In The Name of ALLAH, WHO Is The Most Beneficent and The Most Merciful

Energizer Product Limited
In the Name of ALLAH, WHO is the

most Beneficent and the most
Merciful.
_______________________________________________________________________
The Projecticians 1 Roll No s’:
115, 134 & 165
PREFACE
Department of Commerce, The Islamia University of Bahawalpur has

always been admirable in its efforts to equip the future executives with
arms of creativity, flexibility and adaptability to meet the challenges
offered by fast changing business environment.
To achieve the above goals the department is providing both text and
practical knowledge to its students with its available resources. Text
knowledge is very well transferred to the students within the premises of
the department; Practical knowledge requires the kind co-operation of
various business organization of the country. Faculty members are
always trying their best to ask the students to explore the market by
assigning different field activities and to prepare a report.
This report has been written on the “Energizer Tea Company, Multan.”
We have done our best efforts to complete this report efficiently and
effectively with all abilities. We hope this report fulfills the criteria and
expectations of Department of Commerce. We have tried our best to
make it analytical as well as informative.
May Allah help us in this world
_______________________________________________________________________
115, 134 & 165
Acknowledgement
We bow our head, before ALLAH Almighty, who blessed us with Potential
and stamina to complete our report.
First of all we would like to pay our special regards and thanks to Respected
“Mr. Javaid Iqbal” who provides us guidance at each and every step, in
completion of this report.
_______________________________________________________________________
115, 134 & 165
Dedicated to:
Our Beloved Parents

Who Pray
For
Our Bright Future
_______________________________________________________________________
115, 134 & 165
Executive Summary
Prior to the detail description we are starting the summary of our report. To
review the executive summary the basic purpose is to give the clear idea
about what report actually contains and efforts made behind the completion
of report.
As it as assigned us to work at “Tea Company” we started work and gather
data. In this report first of all general overview of tea is given then major and
minor things related to tea Industry are introduced with area and other
information are discussed.
The main task, which this particular report will show, was to make project
regarding all major aspects, working area, internal as well as external
factors, that may best choose for tea Industry.
After working at this report we come to know that what is the real picture of
this huge sector of tea Industry in Pakistan. The production and export of tea
is very important and the tea Industry is very beneficial and profitable
industry.
_______________________________________________________________________
115, 134 & 165
INTRODUCTION
Pakistanis are avid tea drinkers. In the hinterland, which still commands 70 per
cent of the rural and agricultural population, a cup of tea is part of the daily
routine and culture. More often than not it is cooked in milk and sugar and taken
with bread — making for the cheapest form of dietary intake or food — rather
than being taken purely and simply as a beverage.
The government of Pakistan treats tea as an essential commodity. Although there

is no price control, tea prices are monitored very closely by the government. It is
not only the most popular Beverage in the country but it is also the cheapest
available.
Being a developing country with meager foreign exchange resources tea imports
has been putting enormous pressure on the country’s exchequer and from time
to time the government has been exhorting the people to drink less tea. Also,
they have imposed duties to raise the price of tea to discourage tea consumption.
However, none of these measures have worked, and tea continues to be the most
popular drink among the masses.
Pakistan imports almost 170 million kilograms of tea annually. Till recently,
Pakistan had been meeting its demand for tea from Bangladesh, Kenya, Sri
Lanka and Nepal. Over the years, Pakistan has earned the distinction of being a
country with high consumption of tea and the largest tea importing country of
the world.
According to latest research, it has been stated that tea helps prevent cancer, has
cardiovascular benefits like reducing blood pressure, decreasing chances of heart
attacks etc., helps the immune system as it helps counteracting stress, poor
nutrition, etc. It also helps prevent tooth decay.
On the other hand its adverse effects include addiction to it to the extent that
people find it very difficult to stop its intake and if they do, it causes headaches
and restlessness. The worst part is that you get addicted to it without even
knowing!
_______________________________________________________________________
115, 134 & 165
Our Mission
To develop and deliver the most
innovative tea products, manage
customer experience, deliver quality
service that contributes to brand
strength, establishes a competitive
advantage and enhances
profitability, thus providing value to
the stakeholders of the company.
_______________________________________________________________________
115, 134 & 165
Core Values
“Leadership
We value leaders of high integrity, energy and enthusiasm who have the
necessary managerial, professional and people skills to inspire a group or an
organization to set high goals and achieve them willingly. We believe that
leadership skills need to be strengthened at all levels within our organization
and that managerial and professional competence is a necessary foundation.
“Teamwork and Partnership

We believe that high performing teams containing appropriate diversity can
achieve what individuals alone cannot. Consciously using the diversity of style,
approach and skills afforded by teams is strength we must continue building into
our organization.
“Quality and Continuous Improvements

We believe that quality and strong commitment to continuous improvements are
essential to our ongoing success. To this end, we define quality as understanding
the customer’s expectations, agreeing on performance and value, and providing
products and services that meet expectations 100 percent of the time. Our motto
is, “Quality in all we do”.
“Ethics and Integrity

We do care how results are achieved and will demonstrate honest and ethical
behavior in all our activities. Choosing the course of highest integrity is our
intent and we will establish and maintain the highest professional and personal
standards. A well-founded reputation for scrupulous dealing is itself a priceless
asset.
“ Open Communication
_______________________________________________________________________
115, 134 & 165
We value communications that are courteous and open and that enables each of
us to do our jobs more effectively by providing information that contributes to
the quality of our judgment and decision making. Effective communication
should provide the means for gaining understanding of the company’s overall
objectives and plans and of the thinking behind them.
“Innovation
Success requires us to continually strive to produce break through ideas that
result in improved solutions and services to customers. We encourage challenges
to the status quo and seek organizational environment s in which ideas are
generated, nurtured and developed.
“Individual Growth and Development

We strongly believe in the dignity and value of people. We must consistently
treat each other with respect and strive to create an organizational environment
in which individuals are encouraged and empowered to contribute, grow and
develop them and help to develop each other.
“Enjoyment and Fun

We believe that excitement, satisfaction and recognition are essential elements of
a healthy, creative and high performing work environment. Having fun in our
work should be a normal experience for everyone
_______________________________________________________________________
115, 134 & 165
OBJECTIVES AND KEY SUCCESS FACTORS
The main objectives of the development of project are:
 Capitalize on excellent opportunity to extract maximum revenue.

 To launch the tea processing unit with a highly targeted publicity
campaign and in a grand opening event in the start January of 2010.
 To maintain tight control of costs, operations, and cash flow through
diligent management and automated computer control.
 To maintain a high standard of product and service provided.
 Capitalize on excellent location opportunity.
 To be the premier company that achieves the goals of profit maximization
and value maximization for all the stakeholders of the company.
The keys to success in achieving our goals are:
 Be the first in the market to provide a wide variety of innovative taste of

tea that has broad appeal.
 Provide an exceptional service and product that leaves an impression.
 Consistent utilizing of ingredients that creates product quality.
 Managing our internal finances and cash flow to enable upward capital
growth.
 Strict control of all costs at all times, without exception.
 The Company will be strategically located to maximize the revenue
derived from the sales of the quality product.
 Provide exceptional product that leaves an impression with our core
customers.
 Consistent entertainment atmosphere and product quality.
 High demand of such blended tea in the locality.
 Accelerated sales growth experienced in the category of sachet packs.
 Extensive distribution channel for the sachet packs focusing even on small
kiosks in the urban and rural areas.
 The product would be focusing the price conscious segment of the market
by providing similar and better quality branded product at lesser price.
_______________________________________________________________________
115, 134 & 165
 Emphasizing on excellent service to the other wholesalers.

