be demanded by the people to décor their houses and also for many other purposes.

Packaging:

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The next stage after collecting, cleaning and shaping the material is packaging that new making innovative and eye-catching things. This stage is also very important in our business because most of the people are attracted by the packing of the products not only by the products. So, we will make packaging of our products in a better and in an attractive way to attract the warmhearted people of that things.

Delivering:

Firstly we will collect the raw material then after cleaning and molding and shaping of that material we will deliver that products to different retailers or at different retail stores that have the accessories of decorating the houses or which have decoration pieces for beautify the houses and for many other purposes. This is also a very important stage in our production and operation system because if delivery of the products is not on time and is not in a good way or manner then it will definitely affect the sales or revenues of the business.

Therefore after collecting, cleaning, shaping and molding, packing the delivering stage is very important for the continuing and making progress of any business.

These are the five stages in our recycling and production system that will be managed by the managers and their under working different types of employees having different types of skills for making, flourishing progress in our recycling business.

Financial plan and projections

Variety of products is formed by using plastic bottles, wood, jeans, and tyres.

Plastic bottles:

Waste plastic bottles are required to produce the different products. Plastic bottles will be collected from scrap stores in huge quantity monthly.

Tyres:

Tyres will be purchased from workshops to produce the different tables and chairs.

Wood:

Wood will be required for using in tyre products and to produce the racks.

Raw material cost projection (monthly):

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Description Amount (Rs.)

Plastic bottles 50,000

Tyres 150,000

Wood 100.000

Others 50,000

Total 350,000

Labor requirement:

Pak Recycling Pvt. Ltd will be needed skilled, semi-skilled and unskilled labor to perform different kind of activities. Skilled and semi-skilled labor will be required to carry the production process properly. Unskilled labor will be required to perform other activities like raw material collection gate keeping and for other security needs. Company will be formed in Gujranwala so the hiring of local labor will be preferred if required then we will hire new people from other cities

Company will give a proper work schedule to the labor. Labor will have to work 7 hours daily. After hiring of the labor one week training program will be offered to the labor. If anyone wants to quit the job then he will be required to inform the company management one week in advance before quitting the job.

Labor cost projection

Description Amount (Rs.) Amount (Rs.)

Direct labor

a) Skilled

b) Semi skilled

c) Unskilled

90,000

16,000

10,000

116,000

Indirect labor 75,000

Total 191,000

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Indirect factory overhead (monthly)


Indirect labor 75,000

Electricity & water 30,000

Repair & maintenance 10,000

Transportation 20,000

Stationary 2,000

Warehouse expenses 5,000

Advertisement 10,000

Rent 30,000

Depreciation 3,500

Total 185,500

Per unit cost of production


Monthly raw material cost 350,000

Monthly direct labor cost 116,000

Monthly factory overhead 185,500

Total production cost 651,500

Total No. of units 5,000

Per unit cost 130.3

Pre-operating activities

Pre-operating activities involves

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Registration of the company

Applying for the loan and approval

Constructing the factory

Contacting equipment supplier

Hiring the labor

Installing the equipment

Purchasing the raw material

Conducting market survey

Trial production

Market survey will be conducted to know the market trends and customer demands. After conducting the market survey small no. of units will be produced and offer to the customer in the market to know the customer response.

Pre-operating cost:

Description Rs.

Registration cost 5,000

Trial production 30,000

Market survey 10,000

Transportation cost 5,000

Telephone registration cost

2,000

Others 10,000

Total 62,000

Administrative expenses:

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Administrative expenses include telephone bill charges, refreshment charges, accountant salary and depreciation.

Depreciation involves the following assets depreciation

Office building

Computers

Telephone sets

Tables

Chairs

Sofa

Cupboard

Administrative cost (monthly):


Telephone bill 3,000

Refreshment 5,000

Accountant salary 15,000

Depreciation 3441.67

Stationary 2,000

Others 1,000

Total 29441.67

Fixed asset requirement:

Fixed asset will be required to carry the business operation. Company will purchase its own office building, plant and machinery and furniture. Plant and machinery involves the production plant and machinery, 3 computer sets, 2 telephone sets and one generator. Furniture includes 3 tables, 9 chairs, sofa and cupboard.

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Fixed asset cost:

Description Rs.

Office building 300,000 300,000

Plant & machinery

o Computer

o Telephone

o Generator

o Production plant and equipment

60,000

4,000

60,000

150,000

274,000

Furniture

o Tables

o Chair

o Sofa

o Cupboard

30,000

30,000

30,000

10,000

100,000

Total 674,000

Life of asset:

Description Rs. Depreciation %

Annually monthly

Office building 300,000 15% 45,000 375

Plant & machinery

o Computer

o Telephone

o Generator

60,000

4,000

60,000

20

20

20

12,000

800

12,000

1,000

66.67

1,000

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o Production plant and equipment

150,000 20 30,000 2,500

Furniture

o Tables

o Chair

o Sofa

o cupboard

30,000

50,000

30,000

10,000

20

20

20

20

6,000

10,000

6,000

2,000

500

833.33

500

166.67

Total 123,800 6,941.67

Total capital requirement:

Fixed capital:


Fixed asset requirement 674,000

Working capital requirement:


Raw material stock for 1 month 350,000

Cash management

116,000+(185,500-3500)+(29,441.67-3441.67)+40,000

364,000

Total working capital required 714,000

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Cash management involves factory overhead, administrative expenses and marketing expenses.

Pre-operating capital requirement:

Description Rs.

