Rishabh TM

BID AND BUILD AIRA TEAM 30 AIRA (Automated Irrigation from Air) A product developed by: DRIPS Technologies Pvt .Ltd A company based in Malegaon, Maharashtra has launched a new product that redefines the system of agriculture in India.Specifically Specifically targeted at the Indian market, the product aims to provide relief to lakhs of farmers. INDEX SL NO PARTICULARS B –PLAN EXECUTIVE SUMMARY ABOUT THE COMPANY VISION MISSION OBJECTIVES INDUSTRY ANALYSIS RESEARCH AND DEVELOPEMNT ABOUT AIRA USP SWOT McKINSEY 7S MODEL PORTER’S 5 FORCE MODEL TECHNICAL ANALYSIS - MARKETING STRATEGIES CONVENTIONAL UNCONVENTINAL PHASE WISE PLAN STP ANALYSIS - OPERATIONAL PLAN PLANT LAYOUT SUPPLY CHAIN MANAGEMENT LOCATION ANALYSIS LOGISTICAL ANALYSIS - 4. IMPLEMENTATION PLAN 27 5. HUMAN RESOURCE STRUCTURE ORGANIZATIONAL STRUCTURE EMPLOYEE REQUIREMENT 30 31 1. 2. 3. 6. FINANCIALS PAGE NUMBER SOURCES OF FUNDS ALLOCATION BREAKDOWN REVENUE MODEL (PROJECTED FOR 5 YEARS) INCOME STATEMENT (FOR 5 YEARS) BALANCE SHEET (FOR 5 YEARS) BREAKEVEN ANALYSIS VALUATION OF THE COMPANY CASH FLOW STATEMENT ( FOR 5 YEARS) - B –PLAN EXECUTIVE SUMMARY Aira is a revolutionary product which solves the irrigation problem of the country. Agriculture is the backbone of India. This primary sector provides livelihood to 60-70% of the population and contributes 17.9% to India’s GDP. But the agricultural sector has been adversely affected by insufficient rain, inadequate water resources which lead to crop failures .Therefore the problem of irrigation was to be addressed immediately. Our product is an automated irrigation system which works on the simple phenomena of water cycle which converts air into water by utilising the moistures in the air.Our product is a one-time investment which not only solves the problem of water but also uses renewable energy for electricity, this source does not cause an environmental imbalance. The objective is to solve the above problem thereby ensuring that the farmers get high yield from the same plot of land. Our primary aim is to provide a shield to farmers against droughts or excess rain. The agrarian sector faces lots of hurdles due to lack of automation which results in lower output. Moreover the phase of agriculture in India is rapidly changing. Moreover, the agricultural laborers are migrating to urban areas resulting in acute shortage of agricultural labour.Therefore automation is very necessary in order to reduce cost and to enhance the output. This product is backed by intense research and simply readily available raw materials. We are initially targeting only rich farmers and the government yet we have a huge customer base which makes our business a profitable one. 1 ABOUT THE COMPANY The Drips Ltd. will be a private Ltd Company being started by three members, AanchalNagori, Keerthi Jain and RishabTulsi. They are presently pursuing their Bachelors in Business Administration in Christ University, Bangalore and hold a strong interest in rendering value to the ever-growing agricultural industry. and materializing their keen interest in Entrepreneurship. Our registered office will be in Mumbai Maharashtra and our production and warehousing unit will be in Malegaon Maharashtra as these places are near to our target area. Our company will initially target states with high humidity like Maharashtra, Tamil Nadu, Gujrat etc. The core business of the company is making these automated irrigation system and has total of 42 employees from different functional areas. We started our research in 2015 and now are fully ready to put in action. Company’s objective is to To ensure high yield in agriculture even at the time of drought by solving the problem of irrigation And To ensure high yield in agriculture even at the time of drought by solving the problem of irrigation. VISION “To ensure that not a single farmer commits suicide due to crop failure.” India is a country in which 60% of its population is dependent on agriculture. Therefore their wellbeing and livelihood has to be taken care. But thousands of farmers are committing suicide every year as a result of crop failure due to drought. We specifically aim to resolve this fate of farmers. MISSION “To provide excellent returns to farmers thereby securing their livelihood and ensuring the vibrant development of Indian economy” 2 The income of farmers is vital for their livelihood as well as for the growth of the economy. India is a country that has a potential to grow at more than 8% GDP if the agricultural sector is developed to its maximum potential. OBJECTIVES PRIMARY OBJECTIVE: To ensure high yield in agriculture even at the time of drought by solving the problem of irrigation. Agriculture is the backbone of India. This primary sector provides livelihood to 60% of the population and contributes 16% to India’s GDP. But the agricultural sector has been adversely affected by insufficient rain. Therefore the problem of irrigation was to be addressed immediately. Our product’s objective is to solve the above problem thereby ensuring that the farmers get high yield from the same plot of land. Our primary aim is to provide a shield to farmers against droughts or excess rain. SECONDARY OBJECTIVE: To automate the agricultural industry in India. The agrarian sector faces lots of hurdles due to lack of automation which results in lower output. Moreover the phase of agriculture in India is rapidly changing. Moreover, the agricultural laborers are migrating to urban areas resulting in acute shortage of agricultural labor. Therefore automation is very necessary in order to reduce cost and to enhance the output. 