 Adapting to the rapid social and economic changes.
 Improving the packaging will increase the life of tea and hence would
secure the overall distribution and selling techniques.
 Regular flow of local as well as Export orders is the key success factor for
efficiently running of the project.
 Selection and procurement of consistent quality raw material would be
another contributing factor for carrying out successful operations of
proposed project.
 Competitive price of products.
 Abundant supply of raw material.
 Cost efficiency through better management.
 Media campaign for the awareness of the retail customers.
 Availability of low cost skilled labor.
_______________________________________________________________________
115, 134 & 165
PRODUCTS OF THE COMPANY
The project involves buying loose tea and then packing and marketing the
product under a brand. The branded tea will be positioned in competition with
other branded and unbranded tea. The brand standardization will be done
through the combination of different types of unbranded/open tea available . It
is suggested that the company should initially introduce its products in the rural
or small town markets where brand awareness is easy to make and heavy
advertisement budget is not required.
The proposed product mix of the company is as under;
 Jasmine (Black) CHAI

 Jasmine Green CHAI
 Jasmine Iced CHAI
 Jasmine Flavored CHAI
The brand name for the product will be “CHAI”. All the brands of the company
will be marketed under the name of Jasmine. The demand for the Black Tea is
largest in the country and the company will use most of its capacity to produce
the black branded tea. With the passage of time the company will enhance the
depth of its brand by adding unique tastes.
_______________________________________________________________________
115, 134 & 165
Proposed Tea Packing
_______________________________________________________________________
115, 134 & 165
Competitors :
_______________________________________________________________________
115, 134 & 165
PROJECT BACKGROUND
Project Brief
The project involves buying loose tea and then packing and marketing the
product under a brand. The branded tea will be positioned in competition with
other branded and unbranded tea. The brand standardization will be done
through the combination of different types of unbranded/open tea available.. It
is suggested that the company should initially introduce its products in the rural
or small town markets where brand awareness is easy to make and heavy
advertisement budget is not required.
Opportunity Rationale
In Pakistan, a morning and evening cup of tea is an essential part of everyday

culture. This tradition has existed for many years. Every guest in a home in
Pakistan is most likely to ask for a cup of tea to relax after a demanding journey.
This trend has always created a strong demand for tea in Pakistan and made it
the world's third largest importer of tea. In terms of tea consumption, it is the
seventh largest country. Even in summer when the weather is extremely hot, tea
is drunk twice a day.
During the review period, the hot drinks market grew in both volume and value
terms. Tea dominated the market in both the retail and foodservice channels. Tea
is a part of daily life, and rural areas generate the most sales. Rural areas drove
sales growth because they consist 66% of the country's population.
Consequently, companies have to focus on rural areas to maintain their market
shares. Throughout the review period, sales of loose black standard tea were
very dynamic as consumers in rural areas always buy loose black standard tea.
Introducing affordable brand in such areas would attract sales. On the other side,
_______________________________________________________________________
115, 134 & 165
in urban areas, offices prefer to use tea bags. Such a market could also be
explored with low cost and high product quality.
In rural areas and small towns new brands of tea are relatively easy to introduce.
The tea sachet packets have seen high sales growth throughout the country and
especially in rural areas.
Economic Rationale
Out of every five, one Pakistani starts his day with a cup of tea. One has drawn
the conclusion from the data pertaining to Pakistan’s tea imports last year when
the country imported tea of $220 million.
Consumption of one kilogram of tea per head and 1.8 per cent annual growth in
population, Pakistan’s tea imports are constantly rising. Due to the growing
demand, some 40 to 60 million-kilogram tea is also smuggled into Pakistan,
largely under the guise of Afghan Transit Trade, causing considerable revenue
loss to the exchequer in the shape of duties and taxes.
Pakistan averages approx. 1 Kg per person per annum. On average a tea
drinking Household consumes 4.85 kg of tea/year. Nationally, 4.63 kg in urban
& 5.4 kg in rural areas. This translates into a daily consumption of 2-4 cups per
day.
As the world's third largest importer of tea, Pakistan has called for a single
market in Asia for the optimal utilization of resources and expansion of the trade
in the sub-continent. Consumption of tea is increasing at 4% p.a.
Pakistan is the second largest tea importer after Russia with consumption of 180
million kilogram a year, imports about 120 million kg annually, while rest of the
60 million is brought into the country through smuggling.
Market Entry Timing

The tea business can be started in any month of the year as it is consumed
throughout the year. The demand of the tea will be raised in the country because
it is the cheapest refreshing drink that the people of Pakistan used to drink and
also as the population of the country raises its demand will automatically raised.
_______________________________________________________________________
115, 134 & 165
Business Legal Status

It is recommended that this project should be started as sole proprietorship or
partnership as it does not involve heavy investment. Moreover, less
complications and costs are involved in forming, administering and running the
sole proprietorship or partnership business.
Project Capacity and Rationale
The total capacity of the project will be 1500000 kilograms production of the
branded tea. In the beginning the company will utilize its 60% of the capacity for
the processing of the raw tea into the branded one, which will be 900000
kilograms of the branded tea. The company will enhance its capacity utilization
by 10% annually. .
The project consists of a sachet-manufacturing machine having production
capacity of 3,000 sachets per hour and two box-making machine with production
capacity of 2,640 boxes (60 g and 125 g packs) per hour and 1,200 boxes (250 g
packs) The box packing would be in three different sizes i.e. 60g, 125g, and 250g.
The project is assumed to start with 60% capacity utilization. At the 60% capacity
utilization the company will produce 900000 kilograms of branded and quality
tea that will be available to the consumers in the markets of rural as well as the
urban areas of the country. At 60% capacity utilization, the production
breakdown of the four different categories of products is shown in the table
below:
Production breakdown at 60% Capacity Utilization
Sachets 60 Gms 125 Gms 250 Gms

Production %age 45% 25% 15% 15%
Kilograms of Tea 405000 225000 135000 135000
Total Production
900000Kilograms at 60% Capacity Utilization
The table shows the capacity utilization of the 60% for the very first year of the
operations of the company. This capacity will be utilized by producing
900000kilograms of the branded tea, which will be distributed into sachets, 60
_______________________________________________________________________
115, 134 & 165
grams, 125 grams and 250 grams packing. The production will be sold as, 45% of
the production will be sold by sachets or tea bags. 25% of the production will be
sold by 60 grams, 15% of the production is sold by 125 grams and remaining 15%
of the production will be sold by 250 grams packing. In the coming years the
company will add 500 grams and 1000 grams packing and jars into its product
mix.
INDUSTRY ANALYSIS
World Scenario
Leading tea producers of the world
 Kenya
 India,
 Sri Lanka,
 Japan
 China,
 Taiwan
 Indonesia and
 Malawi.
Large tea importers of the world
 Russia … 172,145 metric tons (17.8%)

 United Kingdom … 156,311 mt (16.2%)
 Pakistan … 115,967 mt (12.0%)
 United States of America … 99,484 mt (10.3%)
 United Arab Emirates … 65,826 mt (6.8%)
 Japan … 56,234 mt (5.8%)
 Morocco … 45,670 mt (4.7%)
 Germany … 43,409 mt (4.5%)
 Poland … 32,119 mt (3.3%)
 Syrian Arab Republic … 30,330 mt (3.1%)
 Netherlands … 29,155 mt (3.0%)
 Canada … 18,835 mt (1.9%).$
_______________________________________________________________________
115, 134 & 165
Industry Scenario in Pakistan
 Pakistan imports tea from 21 countries and the major portion is imported
from Kenya.
 Pakistan meets its green tea requirement from 5 countries in which China
and Vietnam take lion’s share.
 Pakistan is the world’s third-biggest importer of tea, consuming around
220 million dollars worth every year, while Sri Lanka is the world’s largest
tea exporter, with annual exports worth $ 660 million.
 Pakistan now imports just 2 percent, or 2.4 million kilograms, of its total
annual consumption of tea from Sri Lanka, which lost its market in that
country to Kenya six years ago.
Leading Tea Brands in Pakistan
A vast range of branded and unbranded tea is available in the market. The top
leading brands having an enormous range of products are:
1. Brooke Bond Supreme
Supreme is Pakistan’s largest brand of tea, with over 30 million cups consumed
daily and is made primarily from the world’s finest Kenyan tea. The success of
Brooke Bond Supreme is based on this very insight, since tea is a part of the
social fabric of Pakistanis. Brooke Bond Supreme was launched in Pakistan in
1984. Since then Brooke Bond Supreme has never looked back and today, is the
largest selling tea brand in Pakistan.
Their products range from:
 Supreme 125g
 Supreme 250g
 500g Supreme
 Supreme 60g
_______________________________________________________________________
115, 134 & 165
 Supreme jar
 Supreme sachet
 Supreme Triple sachet
2. Brook Bond A1 Karak Chai
A1 is the individual’s aegis. Launched in 1996 the brand has certainly come a
long way to acquire national status. It has two variants catering to regional taste
preferences, mixture for the South and leaf for Punjab.
A1 has a unique standing thanks to its strong blend, which translates into the
strength of the common man.
Their products range from:
 Leaf tea
 Mixture
3. Tetley Tea
Tata Tea has been ranked in the 20th position among 275 brands (195 consumer
products and 80 service brands) in the Most Trusted Brands Survey conducted
by The Economic Times, which makes it the only tea brand to figure in the top 50
list.
Tetley tea has introduced by Tata tea in Pakistan predicting that this new arrival
is likely to give a tough competition to some of the old market players. The firm
has initially introduced two tastes namely “danedar” and “mixture.” A pack of
400 grams of Tetley tea has a price tag of Rs 120 while Tapal’s 500 grams pack is
available at Rs 140. The company introduced four packs of 400 grams, 200, 100
and 45 grams.
_______________________________________________________________________
115, 134 & 165
4. Lipton
Lipton is the world's leading brand of tea by far. It's the global market leader in
both leaf and ready-to-drink tea, giving a global share of all tea-based beverages
that's nearly three times larger than its nearest rival.
Their product ranges from:
 Caramel flavored
 Cookies flavored
 Vanilla flavored
 Lipton Green Tea
 Lipton Yellow Label tea bags
 Lipton Yellow Label sachet
 Yellow Label pack
5. Tapal Tea
Tapal chai family mixture is the pride of Tapal developed in 1947 and thus
creating a new category of mixture in tea market.
It is the blend that started the Tapal success story, and now the other tea
companies are following Tapal’s footsteps by entering the market with similar
blends. Danedar Leaf Blend Pioneer of the Danedar category in Pakistan, Tapal’s
Danedar remains a firm favorite around the country with its grape-nutty
appearances, rich golden color and a strong refreshing taste. In fact its popularity
is such that several multinationals have launched their own versions, but Tapal’s
remains the original and ultimate Danedar because of its unique color and taste.
Their range of products is as follows:

