Chapter I

Introduction to Amrutlal & Hansraj Co.

The company provides a wide range of disposal plastic products to the supplier and not to the
direct consumer as it is largely based company which only serves to the wholesaler and
supplier due to its large production of plastic products. It provides with many plastic products
such as Garbage bags, Table Cover, Shopping Bags, Milk Bags, Kirana Bags, etc.
The company sells her products at a very reasonable rate. The company uses eco friendly
business environment and produces the products according to the given standard by the
government of India i.e. above 50 microns for shopping bags and Carrying away bags.
Microns are the gauge of the plastic bags which shows the resistance of carrying the weight
and capacity of carrying the weight.
The company was started by AMRUTLAL & HANSRAJ they were both brothers who took
the initiative and started a small firm of manufacturing only plastic carrying bags which were
mostly used by the vendors, fruit seller, vegetable seller, later they set up a huge plant in
daman and their main branch at the heart of the Mumbai city, Masjid Bunder which latter to
known as only Masjid. Then latter they also started a shop in Masjid. The work was divided
among them as the elder brother AMRUTLAL was looking over the manufacturing process
while his younger brother was looking over the shop they settled at Masjid. They are the
leading manufacturer of polythene bags and garbage bags.
The company is owned and controlled by the proprietor of the Amrutlal & Hansraj Co. and
the son of AMRUTLAL & HANSRAJ, Navin.A.Shah and Bharat H. Shah. The company is
situated near Daman. Daman is the Hub for manufacturing of plastic bags and plastic related
materials. This company exports goods to many countries, recently the company exported
goods to London to a supermarket, which the company produced Carrying away bags for that
supermarket along with printing of the name on the bag. The company is around 35-40 years
old in this field.
ORIGIN:
Three Canadians--HARRY WASLYK, FRANK PLOMP and LARRY HANSEN--made the
first trash bags in 1950. CBC television ranked their invention 36th among 50 top Canadian
inventions. Initially trash bags were called "green garbage bags" because of their color. These
bags were first launched for commercial use, but beginning in 1960 they were made for home
use as well.
What is LDPE - Low-density polyethylene (LDPE) is a thermoplastic made from
the monomer ethylene. It was the first grade of polyethylene, produced in 1933 by Imperial
Chemical Industries (ICI) using a high pressure process via free radical polymerization.

1|Page

Applications of LDPE:
LDPE is widely used for manufacturing various containers, dispensing bottles, wash bottles,
tubing, plastic bags for computer components, and various molded laboratory equipment. Its
most common use is in plastic bags. Other products made from it include:

Trays and general purpose containers

Corrosion-resistant work surfaces
Parts that require flexibility, for which it serves very well
Very soft and pliable parts such as snap-on lids
Six pack rings
Juice and milk cartons are made of liquid packaging board, a laminate
of paperboard and LDPE (as the waterproof inner and outer layer), and often with of a
layer of aluminum foil (thus becoming aseptic packaging)
Packaging for computer hardware, such as hard disk drives, screen cards, and optical
disc drives
Playground slides
Plastic wraps
Garbage bags.

Garbage Bags or Trash bags.

The most common form of trash bags available today. Polyethylene trash bags are petroleum
based products that are preferred because of their strength and tear resistance. The most
common form of polyethylene trash bags are made from low density polyethylene. Some
trash bags are made from high density polyethylene for other applications. Both types of trash
bags come in a wide variety of sizes and strengths. Below is a chart showing the
characteristics of each type of trash bag.

Trash Bag Material

Puncture Resistance

Tear Resistance

Load Capacity

Low Density Polyethylene Trash Bags

Good

Excellent

Good

High Density Polyethylene Trash Bags

Excellent

Good

Excellent

2|Page

Starting a Plastic Manufacturing Plant

Starting a plastic manufacturing plant, like any other business, requires research and
planning. More than just a business, it requires the technical and scientific knowledge of
manufacturing plastic as well as the legal requirements of licenses and environmental
permits.
Here are a few things to consider in starting a plastic manufacturing plant.
Like any other business, planning to start a plastic manufacturing plant involves a lot of
planning and research. In fact, one may consider starting a manufacturing plant even more
tedious than any other business as one does not only try and consider the business aspect of
the plastic manufacturing plant but even the environmental and legal aspects of the business
venture. It requires not only the skills of a businessman but even the knowledge and skill of a
scientist and engineer. Services of attorneys may also be needed to help maneuver the
environmental and license requirement of the government.
But before even going into the specific needs of a plastic manufacturing plant, it is first
essential to determine what kind of plastic one is looking to produce. There are a lot of plastic
products in the market today and there are even more competitors for the said product. One
has to carefully plan and research the market and find out which area has a shortage or need
for plastic products. In determining the kind of product to produce, one must also consider
the skill level needed to produce such product. Do you have the necessary background in
plastic making for such product? Do you have the necessary experience in manufacturing
such product?
After determining the product, it is then necessary to decide the size of the plastic
manufacturing plant. Do you plan to work merely at home or start a plant some other place?
How much plastic do you want to produce in a given period of time? There are generally
three ways in starting a plastic manufacturing plant. One can either buy an existing
manufacturing plant. There are a lot of plastic manufacturing plants that are fully furnished
and offered for sale in various parts of the world. They cater to a wide variety of plastic
products. Another way is to start the manufacturing plant yourself. This means producing the
necessary capital or finding investors to do so and building-up the plant yourself. Another
way is to start small and try homemade plastic first. If one is just new in the plastic
manufacturing business, one can choose to apprentice and work for a plastic plant before
starting ones own business.
Once you are knowledgeable of your desired product, the scientific and technical way to
manufacture it and the type of business venture you are planning, as well as the location of
your plant, you can start looking into the license and permit requirements of the government.
Oftentimes, environmental pre-conditions are also necessary before a permit or license is
granted.

