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School of Business
POKHARA UNIVERSITY
PRESENTATIONBusiness Development Plan
(Graduate Seminar- 1 credit Hour)
MBA –
IV TrimesterAugust 23, 2011
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Business Development Plan of
Annapurna Organic Tea
Sardhikhola, Kaski
Name of Student: Binay ThapaRoll No.: 6
IV Trimester
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Highlights of the Project
• Name of Company : Annapurna Organic Tea
• Name of Project : Organic Tea Production
• Promoter(s) : Binay Thapa & Community
People
• Objective of Project: To export Organic Tea In
International Market.
•
Capacity : 40,000 Kgs
• Duration of Projection: 5 years
• Major products: Organic Tea (Grade 1-5)
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History•
Tea was discovered accidentally by Emperor Shen Nung backin 2700BC.
• He was relaxing in the garden with a cup of boiling water. At
that time some leaves from a nearby tree fell into the cup.
Unnoticed he consumed the drink. He enjoyed the taste of the tea and the pain relief of the drink was so much.
• The first tea used in England came from China.
• The UK is the largest importer of tea.
•
The English quickly developed an almost unquenchable thirstfor the drink and began searching for a way to get tea in other
countries.
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Introduction
• Reason for selecting this project The Annapurna Organic Tea is a gift from the silvery mountains. It is grown
organically from the high elevation gardens of Himalayan range close to
Mount Annapurna and Fishtail. The local farmers are the growers and
processors of the tea.
• Uniqueness / product features : The quality and high value of this tea is attributed to the fresh soil and, the
fresh water and the fresh air of the Annapurna region. It possesses
delicate flavour along with strength and brightness. You will enjoy thefreshest and finest tea with exclusive taste and aroma from the
Annapurna Himalayas.
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Production Plan
First the company will focus on the plantation of tea in Sardikhola VDCabout 3000 hectares with the coordination of ACAP, technical/resources
people, local communities, clubs, etc.
After two years the company will collect the raw material from the
farmers for the production of tea.
Step I Collection of green leaf from collection centre Step II Weathering
Step III Rolling
Step IV Fermentation
Step V Heating
Step VI Shorting
Step VII Savaging
Step VIII Separating Grade
Step IX Packaging
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Project Management Plan
• BOD CEO would be the major person in this organization with
President, Vice president, Secretary .
• Expert in this project
ACAP will be the prime organization that will provide the
technical assistance.
• HR Policy
HR policy will be based on the nations law.
Compensation based on performance.
Performance appraisal on every quarter.
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Management Plan
• Organization Chart
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CEO
Finance/Account
Manager
Marketing
ManagerSupervisor
Labors
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SWOT Analysis• Strength Local community will favor.
Increasing importance of organic foods in the world.
Emerging issues of the health of the people.
• Weakness Nepal is out of insurgency and the nation have instable politics.
New company - needs to establish its position in the market place.
• Opportunity Consumers are living a more healthy lifestyle.
Consumers prefer quality products that offer true value.
Demand all over the world.
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SWOT
• Threats
Needs to compete with foreign goods that are produced with
sophisticated technology.
Limited number of raw materials . Unstable tea supply of high quality tea.
High quality tea prices will increase moderately.
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Marketing Plan
• Marketing Strategy
With the brand Anna Organic Tea we are going to introduce
innovative products in an existing market and focus on Market
Development We will spread awareness about the health betterment by
consuming the Tea and capture the educated and health
conscious class of people.
• Marketing Plan Marketing communication campaign
Marketing Promotion Campaign.
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Marketing Plan•
Role of Marketing Departments & Staffs The selling process is vital in the decision making process.
The selling is making by the advice.
The clients needs to be assured in quality in order to make
them more confident the product.
• Promotion
The promotion is the most important point to launch our
products because we want to be able to compete with ourcompetitors.
We are going to set up original events in order to attract new
customers and consumers of other tea brands.
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Financial Projection
• Assumption of Financial Calculations:
Year Capacity % Sales Rs.
1 40 % 1,06,92,0002 50% 1,33,65,000
3 60% 1,60,38,000
4 70% 1,87,11,000
5 80% 2,13,84,000
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Financial Projection
Assumption of Financial Calculations:
• Demand :- 3000 Kgs
• Variable Cost :- Rs. 1,26,80,000
•Fixed Cost :- Rs.27,00,000
• Market Scenario : Since people are being aware of the importance of the organic foods, they
are ready to pay high for these goods.
The tea industry in Nepal is about 150 years old.
It occupies an important place and plays a very useful part in the nationaleconomy .
Major competitive countries in tea in the world are Sri Lanka, Kenya,China and Indonesia.
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Market Scenario•
Government Policy• Industry related factors Tea is hot beverage consumed by people all over the world at highest after
water.