 Family Mixture
 Safari Kenya Leaf
 Mezban Super Dust
 Chenak Kenya Dust
_______________________________________________________________________
115, 134 & 165
 Special Teabags
 Jasmine Green Tea
 Gulbahar Green Tea
 Tezdum
 Special Round Teabags
 Danedar Leaf Blend
COMPETITIVE ANALYSIS
PORTER’S FIVE-FORCES MODEL

Potential
New Entrants
Bargaining Intra-Industry Rivalry Bargaining

Power of Tea Products Power of
Suppliers Buyers
Substitute
Products
The Bargaining Power of Buyers
The power of buyers is the impact that customers have on a producing industry.
In general, when buyer power is strong, the relationship to the producing
industry is near to what an economist terms a monopsony - a market in which
there are many suppliers and one buyer. Under such market conditions, the
_______________________________________________________________________
115, 134 & 165
buyer sets the price. In reality few pure monopsonies exist, but frequently there
is some asymmetry between a producing industry and buyers.
The bargaining power of the buyers is low in the country. Because what so ever
is producing by the companies it is accepted by the consumers. There is no
involvement of the consumer in deciding the taste of the tea.
The Bargaining Power of Suppliers
A producing industry requires raw materials - labor, components, and other

supplies. This requirement leads to buyer-supplier relationships between the
industry and the firms that provide it the raw materials used to create products.
Suppliers, if powerful, can exert an influence on the producing industry, such as
selling raw materials at a high price to capture some of the industry's profits.
All the sellers of the raw tea are in India, China, srilanka, Japan, Taiwan, Kenya,
and Malawi. If any of the suppliers raises its prices, we can shift to another
supplier.
Barriers to Entry / Threat of Entry

It is not only incumbent rivals that pose a threat to firms in an industry; the
possibility that new firms may enter the industry also affects competition. In
theory, any firm should be able to enter and exit a market, and if free entry and
exit exists, then profits always should be nominal. In reality, however, industries
possess characteristics that protect the high profit levels of firms in the market
and inhibit additional rivals from entering the market. These are barriers to
entry.
There are no barriers to entry in the tea processing industry, because the
machinery, labor and raw material is readily and easily available in the country.
The retaliation level of the companies in the industry is very low. Because the
companies have generations of the loyal customers
Rivalry
_______________________________________________________________________
115, 134 & 165
The market structure of the tea industry is oligopolistic. All the companies in the
industry are charging the same prices against there products. If any of the
company enhanced the prices of the tea, all the companies followed the same
path. There are few firms in the industry like Supreme, Lipton, Tetley, Tapal etc
and all the firms are competing on the basis of the huge marketing campaigns in
the media.
Threat of Substitutes
In Porter's model, substitute products refer to products in other industries. A

threat of substitutes exists when a product's demand is affected by the price
change of a substitute product. A product's price elasticity is affected by
substitute products - as more substitutes become available, the demand becomes
more elastic since customers have more alternatives. A close substitute product
constrains the ability of firms in an industry to raise prices.
The direct competitor of the tea is coffee and indirect competitors are soft drinks
but it is costly in the country, so we can say that there is no threat from the
substitute products.
_______________________________________________________________________
115, 134 & 165
TECHNICAL ANALYSIS
Location of the Project
Our tea company will be located in industrial zone of Multan.
The site enjoys the following advantages: -
 Access to the main road, Sources of Power, water, fuel etc.

 Availability of transport & communication like telephone, telex, Internet
etc.
 Availability of skilled and Un-Skilled manpower
 Free from other environmental hazards like water logging, floods, salinity
etc.
Current Industry Structure
In rural areas of Punjab and Sindh, there is relatively more trend of using loose
unbranded tea by the consumers as compared to popular brands. Small local
brands are also commonly sold in these areas. The mixture of different blends
not only gives better taste but also better color.
There are five major categories of unbranded (loose) tea available in the market.
The details are:
_______________________________________________________________________
115, 134 & 165
Black Unblended Tea
Category Origin
Assam India
Ceylon Sri Lanka
Darjeeling India
Nilgiri India
Sikkim India
Yunnan China
Scented/Flavored Tea
Category Origin
Jasmine China
Earl Grey China
Lapsan Souchong China, Taiwan
Oolong Tea
Category Origin
Tie Guan Yin China

Formosa Oolong Taiwan
Pu-erh China
Green Tea
Category Origin
Genmaicha Japan
Gyokuro Japan
Spider Leg Japan
Mattcha Japan
Sencha Japan
_______________________________________________________________________
115, 134 & 165
Hojicha Japan
Genmaicha Japan
Longjing China
Baozhong China
Gunpowder China
Other Popular Blends
Some of the other popular blends are:
 English Breakfast
 Irish Breakfast
 Russian Caravan
Plant and Facilities

The building will be constructed for the processing of the unblended tea . The
regional office of the company will be located in the same city. The head office of
the company will be located in Multan and subsidiary office will be at
Bahawalpur. Where the offices of the CEO and all the functional heads will be
established.
Raw Material Requirement
The raw material required for the production process is unblended and blended
tea imported from areas like Kenya, Indonesia, Turkey, Russia, Africa and South
America.
_______________________________________________________________________
115, 134 & 165
TEA PROCESSING DETAILS
There are mainly seven divisions in the tea-processing unit. These are;
 Withering Unit
 Rolling and Cutting Unit
 Fermentation Unit
 Drying Unit
 Shorting / Grading Unit
 Packaging Unit
 Auxiliary Work Unit
Withering Unit
It is the first stage of tea manufacture. During
withering harvested tea flush is evenly spread on
the withering troughs, which are normally 4 to 5
feet wide and 50 to 70 ft long. During the process
hot and cold air is blown through to remove the
moisture of fresh leaf to 30-40 percent, which is
achieved during 16 to 18 hours of period. The
prime object of withering is to make the turgid leaf
flaccid and prepare the leaf for next stage to
facilitate rolling.
_______________________________________________________________________
115, 134 & 165
Rolling and Cutting Unit
The withered leaf is charged in the rollers,

which vary in size. Normally they are 36"
and 48" rollers capable of rolling 70 to 120
kg of withered leaf. The pressure is
exerted on the leaf in 'open and pressure'
sequence. This operation lasts for 45
minutes. During this process tea leaf is
twisted as a result of repeated rolling
action and simultaneously leaf tissue
rupture thus forcing out the cell-sap
which spreads as a this film on the surface
of the leaf. Various enzymes and their
substrates come in contact and enzymatic
oxidation starts at this stage. The green color of leaf starts diminishing and
brown coppery color of leaf begins to appear.
Fermentation Unit
Rolled leaf is put on fermentation racks
specially made of tiles, cement or aluminum.
Fermentation rooms are kept clean and cold.
Fermentation is carried out at low
temperature. In hot season the air is kept
humid with the help of humidifiers with less
_______________________________________________________________________
115, 134 & 165
than 200c hygrometric difference Optimum fermentation is adjudged by the subjective

assessment of the tea maker. Fermentation period varies from 2 to 3 hrs depending on the
type of leaf, degree of wither, temperature, availability of oxygen and fermenting ability
of the tea flush. The time of fermentation is reckon from the time at which rolling begins.
Fermentation is a very sensitive process. Even 5 minutes time delay in adjusting the
correct fermentation period is likely to deteriorate flavor appreciably. During
fermentation the leaf changes color and becomes dark coppery. A typical aroma develops
at this stage. The term 'Fermentation' is a misnomer and, in fact, it is an oxidative
process. Oxidation of catechin / polyphenols by the enzyme polyphenol oxidize is the
main reaction of the process that imparts 'tea character' to the black tea
Drying Unit
Fermented leaf is loaded onto the dryer,