3|Page

CHAPTER 2
Introduction to Manufacturing Process
There are several steps involved in manufacturing of garbage bags.
LLDPE or LDPE granules: what are LDPE granules?
LDPE granules are widely known for its flame resistance, non-oxidizing in nature and nontoxicant to a some extent and it is chemically stable.
LDPE are further classified into various categories:

White LDPE granules

Reprocessed LDPE granules
Natural LDPE granules
Colored LDPE granules
Milky LDPE granules

Steps involved in manufacturing garbage bags.

Step1) These polyethylene resin pellets are LDPE granules which are poured in to the large
hoppers. Large hoppers are of different sizes, but suitable size of the production of garbage
bags can be stated as
Diameter
Mm
Approx

Height
Mm
Approx

Volume
Liters
Approx

RPL
Code

Colour

1100/225

820

325

5097

Preferable
Rusted
Red
and
black
colour.

Step 2) In the extrusion of plastics, the raw compound material is commonly in the form

of murdles (small beads, often called resin) that are gravity fed from a top
mounted hopper into the barrel of the extruder. Additives such as colorants and UV inhibitors
(in either liquid or pellet form) are often used and can be mixed into the resin prior to arriving
at the hopper. The process has much in common with plastic injection model from the point
of the extruder technology though it differs in that it is usually a continuous process. While
pulltrusion can offer many similar profiles in continuous lengths, usually with added
reinforcing, this is achieved by pulling the finished product out of a die instead of extruding
the polymer melt through a die.
The material enters through the feed throat (an opening near the rear of the barrel) and comes
into contact with the screw. The rotating screw (normally turning at up to 120 rpm) forces the
plastic beads forward into the heated barrel. The desired extrusion temperature is rarely equal
4|Page

to the set temperature of the barrel due to viscous heating and other effects. In most
processes, a heating profile is set for the barrel in which three or more independent PID
-controlled heater zones gradually increase the temperature of the barrel from the rear (where
the plastic enters) to the front. This allows the plastic beads to melt gradually as they are
pushed through the barrel and lowers the risk of overheating which may cause degradation in
the polymer.
Extra heat is contributed by the intense pressure and friction taking place inside the barrel. In
fact, if an extrusion line is running certain materials fast enough, the heaters can be shut off
and the melt temperature maintained by pressure and friction alone inside the barrel. In most
extruders, cooling fans are present to keep the temperature below a set value if too much heat
is generated. If forced air cooling proves insufficient then cast-in cooling jackets are
employed.

Plastic extruder cut in half to show the components

At the front of the barrel, the molten plastic leaves the screw and travels through a screen
pack to remove any contaminants in the melt. The screens are reinforced by a breaker plate (a
thick metal puck with many holes drilled through it) since the pressure at this point can
exceed 5,000 psi (34Mpa). The screen pack/breaker plate assembly also serves to create back
pressure in the barrel. Back pressure is required for uniform melting and proper mixing of the
polymer, and how much pressure is generated can be "tweaked" by varying screen pack
composition (the number of screens, their wire weave size, and other parameters). This
breaker plate and screen pack combination also does the function of converting "rotational
memory" of the molten plastic into "longitudinal memory".
After passing through the breaker plate molten plastic enters the die. The die is what gives the
final product its profile and must be designed so that the molten plastic evenly flows from a
cylindrical profile, to the product's profile shape. Uneven flow at this stage can produce a
product with unwanted residual stresses at certain points in the profile which can cause
warping upon cooling. Almost any shape imaginable can be created so long as it is a
continuous profile.

5|Page

The product must now be cooled and this is usually achieved by pulling the extrudate through
a water bath. Plastics are very good thermal insulators and are therefore difficult to cool
quickly. Compared to steel, plastic conducts its heat away 2,000 times more slowly. In a tube
or pipe extrusion line, a sealed water bath is acted upon by a carefully controlled vacuum to
keep the newly formed and still molten tube or pipe from collapsing. For products such as
plastic sheeting, the cooling is achieved by pulling through a set of cooling rolls. For films
and very thin sheeting, air cooling can be effective as an initial cooling stage, as in blown
film extrusion.
Plastic extruders are also extensively used to reprocess recycled plastic waste or other raw
materials after cleaning, sorting and/or blending. This material is commonly extruded into
filaments suitable for chopping into the bead or pellet stock to use as a precursor for further
processing.

6|Page

For manufacturing plastic bags, shopping bags, garbage bags blown flim is required.

Blown film extrusion

Blow extrusion of plastic film

The manufacture of plastic film for products such as shopping bags, garbage bags etc. and
continuous sheeting is achieved using blown film line.[4]
This process is the same as a regular extrusion process up until the die. There are three main
types of dies used in this process: annular (or crosshead), spider, and spiral. Annular dies are
the simplest, and rely on the polymer melt channelling around the entire cross section of the
die before exiting the die; this can result in uneven flow. Spider dies consist of a central
mandrel attached to the outer die ring via a number of "legs"; while flow is more symmetrical
than in annular dies, a number of weld lines are produced which weaken the film. Spiral dies
remove the issue of weld lines and asymmetrical flow, but are by far the most complex.[5]
The melt is cooled somewhat before leaving the die to yield a weak semi-solid tube. This
tube's diameter is rapidly expanded via air pressure, and the tube is drawn upwards with
7|Page

rollers, yielding the plastic in both the transverse and draw directions. The drawing and
blowing cause the film to be thinner than the extruded tube, and also preferentially aligns the
polymer molecular chains in the direction that sees the most plastic strain If the film is drawn
more than it is blown (the final tube diameter is close to the extruded diameter) the polymer
molecules will be highly aligned with the draw direction, making a film that is strong in that
direction, but weak in the transverse direction. A film that has significantly larger diameter
than the extruded diameter will have more strength in the transverse direction, but less in the
draw direction.
In the case of polyethylene and other semi-crystalline polymers, as the film cools it
crystallizes at what is known as the frost line. As the film continues to cool, it is drawn
through several sets of nip rollers to flatten it into lay-flat tubing, which can then be spooled
or cut.