Tea proves as refreshing drink as well as medicine and offer better health& immunization as it is consumed twice to thrice a day.
Internal factor The employees are very important since they represents the image of the
brand.
The employees and more particularly the commercial people are trained
in order to know the product and sell it properly.
The employees explains the quality, the taste of the product.
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Financial Projection
• Initial Investment :
– Fixed Assets Requirements: Rs. 45,26,500
– Working Capital Requirements: Rs. 34,73,500
• Initial Capital StructureCurrent Assets: Rs. 50,03,868 Current Liabilities: Rs. 2,08,011
Fixed Assets: Rs.40,97,350 Long Term Loan: Rs. 34,40,88
Total Assets: Rs. 91,01,218 Equity Capital: Rs. 54.52,319Total Equity & Liabilities: Rs. 91,01,218
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Financial Projection
• Income Statement Summary In Million
100% 40% 50% 60% 70% 80%
Year 1 2 3 4 5
Sales 26.73 10.69 13.36 16.03 18.71 21.38
VC 12.65 5.06 6.32 7.59 8.85 10.12
Contribution Margin 5.63 7.03 8.44 9.85 11.26FC 6.08 6.08 6.08 6.08 6.08
EBIT 4.59 6.08 7.52 8.95 10.39
Interest 0.72 0.61 0.50 0.36 0.19
EBT 3.87 5.46 7.02 8.59 10.19
Tax 0.96 1.36 1.75 2.14 2.54
Earning After Tax 2.90 4.09 5.26 6.44 7.64
Dividend 1.45 2.04 2.63 3.22 3.82
Retained Earnings 1.45 2.04 2.63 3.22 3.82
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Financial Projection
• Cash Flow Summary In Million
Year 1 2 3 4 5
Operating cash inflow 3.4 4.3 5.9 8.0 10.5
Financing cash inflow 4.1 4.8 5.7 6.7 7.7
Investing cash Inflow
Total cash Inflow (A)
Operating cash outflow
Financing cash outflow
Investing cash outflow
Total cash outflow
Operating cash Outflow (B)
Cash Balance (A)-(B)
Add :Opening Cash balance
Closing Cash Balance3/22/2012 18Name of student MBA IV Trimester, SOB,PU
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Financial Projection
Capital Budgeting Summary
Initial Investment
Total Present Value
Non Discounted Pay Back Period
Discounted Pay Back Period
Net Present Value (NPV)
Internal Rate of Return(IRR)
Profitability Index
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Projected Balance Sheet
Year 1 2 3 4 5
Current Assets 50,03,868 67,90,372 90,10,996 1,16,54,230 1,47,05,977
Fixed Assets 40,97,350 37,52,690 34,39,242 31,54,048 28,94,437
Total Assets 91,01,218 1,05,43,062 1,24,50,239 1,48,08,278 1,76,00,415
Current liabilities 2,08,011 2,60,014 3,12,016 3,64,019 4,16,022
Long Term Loan 34,40,889 27,81,137 20,02,631 10,83,993 0
Total equity 4,52,319 75,01,911 1,01,35,592 1,33,60,266 1,71,84,393
Total Equity
&liabilities
91,01,218 1,05,43,062 1,24,50,239 1,48,08,278 1,76,00,415
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BEP & Major Financial Ratio
Year 1 2 3 4 5
BEP Sales1,970,284 1,809,839 1,750,568 1,696,915
1,648,333
BEP % 18% 14% 11% 9% 8%
ROI 31.91% 38.88% 42.3% 43.55% 43.45%
ROE 53.27% 54.64% 51.9% 48.27% 44.51%
ROA 31.91% 38.88% 42.3% 43.55% 43.45%
Current Ratio24.1 26.1 28.9 32.0 35.3
Interest/Sales6.73% 4.63% 3.12% 1.93% 0.91%
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Sensitivity Analysis
If sales price decreases by 10%
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Year 1 2 3 4 5
BEP Sales6,580,080 8,225,100 9,870,120 11,515,140 13,160,160
If cost increases by 10%
Year 1 2 3 4 5
BEP Sales
7,238,088 9,047,610 10,857,132 12,666,654 14,476,176
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Sensitivity Analysis
• If cost increases by 5% and sales decreases by
10%.
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Year 1 2 3 4 5
BEP Sales6909084 8636355 10363626 12090897 13818168
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Recommendation
• Considering the above analysis and projection based on above
assumptions, I would like to recommend that : -.
• The concept of the project is good and well planned. The
customers are large in numbers and the product has high
demand all over the world.
• Net Present Value of the project is positive.
• The Internal Rate of Return (28%) is greater than project cost
of capital (18%).
• Expand its production in others places of Nepal.
• Advertisement should be done consistently
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Any Questions???
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Thank You
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