which comprises perforated moving trays.
The dryer inlet temperature is maintained
at 200 to 2400F. Thickness of spread, speed
of trays and volume of air blown through
are regulated meticulously so as to achieve
the correct drying. Low exhaust
temperature often produces stewed teas
while high temperature in the initial stages
is apt to casehardening of teas. The whole
process of drying is completed within 20 to
30 minutes. The moisture content of the
final product is kept at 2 to 3 percent. Teas
are normally fired at high temperature,
which is considered essential for squeezing
the correct balance of volatile flavor
compounds in high quality teas. During the drying process enzymes responsible
for fermentation are inactivated and even after the tea is dry the maturation
process continues and tea attains the mellowness a desirable character of
Darjeeling teas.
Shorting / Grading Unit
_______________________________________________________________________
115, 134 & 165
For grading there is a vibrator

plate, one conveyor and one motor
base-vibrating device where
various size sieves are assembled,
through which we get different
grade tea. First, the vibrator plate,
which is, called pannual shifter
extract the unwanted fiber particle
for the final product and then the
ready to use tea is carried to the
sieve through a conveyor by a
motor. Then the conveyor drops
the tea in the vibrator mouth and
finally the pinion motor give eight different grades of the tea. The bulk tea is
sorted on mechanically oscillated sieves. The sieve size decreases gradually from
top to bottom. Thus the bigger size teas are retained on the top while the broken
leaves fall towards the floor.
Blending unit
The blending unit has the capacity to blend 4000 Kg of un blended tea. For the
preparation of one fine blended product it takes 30 minutes.
Packaging Unit
Now comes to the last stage of all in our account of the tea manufactures
packing. Boxes, lined with sheet lead are weighted and placed ready in the tea
house; all the tea that is about to be packed is re-fired over tremendously hot
_______________________________________________________________________
115, 134 & 165
dhools in order to get rid of any moisture that may be retained, then weighed, the
lead lining is soldered down as rapidly as possible, the weight of the box and the
net weight stamped on the outside. Lead nailed down, the gardeners private
mark, together with the number of the grade put in the conspicuous plate.
PRODUCTION PROCESS DIAGRAM
Production Process Flow
The final product will be passed through the following steps. The company will
add the value at every step and there will be no compromise on the quality from
the raw stage till the consumption point
Sorting of Different
Blends
Mixing of Different
Blends
Mixture of Blends Separated Mixture of Blends Separated

for Box Packing for Sachet Packing
_______________________________________________________________________
TeaProjecticians
The Box Packing 32 Tea Sachet Packing
Roll No s’:
115, 134 & 165
Printing and Labeling

WORK BREAKDOWN STRUCTURE
The work breakdown structure (WBS) is a powerful tool for expressing the scope
or extent of a project in simple graphic terms. It represents the project in terms of
the hierarchy of deliverables and services it will produce. The project is therefore
described just as a manufacturer would document the bill of materials
breakdown for a washing machine or automobile. The WBS starts with a single
box at the top, which represents the whole project. The project is then partitioned
into its components with lower level boxes. The Work Breakdown Structure
(WBS) is used to provide the framework for organizing and managing the work.
WBS Role
The role of the WBS is to:
 Partition the major project deliverables into smaller components to

improve the accuracy of cost estimates
 Provide a mechanism for collecting and organizing actual costs
 Provide a mechanism for performance measurement and control
The deliverable of the project is the tea pack for the satisfaction of the customer’s
need. The deliverable cannot be provided directly rather it will be passed
through certain processing and all the details of the processing are available in
the work breakdown structure diagram.
_______________________________________________________________________
115, 134 & 165
_______________________________________________________________________
115, 134 & 165
RESPONSIBILITY CHART OF THE PROJECT
Project Coordinator
Marketing Manager
General Manager
Project Manager
Manufacturing
Field Manager
Mechanical
Manager
Engineer
Establish Project Plan 6 1 2 3 2 2 2
Define WBS 1 4 2 2 2 2
Manufacturing Plan 4 4 2 2 1 4
Financial Plan 1 4 2 3 2 2
Prepare Labor Estimate 4 2 1 2 1 2
Prepare Equipment Cost Estimate 1 2 3 2 2 1
Prepare Material Costs 4 2 3 5 1 1
Make Program Assignments 4 4 2 4 1 2
Establish Time Schedules 4 1 2 3 5 2
Assessment of Risks 1 4 3 4 4 2
Define Documentation 1 2 2 2 2 2
Quality Assurance 1 4 2 2 1 4
Project Audit (Internal) 1 2 2 2 4 2
Market Plan 2 4 5 1 4 2
Software and Computer affairs 3 2 2 4 2 2
Project Control 1 2 2 2 4 4
1 = Actually Responsible
2 = May Be Consulted
3 = Provides the Market Data
4 = Must Be Consulted
5 = Must Be Notified
6 = Final Approvals
_______________________________________________________________________
115, 134 & 165
PROJECT REQUIREMENTS
Machinery Requirements Details

The project will require the machinery for the processing of the raw tea in to the
blended tea, following is the list of the machinery and equipment that will be
require for the conversion process in the various processing units.All the
machinery will be available in Pakistan ,USAMA builders Karachi.
 Blending Unit
 Pannual shifter
 Magnetic platter
 Motor base-rotating drum device
 Pinion motor
 Packaging Unit
The project will purchase two sachet-manufacturing machine having production

capacity of 3,000 sachets per hour, two box-making machine for 60 g and 125 g
packs with production capacity of 2,640 boxes per hour, and two box-making
machine for 250 g packs with production capacity of 1200 boxes per hour. These
machines are locally fabricated. The machinery is available in Karachi from
USAMA builders and is designed for carrying out assembly line operations. The
machinery is semi-automatic. The assembly line would involve direct labor
placed on either sides of the manufacturing table. Inputs would be introduced
from one end of the table and would be worked upon as they pass down various
manufacturing levels towards the other end of the table. The estimated cost of
machinery is subject to change according to market trend.
Technology and Processes
On the technology front, local machines have dominated the Pakistani packaging
industry since long. These machines are time tested. Easy availability of machine
parts and abundant technicians makes Pakistani machinery the first choice for
the entrepreneurs. New Pakistani machines are easily available in the local
market.
_______________________________________________________________________
115, 134 & 165
Machine Maintenance
The machinery maintenance would be an on going process whenever required. It

is mentioned in the key financial assumptions the project will consume 1% of the
cost of production. This is necessary for the maintenance of machinery and
equipment.
Raw Material Requirements
The raw material required for the production process is unblended and blended
tea imported from areas like Kenya, Indonesia, Turkey, Russia, Africa and South
America.
In the rural areas of Punjab and Sindh, there is relatively more trend of using
loose unbranded tea by the consumers as compared to popular brands. Small
local brands are also commonly sold in these areas. The mixture of different
blends not only gives better taste but also better color.
There are five major categories of unbranded (loose) tea available in the market.
The details are:
 Black Unblended Tea

 Scented/Flavored Tea
 Green Tea
 Oolong Tea
Some of the other popular blends are:
 English Breakfast
 Irish Breakfast
 Russian Caravan
_______________________________________________________________________
115, 134 & 165
Location of the Project

Our tea company will be located in industrial zone of Multan.
The site enjoys the following advantages:-
 Access to the main road, Sources of Power, water, fuel etc.

 Availability of transport & communication like telephone, telex, Internet
etc.
 Availability of skilled and Un-Skilled manpower
 Free from other environmental hazards like water logging, floods, salinity
etc.
Plant and Facilities

Building will be constructed for the processing of the unblended tea and
production of the branded tea. The regional office of the company will be located
in the same city. The head office of the company will be located in Multan and
subsidiary office at Bahawalpur. Where the offices of the CEO and all the
functional heads will be established.
Construction Company:
Process Dynamic Engineering and construction company, Lahore.
_______________________________________________________________________
115, 134 & 165
MARKETING PLAN
Steps in Developing Marketing Plan;
1. Define Business Situation
2. Defining Target Market
3. SWOT Analysis
4. Development of Goals and Objectives
5. Key Success Factors
6. Development of Marketing Strategies & Action Plan
7. Budgeting of Marketing Plan
8. Implementation of Marketing Plan
9. Monitoring
Define Business Situation
Basically while defining the business plan we actually intended to do the

‘Situation Analysis’.
The situation analysis describes past and present business achievements of new venture.
The situation analysis is a review of where we have been. It responds to the first
of three questions such as:
 Who are the users, where they are located, how much do they buy, from
whom do they buy, and why?
 How have promotion and advertising been employed and which

approach has been most effective?
_______________________________________________________________________
115, 134 & 165
 What are pricing changes in the market, who has initiated theses changes,
and why?
Defining Target Market

Target market is specific group of potential customers toward which venture
aims its marketing plan. Target market provides a basis for determining the
appropriate marketing action strategy that will effectively meet its needs. The
defined target market will usually represent one or more segments of the entire
market. Market segmentation is process of dividing a market into definable and
measurable groups for purposes of targeting marketing strategy.
Segmenting and targeting customers by entrepreneur normally incorporate

following concerns.
 Decide what general market or industry you wish to pursue.