Step 3) Die forming typically occurs immediately after polymer melt has exited an extruder.

The most basic process involves guiding the stream of molten polymer under pressure
through a die, which three distinct regions: manifold, approach, and lip. The 'manifold' serves
to channel the polymer melt from its initial extrusion point to a near-net-shape of the final
product. The 'approach' region further guides the melt into the final shape, and begins to
correct for any non-uniform flow. Finally, the 'lip' forms the melt into the final desired cross
section and compensates for any remaining flow asymmetry. After exiting the lip of the die,
the polymer melt will undergo before curing. Die swell is an expansion of the melt as the
pressure is released, and is dependent on polymer chemistry and die design. After curing, the
solid, continuous part is drawn onto a take-up roller or cut into transportable lengths,
depending on the type of part. This process may vary significantly depending on the type of
die and extrusion process
Step 4) the molten granules flow up evenly up and over to the circular die.
Step 5) as the molten poly emerges from the die, the machine operator: a. Grabs it wearing
protective gloves. b. Pinches the molten poly together. c. Ties a rope to the top of the molten
poly. The rope leads upward to a pulley system. d. Pulls the other end of the rope to move the
molten poly upwards. At the same time, the air ring blows cool air upwards, which solidifies
the molten poly.
Step 6) As the tubular shape moves up, the machine operator inserts an air gun through the
poly film to blow in additional air. This step is repeated until the diameter of the tubular poly
film reaches the required bag size
Step 7) Along the length of the tower are guides to keep the tubular poly film from shifting.
As the film reaches the top of the cooling tower, the guides gradually flatten it into a layflat
form. If the plastic bag will have gussets, special frames (called gusset boards) indent the
sides of the tube before it is flattened.

8|Page

Step 8) At the top of the cooling tower, motorized nip rollers grab the solidified poly film.
The nip rollers now take over the job of moving the poly film up the cooling tower. Note:
Extruder and die assembly towers can be 25 to 35 feet tall. This height is needed to cool the
polyethylene film before the layers are flattened together.
Step 9) The layflat film travels over a series of rollers. For simple bags, such as trash bags or
industrial bags, the film is contained to a single, in-line process. In this case, the polyethylene
film: Travels through a bag machine that seals the bottom of the plastic bag and perforates
it at the same time. The perforation allows the bags to be easily torn from the roll.
The blown film extrusion process for creating poly bags hasnt changed much over the years.
But what has changed is how we use plastic bags in our daily lives whether we carry home
groceries in T-shirt plastic bags or seal an expensive cut of meat into an air-tight freezer
bag. What was once a novelty is now an everyday convenience that makes our lives easier.

9|Page

Fixed Asset Required

Land, Building, Plant and Machinery, Furniture, Warehouse, Transport Vehicle.
Currently the company owns a land in DAMAN of 25000 sq ft for manufacturing of garbage
bags and other products. It has his warehouse near the manufacturing plant. The company has
its of 5000 sq ft.
Currently the company owns the manufacturing plant, extrusion machine, hoppers, etc worth
10CR.
The following table shows the asset required for manufacturing the garbage bags.
S no.
1.

Description
Land

2.

Office

3.

Plant and Machinery

a) Extrusion line
b) Hopper
c) Die
d) Generator
e) Barrel
f) Blow heater

4.

Warehouse

5.

Transportation Vehicle
(Container)
Total

10 | P a g e

Unit
Quantity
50000 sq. 1
ft.
5000 sq 1
ft.
Sets
5
9
8
10
4
7
25000 sq. 1
ft.

Rate(Rs)
25000

Amount(Rs)
150000000

53000

265000000

1000000
500000
250000
50000
75000
10000
30000

5000000
4500000
2000000
500000
300000
70000
75000000

Sets

1900000

58900000

31

561270000

Life of Fixed Asset.

All depreciation will be calculated on the basis of straight line method.

The Land and Office is depreciated at the rate of 15% per annum and the life is
estimated to be 25 years.
All the plants and machineries are depreciated at the rate of 20% per annum and are
estimated to have life of 5 years.
The life of vehicle is estimated to be 10 years and is depreciated at the rate of 15% per
annum.

S
No.

Description

Amount(Rs)

1.
2.

Land
Office

3.

Plant and Machinery

g) Extrusion line
h) Hopper
i) Die
j) Generator
k) Barrel
l) Blow heater

4.

Warehouse
Transportation Vehicle
(Container)
Total

Depreciation
Amt(Rs)

150000000
265000000

Depreciatio
n
%
15%
15%

5000000
4500000
2000000
500000
300000
70000
75000000

20%
20%
20%
20%
20%
20%
20%

100000
900000
400000
10000
60000
14000
1500000

58900000

15%

8835000

Planned Capacity and Future Capacity

11 | P a g e

22500000
39750000

12719000

The factory will be open from 9am to 6pm. Some of the raw materials used will be available
in the local market whereas others will be imported from China. The company will only
provide the wholesaler with an estimate of a monthly and yearly demand. The total number of
working days will be 240 days.
We have kept our capacity a bit large than what is required today but it is quite relevant in
context to the increased demand in future since there are few competitors and we expect that
the locally made plastic bottles will be widely used than those imported from abroad in
future. Below is the calculation of future capacity utilization estimation:
Future Capacity Utilization

Year

Capacity
Utilization

Sales (in Cr)

2014

75%

159

2015

80%

178

2016

85%

200

2017

90%

225

2018

100%

278

In the year 2014 the total utilization of cubic space i.e. capacity was 75% of the total
space available while during the current year it tends to increase with 80% and the
future forecast shows an increasing trend which helps the company to have greater
sales in the next proceeding years.
The sales in the current year shows upto 178 Cr. In rupees, while it shows an healthy
increment in the next proceedings year with the highest of 278 Cr. In rupees in 2018.

