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A Proposal of Recycled Polyester Manufacturing Facility Establishment

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Table of Contents

1. Introduction:........................................................................................................... 3

1.1 Background of business:............................................................................................3

1.2 Objectives of the business:.........................................................................................42. Analysis of the process inoled in the entrepreneurial enture:...........................4

2.1 Idea Generation:......................................................................................................!

2.2 Planning:............................................................................................................... "

2.2.1 Selection of country:..........................................................................................."

2.2.2 onduct of !arket analysis and identifying target !arket:............................................."

2.2." Projection of sales:..............................................................................................#

2.2.# Production $lan:.................................................................................................#

2.2.% &irect !aterial $lan:............................................................................................#

2.2.' &irect labor $lan:................................................................................................$

2.2.( Planning of $roduction facility:..............................................................................%

2.2.) Overhead $lan:..................................................................................................%

2.2.* Selling and +d!inistration overhead e,$enses:.........................................................1&

2.2.1- ash Budget:.................................................................................................1&

2." esources collection:..............................................................................................11

2.# /egal $rocesses:....................................................................................................12

2.% Building facilities:..................................................................................................12

2.' I!$le!entation:....................................................................................................13

3. 'tate(ent of )nancial pro*ection:........................................................................ 13

4. Conclusion:........................................................................................................... 1"

!. +eferences:...........................................................................................................1"

". ,otes and assu(ptions:....................................................................................... 1#

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1. Introduction:

In today0s hy$er co!$etitive business environ!ent assurance of cost effectiveness and eco

friendliness can hel$ every business organi3ation to run business o$erations successfully.

4hrough bringing ne5 business venture 5hich can reduce environ!ental $ollution and reach the

underserved or $oorly served !arket seg!ent oats Bangladesh /td can $rotect the hu!an race

fro! e,tre!e $o$ulation and $overty. Plastic 5hich is a !ajor cause of $ollution can be used to

!ake $olyester yarn. 4he P64 7Polyethylene tere$hthalate8 bottles used to !eet hu!an needs of

serving !ineral 5ater soda and other different sorts of beverages can be used in this $ur$ose.

oats Bangladesh /td. can use these P64 bottles as ra5 !aterial for $roducing $olyester yarn

5hich 5ill not only reduce the ecological threats but also 5ill contribute to the te,tile industry.

1.1 Background of business:

oats P/ is the largest se5ing thread !anufacturing co!$any in the 5orld. It 5as founded in

1(%% in 9. It is an unrivaled industrial thread !anufacturer o$erating in over (- countries and

e!$loying over 2---- $eo$le 7oats official 5ebsite8. +l!ost 1 in every % gar!ents and te,tile

industries in the 5orld use the thread !anufactured by oats. It has a long heritage of over 2%-

years and is fa!ous for $roducing ;uality se5ing thread. 8

?ision State!ent

9nder !ission you have to discuss goals and objectives

1." #b$ecties of the business:

So!e of the !ain objectives behind $re$aring this re$ort are given belo5.

i. Pro$osing a s$ecific and feasible $olyester yarn business idea in ter!s of the

a$$ro$riateness and !arket structure of a geogra$hic location.

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ii. &escribing the ins and out of the venture and the $ossible challenges in the

i!$le!entation of $roject $lan.iii. +naly3ing and !easuring feasibility allocation of resources financial $ros$ects etc.

2. Analysis of the process inoled in the entrepreneurial enture:So!e of the necessary ste$s involved in the startu$ and i!$le!entation of the $roject are given

belo5. +ll of these ste$s !ust be se;uentially follo5ed in the organi3ation to ensure successful

i!$le!entation.

%dea &eneration

Planning

Resources !ollection

'egal Processes

Building Facilities

%mplementation

oats Bangladesh /td. 5ill start their business o$eration of !aking $olyester yarn fro! recycled

$et bottles in Bangladesh by 1 st@uly 2-1%. 4o !ake the $roject !arketable they 5ill re;uire 1)

!onths to co!$lete as this $roject 5ill be started fro! 1st@anuary 2-1#.

4he co!$any 5ill utili3e the follo5ing ti!e fra!e to i!$le!ent the venture as it is re;uired to

!ake it feasible.