 Divide the market into smaller groups based on characteristics of the
customer or buying situations.
 Select segment or segments to target.
Market Segments
According to buying power and purchase patterns, the market for tea can be
broadly classified into three major segments.
 Lower Segment, which includes tea consumed in the rural areas and in
the urban areas in the lower income households like office staff, labor etc.
This segment accounts for almost 70% of the total market.
 Middle Segment, which includes middle and upper income households

in the urban areas. It accounts for about 20% of the total market.
 Upper Segment, which includes the tea consumers in the upper income
segment of the society, accounting for 10% of the total.
_______________________________________________________________________
115, 134 & 165
SWOT Analysis
STRENTHS
Following factors are the key in making the project profitable:
 Regular flow of orders is the key success factor for efficiently running of
the project.
 Selection and procurement of consistent quality raw material would be
another contributing factor for carrying out successful operations of
proposed project.
 Competitive price of end products.
 Abundant supply of raw material.
 Cost efficiency through better management.
 Media campaign for the awareness of the retail customers.
 Availability of low cost skilled labor.
WEAKNESSES
The major weaknesses in this field of business are:
 Poor-availability of suitable processing variety of raw materials at present.

 Existing technology obsolescence.
 Poor infrastructure facilities such as irregular power supply, high inland
transportation cost and lack of cold chain facilities etc.
 The other major weakness in Pakistan food industry is the lack of
coherence and co-operation amongst the processors and exporters due to
which the problems can not be effectively addressed and tackled
collectively.
 Non Availability of properly quality raw material at competitive prices,
which fluctuate depending upon the harvesting season crop.
_______________________________________________________________________
115, 134 & 165
THREATS
The proposed project will be facing the following threat:
 Competition from the local unorganized sector

 Imposition of Quality and Environment standards by importing countries
 Decline in the average sale price for products
 Influence of major local and foreign brands operating in the market
 Change in Government regulations
Product Mix
Loose imported tea is a vast product group available from which countless
blends can be made altering the mix of different tea leaves for color and taste.
The product would be of a blend that would give a unique taste in such a way to
focus the lower and middle-income groups of people. Such classes of consumers
usually focus on strong taste and color. The price would be less than that offered
by the brands targeting higher-end consumer classes. The box packs would be in
three different sizes of 60 grams, 125 grams and 250 grams. Other than this the
product would also be packed in 7 grams sachets. Twenty sachets would be
packed in a box for sale to the wholesalers.
The proposed product mix of the company is as under;
 Joosh (Black) CHAI

 Joosh Green CHAI
 Joosh Iced CHAI
 Joosh Flavored CHAI
The brand name for the product will be “CHAI”. All the brands of the company
will be marketed under the name of Joosh. The demand for the Black Tea is
_______________________________________________________________________
115, 134 & 165
largest in the country and the company will use most of its capacity to produce
the black branded tea. With the passage of time the company will enhance the
depth of its brand by adding unique tastes.
Marketing Strategy
Our marketing budget is set at 1% of our overall sales revenue. This budget will
be used to reach our targeted customers through cost-effective marketing
campaigns. On-going processes will be geared to promote the brand name and
keep the venue at the forefront of entertainment establishments in the
Bahawalpur area. Our marketing efforts will focus on the following channels for
reaching new and repeat customers:
 Website
 Print
 Neighborhood Marketing
 Radio
 Television
 Email/Newsletter
 Road Shows
Website
A website is an important component of our advertising and marketing

campaign, allowing us to stay in contact with our customers and provide up-to-
date information regarding all of our products. We will launch a website within
the first month of operations, and develop the website's content over the first six-
months. The site will include product mix details, upcoming new quality tea
taste, along with online registration for job opportunities.
Print Advertising
Through commercial repetition, a teaser campaign, and the use of catchy

phrases, we will focus on our target market segments.
Neighborhood Marketing
_______________________________________________________________________
115, 134 & 165
We will advertise directly to local hotels and surrounding businesses in the

country to attract businesses to be our customer. Through the use of fliers and
table tents placed in hotel rooms, we will create visitor awareness of our location
and products. Promos such as 'show your room key and get a free drink' in
conjunction with the room ads would be relatively inexpensive from an
advertising standpoint and requires limited ongoing maintenance and expense.
Print ads will appear in the local and college newspapers serving the region.
Radio Advertising
The company will utilize the FM radio channels to create the brand awareness
and loyalty in the various regions of the country.
In-Store Promotions
Shirts, cricket caps, hand bags, and bumper stickers bearing the company logo
will be marketed, as well as given away as prizes to spread brand awareness.
Email/Newsletter
Loyal, repeat customers are critical to our success. To drive repeat business
revenue, we will maintain an 'opt-in' database of customers. This valuable
database will be used to distribute monthly email newsletters. The newsletter
will be a vehicle to announce our upcoming programs, upcoming new games
and specials. The newsletter will provide timely information regarding market
share, job offerings, and special Members announcements.
Road Shows
The company will create brad awareness by conducting extensive road shows
through out the country in the beginning. Here the potential customers will be
made familiar with the new taste of CHAI. New recipes of making a delicious
cup of CHAI will be shared with the potential customers.
Electronic Media
The company will launch an extensive media campaign to introduce its products
in front of the potential consumers. Various schemes will be introduced through
_______________________________________________________________________
115, 134 & 165
the electronic media to enhance the sales of the product and to make the loyal
customer.
Distribution Mix
Mode of Transportation
The company will use the trucks as a mode of transportation and full truck load
strategy. The reason is, that we will producing standardized tea and its demand
can easily be calculated. So full truck load strategy would best strategy for that.
Storage
The company will use distribution channel instead of warehouses for storage the
inventory. It would save our cost and also helpful for the efficient movement of
inventory.
Exclusive Dealership
The company will use exclusive dealership strategy. In which we will give one
distribution channel in a territory.
Mode of Communication
The company will use internet and phone initially .We will receive our order
both, on internet and on telephone and then response accordingly.
_______________________________________________________________________
115, 134 & 165
ORGANIZATION PLAN
Form of Business
The business of “TEA Processing Unit” that we are going to start. We start it in
the form of partnership format. There will be three total partners and all will be
active partners and have equal responsibility of profit and loss and no one is
limited partner in that business. And also have equal share in the investment
and profit of the business.
_______________________________________________________________________
115, 134 & 165
Chairman
CEO
CFO
Manager HR Manager Finance Manager Marketing
Assistant Manager Assistant Manager Assistant Manger

HR Finance Marketing
Organizational Structure
Management Commitment
Top management demonstrates its commitment to the development and
implementation of the quality management system and continually improving
its effectiveness by:
 Communicating the importance of meeting customer requirements as well

as statutory and regulatory requirements. Establishing the quality policy.
 Review and approve quality objectives.
_______________________________________________________________________
115, 134 & 165
 Conducting management reviews.
Customer Focus
Top management, through its internal systems, ensures that customer

requirements and needs are determined and are met with the aim of enhancing
customer satisfaction.
Customers of the Company Include:
1. Clients
2. Employees of the company.
3. Creditor/fund-providers
4. Society in terms of the community and the public affected by the organization
or its service.
Quality Policy
Top management has established a quality policy and ensures that it:
 Is appropriate to the purpose and scope of the company.

