School of BusinessPOKHARA UNIVERSITY

PRESENTATIONBusiness Development Plan

(Graduate Seminar- 1 credit Hour)

MBA – IV Trimester23rd August 2011

BDP Plan of “ Tasty Mushroom Udhyog “ Nitesh Shrestha 1

Business Development Plan of

Tasty Mushroom UdhyogLekhnath-12, Kaski

Presented byNitesh ShresthaRoll No. 10220019

IV Trimester

BDP Plan of “ Tasty Mushroom Udhyog “ Nitesh Shrestha

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Project Highlights

Name of Project: Tasty Mushroom Udhyog

Objective of Project: To Provide quality of tasty mushroom

Annual Capacity ( in 100%) : 30,000 Kgs.Duration of Projection: 5 yearsTotal Initial Investment : Rs. 3,500,000.

BDP Plan of “ Tasty Mushroom Udhyog “ Nitesh Shresth3

Project Highlights

Fixed Assets – Rs. 2483,000.Working Capital – Rs. 1017,000.Equity Financing – Rs. 2,100,000.Loan Financing – Rs. 1,400,000.

Employment generation: 10 employees.General Manager 1.Production / Service dept. 4 employees. Admin / Support dept. 5 employees.

BDP Plan of “ Tasty Mushroom Udhyog “ Nitesh Shrestha4

Project Highlights

• Rational of this project : The current market have high demand of mushroom. lack the product which dissatisfies the customer. The feasibility for inauguration of the business

inspired much. Through market analysis the availability of resources

have made my project more convenience.

BDP Plan of “ Tasty Mushroom Udhyog “ Nitesh Shrestha5

Uniqueness of this project :

Methods of production : concerned to quality.Different strategies to enter the market.Accessible of mushroom with effective supply

chain.Seeds of mushroom and cultivation.Producing mushroom in economies of scale

that would minimize the cost than competitors with better quality and taste.

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About the Product• A mushroom is the fruit of a fungus. Its purpose is to

disperse spores, microscopic single cells that can grow into new fungi. The fungus looks like a series of branching threads infiltrating the soil or leaf litter, or in the wood of living or dead trees.

• Mushroom is an exotic and nutritious source of vegetarian food.

BDP Plan of “ Tasty Mushroom Udhyog “ Nitesh Shrestha7

Production Plan• Production process

– The company will collect poly bags called “spawn”. Such bags include "mycelium" (growing media) inoculated with mushroom spawn. After placing/planting these bags on the racks of the mushroom house, harvesting can be completed.

– Production.As per the market coverage and the requirement basis the demand and supply are analyzed. The full capacity of the plant is 30000 kg. Per year and produced and sold 60%, 70% , 75%, 80% and 80% in 1st ,2nd ,3rd 4th and 5th year respectively.

BDP Plan of “ Tasty Mushroom Udhyog “ Nitesh Shrestha8

Capacity of production & Sales

BDP Plan of “ Tasty Mushroom Udhyog “ Nitesh Shrestha 9

Year Capacity % Sales Rs.1 60 % 36,00,000.2 70 % 42,00,000.3 75 % 45,00,000.4 80 % 48,00,000.5 80 % 48,00,000.

100% 60,00,000.

Project Management Plan

Highlight t the overall structure of the project in brief• BOD• Tasty Mushroom Udhyog is the sole propertorship

company of Mr. Nitesh Shrestha. With assistance of my father Mr. Mahesh Pd Shrestha. The company may hire experts as the partner if required.

• Management level Strategic Level Operational Level

BDP Plan of “ Tasty Mushroom Udhyog “ Nitesh Shrestha10

• Working level• Working: 360 days• 10 employees. Working 8 hrs.• HR Policy• .The employee recruitment and selection, hiring and firing

will be accordance with company need and regulation. • Salary will be paid on performance, education and

experience basis. • Employee should notice 15 days earlier before resignation. • The basic salary would increment 10% each year along

with a 5% dearness allowance.

BDP Plan_ <Name of Student> 11

Structure of the organization

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Marketing Plan

• Product Strategy – • Concerned to health and taste it can be the

substitute for non vegetarian. • It cures from blood pressure, diabetics,

cancer, heart disease etc. • The rising use of mushroom in pizza, burger, in

herbal medicine, foods prickles etc. is growing demand on mushroom.

BDP Plan of “ Tasty Mushroom Udhyog “ Nitesh Shrestha 13

Pricing Strategies

• A cost-plus pricing strategy will be adopted to set the price of the product.

• Quality Mushroom Company wants to be the market leader of this industry by establishing a higher quality product at lower price.

• Restrict the entry of new competitors and defeat competitors in the market.

• A profit margin would be achieved by pricing mushroom at Rs.200 per kg.

BDP Plan_ <Name of Student> 14

Promotion Strategies

• Advertising, Trade promotion, and Fairs• The company will participate in trade fairs and serve the

visitors several kinds of food, pickles etc made from mushrooms.

• Leaflets will be distributed to the consumers through the national daily newspapers.

• campaign would be conducted only in Pokhara division. • Convey about the consumption benefits and cooking

process of mushroom.

• Sales person will be handed out T-shirts.BDP Plan_ <Name of Student> 15

Distribution Strategies• It will build distribution centers in the different

divisions of Nepal: Pokhara, Lekhnath.