1 2 " # % ' ( ) * 1- 11 12 1" 1# 1% 1' 1

(

1)

Idea generation

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Planning

esources

obtaining

/egal

$rocessing

Buildingfacilities

I!$le!entatio

n of venture

".1 %dea &eneration:

4he Business Idea is generated for oats Bangladesh 5hich includes $roduction of $olyester

yarn for the co!$any fro! recycled P64 bottles in Bangladesh. Bangladesh is a country 5ith

great $otentials in eady!ade gar!ents 7=G8 sector. In 2-11 =G sector contributed toal!ost 1"A of the G&P in Bangladesh 74he orld Bank 2-128. +lthough oats is $roducing

$olyester yarns in Bangladesh the idea of $roducing $olyester yarn fro! recycled P64 bottles is

ne5 in the country. +lso it 5ill be cost efficient for the co!$any and 5ill reduce the cost of

$roduction by a$$ro,. %%A. Su$$ly of Polyester yarn $roduced fro! ecycled P64 bottles 5ill

reduce P64 bottles out of landfills and conse;uently decreases the a!ount of trash7entre for

Policy &ialogue 7P&8 Bangladesh. 2--2.8. Bangladesh had about 2(%-- tons of 5aste P64

bottles in 2--*. +nd every year this a!ount increases by a$$ro,i!ately 2-A 7Bangladesh

Bureau of Statistics 2--*8. Production of Polyester Carn by oats Bangladesh 5ill $rove to be

an e,cellent strategy since it has both do!estic and foreign de!and.

+lthough there are certain challenges and o$$ortunities that 5ill likely be faced by the co!$any.

4he challenges include:

1. +vailability of ade;uate skilled 5orker.

2. Bureaucratic behavior of the country.

". orru$tion in the country.

4he o$$ortunities are also tre!endous for oats Bangladesh. Its greatest o$$ortunities are:

1. Do restriction regarding the a!ount of foreign invest!ent is i!$osed.

2. Since 4e,tile is a $otential industry in the country govern!ent subsidi3es and hel$s the

organi3ation hel$ing te,tile industry.

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". 4here is not !uch of a co!$etition of oats and certainly none as $olyester !anufacturer

in Bangladesh.

"." Planning:

".".1 (election of country:

4he P6S4 analysis can hel$ to identify the influential factors in case of country selection.

".".1.1 PE() analysis:

i. Political Factors: 4he $revalence of $olitical factors i!$act the overall $erfor!ance of

the industry. 4he govern!ent of Bangladesh $atroni3es and encourages this te,tile

industry in 5hich !ajor of the e,$ort of the country de$ends.

ii. Economic Factors: 4he abundance and chea$ness of labor in Bangladesh !akes the

business o$eration !ore cost effective co!$aring to other countries 7Delson &. et al.

2--'.8

iii. (ociological Factors: 4he availability of in$ut and the higher de!ands of Bangladeshi

$roducts instigate the oats Bangladesh /td to $ursue this cost effective venture in

Bangladesh. +ccording to a statistics of 2--* in Bangladesh there 5ere about 2(%-- tons

of 5aste P64 bottles that year and every year this a!ount increases by a$$ro,i!ately

2-A 7Bangladesh Bureau of Statistics 2--*8.

i. )echnological Factors: 4he favorableness of the technological condition of the country

is also considered. +lthough Bangladesh is e,tre!ely technological advanced. But the

country al5ays atte!$ts to facilitate the o$erations of te,tile industry co!$aring to other

industry.

"."." !onduct of market analysis and identifying target market:

".".".1 Porter*s Fie Forces Model Analysis:

i. Rialry among the competitie firms +high,: 4here are so !any co!$anies are running

business o$erations in this industry such as =uslin4e,tile=ills /td. @a!una Grou$

Parte, Grou$ etc. 5hich !ake the !arket of $olyester yarn !ore co!$etitive 7illia!

6. 2--28.

ii. Potential entrants +high,: Eigher level of $otential of the industry instigates other fir!s

to enter into the industry 5hich increases the threat of $otential entrants.

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iii. Potential deelopments of substitutes +medium,: 4he substitute of !aking $olyester

yarn using the P64 flakes is not so easy because of the cost effectiveness of P64 flakes.

i. Bargaining po-er of suppliers +lo-,: 4he bargaining $o5er of su$$liers is lo5 as the

!ain ra5 !aterials P64 bottles are largely available in Bangladesh.

. Bargaining po-er of customers +medium,: 4here is !ediu! degree of bargaining$o5er of the custo!ers in case of our $ro$osed co!$any in this industry in Bangladesh. .

4hrough having a look over this analysis the higher !arket $otential of the venture in the te,tile

industry in Bangladesh see!s ;uite satisfactory.

"."."." (egmentation )argeting and Positioning Model:

4he follo5ing S4P !odel can be used to identify a strategic $osition for the venture.