 Includes a commitment to comply with requirement and continually
improvement the effectiveness of the quality management system.
 Provides a framework for establishing and reviewing quality objectives.
 Is communicated and understood within the company.
 Is reviewed for continuing suitability.
Planning
Quality Objectives
Top management establishes quality objectives at each relevant function and
level, including those needed to meet service requirements. The quality
objectives are measurable and consistent with the quality policy and annually
reviewed by top management through the Management Review Meeting. Top
_______________________________________________________________________
115, 134 & 165
Management ensured that quality objectives are specific, measurable, and

realistic and measured with time.
Quality Management System Planning

Top management has identified and defined activities and resources needed to
achieve quality objectives and meet customer requirements. Planning is
consistent with other requirements of the quality system, and it is carried out in
order to meet the quality objectives, the results are documented. The integrity of
the quality management system is maintained when changes to the quality
management system are planned and implemented.
Responsibility, Authority and Communication

Responsibilities and authorities are defined within the organization charts and
job descriptions. The Administration Director is responsible for preparing the
organization chart which revised and approved by Chairman before
communicated through the company.
Human Resource Requirements

For the management of the proposed project we think that, a total of fifty people
are required excluding the owners.
Reward System
The reward system that is suitable for the project is variable plus fixed salary
structure the variable salary will be dependent of the performance of the workers
and fixed will be given to provide social security of the workers.
Training and Development

Two weeks Training should be given to every employee in the respective fields
in the start of the business. Then time to time the performance of the employees
will be monitored and if there is found any gap between the actual performance
and the required performance then the training will be conducted.
FINANCIAL PLAN
The purpose of the financial plan is to estimate start-up and ongoing costs;
identify revenue streams; and forecast net cash flow and profits. The venture will
be funded partners through paid-in capital provided by the owners and debt will
be taken from the bank.
_______________________________________________________________________
115, 134 & 165
Important Assumptions
The financial plan depends on important assumptions. The key underlying

assumptions are:
 We assume that price will be a key competitive element in the first three
years of operations where competitors in the business will seek to cut into
our business through price cutting.
 The marketing expenses will be considered to be the 1 % of total sales.
 We assume continued popularity of products of the company and the
growing demand for high quality and refreshing tea.
 We assume that average daily consumer drinks two cups of tea.
 We assume that the capacity of the production will be enhanced by 10%
annually.
 Initially the company will utilize only 60% of the total installed capacity in
the very first year.
 The sales price of the product will be directly releated to the competitors.
Some of the important assumption regarding the production, cash flow,

expenses, depreciation and financing assumption are listed in the following
tables.
Production Assumptions
Maximum Attainable Capacity In Percentage 100%

Capacity Utilization (1st Year) In Percentage 60%
Production Capacity In K.g (60% in first year) 900000Kilograms
Production Capacity Utilization Growth Rate 10% per year
Cash Flow Assumptions
Raw Material Inventory Cycle (In Days) 30 Days

Accounts Receivables Cycle (In Days) 2.5% of sales
_______________________________________________________________________
115, 134 & 165
Accounts Payable Cycle (In Days) 25% of purchase
Expense Assumptions
Machine Maintenance 1% of the cost

Pre-Operational Expense Rs.2235000
Wages Growth Rate 10%
Deprecation Expense Assumptions
Plant & Machinery Depreciation Rate 10%

Furniture & Fixtures Depreciation Rate 5%
Vehicle Depreciation Rate 20%
Building 5%
Financing Assumptions
Debt 60%
Equity 40%
Tax Rate 35% of sales
PROJECT ECONOMICS
Energizer Tea Company Private Limited
Estimated Cost of Project
_______________________________________________________________________
115, 134 & 165
(RS.000)
COST OF THE
PROJECT LOCAL TOTAL

- Project Land & Its
Development 17000 17000
- Building & Civil Works 25800 25800
- Local Machinery 2280 2280
- Engineering /Technical
Fees 200 200
- Erection & Installation 50 50
- Furniture & Fixture 500 500
- Vehicles 425 425
- Mark-up during
Construction 2905 2905
- Pre-production
Expenses 2235 2235
contingencies 200 200

TOTAL FIXED COST: 51595 51595
- Initial Net Working
Capital 6,047 6,047

TOATL COST OF
THE PROJECT: 57643 57643
Raw Material Requirement
For Sachets
Total sachets at 100% operating capacity.

{(333 sachet*8 hours*350 days*2)100%}=1864800 sachets of 8 grams
{(1864800sachets * 8 grams)/1000} = 14918.4 kg/annum.
14918.4 kg*150/Kg = Rs. 2237760
_______________________________________________________________________
115, 134 & 165
For Boxes (125 grams)
Total boxes at 100% operating capacity:

(233 boxes*8 hours*350days*2)100%=1304800 Boxes of 125 grams
{(1304800 Boxes *125 grams)/1000} = 163100 kg/ annum.
163100 kg/ annum* 180/ kg = Rs.29358000

(200 boxes*8 hours*350days*2)100%=1120000Boxes of 250 grams
{(1120000 Boxes *250 grams)/1000}= 280000 kg/ annum.
280000 kg/ annum* 180/ kg = Rs50400000
Total annual material requirement: (Rs 000)

2238+29358+50400 =81996
Raw Material Inventory Kept:

Rs.81996/350*30 days= Rs.7028
Financial Plan:(Rs.000)
IDBP loan 60% Rs. 34586
Equity 40% 23057
Total 57643
Estimated Cost of Land
_______________________________________________________________________
115, 134 & 165
Sr. No Description Rate per Unit Total Cost

(Rs. in, 000)
1 10 cannal of Land 1500000 15000
2 Legal and Transfer Fee 10% of Cost 1500
3 Development Charges 500
Total 17000
Estimated Cost of Civil Works
_______________________________________________________________________
115, 134 & 165
Type of Area in Rate/sq. ft. Total Cost

Sr. No Item Building Sq. ft. (Rs.) (Rs 000)
Main Factory
1 RCC 15000 800 12000
Building
2 Warehouse RCC 8000 800 6400
3 Office Block RCC 4000 1,000 4000
4 Canteen RCC 3000 1,000 3000
5 Wash rooms RCC 400 1,000 400
6 Free Area 14600
Total 45000 25800
Estimated Cost of Plant and Machinery
_______________________________________________________________________
115, 134 & 165
Items and
Sr. No Quantity Cost/Unit(000) Total Cost(Rs, 000)
Specification
1 Mixer
Pre-production 2
expenses: 200 400
Salaries and wages 450
2 Printing Machine for 250g Boxes
and stationary 2 205 10 410
Wapda/KESC deposits 1500
3 Telephone,
Machine for 125g
entertainment Boxes
& other expenses. 2 205 150 410
Project examination fee. 125
Machine for Sachet
4 Total 2 190 2235 380
8grams
Machine for Labeling
5 2 150 300
and Printing
Total 2280
Estimated Cost of Net Initial Working Capital
Amount (Rs. 000)
CURRENT ASSETS (Rs. in 000 )

Cash 300
Accounts Receivable @2.5% of sales 3,223
Raw materials 7,028
Finished Goods Inventory 10% of production 5,738
Stores & Spares 1,500
_______________________________________________________________________
115, 134 & 165
Advances & deposits 250

Total 18,039
CURRENT LIABILITIES
Accounts Payable 0
Accrued Expenses 0
Bank Borrowings 75% of inventories 11,992
11,992
INITIAL NET WORKING CAPITAL 6,047
Assumptions
1. It has been assumed that Raw Material Inventory is kept for 30 days and
amount. Is derived as {(Annual Requirement/350*30 days)}
2. 10% of cost of goods manufactured is kept as finished goods inventory.
3. 2.5% of total sales are assumed to be on account.
4. Bank will give loan of 75% of total inventory.
_______________________________________________________________________
115, 134 & 165
Assumptions Underlying Earning Forecasts
Production and Sales
The purpose unit would be equipped with four types of machines.
One for sachet packing of 8gram and other for boxes of 125 & 250 grams. The
sachet machine is capable of producing 333 sachet /hour and 125 gram boxes
machine is capable of making 233 boxes /hour and machine for 250 grams
boxes is capable of producing 200 sachet /hour. The unit will be operated in
only one shift of 8 hours and total number of working days is 350.
Annual Production at 100% Operational Capacity
For Sachet:
(333 sachet*8 hours*350 days*2) 100%=1864800
For Boxes:
(233 boxes*8 hours*350days*2)100%=1304800

(200 boxes*8 hours*350days*2)100%=1120000
The above capacity is based on one shift working and 350 working days per
annum at 100% capacity and the project would start commercial operations from.
January 1, 2010.
Operational Efficiency
Operational efficiency of the project is assumed to be at 100% for all

operating year.
Ending Inventory
There will be 10% unsold inventory at end of the year.
Production Plan
_______________________________________________________________________
115, 134 & 165
Production plan includes three types of products and offer in the single
market.
Selling Price
Selling price is set according to the demand and supply and due to
competitiveness of market and increasing gradually due to increase in the raw
material prices.
_______________________________________________________________________
115, 134 & 165
PRODUCTION AND SALE
 Geographical limits of project are Province Punjab, Sindh .

 Offer three types of products.
 Sachet of 8 grams.
 Box of 125 grams
 Boxes of 250 grams
 No. of shift = 1
 8 hours in a shift.
 350 days in year.
 Estimated capacity of machine per hour:

 333 sachets of 8 grams per hour.
 233 boxes of 125 grams per hour.
 200 boxes of 250 grams per hour
 Operational capacity of machines is 100%.
Total Annual Capacity
For Sachet
(333 sachets*8hours*350days*2) = 1864800 Sachets
For Boxes
125 Grams
(233 boxes*8hours*350days*2) = 1304800 Boxes
250 Grams
(200 boxes*8hours*350days*2) = 1120000 Boxes
_______________________________________________________________________
115, 134 & 165
Production efficiency achieved

Year 2010(60%) 2011(70%) 2012(80%)
sachet 1119000 1305000 1492000
Boxes (125g) 783000 913000 1044000
Boxes(250g) 672000 784000 896000
Estimation of units sold.

