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LARSEN & TOUBRO LTD

Larsen & Toubro Limited : All rights reserved16th May 151 Non Woven BagsECONOMICAL & ECO FRIENDLYPresented by:1- Hardik Umrania2- Harshit Mathur3- Harish Arwade4- Isha Batra5- Kaushal Sheth6- Leon Bhuyan7- Madhusoodhanan ContentsINTRODUCTIONOBJECTIVESMANUFACTURING PROCESSMARKETINGRISK ANALYSISSWOTBUDGET & IMPLEMENTATION SCHEDULEFINANCE2 Introduction Non Woven Fabric BagsThis project report will add details to technical and commercial aspects of Non Woven Fabric Bag Production.Nonwoven Fabric Bags Recyclable and Reusable v/sPlastic Bags Non-Bio-Degradable in nature

Product- Non Woven Fabric BagCompany Name GREEN BAGS Pvt. Ltd.

Bag Size Width: From 100mm to 800mm Length: From 200mm to 500mm (As per the customers requirement)Application Shopping bags, Hotel bags, Travel Bags, Retail Bags, etc.,

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ObjectivesTo do a profitable business by selling non-woven fabric bags

Making low cost and fashionable non-woven carry bags

To make non-woven products as a part of our daily living

Create a pollution free environment

Creating awareness about non-woven products

4Manufacturing Process5Raw material inspectionCutting Ultrasonic StitchingPrintingFinal InspectionPackingNon Woven Fabric SupplierKnack Packaging Pvt. Ltd. Ahmedabad

Shree Shyam Nowo Textiles, Ahmedabad

Vishal Synthetics, Kadi Kalol, Gujarat6Ultrasonic Sewing TechnologyBonding MethodHigh Frequency Mechanical Sound Waves are created in the range of 20 kHz to 1 gHz

A molecular bond between this non woven fabric is formed7

Machines RequiredUltrasonic Heat Treating Machine

TechnicalParameter:

Productionspeed20-80pcs/min

Bagwidth100-800mmand Baglength200-500mm

Nonwovenfabricspecification (G.S.M)30-100

Powersupply220v

Totalpower11KW

Overallsize790015001800mm( Floor Space Required 175 sq. ft)

8Fully Automatic Non-Woven M/c9

Machines RequiredFeatures:

Electro-mechanicalintegrated

Automaticslottingdevice / punchingdevice

Firmappearanceaftersewing

Feedoffautomaticshutdown,auto-punch

Whileattheendoftheroll ultrasonicsewing

Whilecuttingedgeautomaticclosure,automaticnesting

10Machines RequiredPrinting Machine

TechnicalParameter:

No. Of Colors: 1 To 8

Printing Speed:50 pcs / min

Power Requirement: 16 Kw

Floor Space Requirement: 100 sq ft.

Web Width: 500 mm To 2050 mm

The Market ProspectPositivesRising per capita incomeGovernment restrictions on the use of Polythene bagsCan be used as Fancy bags, gift bags etc.

ChallengesSetting up the entire distribution network and establishing the sales forceIncreasing the awareness level about NW bags especially in the rural areasPrice

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The Market Prospect (contd..)Considering Gujarats Urban areas, Places like Ahmedabad, Vadodara, Surat , Rajkot ( Population is around 1.5 Crores)Daily bags usage ( considering 20% of the population, as per the above data ) = 30 LakhsConsidering NW bags market share to be 20%, potential market = 6 lakhs bags per day, per month = 180 lakhs (approximately 180 Tons)13

Alternates & SubstitutesPaper Bags:- Manufacturing process of paper bags results in plenty of leftover waste.- Environmental Damage- They are meant for short term usage.

Plastics or Polyethylene Bags:- Non Biodegradable

14The Marketing Mix

STP FrameworkSegmentation: Based on Geography and Demography, creating a network is easier in urban areas; distribution to semi urban areas will be easy

Targeting: It is a B2B model and the focus is to target the retail chains, clothing brands, shoe brands, etc.,

Positioning: Environment Friendly, Low Cost, Trendy, Innovative

Risk Analysis!Entry Barriers: Low, anyone having decent capital can enter the industry, as there are no market regulations as well

Threat from existing customers: Low, as there are not enough existing competitors, huge market yet to be tapped

Threat from substitutes: Good, as number of products already in the market which are potential substitutes, ex Polythene bags