3 INDUSTRY ANALYSIS INDUSTRY ANALYSIS – AGRICULTURAL AND AGRI-INPUTS INDUSTRY India has the 10th-largest arable land resources in the world. With 20 agri-climatic regions, all 15 major climates in the world exist in India. The country also possesses 46 of the 60 soil types in the world. India is the largest producer of spices, pulses, milk, tea, cashew and jute; and the second largest producer of wheat, rice, fruits and vegetables, sugarcane, cotton and oilseeds. Further, India is second in global production of fruits and vegetables, and is the largest producer of mango and banana. During 2017-18 crop year, food grain production is estimated at record 284.83 million tonnes. In 2018-19, Government of India is targeting foodgrain production of 285.2 million tonnes. Production of horticulture crops is estimated at 306.82million tonnes in 2017-18 as per third advance estimates. India is among the 15 leading exporters of agricultural products in the world. Agricultural exports from India reached US$ 38.21 billion in FY18 and US$ 21.61 billion between Apr-Oct 2018. Exports of ready to eat items from India reached US$ 689.80 million in FY18. The Government of India is aiming to achieve US$ 60 billion in agricultural exports by 2022. India was the ninth largest exporter of agricultural products in 2017. India entered the league of water deficient nations. A nation is considered water deficient if the per capita availability falls below 1700 cubic meters per person.As per the Central Water Commission, 80% of the total water consumed was for agriculture yet its not enough to irrigate farms which causes wastage and suicides by farmers.The Governments, both State and the Central, have traditionally spent taxpayers money generously for flood irrigation. The Finance Minister had in the 2016 budget committed to find Rs 86,500 crores for funding 99 irrigation projects in the water stressed districts of India. This does not help reduce the water stress of the districts because irrigation canals are wasteful. They draw 4 times water from the rivers than what is delivered to the fields. Water utilisation efficiency is less than 30% in the best cases, and half that amount in the worst. Besides, historically, around a third of the irrigation projects start with a lot of fanfare, but do not see completion. 4 Successful agriculture in most parts of the country is not possible without the use of water. The large land resources of India cannot be put to productive use without a simultaneous development and use of the water resources. In fact, an integrated development of the land and water resources of India is of fundamental importance to the country's economy. From times immemorial, life and civilization in India have been dependent largely on rivers. About 75% people are living in rural areas and are still dependent on Agriculture.  About 43% of India’s geographical area is used for agricultural activity.  Agriculture continues to play a major role in Indian Economy.  Provides food to more than 1 billion people  Produces 51 major crops  Contributes to 1/6th of the Export Earnings Reduction in arable land This has put immense pressure on the current available arable land for the food and nutritional needs of the population Decreasing farm sizes While the average size of landholding is decreasing (also fragmenting) the number of operational holdings is increasing leading to no.of challenges. Irrigation is also one of the biggest challenges which is indicated in the table given below. Thus the Demand for irrigation is abundant while competitors are pretty less. Government has the monopoly yet is not able to significantly solve the problem calling for players in this industry. STATEWISE IRRIGATION TYPES, CAPACITY AND ACTUAL: Total crop Groundwater State Total crop area irrigation (million crop hectares) (million Canal irrigation area crop area (million hectares) hectares) area actually irrigated (million hectares) Andhra Pradesh 14.3 2.5 2.7 4.9 Bihar 6.4 2.2 1.3 3.5 5 Total crop Groundwater State Total crop area irrigation (million crop hectares) (million Canal irrigation area crop area (million hectares) hectares) area actually irrigated (million hectares) Chhattisgarh 5.1 0.17 0.74 0.85 Gujarat 9.9 3.1 0.5 3.2 Haryana 3.6 1.99 1.32 3.26 Jharkhand 3.2 0.11 0.13 0.24 Karnataka 12.2 1.43 1.33 2.38 Kerala 1.5 0.18 0.21 0.39 Madhya Pradesh 15.8 2.74 1.70 4.19 Maharashtra 19.8 3.12 1.03 3.36 Odisha 4.9 0.17 1.07 1.24 Punjab 4.0 3.06 0.94 3.96 6 Total crop Groundwater State Total crop area irrigation (million crop hectares) (million Canal irrigation area crop area (million hectares) hectares) area actually irrigated (million hectares) Rajasthan 21.1 3.98 1.52 5.12 Tamil Nadu 6.5 1.61 1.43 2.66 West Bengal 5.5 2.09 1.22 2.98 58.13 All India 159.6 39.43 7 22.48 RESEARCH AND DEVELOPMENT Farmers all over India are suffering from agricultural problems. Above all the factors contributing to the above problem, it has been noticed that the problem of irrigation is the main one. Though India has lots of water resources in the form of rivers and oceans, the problem of irrigation is still prominent in most of the agricultural regions. The reason can be attributed to deficit of rain. 8 But however, there is a solution to the problem. Since India is a peninsular country, the atmosphere contains lots of humidity. Even if 25% of India’s humidity is converted into water, it has the potentiality to solve the irrigation problem in India. AIRA has the capacity to produce 20,000 liters of water in one day at a humidity of approximately 40% which is sufficient to irrigate 5 acres of land. 9 ABOUT AIRA PRODUCT DESCRIPTION AIRA is an automatic irrigation system which converts the atmospheric air into water which is used for irrigation in arid regions. AIRA uses solar energy to function, making it an Eco Friendly product. This product works on the principle that when humid air is highly heated and cooled immediately, the air condenses into the water droplets. The condensed water is the judiciously used to irrigate the land. FEATURES OF THE PRODUCT    Converts air to water. Uses solar energy and electricity (if required in cloudy weather) Works on the principle of condensation and pressure. WORKING OF THE PRODUCT The product contains a Solar panel, Air fan, Air filter, PVC tubes with hydrophobic coating and acetone.  