BUSINESS PLAN

SALEM MGOPrepared by

Akshay kumar.PJaffer

Monica.INaveen Pandiyan

Revathi.RVivek.K

Executive summary

SALEM MGOVISIONTo be the supplier of choice in every industry we serve

MISSION To exceed our customers expectations in quality, delivery, and

cost through continuous improvement and customer interaction. Operate and grow at a promising rate. Serve high quality MgO.

KEYS TO SUCCESS Product quality, world-class customer service and support. Excellence in fulfilling the promise. Labor flexibility.

Company description

Our business is a manufacturing oriented business. The output product of our manufacturing process is MAGNESIUM OXIDE which will be obtained from magnesium carbonate when heated at 1200oC.

Our factory is located in Salem, Tamil Nadu. We mainly focus on producing MgO at a grade of 75%

Working time of our factory is 25 days per month from 9.00 am to 7.00pm.

On an average we produce 45 tonnes of MgO per day and production output per month is 1125 tonnes. Overall we supply our product to 38 companies (approx.) all over India.

This business will be profitable because it has more demand for fertilizer where the major consumption of MgO is made. It is used in the field of medicine, refractory bricks, abrasives (granite polishing), ceramic and chemical industries.

CONVENIENCE: Plant location near to mine to reduce the cost of transportation. Deposit of Magnesium Carbonate found widely in and around

Salem, Mysore and Trichy.

Target market:Magnesium oxide used as base & bonding agent.

Medicine- Special grades of magnesium oxide is used in antacids, cosmetics, toothpaste, and ointments

Refractory bricks- Magnesia bricks often in combination with spinel or chrome are also used in ferroalloy, non-ferrous, glass and cement industries.

Abrasives- As a binder in grinding wheels Ceramic- Basic ingredient in product formulations for the steel

industry Chemical industries- Starting point for the production of other

magnesium salts such as sulfate and nitrate.

Competitors

These are the major competitorsTANMAGBURNS STANDARDDALMIAFew other private firms

Manufacturing/production plansFacility: Land of 1 acre to setup plant. Plant is located in kuruvampatti

area, foot hills of yercaud. Coal is imported from Chennai and tuticorin.

Requirements : Raw Materials :Magnesium Carbonate(MgCo3), Coal Equipment and power source :Industrial Power supply, three

small shaft Kiln(furnace), three roller mill Testing : Lab and lab chemicals Packing :HDPE bags with thick inner liners(packing) Labors: Skilled(for salary), unskilled(daily wages) Delivery: Roadways and Railways

Production

The reaction involved in manufacturing Magnesium Oxide (MgO) MgCO3(s) → MgO(s) +CO2 (g).

GRADE OF MgO We produce only 75% grade.

Procedure Magnesium carbonate rocks are taken to the factory and loaded

into furnace with the machine. The furnace is heated at 1200oC with the help of coal for 8 hours. The output is magnesium oxide in lump form which is then grinded with the help of 3 roller mill. The output is fine particles.

The good quality of MgO depends on low presence of calcium content in MgCO3.

From 2 tonne of MgCO3 we get 1 tonne of MgO. Per day a kiln will produce 15 tonne of MgO Per day we are capable of sending 3 loads for customer (i.e.)

1load=15 tonne

Environmental concerns Rainy seasons, pollution control, permits for

transportation, taxes, VAT etc.Skilled Labor

Manager, Marketing Manager, Production Manager, Factory Supervising, Clerical Job.

Unskilled labor Office boys. For wages(daily basis)

In rainy season demand in North India is high. So when the demand increases the supply also has to be increased. Three plants are installed and two are continuously run and one is kept as substitute at normal situation. During the period of more demand three plant will be running in two shifts (morning and night shift).

Management structure POSITION

 REQUIREMENTS

General Manager MBA, PhD.

Marketing Manager MBA in marketing

Production Manager MBA in production

Clerical Job Any UG degree.

Factory Supervising Any UG with Engineering background

Office boys 10th pass

Structure:

Swot Analysis 

STRENGTH  Location Low cost for startup(Mark up pricing) Quality Oligopoly market structure Direct contact All partners are MBA

graduates

 

 WEAKNESSES

  Availablility of resources Rainy season Coal import Less resources less supply Competition Submission of C-forms

 OPPORTUNITIES

  Expansion Demand for product Size of market Grow to big brand A market vacated by an inefficient

competitor

 THREATS

  A new competitor in home town Price wars with competitors A competitor have new, innovative product or

service If they start to import(Major-China) Competitors have superior access to channels

of distribution Taxation is introduced on your product

Financial statement Assuming 20% profit on selling price Fixed investment involves for plant, machineries and transport

charges We manufacture MgO of Grade 75% which is Rs.12000/tonne We purchase 300kg of coal which is Rs.6/Kg Coal cost=Rs.1800/tonne MgO MgCO3: MgO=2:1 Fixed Investment=Rs.30, 00,000/- Coal cost=Rs.6000/tonne

Workers: 

POSITION

 

SALARY

General Manager Rs.20,000/-

Marketing Manager Rs.15,000/-

Production Manager Rs.15,000/-

Clerical Job (7500*6) Rs.45,000/-

Factory Supervising Rs.10000/-

Office boys Rs.5000/-

Fixed Cost Per month is Rs.110000/-

Depreciation 10% per annum Rs.3,00,000/-

Depreciation 10% per month Rs.25000/-

Fixed Cost per month Rs.1,10,000/-

Total Rs.1,35,000/-

Production of MgO per month is1125 tonnes

PARTICULARS FOR PER TONNE

 

Fixed cost Rs.20

Coal cost Rs.1800

Electricity Rs.200

Bags & Packing Rs.200

MgCO3 Rs.8636

NET PROFIT Rs.44

SELLING PRICE (b/f) Rs.12000

Break even analysisA point when no profit no loss occurs

Fixed cost per annum Rs.1320000

Depreciation 10% per annum Rs.300000

Total Rs.1620000

Contribution=(-variable cost+selling price) =(-

11836+12000)

Rs.164

Break-even point=1620000/164 9878 units

Government policies

Pollution control Violation act Sales tax EPT,VAT Income tax Industrial Registration board. Business name registration Supporting documents

Exit strategyPlant is built in a way that, it can be easily

detachable. The same kilon can be shifted to some other place and can be used to process some other materials with little modification. Why exit strategy?These three are high priced factor. If the price of these is reduced the demand for MgO will decrease.

Calcium oxide Barium oxide Magnesium sulfide.

THANK YOU