Registration cost 5,000

Trial production 30,000

Market survey 10,000

Transportation cost 5,000

Telephone registration cost

2,000

Others 10,000

Total capital required 62,000

Total capital requirement:


Fixed capital 674,000

Working capital 714,000

Pre-operating capital 62,000

Total capital required 1,450,000

Capital structure:

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We have planned to take loan of Rs. 507,500 from the bank. That is the 35% of total capital requirement. Rest of the 65% will be invested by the five partners in equal proportion (that is Rs. 188,500 each).


Owner’s equity 942,500

Bank loan 507,500

Total 1,450,000

Loan repayment structure:

Loan will be paid over the period of 5 years at 15% interest rate per annum. To secure the bank loan, Owners have the land and building of Rs. 600,000 which will be kept as collateral security with the bank.

year Loan amount payable

Interest (15%)

Principle Total payment

1 507,500 76,125 101,500 177,625

2 406,000 60,900 101,500 162,400

3 304,500 45,675 101,500 147,175

4 203,000 30,450 101,500 131,950

5 101,500 15,225 101,500 116,725

Selling price:


Per unit cost of production

130.3

Monthly administrative 29,441.67

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expense

Monthly marketing expense

40,000

Monthly interest on loan 6,343.75

Total 75,785.42

Per unit cost 15.16

Final cost 145.46

30 % mark-up 43.638

Selling price per unit 189.098

~190

Income statement


Income from sale

(190*60,000units)

11,400,000

Less : Raw material Cost

(350,000 *12)

4,200,000

Direct labor cost

(116,000*12)

1,392,000

Factory overhead

(182,000*12)+42,000

2,226,000

Total 7,818,000 (7,818,000)

Gross profit 3,582,000

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Less: Marketing expenses 40,000

Administrative expenses

(26,000*12)+81,800

393,800

Total 433,800 (433,800)

Earnings before interest and tax

3,148,200

Less: interest (15%) (76,125)

Earnings before tax 3,072,075

Less: tax (34%) 1,044,505.5

Earnings after tax 2,027,569.5

Cash flow statement:

Description Pre-operating (Rs.) Ist year (Rs.)

Cash inflow

Equity 942,500

Loan 507,500

Cash sales 10,830,000

Total cash inflow 1,450,000 10,830,000

Cash outflow

Pre-operating expenses 62,000

Purchase of fixed asset 674,000

Raw material cost 4,200,000

Direct labor cost 1,392,000

Factory overhead 2,178,000

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Marketing expense 40,000

Administrative expense 312,000

Increased in inventory 200,000

Interest 76,125

Repayment of loan 101,500

Tax 1,044,505.5

Total cash outflow 736,000 9,544,130.5

Net cash flow 714,000 1,285,869.5

Cash balance in the beginning

- 714,000

Cash balance at the end 1,999,869.5

Balance sheet


Assets

Current assets

Cash 714,000 1,999,869.5

Account receivables - 564,000

Inventory - 200,000

Total current assets 714,000 2,763,869.5

Fixed asset 674,000 674,000

Less: Depreciation - (123,800)

Net fixed assets 550,200

Operating expenses 62,000 62,000

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Total assets 1,450,000 3,376,069.5

Capital and liabilities

Long-term loan 507,500 406,000

Owner’s equity 942,500 942,500

Accumulated profit 2,027,569.5

Total owner’s equity 2,970,069.5

Total capital & liabilities

1,450,000 3,376,069.5

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Appendices

Figure 1

Jewellary Boxes

Figure 2

Kitchen wears

30


Figure 3

Figure 4

Decoration Pieces

31


Figure 5

32


Figure 6

Coin collection box

Figure 6

Tyre Products

33


Figure 7

Jeans Products

Figure 8Management

34


Work No of employees Proficiency

Operational department 5 Skilled & Semi-skilled

Sales department 2 Skilled

Research & Development

1 Skilled

Finance department 2 Skilled

HR department 1 Skilled

Figure 9

Income statement


Income from sale

(190*60,000units)

11,400,000

Less : Raw material Cost

(350,000 *12)

4,200,000

Direct labor cost

(116,000*12)

1,392,000

Factory overhead

(182,000*12)+42,000

2,226,000

Total 7,818,000 (7,818,000)

Gross profit 3,582,000

Less: Marketing expenses

40,000

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Administrative expenses

(26,000*12)+81,800

393,800

Total 433,800 (433,800)

Earnings before interest and tax

3,148,200

Less: interest (15%) (76,125)

Earnings before tax 3,072,075

Less: tax (34%) 1,044,505.5

Earnings after tax 2,027,569.5

Cash flow statement:


Cash inflow

Equity 942,500

Loan 507,500

Cash sales 10,830,000

Total cash inflow 1,450,000 10,830,000

Cash outflow

Pre-operating expenses 62,000

Purchase of fixed asset 674,000

Raw material cost 4,200,000

Direct labor cost 1,392,000

Factory overhead 2,178,000

Marketing expense 40,000

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Administrative expense 312,000

Increased in inventory 200,000

Interest 76,125

Repayment of loan 101,500

Tax 1,044,505.5

Total cash outflow 736,000 9,544,130.5

Net cash flow 714,000 1,285,869.5

Cash balance in the beginning

- 714,000

Cash balance at the end 1,999,869.5

Balance sheet


Assets

Current assets

Cash 714,000 1,999,869.5

Account receivables - 564,000

Inventory - 200,000

Total current assets 714,000 2,763,869.5

Fixed asset 674,000 674,000

Less: Depreciation - (123,800)

Net fixed assets 550,200

Operating expenses 62,000 62,000

Total assets 1,450,000 3,376,069.5

37


Capital and liabilities

Long-term loan 507,500 406,000

Owner’s equity 942,500 942,500

Accumulated profit 2,027,569.5

Total owner’s equity 2,970,069.5

Total capital & liabilities

1,450,000 3,376,069.5

38

pak recycling pvt(ltd)

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