The Air fans suck the air in the atmosphere into the machine.  The air which is sucked passes through the Air filter which makes it pure by removing all the contaminations.  Then, the purified air passes through the Condenser Section which contains PVC tubes with hydrophobic coating that repels water. The Condenser Section is divided into two parts namely Heating section and Cooling section.  The air first passes through the Heating section which heats up the air to 50 degree Celsius using solar energy.  The hot air then passes through the cooling section where another pipes containing Acetone helps in cooling. The pipes containing Acetone will work on a recycling process where in the acetone will evaporate taking away the heat from the air pipe, due to the lack of opening 10 the evaporated acetone again condenses on the top of the acetone pipes and again drips down.  Due to change in temperature drastically, the air condenses into water droplets which is stored in the tank (or a well or directly discharged to irrigate the crops).  Then that water will be used for the purpose of irrigation.  Drip irrigation is the method through which the plants will be irrigated. Acetone PVC Pipes 11 UNIQUE SELLING PROPOSITION\ Eco friendly product that generates water from air for irrigation using condensation technique. 12 SWOT ANALYSIS  STRENGTH:  Only product that converts air to water for the purpose of irrigation.  Uses solar power, therefore it does not require electricity and it is Eco friendly.  Automatic irrigation feature eliminates the burden of irrigation of a farmer.  Uses scientific methods for irrigation, thus maximizing the output.  Requires just one time investment and the cost of operation is absolutely low.  WEAKNESS:    The product cannot be affordable by small farmers unless subsidies are given. Farmers might need technical assistance frequently during initial years. OPPORTUNITY:   Growing awareness for using Eco friendly machines. To emerge as a mechanism that would help the government to fulfill its goal of doubling the output of farmers by 2020.   Average humidity of India is 48%, therefore AIRA can perform its task successfully. There is a need for an all time source of water for farmers for irrigation in India, therefore Aira will be very useful to them.  THREATS:   Rigidity of farmers to adapt to new technology. The quantity of water produced depends on the humidity of the air, therefore the humidity of the air is a very important factor of water production. 13 McKINSEY 7S MODEL Strategy: Our strategy would involve intense rural marketing by conducting fairs, free sample and also devising a pricing strategy which involves down payment and EMI options for fostering sales and achieving our objectives.Our main focus will be on highlighting the benefits of the product and marketing it as one time investment.Customisation of the set up according to the needs of the customer will cater to their changing preferences. Our product uses renewable energy and also does not cause severe environment issues , instead solves a social problem. Structure: The organizational structure of Drips Ltd will be according to function of the business. The department of the organisation will be on enterprise function type of organizational structure. This is very important type of organisational structure during the time period of recession. top level management marketing logistics sales finance human resource R and D after sales services This type of organisation structure will give power to the top level management. This will follow a proper channel of communication leading to no barrier of communication. This type of organisation will have department head that will have certain target to fulfil. This will provide responsibility to everyone at every level. These type structures will make the CEO go for inspection on a daily basis. As it’s a start-up will be hiring less employees under each department and as we proceed Systems: The qualified and experienced workers with professional dedication and competence produce and assemble high quality product at the facility . The company’s system follows a top-down approach of management and the authority over the production ensures smooth manufacturing of 14 fibre and retail textiles. As we have just started we don’t have rigid communication and structural lines and believe in working together to achieve daily targets. All the data is stored and managed by our analyst in separate files in our cloud. Our system focuses on achieveing daily targets and does not involve any complexity. Shared Values: The core values of Drips ltd. act central to the development of the company’s business model and facilitates in the critical growth of other functional areas of the business. Precision in action and accurate results is what the company strives to achieve through its superior tech and high performing employees. It forms the basis of the company’s subordinate goals as a part of its initial business approach. Our company focuses on a solving a social problem therefor unethical practices are strictly taken care for. Our objective is to reduce the number of farmer suicides and solve the