GK Grinding Mills, Plukamam 2 1.0 Marketing Plan 1.1 Description of products. Produce clean and hygienic chili powder, rice and rice flour in accepted quantities with attractive packaging and competitive price and distribute to wholesalers, retailers and individual consumers in Batticaloa and Ampara districts through an organized network 1.2 Proposed Market Segment/s Wholesalers, retailers and individual consumers in Batticaloa and Ampara districts 1.3 Market area or buying agencies Karaitheevu, Kaluthavalai, Pandiruppu, Palukamam, Periyaporatheevu, Kaluvanchikudy, Vellaveli, Kallaru, Koyilporatheevu, Cheddipalaiyam, Thettatheevu, Sainthamaruthu, Kalmunai, Batticaloa Town 1.4 Demand analysis Product No of target customers Purchasing pattern Annual Total demand Chillie powder 1 kg 65618 1kg per month 393708 500 g 65618 500 g per month 196864 Rice flour 65618 1 kg per week 3412136 Rice 65618 4 kg per week 13648544 2|Page 1.5 Supply Analysis Product Chillie powder Rice flour Rice Supplier Quantity Supplied Sumathy stores 300 Kodees stores 900 Latha stores 720 Thirunaa stores 600 Luxmy 1200 Sutha 1500 Suseela 1200 Ganesh 1800 Nasir 250000 Baser 225000 Naufer 200000 Raheems 150000 1.6 Proposed Market Share Product Market Share Chillie powder Rice flour Rice 3500 kg 0.9 % 1500 kg negligible 2200 kg negligible 1.7 Competitors Marketing Performance Analysis Product Product Price Place/ (Distribution) Promotion Competitor 1 Sumathy 2 Kodees 3 Latha 4 Thirunaa Average Average Good quality; Average quality; quality; and packed in polythene quality; no packaging no packaging bags no packaging Pricing is fixed looking at the market prices in the nearby shops. no scientific calculations Sold at own small shops. no systematic distribution No promotional activities; only word of mouth 3|Page 1.8 Marketing Strategies of the Proposed Business Product Produce the products hygienically and with high quality and distribute in different pack sizes Brand name - GK Products Chilie powder - Rs. 500 per kg Price Rice flour - Rs. 130 per kg Rice - Rs. 70 per kg Place/ (Distribution) Promotion Own production centre in Palukamam Distribute to shops in hired vehicles Pack in air tight and environment friendly polythene bags Hired vehicles fixed with advertisement on GK products 4|Page 1.9 Sales Forecast per Annum Product/s Quantity Year 1 Price Total Year 2 Price Quantity Total Year 3 Price Quantity Total Chillie powder 3500 500 1750000 3800 550 2090000 4180 600 2508000 Rice flour 1500 130 195000 1650 138 227700 1815 146 264990 Rice 2200 70 154000 2420 75 181500 2660 80 212800 2099000 Total annual sales 1.10 2499200 2985790 Marketing Staff Year 1 Position Sales person Annual marketing staff salary No of Persons 1 Salary (including Salary EPF & ETF) 6900 82800 82800 No of Persons 2 Year 2 Salary (including EPF & ETF) 8050 Year 3 Salary Salary 193200 193200 No of Persons (including 2 9200 EPF & ETF) Salary 220800 220800 5|Page 1.11 Asset Trishaw Assets Used in Marketing Market value (LKR) 500000 Life time (Years) 5 Annual depreciation (LKR) 100000 Furniture 10000 3 3333 Equipments 10000 2 5000 Building 50000 20 2500 Show case 50000 5 10000 620000 Total 1.12 Annual Marketing Expenses Item Fuel 120833 Expenses 72000 Vehicle maintenance 5000 Telephone 6000 Name board 2500 Entertainment 3000 Salary Total 82800 171300 6|Page 2.0 Production and Technical Plan 2.1 Production Process Chillie powder production Clean dried chillie, coriander, pepper, fennel seed, cumin seed and curry leaves Roast the ingredients Grind the ingredients in the chillie grinder Allow for cooling Pack in relevant sizes Store in appropriate places Chillie coriander pepper other spices Roast 15 min Grinding 20 min Inspection 1 min Allow for cooling 30 min Packing 10 min Chillie powder packs 7|Page 2.2 Estimated Production Volume Year 1 Year 2 Year 3 Chillie powder 3500 3800 4180 Rice flour 1500 1650 1815 Rice 