ppt of bdp

School of BusinessPOKHARA UNIVERSITY

PRESENTATIONBusiness Development Plan

(Graduate Seminar- 1 credit Hour)

MBA – IV Trimester26 July 2011

1BDP Plan_ <Ram prasad Timilsina>

Business Development Plan of

< Methlang Organic Goat and vegetable Production Centre

><Sarangkot-6 Methlang>

Presented by<Ram Prasad Timilsina >

Roll No. 21 IV Trimester


Project Highlights

• Name of Project: Methlang Organic Goat and vegetable Production Centre

• Objective of Project:• Increase sales revenue 10% each year.• Expand market share by 5% each year.• Increase the salary of the staffs by 10% each

year.


Project Highlights

Annual Capacity ( in 100%) :• Goat Meat: 10000 kg• Vegetables: 40000 kg (Increase by 10% each

year)Duration of Projection: 5 YearsTotal Initial Investment : Rs. 8 Million

BDP Plan_ <Ram prasad Timilsina> 4

Project Highlights

Fixed Assets – Rs. 6770000Working Capital – Rs. 1230000 Equity Financing – Rs. 4800000 Loan Financing – Rs. 3200000Employment generation: 11 employees


Project Highlights

• Rational of this project : Increasing demand of organic products. Give employment opportunities.• Uniqueness of this project : First organic farm near to tourism place, Lakeside. Firm practicing zero Current liabilities. Flexible Working Hours. Organic Goat farming.


About the Product

• Goat Meat: Organically produced Daily supplied Premium pricing• Vegetables: Organically produced Daily supplied to market Low priced compared to competitors


Production Plan

• Labor intensive production process• Level strategy of production• 10% increase in production of vegetables each

year


Production & Sales

Year Meat (kg) Vegetable ( kg)1 10000 395002 10000 434503 10000 477954 10000 525755 10000 57832


Marketing Plan

Product Strategy:• Organic• Fresh• Competitive pricing Pricing Strategies :• segmentation• Fixed margin• Penetration


Marketing Planning

Promotion Strategies :• Quantity discount• Seasonal discount• Cash discountDistribution Strategies:• Advertisement• Membership based• Online stock monitoring


Environmental Risk AssessmentPolitical Economic Legal Socio-Culture Global Competitor

Bandhs Market Slowdown

Trade related disputes

Hierarchy of jobs( educated don’t want to work in farm)

Less flow of tourism

Low price of substitutes

Donations Inflation Expired and damaged products

Nepalese customers less sensitive to organic products

Difficult to export

Lack of databases on competitors statements

Tax policies Employee Turnover

Demand fluctuations in festival time

Low cost competitors


Assumption of Financial Calculations

• Salary :- Rs. 1651000 (10% increase every year)

• Cash sales :- 80%• Depreciation :- 20% (Straight line method)• Interest :- 18%• Tax rate :- 5%


Projected Sales, Cost and Profit


Projected Income Statement Year of operation 1 2 3 4 5

Sales 7,455,000 8,165,220 8,965,753 9,874,875 10,914,637

VC 3154550 3464852 3805994 4181120 4593708

Contribution Margin 4,300,450 4,700,368 5,159,760 5,693,756 6,320,929

FC 3,485,000 3,678,900 3,891,614 4,124,977 4,381,005

EBIT 815,450 1,021,468 1,268,146 1,568,778 1,939,924

Interest 547623 463610 363423 243947 101470

EBT 267,827 630,741 1,080,867 1,628,985 2,300,979

Tax 13391 31537 54043 81449 115048

Earning After Tax 254,435 599,204 1,026,824 1,547,536 2,185,930

Dividend

Retained Earnings 254,435 599,204 1,026,824 1,547,536 2,185,930


Projected Cash Flow Statements

Year 1 2 3 4 5

Total cash Inflow (A)

13,964,000

8,096,060

8,981,791

9,997,205

11,169,210

Total cash outflow (B)

13,052,956 6,805,304

7,381,666

8,017,561

8,719,776

Cash Balance (A)-(B)

911,044 1,290,756

1,600,125

1,979,644

2,449,433

Add :Opening Cash balance 0

911,044

2,201,800

3,801,925

5,781,569

Closing Cash Balance

911,044

2,201,800

3,801,925

5,781,569

8,231,002


Projected Balance SheetYear 1 2 3 4 5

Current Assets2402044 3834844 5595075 7756544 10413930

Fixed Assets5416000 4062000 2708000 1354000 0

Total (A)7818044 7896844 8303075 9110544 10413930

Current Liabilities

Long Term Loan2763609 2243204 1622612 882544 0

Equity Capital5,054,435 5,653,639 6,680,463 8,227,999 10,413,930

Total (B)7818044 7896844 8303075 9110544 10413930


Capital Budgeting Summary

Initial Investment : Rs.677000Total Present Value : Rs.6896505Non Discounted Pay Back Period : 3.29 YearsDiscounted Pay Back Period : 4.91 YearsNet Present Value (NPV) : Rs.126505Internal Rate of Return(IRR) : 21%Profitability Index : 1.019


Financial RatiosYear 1 2 3 4 5

Total Assets Turnover

0.95 1.03 1.08 1.08

1.05

ROE(%) 5 11 15 19 21

ROA(%) 3 8 12 17 21

Net Profit Margin(%)

3 7 11 16 20

Interest Coverage Ratio 1.5 2.2 3.5 6.4 19.1Break Even Sales (%) 81 78 75 72 69


Key to Success of the Project

• Low cost organic products.• Timely delivery to needed place.• Use of interactive websites and other e-

commerce strategies.• Qualitative and fresh products.• Flexible work schedule to employees.• Pay for performance system.• Team and target based approach


Suggestion

• To investors High potentiality for growth increasing profit margin Project may extended by retaining all the returns.• To lender Sufficient cash flow to pay installment Low risky business


BDP Plan_ <Ram prasad Timilsina>22

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