Managerial Economics

Business Modelfor Jute Products

Presented by:61 Anshari Naved Abdul

Vahid67 Dhuri Swapnil

Manohar74 Jain Ashish Ganpathlal77 Kadam Mandar

Prabhakar82 Khedekar Pooja

Shravan

Objectives:

• For creating pollution free environment as jute is eco-friendly products.

• Making low cost carry bags and fashionable jute products.

• To make jute products as a part of our daily living.

• Creating awareness about jute products.

• Last but not the least to earn profit.

Introduction:

• Jute is a natural fiber popularly known as ‘The golden fiber’.

• One of the cheapest and the strongest of all natural fiber.

• Jute is a bio-degradable eco-friendly item.

• India, Bangladesh, China and Thailand are the leading producers of Jute.

• India is the largest producer of jute goods in the world, while Bangladesh is the largest cultivator of raw jute.

Our Product Range:

Jute Bags

Printed & Decorated Jute Shopping Bags

Designer Laptop Bags

Jute Folders

Men’s Handbags

Market and Demand Aspects: • Every responsible citizen considering the black future of ours

next generation shall stop using plastic carrier bags used for shopping as much as possible.

• Plastic bags in general take anywhere from 20 to 1000 years to breakdown in the environment. The natural alternative is jute bag.

• Decorated jute bags and shopping bags are very much in demand both for domestic and international market.

• With the increase of population the scope of trade and industry is also increasing. As the bags are an essential commodity for human, so the demand of the product is growing day by day.

• The demands of the product remain consistent through out the year. So, it is presumed that there is a good scope for starting of such type of industry with a huge export potential.

Government Bodies:

• Jute Manufacturer Development Council (JMDC)

• National Centre for Jute Diversification (NCJD)

• National Jute Board (NJB)

Alternates and Substitutes:

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

• Cotton Bags:- They are costly as compared to jute.- Scarce raw material

• Plastics or Polyethene Bags:

Manufacturing Process:

Laminated & Non-Laminated Jute Facbrics

Printing

Stitching and Finishing

Dispatching Market for Sale

Design & Size Cutting

Checking & Packing

Presumptions:• Unit will operate 9 hours daily and 25 days in month.

• Capacity utilization will be 75% which will remain constant.

• The salary and wages of staff has been taken as per present market rate.

• Cost of Assets, Raw Materials and Selling price of Finished product are those generally obtained at the time of preparation of Business Model.

• The rate of interest on Bank Loan may vary from time to time.

• Since the project is small the financial calculation has been done for one year only.

Financial Aspects:

Suggested LocationDahisar (East)Mira Road (East)

Production Programme for a year

Sr. No. Items Qty (Nos) Rate (Rs.) Total Amount

1 Jute Bags 75,000

35

2,625,000

2Printed & Decorated Jute Shopping Bags

30,000

65

1,950,000

3 Designer Laptop Bags 2,000

300

600,000

4 Jute Folders 7,500

30

225,000

5 Mens Handbags 3,000

260

780,000

  Total     6,180,000

Financial Aspects:

Fixed Capital:

1. Land & BuildingWorkspace 750 sq. mtrs on long term monthly rental basis

Rs.20,000/-

Sr. No. Items Qty (Nos) Rate (Rs.) Total Amount

1 Industrial Sewing Machines 31K 5

7,500

37,500

2 Screen of Diff. Designs 15

350

5,250

3 Rubber Wiper 10

125

1,250

4 Dye Paste Stirrer 4

3,600

14,400

5 Cottage Steamer 1

17,500

17,500

6 Water Drum 2

1,500

3,000

7Scissors, Measuring Tapes and other Equipments L.S  

3,800

  Total     82,700

2. Machinery / Equipment

Financial Aspects:Fixed Capital (Contd.)3. Furniture & FixturesSr. No. Items Qty (Nos) Rate (Rs.) Total Amount