Chapter III
Market Analysis

Market Analysis Summary

Strong demand for recycled plastics is working in the industry's favor. Major users of plastic
packaging, apparently responding to consumer desires, have begun incorporating at least
12 | P a g e

some recycled plastic content in their products as part of the growing interest in recycling.
Recycled resin demand is on the rise as prices for the two major recycled resins, PET and
HDPE, continue to hold value or appreciate against their virgin counterparts.
In volume, PET is currently the number one recycled resin. Supply of recycled PET is in
excess of 800 million pounds per year. This figure is expected to grow, reaching over 1
billion pounds during the next few years. The plastics industry has developed new markets
and applications for recycled resins from both post-consumer and post-industrial sources.
PET leads the recycled recovered resins as the most visible and valuable, and its use is
increasing. Of the total 3.7 billion pounds of PET consumed in 1997, just 16% was from
recycled sources. Of the more than 90 billion pounds of plastics produced annually in the
United States, less than 5% is from recycled sources. Plastics, after aluminium, represent the
second highest value material in the waste stream and have the highest projected growth rate.
Markets and uses for recycled plastics are rapidly expanding. Plastic containers are being
collected at the curb for recycling in nearly 500 communities, representing more than 4
million households. U.S. demand for recycled plastic will continue to expand and new
markets will develop as technologies permit the efficient segregation and reprocessing of
high-purity resins. Improved quality of resins, environmental issues and higher prices for
virgin resin will contribute to growth.
Packaging is expected to be the largest market segment for recycled plastics, with sheet and
lumber following. Surveys indicate that Americans are increasingly willing to collect and
separate discarded packages, foregoing a degree of convenience to make products more
disposable, and even paying a premium for a recycled item.
Increasingly, communities are refusing to consider incineration until every effort is made first
to recycle; public sentiment is strongly in favor of products that can be recycled or are made
of recycled materials. In recent years, the household recycling rate of PET bottles has more
than doubled to 30% of all PET soft drink bottles sold. In fact, PET's recycling rate is the
fastest growing among all beverage containers. The future of PET recycling is even brighter
than it has been in the past. PET intrinsic scrap value is second only to aluminium among
container materials. The plastics industry has launched a research and development program
aimed at increasing PET recycling. According to the U.S. Environmental Protection Agency
(EPA), plastic soft drink bottles account for approximately 2% of the solid waste discarded in
America. The EPA has set a national goal to recycle 25% of the municipal solid waste stream
and the industry is committed to achieving its share of that important goal.
The recycling industry intends to accelerate the rate of plastic recycling as part of its
commitment to develop solutions to the solid waste problem. Industry analysts have projected
that 50% of all PET containers will be recycled by the year 2007. More plastics will be
recycled annually than any other recyclable material. Replay believes a significant answer to
America's waste problem lies in creating high value, recycled thermoformable sheet and other
extruded products for the packaging market.
Although more than 200 million pounds of PET post-consumer materials are collected in the
western United States each year, there is presently no local cleaning and refining facility
converting the bottles into resins suitable for re-manufacturing. Originally, recycled PET
(RPET) was used primarily in the carpet fiber industry, which is located along the eastern
13 | P a g e

seaboard. The early development of the RPET industry was therefore focused in the eastern
USA, with eastern states adopting the first bottle deposit laws that resulted in collection of
post-consumer bottles that can be recycled. Recently, California, Oregon and Washington
have adopted bottle deposit programs, and accumulation of recyclable materials in those
states has begun. With all of the cleaning and recycling plants and the majority of consumers
traditionally located in the eastern part of the country, development of consumers of recycled
flake and down-line products, such as film and sheet, has been slow to develop in the West. A
strong demand for post-consumer bottles from Asia has prevented the buildup of inventories
and reduced the pressure for the collection industry to find or develop western markets.
There is currently no independent extrusion plant of recycled polyterephthalate (PET) sheet
in the western United States or Canada that services the roll stock requirements of major
custom and proprietary formers. With the development of the recycling industry for PET
starting in the eastern part of the country, and the preponderance of consumers of sheet there
as well, development of independent extrusion facilities using RPET has been slow to
develop. It appears that in order to attract such companies, local sources of RPET would have
to available. While there are customers in the West for the products, contracting a supply and
shipping it from the East makes the venture unattractive.
Our founders recognize that an opportunity exists and propose a vertically
integrated conversion facility that will employ state-of-the-art technologies to produce
extruded sheet and high strength strapping from 100% recycled PET post-consumer bottle
stock, cleaned and refined in our own facility.
Target Market Segment Strategy
The Company has chosen its target markets because recycled PET (RPET) is in high demand
as flake resin by converters, as roll stock sheet used to produce high visibility packaging and
as high strength strapping for the lumber industry. Sales are price-sensitive, so that proximity
to markets and feed stock source provide a competitive edge. Replay Plastics identified an
opportunity to take advantage of both circumstances in the western United States.
RPET Flake
Total market demand is reported as 1.2 billion pounds per year. Since only 800
million pounds are processed in the USA, consumers are forced to look at wide spec virgin
PET (virgin resin that is outside of spec but still usable) which is normally sold at a discount
to virgin prices, but still higher than recycled (RPET) pricing. Some manufacturers are also
forced to import materials from Mexico, India and South America. Some converters are being
forced to use more expensive virgin resin.
The current pricing for virgin resin is $0.65-0.73 per lb. and $0.42-.53 for RPET flake. The
spread between the two has traditionally been maintained at approximately $0.20 per lb.
PET Film & Sheet
The total reported market of extruded film and sheet is 872 million pounds, of
which identified industry usage of RPET is 160 million pounds.

