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School of BusinessPOKHARA UNIVERSITY
PRESENTATIONBusiness Development Plan
(Graduate Seminar- 1 credit Hour)
MBA – IV Trimester26 July 2011
1BDP Plan_ <Ram prasad Timilsina>
Business Development Plan of
< Methlang Organic Goat and vegetable Production Centre
><Sarangkot-6 Methlang>
Presented by<Ram Prasad Timilsina >
Roll No. 21 IV Trimester
2BDP Plan_ <Ram prasad Timilsina>
Project Highlights
• Name of Project: Methlang Organic Goat and vegetable Production Centre
• Objective of Project:• Increase sales revenue 10% each year.• Expand market share by 5% each year.• Increase the salary of the staffs by 10% each
year.
3BDP Plan_ <Ram prasad Timilsina>
Project Highlights
Annual Capacity ( in 100%) :• Goat Meat: 10000 kg• Vegetables: 40000 kg (Increase by 10% each
year)Duration of Projection: 5 YearsTotal Initial Investment : Rs. 8 Million
BDP Plan_ <Ram prasad Timilsina> 4
Project Highlights
Fixed Assets – Rs. 6770000Working Capital – Rs. 1230000 Equity Financing – Rs. 4800000 Loan Financing – Rs. 3200000Employment generation: 11 employees
5BDP Plan_ <Ram prasad Timilsina>
Project Highlights
• Rational of this project : Increasing demand of organic products. Give employment opportunities.• Uniqueness of this project : First organic farm near to tourism place, Lakeside. Firm practicing zero Current liabilities. Flexible Working Hours. Organic Goat farming.
6BDP Plan_ <Ram prasad Timilsina>
About the Product
• Goat Meat: Organically produced Daily supplied Premium pricing• Vegetables: Organically produced Daily supplied to market Low priced compared to competitors
7BDP Plan_ <Ram prasad Timilsina>
Production Plan
• Labor intensive production process• Level strategy of production• 10% increase in production of vegetables each
year
8BDP Plan_ <Ram prasad Timilsina>
Production & Sales
Year Meat (kg) Vegetable ( kg)1 10000 395002 10000 434503 10000 477954 10000 525755 10000 57832
9BDP Plan_ <Ram prasad Timilsina>
Marketing Plan
Product Strategy:• Organic• Fresh• Competitive pricing Pricing Strategies :• segmentation• Fixed margin• Penetration
10BDP Plan_ <Ram prasad Timilsina>
Marketing Planning
Promotion Strategies :• Quantity discount• Seasonal discount• Cash discountDistribution Strategies:• Advertisement• Membership based• Online stock monitoring
BDP Plan_ <Ram prasad Timilsina> 11
Environmental Risk AssessmentPolitical Economic Legal Socio-Culture Global Competitor
Bandhs Market Slowdown
Trade related disputes
Hierarchy of jobs( educated don’t want to work in farm)
Less flow of tourism
Low price of substitutes
Donations Inflation Expired and damaged products
Nepalese customers less sensitive to organic products
Difficult to export
Lack of databases on competitors statements
Tax policies Employee Turnover
Demand fluctuations in festival time
Low cost competitors
BDP Plan_ <Ram prasad Timilsina> 12
Assumption of Financial Calculations
• Salary :- Rs. 1651000 (10% increase every year)
• Cash sales :- 80%• Depreciation :- 20% (Straight line method)• Interest :- 18%• Tax rate :- 5%
13BDP Plan_ <Ram prasad Timilsina>
Projected Sales, Cost and Profit
BDP Plan_ <Ram prasad Timilsina> 14
Projected Income Statement Year of operation 1 2 3 4 5
Sales 7,455,000 8,165,220 8,965,753 9,874,875 10,914,637
VC 3154550 3464852 3805994 4181120 4593708
Contribution Margin 4,300,450 4,700,368 5,159,760 5,693,756 6,320,929
FC 3,485,000 3,678,900 3,891,614 4,124,977 4,381,005
EBIT 815,450 1,021,468 1,268,146 1,568,778 1,939,924
Interest 547623 463610 363423 243947 101470
EBT 267,827 630,741 1,080,867 1,628,985 2,300,979
Tax 13391 31537 54043 81449 115048
Earning After Tax 254,435 599,204 1,026,824 1,547,536 2,185,930
Dividend
Retained Earnings 254,435 599,204 1,026,824 1,547,536 2,185,930
15BDP Plan_ <Ram prasad Timilsina>
Projected Cash Flow Statements
Year 1 2 3 4 5
Total cash Inflow (A)
13,964,000
8,096,060
8,981,791
9,997,205
11,169,210
Total cash outflow (B)
13,052,956 6,805,304
7,381,666
8,017,561
8,719,776
Cash Balance (A)-(B)
911,044 1,290,756
1,600,125
1,979,644
2,449,433
Add :Opening Cash balance 0
911,044
2,201,800
3,801,925
5,781,569
Closing Cash Balance
911,044
2,201,800
3,801,925
5,781,569
8,231,002
16BDP Plan_ <Ram prasad Timilsina>
Projected Balance SheetYear 1 2 3 4 5
Current Assets2402044 3834844 5595075 7756544 10413930
Fixed Assets5416000 4062000 2708000 1354000 0
Total (A)7818044 7896844 8303075 9110544 10413930
Current Liabilities
Long Term Loan2763609 2243204 1622612 882544 0
Equity Capital5,054,435 5,653,639 6,680,463 8,227,999 10,413,930
Total (B)7818044 7896844 8303075 9110544 10413930
17BDP Plan_ <Ram prasad Timilsina>
Capital Budgeting Summary
Initial Investment : Rs.677000Total Present Value : Rs.6896505Non Discounted Pay Back Period : 3.29 YearsDiscounted Pay Back Period : 4.91 YearsNet Present Value (NPV) : Rs.126505Internal Rate of Return(IRR) : 21%Profitability Index : 1.019
18BDP Plan_ <Ram prasad Timilsina>
Financial RatiosYear 1 2 3 4 5
Total Assets Turnover
0.95 1.03 1.08 1.08
1.05
ROE(%) 5 11 15 19 21
ROA(%) 3 8 12 17 21
Net Profit Margin(%)
3 7 11 16 20
Interest Coverage Ratio 1.5 2.2 3.5 6.4 19.1Break Even Sales (%) 81 78 75 72 69
BDP Plan_ <Ram prasad Timilsina> 19
Key to Success of the Project
• Low cost organic products.• Timely delivery to needed place.• Use of interactive websites and other e-
commerce strategies.• Qualitative and fresh products.• Flexible work schedule to employees.• Pay for performance system.• Team and target based approach
BDP Plan_ <Ram prasad Timilsina> 20
Suggestion
• To investors High potentiality for growth increasing profit margin Project may extended by retaining all the returns.• To lender Sufficient cash flow to pay installment Low risky business
21BDP Plan_ <Ram prasad Timilsina>
BDP Plan_ <Ram prasad Timilsina>22