water problem by a self-sustaining automated irrigation system. To achieve this we aim to make durable long lasting product which does not require after sales services. Style: A superior relationship between the personnel of the organization, a resilient structure adopted for policy making and strict adherence to the ethics of the business is what contributes to the style of the company’s operations. The leadership traits of the managers help in bringing accord within the workplace. There is strict distinction between levels and as we are in the developmental stage we believe in working together as a team. Staff: We have a total of 42 employees divided into various functional areas lwho are highly skilled professionals like mechanical engineers ,research analyst,scientists,marketers etc who contribute to the efficiently assembling the entire and running the business by the company. Skills: The production and processing employees of the firm possess Knowledge of raw materials, production processes, quality control, costs, and other techniques for maximizing the effective manufacture and distribution of goods. Workers for engineering and technology have knowledge in the techniques, procedures, and equipment used for production of products. Promotors are 15 well acquainted with business development and management skills which include finance, HR and marketing PORTERS 5 FORCE MODEL : 1. Competitive Rivalry: The demand for water is in abundance which makes it in ideal industry for starting a business. While the government has the monopoly with access to various canals, water bodies like groundwater etc., there are many players like Jain Irrigation, Royal irrigation systems etc in various states which have advanced technology but access to limited water supply and are not affordable by all. These players are still not able to solve a problem which calls for a new technology , product differentiation and cost leadership. The basically use pvc pipes, sprinklers, canals which have proved to inefficient to cater to this large population. While our product will make a self-sustained water irrigation system irradiating the need to spend huge amount on water and instead opt for this one time investment. Our unique process and automated sytem is our competitive strength. 2. Supplier Power: Raw materials used by our product are pvc pipes, solar panels, acetone, fans and motors. While these products have stable prices, they are still subjected to hike in prices as the demand for these products is pretty high. With the increasing awareness of renewable energy sources, solar panels are going to face high demand and technological advancements which may fluctuate the price of the product. As these products are not very unique and there is not much price difference in the market, changing supplier wouldn’t be expensive,however mass supply and long term relationship with suppliers does attract discounts and credit which does not stress the working capital management. Almost all the products like pvc pipes, acetone solar panels have alternatives like terracotta , solar shingles, lens, copper pipes etc. 16 3. Buyer Power : As our target market is only large and scale farmers,The price of the set up won’t be a problem for them but if other irrigation systems have reduced cost, the power goes in the buyers hand. As for now, as it’s a radical innovation with no significant competitors, it is less likely for the customers to shift. Even if we target just 1% of cultivators we have a huge market and if we are able to acquire government support it will eliminate the power of buyers. 4. Threat of Substitution: As we use simple but an innovative mechanism to produce water, there aren’t any close substitutes as of now and its less likely to find efficient way doing the same. However substitute’s like canal, sprinklers etc can be used by farmers which are scarce and expensive too which makes our product highly affordable. 5. Threat of New Entry: This product involves a lot of research though a simple mechanism of water cycle is used, the intricacies involved can’t be tackled by everyone as the R and D cost is very high and needs a lot of time. Moreover we have patented the technology used making it difficult for new entrants. 17 TECHNICAL ANALYSIS AIRA is a product made to ease the lives of people, especially farmers by providing solutions to their problems. AIRA is a product which runs based on a simple mechanism. It is based on the universal proven phenomenon of condensation and pressure. Condensation means that when warm air meets a cool liquid, the humidity in the it converts into water droplets. The reasons for using the following products are: 1. Solar Panel Solar Panels absorb heat emitted by the sun and generate heat energy. In AIRA, solar panels are used to heat up the air passing through the device up to 50 degrees Celsius. Solar panels are used because it is one of the most effective ways to generate energy. Solar panels are a renewable means of generating electricity. Since AIRA will be mostly used in farms, and farmers in India are still not blessed with full time electricity, generating electricity through solar panels is a feasible and a good idea. 2. Acetone Acetone is a chemical liquid which provides cooling effect. In AIRA, acetone will be used to cool the heated air. So, after the air which comes into AIRA is heated by solar panels, it must be readily cooled to condense into water. Using artificial means to cool the heated air will fasten the effect of cooling, so acetone acts a catalyst in the cooling process of heated air. 3. PVC Pipes PVC pipes are used to carry air from outside to the inside of AIRA for the process to initiate. PVC pipes are also thin and they do not corrode or rust due to the moisture present in the air due to which this is the preferred product for condensation process. These pipes are easy for maintenance process as they can be easily dismantled and also be replaced due to its easy availability and low cost compared to other metal pipes. 