14 | P a g e

The reported market demand (to replace virgin PS, PVC and PET) if RPET was available
is estimated at 1 billion pounds.
Current pricing for RPET sheet is $0.70-0.79 per lb.
RPET Strapping
The total reported domestic plastic strapping market is 240 million pounds. Of this market,
industry usage of virgin polypropylene is 132 million pounds and of PET is 108 million
pounds.
It is generally accepted in the industry that less expensive strapping made from RPET could
not only take over the polypropylene strapping market, but convert as much of the much
larger and more expensive steel strapping market as RPET strapping was available.
Current pricing for RPET strapping is $0.90 -1.08 per lb.
Market Segmentation
The primary market can be broken down as follows.
Consumers of PET in:

California: 62

Oregon: 8

Washington: 9

Consumers of HDPE in:

Mumbai: 73
Delhi: 10
Patna: 12
All information is based on industry research,and data provided by the Manager of the
company.

15 | P a g e

Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential
Customers

Growth

CAGR

Western PET
Buyers

1%

79

80

81

82

83

1.24%

Western HDPE
Buyers

1%

95

95

95

95

95

0.00%

0.57%

174

175

176

177

178

0.57%

Total

Market Segmentation

Strong demand for plastic bottles is working in the industry's favor. Major users of plastic
packaging, apparently responding to consumer desires, have begun incorporating at least
some recycled plastic content in their products as part of the growing interest in recycling.
Resin demand is on the rise as prices for the two major recycled resins, PET and HDPE,
continue to hold value or appreciate against their virgin counterparts.
The Company has chosen its target markets because PET is in high demand as flake resin by
converters, as roll stock sheet used to produce high visibility packaging and as high strength
strapping for the lumber industry. Sales are price-sensitive, so that proximity to markets and
feed stock source provide a competitive edge.
Total Market Demand

16 | P a g e

Demand can be defined as the quantity which consumer is willing to purchase at a given price
during a certain time period. In our case, demand will be determined by the individual
demand of the shops selling plastic bottles. The estimation of the demand of the bottles is
shown as follows:
Monthly demand (in
quantity)
Garbage Bags

Shop

Number(in

sample)

1120

965

1050

1035

930

Total Market Demand = 5100 units per month

Number of Competitors (Manufacturers) = 3
No. of shops selling bottles = 24
Average Market Demand = (5100 / 5) units
= 1020 units per month
Actual Total Market Demand = (1020 * 24) units
= 24480 units per month
Competitors Analysis

In plastic bottles manufacturing market there is no specific brand name existing so the market is flooded by
small companies which are in this business. So they are our biggest direct competitors. As we are also not
alone as a supplier of PET to the companies as raw materials there are many companies in this region which
are supplying PET. Om Plastic Industries is one of them who is currently selling all types of plastic
bottles. So in case of business to business market they are our direct competitors.

Market Share

17 | P a g e

Market share will help us determine our competitors, total market share of different
competitors and how we plan to make sure that we grab more of the market share in the
future. Our market share will be estimated on the basis of number of competitors. The
industry has only 3 known competitors. Therefore, the market share of our company is:
Market share = (24480 / 4) units
= 6120 units per month

Sales Forecasting

The next important factor for success is planning. Planning involves the forecasting of sales;
that is, determining the amount of sales in advance. It helps to estimate the amount of
production to be done. Forecasting of the sales depends on the market share of the product.
Uncertain environment becomes a barrier to effective forecasting of sales. Sales can be
forecasted through:
1. Conservative estimation (60% - 70%)
2. Moderate estimation (70% - 80%)
3. Aggressive estimation (80% and above)
The sales forecast for the first five years is as follows:
Year
2014
2015
2016
2017
2018

Sales (in qty)

55080
58752
62424
66096
73440

Chapter IV
18 | P a g e

Sales (in amt)(Rs.)

1,28,33,640
1,36,89,216
1,45,44,792
1,54,00,368
1,71,11,520

Cost

The various raw materials required for the production of garbage bags are:

High Density Polyethylene (HDPE) is the most widely used resin for plastic bottles.
This material is economical, impact resistant, and provides a good moisture barrier.
HDPE is compatible with a wide range of products including acids and caustics but is not
compatible with solvents. HDPE is naturally translucent and flexible. The addition of
color will make HDPE opaque although not glossy. HDPE lends itself readily to silk
screen decoration. While HDPE provides good protection at below freezing temperatures,
it cannot be used with products filled at over 160 F (71 C) or products requiring a
hermetic (vacuum) seal.

Low Density Polyethylene (LDPE) is similar to HDPE in composition. It is less rigid

and generally less chemically resistant than HDPE, but is more translucent. LDPE is used
primarily for squeeze applications. LDPE is significantly more expensive than HDPE.

Polyethylene Terephthalate (PET, PETE or polyester) is commonly used for

carbonated beverage, water bottles and many food products. PET provides very good
alcohol and essential oil barrier properties, generally good chemical resistance and a high
degree of impact resistance and tensile strength. The orienting process serves to improve
gas and moisture barrier properties and impact strength. This material does not provide
resistance to very high temperature applicationsmax. temp. 200 F (93 C).

Polyvinyl Chloride (PVC) is naturally clear, has extremely good resistance to oils,
and has very low oxygen transmission. It provides an excellent barrier to most gases and
its drop impact resistance is also very good. This material is chemically resistant, but it is
vulnerable to solvents. PVC is an excellent choice for salad oil, mineral oil, and vinegar.
It is also commonly used for shampoos and cosmetic products. PVC exhibits poor
resistance to high temperatures and will distort at 160 F (71 C), making it incompatible
with hot filled products.

Polypropylene (PP) is used primarily for jars and closures and provides a rigid
package with excellent moisture barrier. One major advantage of polypropylene is its
stability at high temperatures, up to 220 F (104 C). Polypropylene is autoclavable and
offers the potential for steam sterilization. The compatibility of PP with high filling
temperatures is responsible for its use with hot fill products. PP has excellent chemical
resistance, but provides poor impact resistance in cold temperatures.