1 Cutting Table 1

1,700

1,700

2 Wooden Woking Table 2

2,000

4,000

3 Chair 5

500

2,500

4 Almirah 2

4,000

8,000

5 Reck 1

3,500

3,500

6 Electrical Fittings     4,500

7 Misc. Items (Stools) L.S   5,500

  Total     29,700

Total Fixed Capital

Particulars Amount

Land & Building Nil

Machinery / Equipment 82,700

Furniture & Fixtures 29,700

Total 112,400

Financial Aspects:Working Capital per month

1. Salary & Wages Expenses

Sr. No.Particulars EmployeeRemunarrati

onTotal

Amount Annually

1Manager Cum-Supervisor (Promotor) 1

14,000

14,000

168,000

2 Accountant 1

10,000

10,000

120,000

4 Master Tailor and Cutter 1

8,500

8,500

102,000

5 Tailor 4

7,500

30,000

360,000

6 Skilled Printer 1

6,500

6,500 78,000

7 Unskilled workers / Helpers 2

4,500

9,000

108,000

8 Marketing and Salesmen 3

5,500

16,500

198,000

9 Peon / Chowkidar 1

3,500

3,500 42,000

  Total 14  

98,000

1,176,000

Financial AspectsWorking Capital per month

2. Raw Material Consumption

No. Items Qty Rate (Rs.) Total Amount Annually

1 Cloth for Shopping Bags 2200m 28

61,600

739,200

2 Laptop Bags 800m 35

28,000

336,000

3 Jute Floder 550m 18

9,900

118,800

4 Mens Handbags 1100m 30

33,000

396,000

5 Jute Fabric 9500 bags 13

123,500

1,482,000

6 Dye Stuff 15 kg 450

6,750

81,000

7 Chemicals and Auxiliaries L.S   3,500

42,000

8 Printing Gum 15 kg 50

750

9,000

9 PVC buckle or Bamboo Stick 1200 pcs. 1.50

1,800

21,600

10 Sewing Thread, Needle, Label L.S   4,500

54,000

11 Buckles, Hook, Runner, Chain, Lining etc.. L.S   3,500

42,000

12 Transportation & Freight     8,000

96,000

  Total     284,800

3,417,600

Financial Aspects:Working Capital per month

3. Monthly other Expenses

Sr. No. Items Amount Annually

1 Rent 20,000

240,000

2 Electricity 11,500

138,000

3 Utilities 2,500

30,000

4 Office & Administrative Expenses 4,500

54,000

5 Travelling and Transportation 2,200

26,400

6 Repair and Maintainence 1,200

14,400

7 Sales Promotion 15,000

180,000

8 Misc. Expenses 2,500

30,000

  Total 59,400

712,800

Financial Aspects:

Norms of Working CapitalSr. No Description Norms Margin Total Amount Margin Money

1 Raw Materials 1 month 25% 284,800

71,200

2 Wages & Salaries 1 month 100% 98,000

98,000

3 Utility 1 month 100% 2,500

2,500

  Total     385,300

171,700 Total Working Capital per month

Particulars Amount

Monthly Other Expenses 59,400

Margin Money for Working Capital 171,700

Total 231,100

Financial Aspects:

Total Capital Investment

Means of Finance

Particulars Amount

Total Fixed Capital 112,400

Total Working Capital per month 231,100

Total 343,500

Sr. No. Particulars Total Amount

1 Promoter's Contribution (35%) 120,225

2 NCJD's Interest Free Loan (20%) 68,700

3 Bank Loan (45%) 154,575

  Total 343,500

Financial Aspects:Profitability Analysis

Sr. No. Particulars Value (Rs)

a Sales Revenue 6,180,000

b Cost of Production   

Raw Material 3,417,600

 Utilities

30,000

 Salaries & Wages

1,176,000

 Rent

240,000

 Repairs & Maintainence

14,400

 Adminsitrative Overheads

54,000

 Selling and Distribution Expenses

180,000

 Electricity

138,000

 Depreciation @ 10%

11,240

 Interest on Term Loan @ 12.50%

19,322

 Interest on Proprietor @ 10%

12,023

 Total (b)

5,292,584

c Operating Profit (a-b) 887,416

d % of Profit on Sales 14.36

e % of Profit on Investment 258.35

Financial Aspects:Break Even Point Analysis

(75% Capacity Utilisation)

Sr. No. Particulars Value (Rs)

a Variable Cost:    Raw Materials 3,417,600   Utilities 30,000   Selling and Distribution Expenses 180,000   Total (a) 3,627,600 b Semi-Variable and Fixed Cost    Salaries & Wages 1,176,000   Repairs & Maintainence 54,000   Adminsitrative Overheads 54,000   Rent 240,000   Selling and Distribution Expenses 180,000   Depreciation @ 10% 11,240   Interest on Term Loan @ 12.50% 19,322   Interest on Proprietor @ 10% 12,023   Total (b) 1,746,584 c Sales Realisation 6,180,000 d Contribution (c-a) 2,552,400 e B.E.P = b/d*75 47.90

Marketing Strategies:

• Word of Mouth:• Comprehensive Website: • Social Marketing:• Direct Marketing:• Major Festivals:• Online Shopping Sites:• NGO Tie-ups:• Local Tie-ups:• Corporate Gifting:• Conferences and Seminars:

Future Scope:

• We will be focusing on more on product segmentation like introducing new products wallets, water resistance bags, designer’s ladies handbags etc.

• Expansion of our business by introducing new outlets at prime locations across the country which will result in creating more employment opportunities.

• To focus more on the Marketing:Promoting our eco-friendly products through newspapers, hoarding,

Radio etc. Ad Campaign.Focusing more on tie-ups like Award ceremony’s, Standard Chartered

Mumbai Marathon, DNA Half Marathon other the major event happens in Mumbai.

Conclusion:• These reusable 100% natural bags are biodegradable,

ethically sourced, eco friendly, long lasting. They are a sustainable alternative to plastic and most other Green or Eco-friendly type bags available in the market.

• As well as their stylish looks jute bags carry a positive environmental message about your brand when printed with your logo.

• Go plastic bag free and make a difference to our planet.

• Jute is– Natural Fibre– Biodegradable– Sustainable– Stylish– Reusable

Thank You