18 MARKETING STRATEGIES Our product targets middle to large scale farmers, and the government. So, the kind of marketing strategies used will mostly be conventional so that it is in the eyes of the farmers. For the Government Consulting the ministry of agriculture of state and central and explaining the role of our product in solving the irrigation problem in India and to persuade them to subsidize the product. If AIRA is subsidized by the government, then the small-scale farmers will also be able to afford it. For the customers (i.e. Farmers) In rural areas, what is more important is awareness. The marketing campaign will be conducted phase wise which encompasses the following strategies – Conventional: The conventional strategies used will be:  Newspaper advertisements  Radio Jingle  Billboards in rural areas The billboard will read “Never run out with AIRA” signifying that with the purchase of this product the farmers will never have to waste money and time waiting for water to come or depending on the rain during harvest season. They will be leaning towards the product as it will be a one-time expenditure and a lifetime worth of water for their farms.  Local media  Word of mouth 19 Unconventional:  Conducting the workshop for farmers for educating them about the technical aspect of our product  SANGAM – An exotic fair/ Mela Sangam is an fair or mela as called by the localities there. The fair will be set up in the Vidarbha region in Maharashtra specially for farmers. The villagers will be given the right to set up stalls in the fair. But the attraction of the fair is two things Bail Gaadhi Sharyat - Bull competition Our company will organize a bull competition which is a very famous game played by the farmers of Maharashtra. So, farmers have to register, and they will be allowed to participate in the game with their own bulls. The farmers will compete against each other and the winning farmers will get a cash prize and AIRA.  THE AIRA So, in the centre of the fair, a working model of AIRA will be kept. And all the water created by it will be collected in a small tank, which has water sprinklers at the bottom. So initially AIRA will be introduced and it will be told that the product is performing its task, and towards the end an announcement will be made which says, “This is what AIRA does, convert air into water.” And that time water in the tank will be let out which will fall in the form of rain from the sprinklers. This stunt will create an impression that AIRA has converted air into water and hence, we will be successful in positioning the product rightly. This is a promotional event for AIRA, and people of Maharashtra will be notified about it through radio, newspapers and the local media. These marketing strategies will be implemented in a phase wise structure. There are three phases, and it will be conducted in the manner – 20 PHASE 1 (Pre Launch) In this phase, Aira will be promoted though basic simple ways to the farmers, so that they are aware that such a product will come into existence shortly. The methods employed will be –  Billboards  Radio Advertisements  Word of mouth PHASE 2 (Launch) In this phase, most of the strategies will be employed. This is the most intensive phase because this is the phase where the product can be promoted to a great extent. This strategies of mareting used will be –  Billboards  Radio ads  Newspaper ads  Word of mouth  Sangam ( the fair)  Local media PHASE 3 (POST LAUNCH) In this phase, we will mostly focus on  Conducting demonstrations of usage of Aira, and teach the farmers the technical aspects of it  Taking feedback from customers Taking feedback from farmers will help us in two ways - Evaluate our performance on delivering AIRA - Improvisations on AIRA 21 STP ANALYSIS SEGMENTING - Demographic Age: Farmers of any Age, but mostly teenage , adults, senior citizens Gender: All genders Profession: medium and large scale farmers and also the government - Geographic Farmers who live in Maharashtra specially, and then the central parts of India which face scarcity of water - Psychographic Farmers who are facing scarcity of water for irrigating their crops, and hence want a medium to get water to irrigate their crops and want to increase their yield by increasing their production by irrigating their crops properly. - Behavioral Farmers who want are open to change and are always looking for means to increase their yield and raise their standard of living, by one time investment and then having fruitful returns. TARGETING Considering the cost of our product, the target customers would be village Panchayats, state governments and the union government. However drought and monsoon affected states such as Maharashtra, Bihar, Gujarat, Tamil Nadu, etc would serve as the major market for our product. But initially, we would be targeting Maharashtra. We would also be targeting medium and large scale farmers, as they can be ready to invest in a huge amount for fruitful returns. POSITIONING “A unique product which would solve the problems of scarcity of water for irrigation, and hence provide a better life to farmers.” 22 OPERATIONAL PLAN PLANT LAYOUT 23 SUPPLY CHAIN MANAGEMENT Raw Materials Procurement  Product Assembly Direct Sales to end Customer Firstly we will be selecting the suppliers for raw materials. We will shortlist a few suppliers who are committed to supply to us readily whenever the demand arises. We will look for suppliers who provide quality products at cheaper price and mainly the suppliers who are situated in Malegaon.  