2200 2420 2660 Product 2.3 Plant Capacity and Utilization Optimum Capacity % Utilization Year 2 Year 1 Grinder – 6000 kg 20 % 45 % Year 3 95 % 2.4 Assets used in Production Asset Land Building Market Value (LKR) 375000 Life time (Years) - Depreciation (LKR) - 150000 20 7500 Chillie grinder 5 kg 87500 5 17500 Electronic weighing scale 5 kg 35000 5 7000 Weighing scale 100 kg 35000 5 7000 Rice flour grinder 5 kg 45000 5 9000 165000 5 33000 Peddle sealer 75000 5 15000 Wooden table 8’ x 5’ 75000 5 15000 Utensils 50000 2 25000 150000 2 75000 Rice mill (one shot huller) Other equipment Total 1242500 211000 8|Page 2.5 Proposed factory Layout; N Main road Stores Chilli grinder 2.6 Social and Environmental Aspects Dig a pit and dump all the wastes from the production, utilize as animal feed 2.7 Raw Material requirement Dried chilli Quantity (kg) 700 Unit Price (LKR) 200 Coriander 1400 170 238000 Pepper 250 1000 250000 Fennel seed 250 400 100000 Cumin seed 250 600 150000 Curry leaves 150 50 7500 Paddy 5550 19 105450 7 360 2520 5500 1 5500 Item Polythene Label Total annual Raw material cost Cost (LKR) 140000 998970 9|Page 2.8 Manpower Plan 2.8.1 Direct Manpower Year 2 Year 1 Position Workers Annual production staff salary No of Persons 02 Salary (including EPF & ETF) 5750 Salary 138000 138000 No of Persons 03 Salary (including EPF & ETF) 6325 Year 3 Salary 227700 227700 No of Persons 03 Salary (including EPF & ETF) 6900 Salary 248400 248400 10 | P a g e 2.9 Estimate of Production Overhead Item Cost (LKR) Electricity 12000 Firewood 24000 Machine repairs 2500 Telephone 1000 Transport 10000 Employee welfare 6000 Labour (Grinding rice) 29400 84900 Total annual overheads 2.10 Product No of units Total and Unit Production Cost Chilli powder Rice flour Rice 3500 1500 2200 891300 44970 62700 46000 46000 46000 35833 35833 13234 973133 126803 121934 278.03 84.53 55.42 (per Kg) (per Kg) (per Kg) Material Cost (LKR) Direct manpower cost (LKR) Overhead cost (LKR) Total production cost (LKR) Unit production cost (LKR) 11 | P a g e 3.0 Organization and Management 3.1 Form of Business Private entrepreneurship, the producer is responsible for all the activities GK Products Gunasekaram Kamalachchini Vanni Nagar Plaukamam 2 3.2 Organization Structure Person/ Position Marketing √ Manager Production Purchasing Administration and HR Finance √ √ √ √ √ Worker 3.3 Responsibility of Key Positions Person/ Position Responsibilities Manager Direct involvement with finance and administration functions and overall supervising Worker Production, reduce wastage, carry out the instructions from the manager 3.4 Human Resource Management Plan HR activity Strategies Recruitment Training Recruit suitable persons, priority for differently able people, widows, and families with women breadwinners, persons from the same village Train the employees in relevant fields (quality, productivity) Job division Factory location, (labour, transport, electricity, marketing) Performance appraisal Motivation Give promotions and increments according to the productivity Some extra favours and motivation trainings 12 | P a g e 3.5 Assets used in Administration Asset Furniture Telephone Market Value (LKR) 15000 5000 Total 20000 Life time (Years) 5 2 Depreciation (LKR) 3000 2500 5500 13 | P a g e 3.6 Administrative Staff Year 1 No of Persons Position Manager (owner) 01 Annual administrative staff salary Salary (including Salary No of Persons 120000 01 EPF & ETF) 10000 120000 Year 2 Salary (including EPF & ETF) 15000 Salary No of Persons/ 180000 01 180000 Year 3 Salary (including EPF & ETF) 20000 Salary 240000 240000 3.7 Administrative Expenses Item Expenses Telephone charges Receipt book Rubber stamp Stationery Admin salary 2500 480 750 1000 120000 Total 124730 14 | P a g e 3.8 Pre-Operating Activities and Expenses Time schedule (weeks) Activity 1 Business registration Obtain loan Purchase machinery Machines