Operating Years : 2010 2011 2012 2013
Production Effeciency Assumed : 60% 70% 80% 90%

a) Production of Sachet: 1,119 1,305 1,492 1,678
Add : Begining Inventory 0 112 131 149
Available for sale 1,119 1,417 1,622 1,828
Less : End. Inventory 10% 112 131 149 168
SALE 1,007 1,287 1,473 1,660

60% 70% 80% 90%
b) Porduction of Boxes(125g): 783 913 1,044 1,174
Available for sale 783 992 1,135 1,279
SALE 705 900 1,031 1,161
60% 70% 80% 90%

c) Porduction of Boxes(250g): 672 784 896 1,008
Available for sale 672 851 974 1,098
SALE 605 773 885 997
Calculations
 It has been earlier mentioned that total production capacity of the

Machine is 333 sachet /hour and box machine capacity is two hundred
(200) and 233 units /hour
 No. of working hour in day are eight and 350 days in a year
 10 % of units produced are kept as ending inventory
_______________________________________________________________________
115, 134 & 165
Estimated Sales Revenue
60% 70% 80% 90%
a) Packs of
sachet
per pack
Rs 65 65,454 83,636 95,757 107,879
b) 125g box. 30 21,138 27,009 30,924 34,838
c) 250g box. 70 42,336 54,096 61,936 69,776
TOTAL 128,928 164,742 188,617 212,493
Assumptions:
1. It has assumed that one pack contains 20 sachets

2. Per pack and box price is set according to demand and supply forces.
CALCULATION OF COST OF PRODUCTION

_______________________________________________________________________
115, 134 & 165
Raw Material Cost
For Sachets
Total sachets at 100% operating capacity.

{(333 sachet*8 hours*350 days*2)100%}=1864800 sachets of 8 grams
{(1864800sachets * 8 grams)/1000} = 14918.4 kg/annum.
14918.4 kg*150/Kg = Rs. 2237760

(233 boxes*8 hours*350days*2)100%=1304800 Boxes of 125 grams
{(1304800 Boxes *125 grams)/1000} = 163100 kg/ annum.
163100 kg/ annum* 180/ kg = Rs.29358000

(200 boxes*8 hours*350days*2)100%=1120000Boxes of 250 grams
{(1120000 Boxes *250 grams)/1000}= 280000 kg/ annum.
280000 kg/ annum* 180/ kg = Rs50400000
Total annual material requirement: (Rs 000)

2238+29358+50400 =81996
Raw Material Inventory Kept:

Rs.81996/350*30 days= Rs.7028
Direct Labor Cost

_______________________________________________________________________
115, 134 & 165
Category Nos Salary per Annual

Month(Rs.) Cost
Labour: 0
For sachet machine 5 5,000 300
for boxes machine 16 5,000 960
for mixer machine 2 5,500 132
for blend maker 1 6,000 72
supervisor 1 5,000 60
0
TOTAL 1,524
Add: Fringe Benefits @ 25% 381
TOTAL 1,905
Assumption:
10% yearly increase in labour cost.
Factory Overhead
a) FIXED COSTS (Rs.000)
-Pwer KW 600 180 per K.W 1,296

-Insurance @ 0.50% on Fixed Assets 11
-Repairs &Maintenance:
- Machinery @ 1.00% installed cost 25
Miscellaneous 100
Total Fixed cost 1,433
b) VARIABLE COST
Power: KW 90 7.5 8 350 1,890

Total 1,890
Assumptions
1. Estimated utilization capacity is 90kw and rate is charged 7.5/kw/hour
2. Insurance is .5% of machinery cost.
3. Repair and Maintenance cost is 1% of machinery
THE FIXED COST HAS BEEN PROJECTED AS CONSTANT WHILE THE
VARIABLE COST HAS BEEN BUDGED AS PER OPERATIONAL LEVEL
FOR THE CORRESPONDING YEARS.
_______________________________________________________________________
115, 134 & 165
Depriciation
Assets Cost of Assets Depreciation Total Amount

(Rs. 000) (Rate) (Rs. 000)
Building 16800 5% 840

Plant and Machinery 2280 10% 228
Furniture and Fixture 500 5% 225
Vehicle 3000 20% 600
Total 1693
_______________________________________________________________________
115, 134 & 165
OPERATING EXPENSES
Administrations Expenses
Salary Annual
per Month Cost
a) Administrative Salaries Nos (Rs.) (000)
Chairman 1 40,000 480

Chief Executive 1 35,000 420
Financial Controller 1 20,000 240

Purchase Manager 1 20,000 240
Personal Manager 1 10,000 120
Assistants 5 4,000 240
Clerks and Typists 8 2,500 240
Driver and Peons 5 2,000 120
Sweepers 4 1,000 48
TOTAL 2,148
Add: Fringe Benefits @ 50% 1,074
TOTAL 3,222
General Expenses
b) General Expenses
Traveling & Conveyance 400

Telephone, Telex, Postage 300
Rates and Taxes 100
Entertainment 100
Miscellaneous 50
TOTAL 950
Total Administrative & General Expenses (a+b) 4,172
FURTHER, THESE EXPENSES ARE ASSUMED

AT 10% PER ANNUM.
Selling Expenses
Selling expenses are 1% of sales Revenue.

_______________________________________________________________________
115, 134 & 165
Total Cost of Production

2010(60%) 2011(70%) 2012(80%) 2013(90%)
Raw material 51,211 59,747 68,282 76,817
Depreciation 1,693 1,693 1,693 1,693
cost of labour 1,905 2,096 2,305 2,536
F.O.H 2,567 2,756 2,945 3,134
total 57,376 66,291 75,225 84,179
Financial Plan
Source Ratio Amount (Rs. 000)

Bank (@16%) 60% 34586
Equity 40% 23057
Total 100% 57643
All amounts are in the Local Currency (In Rupees).
_______________________________________________________________________
115, 134 & 165
Estimated Income Statement
For the year ending Sept. 30, 2010 2011 2012 2013
Efficiency
Assumed : 60% 70% 80% 90%
SALES 128,928 164,742 188,617 212,493

COST OF GOODS SOLD :
- Raw
Materials 51,211 59,747 68,282 76,817
- Labour 1,905 2,096 2,305 2,536
- Manufacturing Expenses 2,567 2,756 2,945 3,134
- Excise Duty \ Sales tax
-Royalty fee
-
Depreciation 1,693 1,693 1,693 1,693
Cost of Goods Manufactured 57,376 66,291 75,225 84,179
Add: Beginning Inventory 0 5,738 6,629 7,522
Less: Ending
Inv. 10% 5,738 6,629 7,522 8,418
Cost of Goods Sold : 51,639 65,399 74,331 83,284
GROSS PROFIT 77,290 99,342 114,286 129,209

OPERATING EXPENSES
- Admin & General Expenses 4,172 5183 5702 6272
- Selling
Expenses 1,289 1,647 1,886 2,125
Total Operating Expenses 6001 6831 7588 8397
OPERATING PROFIT 71,288 92512 106698 120812
OTHER
INCOME
NON OPERATING
EXPENSES
- Financial
Expenses 5534 4,204 3320 2213
Bank borrowing@ 10%. 672 806 918 1,030
amortization of preliminary exp.
at 5 years 447 447 447 447
Sub-Total 6,653 5680 4,685 3,690
PRE-TAX PROFIT 64636 86832 102,013 117,122
Provision for
Taxes 40% 22622 30391 35705 40993
NET PROFIT 87258 117223 66309 76129
Dividend 0 0 0 0
RETAINED EARNINGS 87258 117223 66309 76129
_______________________________________________________________________
115, 134 & 165
RATIOS
- Gross
Margin (%) 59.9% 60.3% 60.6% 60.8%
- Operating
Margin (%) 55.3% 56.2% 56.6% 57.9%
- Net Margin
(%) 67.7% 71.2% 35.2% 35.8%
- Interest Coverage (Times) 12.88 20.90 32.14 57.58
_______________________________________________________________________
115, 134 & 165