Few parts which have to be prefabricated will be sourced from prefabricators present in Malegaon district. Only those parts which require complex prefabrication will be sourced from them, other basic parts will be modified in our own plant according to the needs of the product.  The assembly will take place in our own manufacturing plant. The assembled product will be such that it is easy for transportation by making it semi assembled product. At the customer’s site our technicians will have to just join the various semi assembled parts to form the whole product.  As ours in an industrial product, we ourselves will be undertaking the whole sales process. Adding on middle man will increase the cost of the product which will not be affordable by many. Also being in contact with the market directly will enable us to get better insights and feedback so that we can improvise.  To streamline the whole supply chain process we will use an ERP system in order to get more clarity and also for analysis purpose. However considering that our supply chain consists of only 3 steps we will not face a lot of complexity in the supply chain process. 24 LOCATION ANALYSIS Malegaon is a city and a Municipal Corporation in Nashik District in the Indian state of Maharashtra. Malegaon is the second largest city of Nashik district after Nashik city. Malegaon is at the confluence of the Girna and Mausam rivers, at elevation of 438 metres (1437 feet) at 18.42°N 77.53°E. It is at around 280 km northeast of state capital Mumbai. It has good connectivity with nearby cities like Nashik, Manmad, Mumbai, and Dhule. Malegaon of late has been diversifying and new industries are rapidly expanding. PVC pipe manufacturing is one such industry. Malegaon is soon becoming a regional centre for PVC pipes. Maharashtra being a state which is centrally located in India is ideal in order to reach out to other parts of the country. Maharashtra itself being a state which suffers from water scarcity we will have a ready market which is easily accessible if we have our manufacturing plant set up in Maharashtra. We prefer to set up our manufacturing plant in Malegaon industrial area as there are no problems of electricity, water, and other amenities. Also Malegaon emerging as a hub for PVC pipes is of utmost beneficial to us as it is one of the core products. Due to the easy availability of raw materials we will be able to procure them with the least possible cost which in turn will help us to reduce the production cost. 25 LOGISTICAL ANALYSIS Our product being big in mass it is hard to transport it. To solve this problem itself we roll out semi assembled product which will be completely assembled by our technicians at the site. The initial assembly will take place in our own manufacturing plant. The assembled product will be such that it is easy for transportation by making it semi assembled product. At the customer’s site our technicians will have to just join the various semi assembled parts to form the whole product. The product will be transported using trucks to places where there is road available to reach the destination. To places where there is no road accessibility we will use tractor’s as they can go even on rugged surfaces. It is at around 280 km northeast of state capital Mumbai. It has good connectivity with nearby cities like Nashik, Manmad, Mumbai, and Dhule. State Highway 10 State Highway 10, commonly referred to as MH SH 10, is a normal state highway that runs south through Pune, Ahmednagar, Nashik and Dhule districts in the state of Maharashtra, India. This state highway touches the cities of Dondaicha, Shevade, Mehergaon, Kusumbe, Malegaon, Manmad, Yeola, Kopargaon, Shirdi Rahata, Rahuri, Ahmednagar, Kashti, Daund. National Highway 3 National Highway 3 (old number), or Old national NH 3, commonly referred to as the Agra– Bombay Road or just Agra Road in Bombay, was a major Indian National Highway that ran through the states of Uttar Pradesh, Rajasthan, Madhya Pradesh and Maharashtra in India. National Highway 3A was a branch highway between Bharatpur and terminated at Dholpur, Rajasthan. 26 IMPLEMENTATION PLAN The operations will be based on the 3 phases: Phase 1: Time Period – 2 years Main purpose –  Survey  Research and development  Inspection of location  Development of Business  Legal Requirements  Hiring of Employees In this phase the company will conduct a survey in various villages regarding the use irrigation, abandon houses etc.The company will also set up research and development team who will be responsible for coming out with products which will be of good quality but at an affordable rate. The company will also inspect the place where the warehousing of good will take place. Then the inspection will also include of the places where it will be initially starting. In this phase the company will also acquire legal requirement to start the business. Following the legal requirement, the company will lease a land and warehouse facilities. Hiring of employees who will be working for the business will take place in this phase. Phase 2: Time Period – 2 months Main purpose –  Purchase of machinery.  Purchase of raw material.  Production of goods.  Marketing.  