Polystyrene (PS) offers excellent clarity and stiffness at an economical cost. It is

commonly used with dry products including vitamins, petroleum jellies, and spices.
Styrene does not provide good barrier properties, and exhibits poor impact resistance.

Post Consumer Resin (PCR) is a blend of reclaimed natural HDPE (primarily from
milk and water containers) and virgin resin. The recycled material is cleaned, ground and
recompounded into uniform pellets along with prime virgin material especially designed

19 | P a g e

to build up environmental stress crack resistance. PCR has no odor but exhibits a slight
yellow tint in its natural state. This tint can be hidden by the addition of color. PCR is
easily processed and inexpensive. However, it cannot come into direct contact with food
or pharmaceutical products. PCR can be produced in a variety of recycled content
percentages up to 100%.

Bioplastic- polymer structures based on processed biological materials rather than

petrochemicals.

We have decided to choose the supplier low cost without compromising on the quality. The
table below shows the total monthly raw material costs and estimated requirement for the
company. The raw material quotation is forwarded to the wholesaler who stocks the goods
according to the companys requirement.
Raw Material Requirement and Cost
S No.

Description

Quantity

Rate (Rs)

Amount (Rs)

1.

Polyethylene Terephthalate

7650 pound

50

38,2500

2.

High Density Polyethylene

7000 pound

46.75

32,7250

3.

Low Density Polyethylene

6500 pound

45

29,2500

4.

Polyvinyl Chloride

6750 pound

55

37,1250

5.

Polypropylene

5000 pound

50

25,0000

6.

Polystyrene

5000 pound

55

27,5000

7.

Post Consumer Resin

4750 pound

55

26,1250

8.

Bioplastic

4000 pound

60

24,0000

9.

Others

25,0000

Total

2,64,9750

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Labour Cost
The business requires various types of laborers skilled, semi-skilled and unskilled as well.
Skilled laborers are required so that the plants and machineries can be handled properly and
the production process can go smoothly. Semi skilled laborers are also required to assist the
skilled ones in the minor activities. Similarly, unskilled laborers are also required to carry out
other minor activities like gate keeping, security, etc. However, finding these various types of
laborers would be difficult.
Since the factory location is Dhulikhel, we plan to employ local laborers and if required, we
will hire few from the valley as well.
The laborers will be given a proper work schedule which is to be followed strictly. One week
training program will be conducted for the laborers. They are required to inform the
management at least one month in advance before quitting the job.

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Labor Requirement and Cost

S
No.
1.

2.

Description
Direct labor
a) Skilled
-Factory head
-Technician
-Others
b) Semi-skilled
c) Unskilled
Indirect Labor
a) Production Manager
b) Logistics Manager
Total

No.

Rate(Rs)

Amount
(Rs)

10
8
5
70
15

12,0000
15,0000
10,0000
60,000
30,000

12,000
15,000
20,000
48,000
20,000

6
3

16,0000
12,0000

20,000
12,000

Total
(Rs)

Amt

Labor Motivation:

The laborers will be given a proper work schedule which is to be followed strictly. One week
training program will be conducted for the laborers. They are required to inform the
management at least one month in advance before quitting the job. we will develop effective
labor packages that will be designed by proffessional HR firms to motivate the workers. we
will take careful measure regarding employee safety in the workplace, and equip our workers
with all necessary materials and equipment.
Extrinsic rewards will be our basic motivation factor under which we will provide enough
monetary compensation to our workers. other benefits will also be provided. we will employ
proper work schedules, taking consideration to workers breaks to create a healthy working
envoirnment within the factory

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Indirect Factory Overhead

Indirect Factory Overhead Expenses (Monthly)

S No.

Description

Amount (Rs)

1.

Indirect labor

32,0000

2.

Refreshment

34,2000

3.

Electricity and Water

20,0000

4.

Repair and Maintenance

10,0000

5.

Transportation

15,0000

6.

Stationery

2,0000

7.

Warehouse expense

10,0000

8.

Others

10,0000

9.

Depreciation

1,90,1420

Total

3,23,34200

Per Unit Cost of Production

S No.

Description

Amount (Rs)

1.

Monthly Raw Material Cost

2,64,9750

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2.

Monthly Direct Labor Cost

1,15,0000

3.

Monthly Factory Overhead Expense

3,23,3420

Monthly Total Cost of Production

7,03,3170

Monthly Production

45900 units

Cost of Production per Unit

1530.23

Logistical cost
The logistical cost is about 7-20 % of the cost of the product. It should be handled carefully
and proper logistics will help to reduce the cost of the product. To reduce the logistical cost,
24 | P a g e

the company needs its manufacturing plant and warehouse both near to them, as longer the
distance greater the logistical cost.

Pre-operating Activities and Cost

The trail production has to be done to see how good the product comes out and whether there
is any problem with the plan and the machinery or not. Moreover, we have to come out with
the sample product in the market to see the response. All these costs are included in the pre
operating cost. They are as follows:

Description

Amount

Registration cost

7000

Trial Production

100000

Market Survey

10000

Transportation cost

5000

Telephone registration

4000

Others

5000

Total

131000

10% amortization

13100

Monthly Amortization

1091.67

The pre-operating cost includes Registration cost of the company, Market Survey,
Transportation Cost, Telephone Registration, Others, expenses etc.

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CHAPTER V
CAPITAL STRUCTURE
Assumptions Sheet

Raw material stock for 2 month

Production time is 7 days
Finished goods stock is 13 days
Credit facility for debtors depends upon the debtors credit limit.
Monthly marketing expense is Rs. 100,000/Cash management is one month expense on direct labour, factory overhead, marketing
expense, and administrative expense
Bank loan of Rs. 1,20,00,000 at 15% interest rate per annum. The loan payback
installment is Rs. 24,00,000 each year till 5 years.
Mark up is 15% and the tax rate is 25%

Total Capital Requirement

The total capital requirement refers to the amount of money a business needs for its normal
operations and also the amount of cash and easily liquidated assets that a broker/dealer or
bank needs to meet SEC regulations, usually expressed as a proportion of total liabilities. In
general, the kinds of assets that can make up the broker-dealer capital requirement are strictly
defined.