Estimated Balance Sheet
Construction. I II III IV
ASSETS
Cash 6,037 81,790 142985 211317 288659
Accounts Receivables 3,223 3,223 4,119 4,715 5,312
Inventory:
Finished Goods Inventory 0 5,738 6,629 7,522 8,418
Raw Material Inventory 7,028 7,028 7,028 7,028 7,028
Stores & Spares 1,500 1,594 1,700 1,800 1,900
Advances &
Deposits 250 500 1,000 2,000 4,000
Total Current
Assets 18,038 99,873 163460 234383 315317
Other assets 0 0 0 0 0
Fixed Assets at cost 49360 49360 49360 49360 49360
Less: Accumulated Dep. 0 1,693 3,386 5,079 6772
Net Fixed Assets: 49360 47667 45974 44281 42588
Preliminary Expenses: 2,235 2,000 1,500 1,000 447
Total Assets: 69634 149540 210935 279665 358353
LIABILITIES & EQUITY
Current Liabilities
- Accounts Payable 0 12,803 14,937 17,070 19,204
- Accrued Expenses 0 546 624 693 768
- Dividends Payable 0 0 0 0 0
- Taxes Payable 0 0 0 0 0
- Bank Borrowings 11,992 6,721 8,061 9,178 10,298
- Cur. Mat. of L T
Debt 0 12451 11344 10237 9131
Total Current Liabilities: 11,992 32520 34,965 37180 39400
Long-term Liabilities
IDBP loan 34586 27668 20751 13,834 6917
Total Long-term Liab.: 34586 27668 20751 13,834 6917
EQUITY
- Paid-up Capital (Sponsors) 23057 23057 23057 23057 23057
- Un-appropriated Profit 0 87987 206012 272745 349342
Total Equity: 23057 111044 229069 295802 372399
Total Liab. & Equity: 69634 171,698 284785 346816 418716

R A T I O S:
Current Ratio 3.07 4.67 6.30 8.00
Debt as %-age of total capital. 20% 8% 4% 2%

_______________________________________________________________________
115, 134 & 165
Estimated Cash Flow

Const.
For the year ending Sept. 30, Yr. I II III IV
SOURCES
Operating Profit 0 71,828 93,106 107,352 121,531
Add Back: Depreciation 0 1,693 1,693 1,693 1,693
Amortization 235 500 500 553
Funds from Operations 0 73,756 95,299 109,545 123,777
- Paid-up Capital (Sponsors) 23057 0 0 0 0
IDBP loan 34586 0 0 0 0
Increase in Current Liab. 0 20529 2,500 2,215 2221
Increase in Bank Borrowings 11,992 6721 8,061 9,178 10,298
TOTAL SOURCES 69634 101006 105,860 120,938 136295
====== ====== ====== ====== ======
APPLICATION OF FUNDS
Investment in Fixed Assets: 49360 0 0 0 0
-Preliminary Exp 2,235 0 0 0 0
Financial Expenses 0 5534 4,427 3,320 2213
Repayment of :
IDBP loan 0 6917 6,917 6,917 6917
- Bank Borrowings 0 6,721 8,061 9,178 10,298
Taxes 0 0 22811 30599 35933
Increase in current Assets: 12,001 6,082 2,393 2,590 3,592
TOTAL 63597 25253 44609 52605 58954
====== ====== ====== ====== ======

Surplus/(Deficit) 6,037 75,753 61195 68333 77341
Cash Balance - Opening 0 6,037 81,790 142985 211317
Cash Balance - Ending 6,037 81,790 142985 211317 288659
_______________________________________________________________________
115, 134 & 165
PROJECT AUDIT
The company will have its internal audit committee, which will conduct the
audit of the various functions of the company as well as the environmental audit.
The audit committee of the company comprises the Chairman of the company
and all the functional heads of the various departments of the company.
The audit committee will be responsible for the edifice of the performance
appraisal of the various functions of the company. The audit committee will
check the performance of the accounts department, finance department,
marketing department and also check the performance of the human resources of
the company. On the basis of the performance determine by the audit committee
various rewards will be announced for the employees.
The company will utilize its promotion and reward system as the motivation tool
for its employees. On the basis of the performance various monetary, stocks and
training and educational rewards will be announced for the employees of the
company.
The company will strictly follow the ISO – 14000 standards that will give the
guidelines to the company for the safe practices, so that no environmental
hazards will be done. The company will get its registration with the ISO – 14000
and will use this as its promotional tool in the marketing campaign in the media.
The company will regularly administer its standards and will keep its system up
to date, so that there will be no cause of the environmental pollution and hazards
by the operations of the company.
_______________________________________________________________________
115, 134 & 165
STRATEGIC RECOMMENDATIONS
Initially, the product should be launched in the local market with branding
concept in mind. Tea sachets have shown tremendous growth in the last few
years. The company should focus to capture the sachet market first by aggressive
marketing campaign. The preferred mode of distribution is going directly to the
wholesalers. There is an option of having no involvement of any distributor
between the manufacturer and the wholesaler in the city where manufacturing is
being done.
By giving healthier profit margins to the wholesalers, the wholesalers will hence
promote the product. This strategy is important to introduce such a new product
and to create an extensive distribution and sales channel. The company will later
expand into other cities through a distributor network.
_______________________________________________________________________
115, 134 & 165
Exit Strategy and Risk Assessment
The owners are aware of the highly risky nature of launching a tea processing
unit in the highly competitive market. If the venture fails, the owner's paid-in
capital and expenses may not be recovered.
The venture's actual revenue will be tracked against projections on a month-to-

month basis. If net profitability is not in-line with forecasts, management and
operational adjustments will be made to address the issues.
If the venture is undercapitalized and requires more working capital, the owner
will consider bringing on investment partners. The owner will also review the
return-on-investment for personally providing more paid-in capital.
In the event that net profitability cannot be attained, the owner will take the
following sequential steps to exit the venture:
1. The owner will attempt to sell the venture outright to a suitable buyer.
2. If a buyer cannot be found, the owner will liquidate all viable assets, including
the computers, play stations etc.
3. Capital raised through asset liquidation will be used to reduce possible debt.
All debt will be negotiated prior to settlement.
4. If debts cannot be eliminated, the owner will discuss corporate bankruptcy

options with legal counsel.
_______________________________________________________________________
115, 134 & 165

In The Name of ALLAH, WHO Is The Most Beneficent and The Most Merciful

Загружено:

Сведения о документе

Исходное описание:

Оригинальное название

Авторское право

Доступные форматы

Поделиться этим документом

Поделиться или встроить документ

Параметры публикации

Этот документ был вам полезен?

Это неприемлемый материал?

Авторское право:

Доступные форматы

In The Name of ALLAH, WHO Is The Most Beneficent and The Most Merciful

Загружено:

Авторское право:

Доступные форматы

Energizer Product Limited

In the Name of ALLAH, WHO is the

Department of Commerce, The Islamia University of Bahawalpur has

May Allah help us in this world

completion of this report.

Our Beloved Parents

The government of Pakistan treats tea as an essential commodity. Although there

“Teamwork and Partnership

“Quality and Continuous Improvements

“Ethics and Integrity

“Individual Growth and Development

“Enjoyment and Fun

OBJECTIVES AND KEY SUCCESS FACTORS

The main objectives of the development of project are:

 Capitalize on excellent opportunity to extract maximum revenue.

The keys to success in achieving our goals are:

 Be the first in the market to provide a wide variety of innovative taste of

 Emphasizing on excellent service to the other wholesalers.

PRODUCTS OF THE COMPANY

The proposed product mix of the company is as under;

 Jasmine (Black) CHAI

Proposed Tea Packing

In Pakistan, a morning and evening cup of tea is an essential part of everyday

Market Entry Timing

Business Legal Status

Project Capacity and Rationale

Production breakdown at 60% Capacity Utilization

Sachets 60 Gms 125 Gms 250 Gms

Leading tea producers of the world

Large tea importers of the world

 Russia … 172,145 metric tons (17.8%)

Industry Scenario in Pakistan

Leading Tea Brands in Pakistan

1. Brooke Bond Supreme

2. Brook Bond A1 Karak Chai

Their products range from:

Their product ranges from:

Their range of products is as follows:

PORTER’S FIVE-FORCES MODEL

Bargaining Intra-Industry Rivalry Bargaining

The Bargaining Power of Buyers

The Bargaining Power of Suppliers

A producing industry requires raw materials - labor, components, and other

Barriers to Entry / Threat of Entry

In Porter's model, substitute products refer to products in other industries. A

Location of the Project

Our tea company will be located in industrial zone of Multan.

The site enjoys the following advantages: -

 Access to the main road, Sources of Power, water, fuel etc.

Current Industry Structure

Black Unblended Tea

Tie Guan Yin China

Other Popular Blends

Some of the other popular blends are:

Plant and Facilities

Raw Material Requirement

TEA PROCESSING DETAILS

Rolling and Cutting Unit

The withered leaf is charged in the rollers,

than 200c hygrometric difference Optimum fermentation is adjudged by the subjective

Fermented leaf is loaded onto the dryer,

Shorting / Grading Unit