n communication with farmers  In communication with government 27 In this phase the purchase of machinery and raw material will take place followed by production of goods and services. The first batch of product will be distributed amongst few people in targeted states. The purpose of doing this is to test the product in the market. This will help the company to analysis where the product will be accepted or the company will bring out changes in the product. Marketing of the product will also take place in this phase where the product will be advertised through different means and medium. The purpose of this it to inform about the products that the company is company is coming out with. Different strategies will be used to educate the farmers. The company believes that this is the most important phase where the customers need to be targeted and motivated to use our product. The company will talk with the state government where the collaboration with it. The product will be sold to the government and the government will provide it at a subsidised rate to farmers. Phase 3: Time period – Till the come exists Main purpose – Release of the product to the customers. Customer support. In this stage the product is released for every farmers places that the company has decided to target. Regular feed will take place in this phase where it will help the company to bring change if required. If the product is liked by the customers, growth strategy will be followed by the company where it will increase the no. of places and also increase its production capacity. Since the company has finished quite some time in operations, the company has passed through its phase 1 and phase 2. The company has released its product to the customers where it’s getting neutral – positive feedback. The company is increasing its market base gradually and within few months of time it will increase its production unit. Add this under strategy in 7s framework. Implementation Strategy 1. Determining Budget: 28 What we offer depends on what we can afford. Budgeting our product; creating a budget that covers each expense to be incurred, from salary to rent. Our product will be priced according to people belonging to middle income levels. 2.Outlay of Marketing Campaign: We will focus on creating engaging content both graphical and visual for our advertising media and initial marketing processes. Our brand value, perceived brand deliverables and market pricing in terms of customer satisfaction and value. 3. Deploy All Funds For Operating Activities: Doing so will allow us to estimate how much raw materials we can stock in relation to our budget so enough is left for meeting demandand other fixed expenses, such as utilities and rent.Finalizing the preferences and specific choices, making sure initial inventory is delivered before opening. Stocking the shelves. Purchasing computers for desk employees. 29 HUMAN RESOURCE ORGANISATIONAL STRUCTURE The organizational structure of Drips ltd. will be according to function of the business. The department of the organisation will be on enterprise function type of organizational structure. This is very important type of organisational structure during the time period of recession. This type of organisation structure will give power to the top top-level level management. This will follow a proper channel of communication leading to no barrier of communication. This type of organisation will have department head that will have certain target to fulfil. This will provide responsibility to everyone at every level. 30 Human Resources: Job Position Numbers Top level management 2 Finance 1 Engineers 3 Marketing 4 HR 1 After sales services 4 Sales person 8 Market Research Analyst 2 Unskilled labourers 9 Total 34 *The HR Budget increases by 15% every year. 31 FINANCIALS SOURCES OF FUNDS SOURCES OF FUNDS Particulars Investors Amount (INR) Details 78,91,557 40% of Investment Proprietor's capital 1,18,37,335 60% of investment Total 1,97,28,892 ALLOCATION OF FUNDS INITIAL INVESTMENT Particulars Amount Assumptions Pre-operative expenses Brokerage for land 1,50,000 Brokeage paid to Broker Other pre-operative exp 17,24,712 1 month of operational expenses Total pre-operative expenses 18,74,712 Capital Expenditure Office and Warehouse Lease 60,00,000 2000 sq ft at Rs 6500 per sq ft Building and construction 10,85,400 Break down given Fixed Assets 20,00,000 Break down given Patenting rights 2,85,500 Cabins 4,80,000 ( 600 sq feet@ Rs. 800 per sq feet) Restrooms 6,00,000 (600 sq feet@ Rs. 1000 per sq feet) Lighting 1,98,280 Break down given Control Room 2,40,000 ( 300 sq feet@ Rs. 800 per sq feet) Computers 12 pieces in the beginning(per piece4,20,000 32 35,000) Furniture and Fixtures 5,00,000 Office equipments 1,00,000 Research and Development 35,75,000 Initial Promotion Cost 20,00,000 Note Given Generators 3,70,000 Kirloskar generator Total Cap. Expenditure 1,78,54,180 Total Initial Investment 1,97,28,892 *BREAKDOWN OF ALLOCATED FUNDS BREAK DOWN Building & Construction Particulars Amount Details Cement 4,48,000 1600*20kg-280 Bricks 84,000 7000*12 2*2sq.ft-1300 (2000/2=1000+50) Tiles 5,25,000 Paint 22,400 20 liters-8 (8*2800)-Asian paints Steel rods 6,000 12 pillars * 4 * 125(Tata group) TOTAL 10,85,400 1050*500 Lighting Particulars Amount Details Fans 10,400 8 fans(1300) LED 10,400 13 LED(800) Switch boards 4,480 14 switch boards(320) AC Wiring 1,45,000 5 AC(29000) 28,000 33 TOTAL 1,98,280 Fixed Assests Particulars Amount Assembling Machinery 8,50,000 Other Machinery 11,50,000 TOTAL 20,00,000 Details MARKETING BUDGET MARKETING COSTS Sl. No. Particulars Amount (Rs.) 1 Local Media 4,00,000 2 Seminars & confrences 7,50,000 3 Billboards 2,50,000 4 Newspaper 20,00,000 5 Fair & Fests 15,00,000 Total 49,00,000 34 HUMAN RESOURCE BUDGET MANPOWER COST Particulars Year 1 Year 2 Year 3 Year 4 Year 5 No of people Managing Directors 3 3 3 3 3 Executive Manager 1 1 1 1 1 Supervisors 3 3 3 3 3 R&D Executives 2 4 6 6 8 Marketing Manager 1 1 1 1 1 Finance Manager 1 1 1 1 1 Finance Executives 2 4 6 6 8 Engineers 4 4 6 6 6 Sales