26 | P a g e

Sources and Uses of Funds Statement

Total Capital Requirement

The total fixed assets requirement is:

S No.
1.
2.

Description
Fixed Assets for Factory
Fixed Assets for Office
Total Fixed Capital

Amount (Rs)
1,79,58,500
1,99,900
1,81,58,400

Fixed Capital

S No.

Description

Amt (Rs)

1.

Raw material stock (for month)

1,32,487.5

2.

Work-in-process stock
(153.23/2 * 2 days * 230 units)

35,243

3.

Finished Goods stock

(153.23 * 5 days* 230 units)

1,76,214.50

4.

Credit Sales
(153.23 * 10 days* 230 units)

3,52,429

5.

Cash Management
(1,15,000+30,000+(48,335.67-3,244-

3,22,200

27 | P a g e

1,091.67)+(323342-190142))
Total

10,18,574

Cash Management = Monthly Direct Labor expense + Monthly Marketing expense +

Monthly factory Overhead Expense + Monthly Administrative Expense

Working Capital
1.

Working Capital

10,18,574

Pre-operating Expenses

The trail production has to be done to see how good the product comes out and whether there
is any problem with the plan and the machinery or not. Moreover, we have to come out with
the sample product in the market to see the response. All these costs are included in the pre
operating cost. They are as follows:
S. No.

Description

Amount(Rs)

1.

Registration cost

7,000

2.

Trial Production

1,00,000

3.

Market Survey

10,000

4.

Transportation cost

5,000

5.

Telephone registration

4,000

6.

Others

5,000

Total

1,31,000

10% amortization

13,100

Monthly Amortization

1091.67

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The pre-operating expense as previously calculated is Rs. 1,31,000. Thus, the total amount
required to start the business is Rs. 1,31,000.
Now the total project cost is:

Total Capital Requirement

S No.

Description

Amount (Rs)

1.

Fixed Capital

1,81,58,400

2.

Working Capital

10,18,574

3.

Pre-Operating expense

1,31,000

Total Capital Requirement

1,93,07,974

Capital Structure

We have planned to take loan of Rs. 1,20,00,0000 from IDBI Bank.

Owners Equity

70,00,00,000

Loan

1,20,00,0000

Total

1,93,07,9740

Loan Repayment Schedule

The loan is to be pain over period of 5years at an interest rate of 15% per annum. For the
security of loan, the owners have a land and building with a valuation of Rs. 1,75,00,000
which will be kept as collateral for the loan from the bank.
The loan repayment schedule is given as below:

Year

Loan Amount Payable

Interest (15%)

Principle

Total Payment

1,20,00,000

18,00,0000

24,00,0000

42,00,0000

96,00,0000

14,40,0000

24,00,0000

38,40,0000

72,00,0000

10,80,0000

24,00,0000

34,80,0000

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48,00,0000

7,20,0000

24,00,0000

31,20,0000

24,00,0000

3,60,0000

24,00,0000

27,60,0000

Selling Price

S No.
1.
2.

Description
Unit Cost of Production
Monthly Administrative Expense

Amount (Rs)

3.

Monthly Marketing Expense

70000

4.

Monthly Interest on Loan

(15% of 1,20,00,000)/12
Total

1500000

Monthly Production Units

Per Unit Cost (1738000/45000)

45000

Amount (Rs)
11.38

150000

1720000

1738000

38.62

Final Cost

50

15% Mark-up
Selling price per Unit

7.5
57.5

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Income Statement

Description
Income from Sales
(233 * 55080 units)

Amt (Rs)

Less: Raw Materials (2,64,975 * 120)

Direct Labor (1,15,000 * 120)

31,79,7000
13,80,0000

Indirect Factory Overhead

(1,33,200 * 12) + 22,81,700
Total

Amt (Rs)
1,28,33,6400

38,80,1000
84,39,8000

Gross Profit
Less: Marketing Expense (30,0000 * 12)
Administrative Expense
(44,000 0* 12) + 38930 + 13100

3,60,0000
5,332030

Total

8932030

(84,39,8000)
39838400

8932030

Earning Before Interest and Tax

30906370

Less: Interest expense (15%)

Earning Before Tax

4635955.5
26270414.5

Less: Tax (30%)

Earning After Tax

7881124.35
18389290.15

Cash Flow Statement

Description
31 | P a g e

Pre-operating

1st year

Cash Inflow
Equity
Loan
Sales
Cash Sales
Total Cash Inflow
Cash Outflow
Pre-operating expense
Purchase of Fixed Assets
Raw Material Cost
Direct Labor Cost
Factory Overhead Expense
Marketing Expense
Administrative expense
Increase in Inventory
Interest expense
Repayment of Loan
Tax
Total Cash Outflow

73,07,974
1,20,00,000
1,93,07,974

1,28,33,640
1,22,98,905
1,22,98,905

1,31,000
1,81,58,400

1,82,89,400

31,79,700
13,80,000
15,98,400
3,60,000
5,28,000
3,43,945
18,00,000
24,00,000
4,13,452.5
1,20,03497.5

10,18,574
10,18,574

2,95,407.5
10,18,574
13,13,981.5

Pre-Operating

1st Year

Cash

10,18,574

13,13,981.5

Inventory

3,43,945

Account Receivables

5,34,735

Net Cash Flow

Cash balance in the beginning
Cash balance at the end

Balance Sheet

Description
ASSETS
Current Assets

32 | P a g e

Total Current Assets

10,18,574

21,92,661.5

Fixed Assets

1,81,58,400

1,81,58,400

Less: Depreciation

(23,20,630)