Exit Barriers: Low, no exit criteria as such, companies can exit as and when they feel like

SWOT AnalysisStrengthEco-friendly in natureLower priceLess competitorsQuality of productWeakness Plant capacityNot useful in monsoon season compared to plastic bagsLess scope for advertising

OpportunitiesIncreasing awareness of hazards of plasticBan imposed on plastic bags in many areasBags are used everywhereNever end packaging and visibility provides added advantagesThreats Government policesInflation RiskIntroduction new product similar to plastic bagsVolatility of interest rate riskIncrease raw material priceEnvironmental riskWeakness - MitigationsPlant capacity: Additional machines can be added after getting return in a year or two

Not Useful In Monsoon Season: Expiry date for this bag, used for carrying food will be mentioned

Shortage Of Working Capital: Flexible financial strategy implies surplus cash and little short term borrowing. However to start the operation of our business, we need to take both short and long term loans. Though the estimated net income for the first two years of our business will be positive. Hopefully reduces the risk of experiencing financial distressThreats - MitigationsGovernment policies: Change in government can result in change in rules and regulation for new players

Inflation risk: High growth rate of price may lead to decrease in investment in various sectors or it may increase the price of the product that will directly affect the revenue

Volatility of interest rate risk: We will take short term loans more than long terms at the initial stage. Since short term interest rates are more volatile than longer rates; this may lead to interest rate risk for our company

Environmental risk: Location we have chosen is least disaster prone area

Source of FundingRegistration of Company with Ministry of Micro, Small and Medium Enterprises (India) Eligibility of loan from Govt. Recognized Banks up to 1 Cr. at a rate of 12 % P.A for at-least 10 years.Setting up of the company in semi urban area of the state of Gujarat provides an interest subsidy of up to 6 % under Gujarat Textile Policy 2012, Scheme-2

21Basis & PresumptionPre processed Non-Woven Fabric Price Rs. 123/kgSelling Price of the Bag- Rs. 160/ kgProduction rate at 60 % capacity- 20 MTNo. of operator required :- 1 at a monthly salary of Rs. 10,000/-No. of Helpers required :- 2 at a monthly salary of Rs. 7,000/-No. of Market rep. cum sales person:- 2 at a monthly salary of Rs 15,000/- Area required : 1500 sq. ft. Rent payable at Rs. 7,500/- per monthCredit Sales at 15 days of credit. Wastage Sales are 50 % cash and 50 % credit

Implementation ScheduleSr. No. ActivityExpected Time1Renting Land for Facility1 month2Project Filing Under MSME7 days3Financial Arrangements2 Months4Procurement of Machinery 2 Months5 Installation and Commissioning2 Months6NOC from government1 Months7 Trial Run 7 month onwardsInvestmentParticularsAmount(Rs.)Automatic Ultrasonic Sealing M/C16,00,000.00Printing M/C4,00,000.00Investment in Electrical Instalment (stabilizer, compressor etc.)2,75,000.00Stores & Spares40,000.00Furniture, Tools, Fixtures25,000.00Working Capital for 30 days24,60,000.00Total Investment48,00,000.00Cost AnalysisOverheadProduction Cost( AT 60 % Capacity)20MTRaw Material Cost per kgRs. 123.00Consumables(electricity, oil etc. ) per dayRs. 200.00Profitability Analysis(per month)Amount (Rs.)Amount (Rs.)Sales (A)Bag Sale( 19800 x 160)31,68,000.00Wastage( 200 x 40)8,000.0031,76,000.00Expenditures (B)Raw Material Cost( 20000 x 123)24,60,000.00Consumables( 200 x 25)5,000.00Labour Cost54,000.00Rent7,500.00Other Expenses12,500.0025,39,000.00Profitability Analysis(per month) (contd..)Amount (Rs.)Amount (Rs.)Profit Before Depreciation, Interest & Tax (A-B)6,37,000.00PBDIT %20.05Depreciation @ 17.55 % P.A.29,250.00Interest on Investment @ 12% P.A.48,000.0077,250.00Profit Before Tax (PBT)5,59,750.00PBT % 17.62Indirect TaxesVAT- 4%1,27,040.00Excise- 12%3,81,120.005,08,160.00Profit After Tax51,590.00CENVAT Credit on Excise at 12 %2,95,200.00Cash Profit3,76,040.0027

16th May 1528Thank YouLARSEN & TOUBRO LTD Larsen & Toubro Limited : All rights reserved