Person 10 12 12 15 15 After Sales Persons 5 5 7 7 7 Others 2 3 3 5 7 TOTAL 34 41 49 54 60 Average Salary per Year per job Managing Directors 6,50,000 7,15,000 7,86,500 8,65,150 9,51,665 Executive Manager 7,50,000 8,25,000 9,07,500 9,98,250 10,98,075 Supervisors 5,20,000 5,72,000 6,29,200 6,92,120 7,61,332 R&D Executives 5,75,000 6,32,500 6,95,750 7,65,325 8,41,858 Marketing Manager 3,50,000 3,85,000 4,23,500 4,65,850 5,12,435 Finance Manager 3,75,000 4,12,500 4,53,750 4,99,125 5,49,038 Finance Executives 2,04,000 2,24,400 2,46,840 2,71,524 2,98,676 Engineers 3,75,000 4,12,500 4,53,750 4,99,125 5,49,038 Sales Person 2,75,000 3,02,500 3,32,750 3,66,025 4,02,628 After Sales Persons 2,55,000 2,80,500 3,08,550 3,39,405 3,73,346 Others 1,50,000 1,65,000 1,81,500 1,99,650 2,19,615 TOTAL 44,79,000 49,26,900 54,19,590 59,61,549 65,57,704 Total Manpower Cost 35 Managing Directors 19,50,000 21,45,000 23,59,500 25,95,450 28,54,995 Executive Manager 7,50,000 8,25,000 9,07,500 9,98,250 10,98,075 Supervisors 15,60,000 17,16,000 18,87,600 20,76,360 22,83,996 R&D Executives 11,50,000 25,30,000 41,74,500 45,91,950 67,34,860 Marketing Manager 3,50,000 3,85,000 4,23,500 4,65,850 5,12,435 Finance Manager 3,75,000 4,12,500 4,53,750 4,99,125 5,49,038 Finance Executives 4,08,000 8,97,600 14,81,040 16,29,144 23,89,411 Engineers 15,00,000 16,50,000 27,22,500 29,94,750 32,94,225 Sales Person 27,50,000 36,30,000 39,93,000 54,90,375 60,39,413 After Sales Persons 12,75,000 14,02,500 21,59,850 23,75,835 26,13,419 Others 5,50,000 9,07,500 9,98,250 18,30,125 28,18,393 1,26,18,000 1,65,01,100 2,15,60,990 2,55,47,214 3,11,88,258 Total Manpower Cost * 10% increase in salary y.o.y REVENUE MODEL (PROJECTED FOR FIVE YEARS) REVENUE MODEL Particulars Year 1 Year 2 Year 3 Year 4 Year 5 Revenue from Operations Selling Price of Product Units Sold in a Year Total revenue 1,30,000 1,30,000 1,30,000 1,30,000 1,30,000 350 625 875 1,150 1,450 4,55,00,000 8,12,50,000 11,37,50,000 14,95,00,000 18,85,00,000 36 INCOME STATEMENT (PROJECTED FOR 5 YEARS) Particulars Revenue from game app Total COGS Gross Profit Year 1 Year 2 Year 3 Year 4 Year 5 11,37,50, 14,95,00, 18,85,00, As explained in the 00 000 000 2,50,25,0 4,46,87,5 6,25,62,5 8,22,25,0 10,36,75, 00 00 00 000 2,04,75,0 3,65,62,5 5,11,87,5 6,72,75,0 8,48,25,0 00 00 00 00 1,26,18,0 1,65,01,1 2,15,60,9 2,55,47,2 3,11,88,2 90 14 4,55,00,0 8,12,50,- Assumptions 000 revenue Operating Expenses Manpower 00 00 49,00,00 53,90,00 0 0 12,00,00 13,20,00 0 0 18,00,00 19,80,00 expenses 0 0 21,78,000 23,95,800 Insurance 1,78,542 1,51,924 1,28,950 1,10,570 2,06,96,5 2,53,43,0 3,12,48,9 3,61,72,6 4,28,50,5 24 40 84 15 - 1,12,19,4 1,99,38,5 3,11,02,3 4,19,74,4 60 16 85 Sales & Marketing Electricity Administrative Total expenses EBITDA 42 2,21,542 58 As per the HR working Y1 revenue 10% ,Year 59,29,000 65,21,900 71,74,090 2 -5% 50K p.m. in Year 14,52,000 15,97,200 17,56,920 1,10% yoy 50K p.m. in Year 76 26,35,380 1,10% yoy 95,867 1% of net fixed asset Dep- Computers and app 20% depreciation in all 2,52,000 1,00,800 40,320 16,128 6,451 assets (except land, computers and app) + DepreciationOthers 26,61,77 22,97,42 8 3 60% depreciation on 18,37,938 37 14,70,351 11,76,280 computers and app- WDV method EBIT 31,35,32 88,21,25 1,80,60,3 2,96,15,8 4,07,91,7 0 3 02 37 53 26,46,37 Taxes Incurred 0 1,22,37,5 6 54,18,091 88,84,751 26 30% of PBT 31,35,32 61,74,87 1,26,42,2 2,07,31,0 2,85,54,2 0 7 11 86 27 PAT 38 BALANCE SHEET ( PROJECTED FOR 5 YEARS) Particulars Year 1 Year 2 Year 3 Year 4 Year 5 Assumption Liabilities Initial Share Capital 1,18,37,335 1,18,37,335 1,18,37,335 1,18,37,335 1,18,37,335 investment by the Proprietor Surplus Profit and Loss -31,35,320 30,39,557 1,56,81,769 3,64,12,855 6,49,67,082 profit retained back Total Long Term Liabilities 87,02,015 1,48,76,892 2,75,19,104 4,82,50,190 7,68,04,417 30 days of Creditors 37,57,935 57,55,933 77,10,529 97,31,317 1,20,43,193 COS and other expenses Total Liabilities 1,24,59,950 2,06,32,826 3,52,29,633 5,79,81,506 8,88,47,610 Assets Gross Fixed Assets Accumulated Depreciation Net Fixed Assets 1,78,54,180 1,78,54,180 1,78,54,180 1,78,54,180 1,78,54,180 29,13,778 53,12,001 71,90,259 86,76,738 98,59,469 1,49,40,402 1,25,42,179 1,06,63,921 91,77,442 79,94,711 Current Assets -24,80,452 80,90,647 2,45,65,712 4,88,04,064 8,08,52,899 Current Assets -24,80,452 80,90,647 2,45,65,712 4,88,04,064 8,08,52,899 Total Assets 1,24,59,950 2,06,32,826 3,52,29,633 5,79,81,506 8,88,47,610 *Note: Cash includes cash in hand & cash at bank 39 BREAK EVEN ANALYSIS Break Even Analysis Particulars Amount (INR) Selling Price/Unit 1,30,000 Production Estimate in one year 350 Cost per Product 1,02,900 Contribution Margin ( SP CP) 27,100 Overhead Costs 1,97,28,892 Breakeven Point (in units) 728 2 Years and 2 monthly Breakeven Points (in years) Approx VALUATION OF THE COMPANY Valuation Year 1 3,20,48,835 2,78,68,553 Year 2 4,16,63,486 3,15,03,581 Year 3 5,41,62,532 3,56,12,744 Year 4 7,04,11,291 4,02,57,884 Year 5 9,15,34,679 4,55,08,913 Valuation 18,07,51,675 40 CASH FLOW STATEMENT Cash Flow statement Particulars Year 3 Year 4 Year 5 (Rs) (Rs) (Rs) Year 1(Rs) Year 2(Rs) -31,35,320 61,74,877 1,26,42,211 2,07,31,086 2,85,54,227 29,13,778 23,98,223 18,78,258 14,86,479 11,82,732 Decrease in Accounts Payable 37,57,935 19,97,999 19,54,596 20,20,787 23,11,876 Operating Activities Net Profit made during the year Depreciation Cash Flow from Operating Activities 35,36,393 1,05,71,099 1,64,75,065 2,42,38,352 3,20,48,835 18,74,712 54,11,105 Investing Activities Financing Activities Net Cash Outflow during the year Opening Balance of Cash Closing Balance 54,11,10 5 1,59,82,203 3,24,57,269 5,66,95,621 1,59,82,203 3,24,57,269 5,66,95,621 8,87,44,456 41