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"."./ Production plan:

Production Budget Cear 1 Cear 2 Cear "

Budgeted unit sales 7!etric tons8 )-- 1--- 11%-

4otal re;uire!ents )-- 1--- 11%-

4otal re;uire!ents of $roduction )-- 1--- 11%-

".".0 irect material plan:

&irect =aterials Budget: Cear 1 Cear 2 Cear "

4otal re;uire!ents of $roduction )#) 1-12 11%*

4otal P64


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".".5 (elling and Administration oerhead e6penses:

> ad!inistrative e,$ense budget Cear 1 Cear 2 Cear

ed unit sales 7!etric tons8 )-- 1--- 11%-

e 6,$enses:

ry e,$ense 7Per !etric ton8 2- 2- 2-

ariable selling cost 1'--- 2---- 2"--

,$enses:

ise!ent #%-- #%-- #%--

strative cost 2--- 2--- 2---

,ed selling > ad!inistrative cost '%-- '%-- '%--

lling > ad!inistrative cost 7F8 22%-- 2'%-- 2*%-

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".".17 !ash Budget:

ash Budget for oats Bangladesh Cear 1 7F8 Cear 2 7F8 Cear " 7F8

Initial ash Balance 1------ ')*2*' 1-)-'%1

ollections of ash:

Sales evenue ('---- *%---- 1-*2%--

4otal +vailable ash 1('---- 1'"*2*' 21("1%1

/ess: ash $ay!ents

=aterial ost "2%)## #-("-% #'("%'.(%

&irect /abor ost %1--- %1--- %1---

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i. +vailability and cost effectiveness of P64 bottles in Bangladesh

ii. Strong infrastructure of te,tile industry

iii. Strong financial $osition of the co!$any.

"./ 'egal processes:

4he legislations in Bangladesh are not too strict. +nd foreign invest!ent is al5ays 5elco!ed at

the country. oats Bangladesh is a subsidiary of oats P/ in 9. But they can easily register

as a $ublic li!ited co!$any. In such case they 5ill need to ac;uire in the office of registrar of

@oint Stock o!$anies in Bangladesh 5here they have to be registered as $er the legislation of

@oint Stock o!$any +ct 1**#. 4he invest!ent ty$es of oats Bangladesh fall under the

category of +ct of


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!hallenges:

1. In !ost of the cases the soil in Bangladesh is not $erfect for building a very high storied

facility.

2. It is often hard to finish building the facility in ti!e.". Often natural cala!ities hinder the construction.

#pportunities:

1. 4he labor cost for building facilities is lo5er than other countries.

2. 4here is availability of high ;uality building !aterial at the country.". 4he govern!ent of Bangladesh a$$reciates industriali3ation and building of facilities at

the country.

".2 %mplementation:

Often the actual o$eration !ay vary 5idely fro! the $lanning seg!ent. Pro$er observation !ust

be given to align the i!$le!entation as $lanned earlier. 4he !ain ste$s can be as follo5s.

are has to be taken in case of distributing authority and res$onsibilities to the

e!$loyees 7&ruckerP.


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Initial inest(ent 71&&&&&&

,P 12$$413

3.2 I++ of the pro*ect:

Internal rate of return is a discount rate at 5hich DP? of a $roject is 3ero. It !eans it is a rate

5hen P? of cash inflo5 P? of cash outflo5. 4o find out I let0s have a look over three

scenarios.

+t 2-A discount rate

DP? calculation Cear 1 Cear 2 Cear "

ash inflo5 (2%%#' )"-'%1 12%##1

#

Present value factor -.)""" -.'*## -.%()(

Present value of cash flo5 '-#%*(.

%

%(')-#.

1

(2%*2*.

%

4otal P? of cash flo5s 1*-(""

1

Initial invest!ent

1-----

-

DP? *-(""1.

1

+t "%A discount rate


ash inflo5 (2%%#' )"-'%1 12%##1

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#

Present value factor -.(#-( -.%#( -.#-'#

Present value of cash flo5 %"(#11.

*

#%#"''.

1

%-*(*#

4otal P? of cash flo5s 1%-1%(

2

Initial invest!ent

1-----

-

DP? %-1%(2

+t %-A discount rate


ash inflo5 (2%%#' )"-'%1 12%##1

#

Present value factor -.'''( -.#### -.2*'"

Present value of cash flo5 #)"(21.

%

"'*1#1.

"

"(1')2.

*

4otal P? of cash flo5s 122#%#

'

Initial invest!ent

1-----

-

DP? 22#%#%.

)

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4herefore DP? 5ill close to 3ero only 5hen the discount rate is ;uite !ore than %-A. In this

regard the I 5ill be !ore than %-A. If the I of the $roject is larger than the $revailing

!arket rate of return then the $roject should be acce$ted.