• The small vegetable traders will purchase mushrooms directly from the distribution centers.

• The business customers such as hotels and restaurants will place order prior to delivery and the company will supply them directly from the cultivation plant.

BDP Plan of Tasty Mushroom Udhyog <Nitesh Shrestha>

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Environmental Risk AssessmentPolitical Economic Socio-

CultureGlobal Competitor

Unstable Government

Inflation Religions Geographic Low cost

Tax policy Interest rate

Veg and non veg

competition Quality

Strike-Band PCI,GDP festivals location BhorlaytarLabor unions Monetary

policyTaste n prefer.

Entry to market

Mainali chyau

Policies Fiscal policy

Values n norms.

Cost of entrance

BD BDP Plan of “ Tasty Mushroom Udhyog “ Nitesh Shrestha17

Assumption of Financial Calculations

• Variable Cost :- per unit price will be constant but depends on sales quantity, it is assumed that the variable cost will be Rs. 107 /kg.

• Salary :- Rs 864,000.• Depreciation :- 20%• Interest :-16%• Tax rate :- 25%

BDP Plan of “ Tasty Mushroom Udhyog “ Nitesh Shrestha18

Projected Sales, Cost and Profit

BDP Plan of “ Tasty Mushroom Udhyog “ Nitesh Shrestha19

Projected Income Statement

BDP Plan of “ Tasty Mushroom Udhyog “ Nitesh Shrestha 20

Capacity Utilization 100% 60% 70% 75% 80% 80%

Year of operation 1 2 3 4 5

Sales 6000 3600 4200 4500 4800 4800

VC 1764 1764 1764 1764 1764 1764

Contribution Margin 2736 1836 2436 2736 3036 3036

FC 964 2449 697 678 664 652

EBIT 1772 -613 1739 2058 2372 2384

Interest 152 217 112 87 58 24

EBT -830 1628 1971 2315 2361

Tax -207 407 493 579 590

Earning After Tax -622 1221 1478 1736 1770

Dividend 244 296 347 354

Retained Earnings 977 1182 1389 1416

Projected Cash Flow Statements

BDP Plan of “ Tasty Mushroom Udhyog “ Nitesh Shrestha21

Year 0 1 2 3 4 5

Total cash Inflow (A) 3500 1761 2362 2653 2974 2964

Total cash outflow (B) 2483 358 235 6967 441 3885

Cash Balance (A)-(B) 1017 2119 2597 4314 2593 921

Add :Opening Cash balance

- 1017 3136 5733 1419 3952

Closing Cash Balance 1017 3136 5733 1419 3952 3031

Projected Balance Sheet

BDP Plan of “ Tasty Mushroom Udhyog “ Nitesh Shrestha 22

Year 0 1 2 3 4 5

Current Assets 1017 3136 5958 5763 7555 8609Fixed Assets 2483 634 536 456 389 335Total (A) 3500 3770 6494 6219 7944 8944

Current Liabilities - 1017 2911 1624 2160 1977

Long /short Term Loan

1400 1275 1129 958 759 525

Equity Capital 2100 1478 2454 3637 5026 6442Total (B) 3500 3770 6494 6219 7944 8944

Capital Budgeting Summary In “000”s

Initial Investment : Rs. 3500.Total Present Value : Rs. 6523.01Pay Back Period : 2 YearsDiscounted Pay Back Period : 2 yrs.Net Present Value (NPV) : Rs. 3023.01Internal Rate of Return(IRR) : 34.20%Profitability Index : 1.64 times

BDP Plan of “ Tasty Mushroom Udhyog “ Nitesh Shrestha23

Financial RatiosYear 1 2 3 4 5ROI -17.78 34.88 42.23 49.60 50.59ROE -42.12 49.74 40.64 34.54 27.48ROA -16.51 18.80 23.77 21.85 19.80Profit volume ratio 51 58 60.8 63.25 63Interest Coverage Ratio

-2.83 15.59 23.71 41.047 100.03

Current Ratio 3.08 2.05 3.55 3.5 4.38Safety Margin -33.39 71.40 75.20 78.14 78.54

Cash BEP 4802 1201 1116 1049 1030BDP Plan of “ Tasty Mushroom Udhyog “ Nitesh Shrestha

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Key to Success of the Project Capacity Utilization Number of days of operation Cost, Interest rates and inflation Lastly, it is not affected by internal as well as external

environment. Can achieve competitive advantage through its various

strategies: Low cost strategy.

Differentiation strategy.

BDP Plan of “ Tasty Mushroom Udhyog “ Nitesh Shrestha25

Suggestion

• To investors• I would like to suggest that project is profitable for equity investor

and maximizes the shareholders value and wealth .• The cost with in the 2 year of operation as well as growth has

opportunity in the business.• Tasty Mushroom Udhyog is promising to provide long term benefits

in term of profitability, fixed assets and liquidity.

• To lender• As the plan is profitable and less risky the lenders are suggested to

lend with considerable cost of capital.

BDP Plan of “ Tasty Mushroom Udhyog “ Nitesh Shrestha

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Thank you

BDP Plan of “ Tasty Mushroom Udhyog “ Nitesh Shrestha

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