installation Purchasing raw materials Recruitment Trial production Total 2 3 4 5 6 7 8 9 10 √ 11 12 Expenditure (RS) 1500 √ 3000 √ 2000 √ 3000 √ 500 √ √ 1000 11000 15 | P a g e 4.0 Financial Plan 4.1 Financial Summary of the Project Fixed assets Item Marketing Land Buildings Machinery & Eq. Furniture & Fittings Vehicles Total value Production 375000 150000 717500 50000 70000 500000 620000 120833 Depreciation Administration 1242500 211000 Total 20000 375000 200000 807500 20000 5500 500000 1882500 337333 Sales and Expenses Item Year 1 Year 2 Year 3 Assumption Sales 2099000 2499200 2985790 10 % increase yearly Material cost 998970 1098867 1208754 10 % increase yearly Direct labour cost 138000 227700 248400 10 % increase yearly Production overheads 248300 273130 300443 10 % increase yearly Marketing expenses 282133 310346 341380 10 % increase yearly Admin expenses 124730 137203 150923 10 % increase yearly Amortization of pre-operating expenses POE amount 11000 Year 1 Year 2 4000 Year 3 4000 3000 16 | P a g e 4.2 Total Project Cost Own (LKR) Available Proposed Item Total (LKR) ACTED( LKR) Fixed assets Land 375000 375000 Buildings 200000 Machinery & Equipment 282625 200000 524875 807500 Furniture & Fittings Vehicles 500000 500000 Others Total fixed assets 375000 982625 524875 1882500 Pre operating expenses Pre operating expenses 11000 11000 Total POE 11000 11000 10160 80000 90160 Manpower 6076 5000 11076 Overheads 7048 3000 10048 6365 6365 Working capital; Raw material Marketing expenses Admin Expenses Total working capital 545 Total project cost % Contribution 545 23829 94365 398829 1087990 19.83 % 54.08 % 118194 524875 2011694 26.09 % 100 % 4.3 Working Capital Chart Item Duration Material cost Material Work in Progress Finished goods in stores Finished goods in market 2 weeks 3 days 1 week 1 day 38420 Credit sales Total 2 weeks 9990 19210 3330 19210 90160 Direct Manpower cost 5308 2654 460 2654 11076 Production overhead Cost 1940 3731 646 3731 10048 940 5425 6365 80 465 545 5456 31485 118194 Marketing expenses Admin expenses Total Total working capital 38420 17238 25595 118194 17 | P a g e 4.4 Profit and Loss Statement Item Sales Year 1 Year 2 Year 3 2099000 2499200 2985790 2099000 2499200 2985790 2099000 2499200 2985790 Material 998970 1098867 1208754 Direct manpower 138000 227700 248400 Overheads 248300 273130 300443 Total Direct cost 1385270 1599697 1757597 Operating Profit 713730 899503 1228193 Marketing expenses 282133 310346 341380 Admin. Expenses 124730 137203 150923 Total indirect cost 406863 447549 492303 Gross Profit 306867 451954 735890 4000 4000 3000 4000 4000 4000 302867 447954 732890 302867 447954 732890 Less: returns Gross Sales Less: VAT % Net Sales Less: Direct cost Less: Indirect cost Less amortized / POE Loan interest Total other expenses Net profit before tax: Less: Income tax Net profit after tax. 18 | P a g e 4.5 Projected Cash Flow Statement Preoperating period Item Cash inflow Equity Loan /ACTED Gross Sales Balance b.f. Total cash inflow Year 1 Year 2 Year 3 1087990 524875 1612865 Cash outflow Purchase assets POE Material purchase Direct manpower Overheads Marketing expenses Admin expenses 2099000 94365 2193365 2499200 682665 3181865 2985790 1416052 4401842 998970 138000 77700 171300 1098867 227700 102530 199513 1208754 248400 129843 189610 124730 137203 150923 1510700 682665 1765813 1416052 1927530 2474312 1507500 11000 Loan Interest Loan installment Total cash outflow Ending balance 1518500 94365 4.6 Financial Analysis Profitability = Net profit before tax ………………………………………. X 100 Sales = 302867 ------------------ X 100% 2099000 = 14.4% 19 | P a g e Return on Investment = Net profit before tax ……………………………………….X 100 Total project cost Return on Equity = = 302867 = 15 % ------------------ X 100% 2011694 Net profit before tax ………………………………………… X 100 Owner’s equity = 302867 = 20 % ------------------ X 100% 14868194 20 | P a g e