3.3 8rea57een point of the pro*ect:

Sales $rice $er unit F *%-

8ariable cost per unit 9 F "2-

Fi6ed cost 9 F #-----

!alculation of BEP ear 1 ear " ear

Price $er unit *%- *%- *%-

? $er unit ""*.2 "2".)# "22.%-#"


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#. 9oaBBe(- ;. . 2&&!. State of Compliance of the RMG Sector of

Bangladesh.+esearch /ello.Center for Policy ialogue =CP>.

$. ,elson . et al. 2&&". ietna( D.'. TeEtile Agree(ent. Aailable at

http:FF.trade.goFpressFpressGreleasesF2&&"Fietna(-2&ied2&on

2&14F&2F2&1&

%. +ies- . 2&11. he Lean Startup" %o& oday's Entrepreneurs (se

Continuous Innovation to Create Radically Successful Businesses. /irst

edition.Cron 8usiness. page. 21%.

1-. Scott +. S. 2-1-. The Illusions of Entrepreneurship: The Costly Myths That Entrepreneurs,Investors, and Policy Makers Live By.


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". ,otes and assu(ptions:

Coats 8angladesh Polyester 9anufacturing /acilityInco(e 'tate(ent

6ear 1 6ear 2 6ear 3Ite( A(ount A(ou

nt

A(oun

t

'ales #"&&&& %!&&&

&

1&%2!

&&CH;' ""%4#% $&342

&

%1&!1

1.$

;ross Pro)t %&!21 14"!$

&

1$1%$

$.3ess: 'elling 0 Ad(in Epense 22!&& 2"!&& 2%!&&

,et Pro)t "$&21 12&&$

&

1!24$

$.3

Calculation of CH;' 0 inentory 6ear 1

=J>

6ear 2

=J>

6ear 3

=J>Cost of direct (aterial total 32!$44 4&! 4"#3!".$

Cost of abor K!1-&&& K!1-&&& K!1-&&&

Total Herhead 2%2"3! 34!11! 3%21!!

Total Cost ""%4#% $&342& %1&!11.$

Cost of (aterial 32!$44 4&! 4"#3!".$

Cost per 9etric Ton $3".$4$$ $&3.42 #%1.#4%3CH;' =K> ""%4#% $&342& %1&!11.$

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Coats 8angladesh Polyester 9anufacturing /acility8alance 'heetA(ount 6ear 1 6ear 2 6ear 3

Assets,on Current Assets:and 11&-&&& 11&-&&& 11&-&&&/actory 8uilding #&-&&&ess: epreciation 3!&& ""!&& "3&&& !%!&&9achineries and

Installations

$!-&&&

ess: epreciation $!&& #"!&& "$&&& !%!&&ehicles !!-&&&ess: epreciation !!&& 4%!&& 44&&& 3$!&&

HLce 8uilding $&-&&&ess: epreciation 3##! #"22! #24!& "$"#!

Total 3#$-#2! 3!#-4!& 33"-1#!Current Assets:Cash "$%2%" $3&"!1 12!4414

Total 1-&"$-&2

1

1-1$$-1&

1

1-!%&-!$

%iability and Muity

Muity 1-&&&-&&

&

"$%-2%" 1-&$&-"!

1Add: ,et inco(e "$&21 12&&$& 1!24$$.3iabilities@ages payable K& K!1-&&& K!1-&&&9aterial cost payable & 32#-#2! 3&"4!&

Total 1-&"$-&2

1

1-1$$-1&

1

1-!%&-!$

%

Coats 8angladesh Polyester 9anufacturing /acilityCash o state(ent

A(ou Total A(ount

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nt6ear 1 6ear

2

6ear 3

Cash o fro( operation:,et inco(e "$&21 12&&

$&

1!24$

$.3Add: epreciation/actory building depreciation 3!&&9achineries depreciation $!&&ehicles depreciation !!&&HLce buidling and arehouse

depreciation

3##!

212#! 212#

!

212#!

Total cash o fro( operation $%2%" 1413

!!

1#3#"

3.3

Cash o fro( inesting actiities:

and 11&-&

&&

&

/actory 8uilding #&-&&

&

&

9achineries and Installations $!-&&

&

&

ehicles 1$#!& &HLce 8uilding $&-&&

&

&

Total Cash o fro( inesting

actiities

7

3"3-#!

&

&

Total Cash o fro( )nancing

actiities

1-&&&-&

&&

"$%2

%"

1&$&"

!1

nding Cash 8alance #2!!4" $3&"

!1

12!44

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