Net Fixed Assets

1,81,58,400

1,58,37,770

Pre-Operating Expense

1,31,000

1,17,900

Total Assets

1,93,07,974

1,81,48,331.5

Long term loan

1,20,00,000

96,00,000

Owners equity

73,07,974

73,07,974

Accumulated profit

12,40,357.5

Total Owners Equity

73,07,974

85,48,331.5

Total Capital and Liabilities

1,93,07,974

1,81,48,331.5

CAPITAL AND LIABILITIES

Projected Income Statement for 5 years

Description

1st Year

2nd Year

3rd Year

4th Year

5th Year

Capacity Utilization

75%

80%

85%

90%

100%

Sales Forecast (in units)

Total Sales Volume (Rs)
Direct Cost
(Raw Material and Direct
Labour) (Rs)
Indirect
factory
overhead(Rs)
Total
Production
Cost(Rs)
33 | P a g e

Gross Profit(Rs)
Administrative
Expense(Rs)
Marketing Expense(Rs)
Total Administrative and
Marketing Expenses(Rs)
EBIT(Rs)
Interest expense(Rs)
EBT(Rs)
25% Tax (Rs)
EAT/ Net Profit (Rs)
Accumulated Profit (Rs)

Long-term Plan
The plan calls for maximum production rate for flake in the sixth month from funding.
Approximately one third of that production will be converted into extruded sheet beginning
approximately at the same time. A second sheet extruder, which will also consume one third
of the flake produced, is planned to be added at the end of year one, coming on line mid year
two. A third extruder, which is planned to produce high-strength strapping, is expected to
come on line late in year two. By the beginning of year three, it is expected that all of the
46,200,000 lbs. of RPET cleaned & recycled annually will be converted into extruded
products. Up until this time, excess flake produced will be sold to other extruder companies.
The plan assumes a 5% increase in the sales price of all products and a 5% increase in the
cost of raw materials and labor in each of years 2 through 5.
The result of the above is rapid growth in revenue and profit through year three, and
moderate growth in years four and five, assuming no expansion of capacity during that time.

34 | P a g e

Replay's Exit Strategy

Management is indifferent as to the question of looking to sell the Company after 4-5 years or
retaining ownership and the resulting annual cash flow. They will look to the investors for
their direction and will generally support their wishes.
Recent information on private sales of similar industry companies has indicated that
transactions under $25 million have averaged 5.3 times EBITDA, while transactions in the
range of $25-250 million have averaged over 7 times EBITDA.
Such multiples would put the potential sales price of Replay, after 4-5 years of operation, in
excess of $100 million based on current projections.

Chapter VI

Vote of thanks

This interview questions was provided by Bharat Shah (Partner of Amrutlal and

Hansraj Co.).Thank you so much madam for taking out your precious time and answering
to all my questions without your precious time this wouldnt have possible .Once again thank
you for understanding me and answering to all my questions.

35 | P a g e

Chapter VII
Interview question
Q1. Tell me a suggestion you have made that was implemented in this production field?

Ans: To make Warehouse and Production Plant at a very nearby distance which would reduce
the transportation cost?
Q2. What experience do you have in this production field?
Ans: 20 years of experience.
Q3. What is your greatest weakness?
36 | P a g e

Ans: No weakness as such.

Q4. What challenges are you looking for in this position?
Ans: Just to make more profitability than profit.
Q5. Have you ever had a conflict with your partner? How was it resolved?
Ans: Yes, but as he is my elder brother the conflict was resolved mutually.
Q6. What are the safety standards you adopt for your employees?
Ans: Safety standards for workers and employees by providing them a proper environment to
work, proper quality of mess, and many more.
Q7. Who are your competitors?
Ans: Supreme Plastics, PeP-CeE Pack Industries.
Q8. How do you provide services to your existing consumers?
Ans: Our aim is to provide them with right quality of goods at a right place and at a right
time.
Q9. Who looks forward for manufacturing process and office work ?
Ans: We both look forward to both of the work sometimes my elder brother while sometime
its me.
Q10. Your opinion towards this industry?
Ans: A large scope for providing the services and making it available to the customer and
making them satisfied towards our products.
Q11. Thank you for your valuable time you designated to me.
Ans: Your most welcome !

37 | P a g e

CHAPTER VIII
Suggestions and Recommendations
From the Internship I found some new techniques that are applicable for better
Improvements.
1. Company should establish back office for internal support.
2. Company should start some sales promotional activity for better attraction in
customers memory.
3. Company should focus on the transportation services.
4. Company should focus on B & C type customers for better profit
5. Company should increase marketing executive team.
38 | P a g e

6. To concentrate on advertisement.
7. Above can be done by expanding its expertise network, also by improving
quality of services at a competitive price.
8. Last but not least impact should focus on slowly to big customers so that it can
expand the size of business and can create Brand name in market for itself

CONCLUSION

The study on measuring the effectiveness of manufacturing of trash bags mechanism in the
organization resulted in effective performance of the company. The goods are dispatched on
time for production activity. There is no delay in transits reported serving as an obstacle for
production process. The transits and the movement of goods are accounted in timely and need
based manner. It is also observed that this mechanism is helping the organization in showing
the optimized results. This mechanism is serving the customers and suppliers timely thereby
maintaining better client tale base for its reputation.

39 | P a g e

Bibliography

Reference books

1) International Plastic Development Rahul Verma

2) Business Forbes Magazine - Forbes
3) Production Management and material Vishal Mehta

Referred website
1) Www .Petmaterials.in

40 | P a g e

2) www.indiamart.com
3) www.google.com
4) Wikipedia.com
5) Yahoo.com

A special thanks to Amrutlal and Hansraj Co. for sharing valuable information and giving
me time for collection of primary data.

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