Executive Summary Domestica Lpg is a company initiated by six persons to provide the Natural gas deprived customers, LPG

gas at their door step.The market analysis shows that there is no one who is doing such kind of work on commercial basis. We have done test marketing and it shows quite promising results. We will promote our product through social networks and flyers directed to the target population. We hope achieve profitable results within the first year of our operations.

Company Description Company history Domestica LPG Ltd. is started recently by six young entrepreneurs. The driving force that keeps us moving forward is our mission to help Natural gas deprived consumers, easy and convenient way to fulfill their needs easily that require the use of LPG. Mission Statement Striving to satisfy our stakeholders by helping them fulfill their requirements in real time.

Products and services Domestica LPG Ltd. offers product that is being used by the households but they have to go to the local market to get that. We are provide the home delivery service for LPG at the same price. Current Status The company is in its initial stages of development. It has been registered as a partnership company and market analysis has been carried out. Legal Status and ownership Partnership of six persons and plans to register with LCCI.

The LPG Industry in Pakistan LPG or liquefied petroleum gas is a by-product of crude oil and natural gas that is rich in propane/hydrocarbons. It is an odorless, non-toxic, clean burning, and an environmentally friendly fuel with almost zero level of pollutants. The greatest advantage of LPG is that it can be easily transported. The LPG industry in Pakistan is a developing one. The industry is deregulated so as to encourage private sector investment and allow market forces to determine demand, supply, and pricing decisions. The local production stands at 1400MT per day while the demand hovers between 1600-2000 MT per day. There are ten LPG producers in Pakistan; JJVL, OGDCL, PPL, PARCO, NRL, PRL, OPI, POL, BYCO and ARL. There are approximately 84 licensed marketing companies with a distribution network of 5000 plus distributors spread throughout the country. In Pakistan, over 5 million family units, out of an expected 36 million for the most part, utilize LPG as their essential and clean energy source. Following are the key success factors in LPG business: LPG quota allocation: Most of the existing plants with fully operational facilities are out of work because of delays in their quota allocation by the LPG producers. Dealing with the sub-distributors: Sub-distributors play important role in the successful operations of a LPG Marketing company because they distribute gas among agency holders who further sale it to the retailers. Survival during the critical period when cheap Irani LPG is available in the market: In such circumstances when cheap Iranian gas is available, a LPG marketing and distribution company may face a situation where it would be forced to lift its quota as per agreement from the producer at a higher cost and sell it at lower price.

Market Analysis Porters five forces model Bargaining power of the Customers The only customer that requires our services is the one who does not want to take the hassle of going to a LPG resale point and have the LPG delivered in their house. This service only valid and useful if the cost of having LPG delivered in their house is not too much. This shows that bargaining power of the customers is comparatively high Threats of New Entrants There is a big threat of new entrants as the market has a big gap and potential and many people can easily enter the market due to regularized rates of the LPG from government Threats of Substitutes The only reason this model is successful is due to the delay in the installation of meters in the newly constructed houses. If, in future, the sui northern gas started issuing sui gas meters at a fast pace. This model is seriously threatened. Competitive Rivalry Our company has a number of competitors in retail market as they may not be our direct competitors although they provide LPG cylinders but they are not providing the door to door service , so we are proving our customer with door to door service which enables us to gain competitive edge over competitors Bargaining power of suppliers This is an important aspect and market research is being done in order to determine it.

4 Ps. Product: The product that we are dealing is a utility. The product is a basic necessity for the Natural Gas deprived customers due to constant delay by the government institutions. The main service is to provide LPG cylinders to the customers in their houses and avoid them the hassle to come to the LPG retail outlets when they do not have any conveyance or the house ladies do not have anyone to deliver them the LPG cylinders. Price: LPG is determined by the government. The dealers normally give the product to the retailers for approximately 100-105 Rs per kg and they sell the LPG within the range of Rs. 130. This price is determined by the government. Place: It is an important aspect of our business model. We are providing door to door services to our customers while keeping our outlet or warehouse to be in the centre of the targeted area. We will use bulk break model. Initially we will start in one area but we plan to expand our business to other newly developed societies and solve their problems. Promotion: The company is using the flyers for promotion of this product. It believes that is helps to target a specific area in much better and effective way and delivers the message to the right audience. The flyers will be affectively designed that would trigger the need to get the LPG through call. They would also have the contact number in writing and this would make sure that they would call us.

Five Cs of market Consumer, Context, Convenience, Channels and Community are five Cs of marketing mix. It determines how, when and why consumer likes to prefer and explore different opportunities in the market and how can they find out the solution for their problems. Consumer: The major stakeholders of any company are the consumers, who receive the services of the company and are the final verdict on the quality of the services of the company. The company has the chance to take note of the needs and wants of the consumers, and serve them accordingly. The consumers are the household residing in the newly developed societies, where their gas connection have not yet been established, because it takes 2 years for the gas providers to install the pipelines for the household. Therefore, our main concern is providing lpg gas for their residential use. Context: The limitations that the company faces are that it cannot provide lpg to the customers 24/7. The cost of the transportation increases drastically if we cater transportation of one customer at a time. We have to manage the deliveries in such a way that we provide services to 2 to 3 households. In one round, this would sometimes affect the responsiveness of our supply chain. Convenience: The whole business model surrounds around giving convenience to ourvaluable customers. We tend to deliver gas cylinders at their addresses at the market rate. By doing this, it will save them money of their own transportation and itwill also give the hassle free delivery at their doorstep. We give priority to on time delivery of the lpg cylinders. This not only saves the time of the customers, but also provides them the convenience of staying at home and ordering at their disposal. Channels: The companys distribution channels include a shehzor pickup, that will provide the lpg gas at the door step of the customer. These channels will be monitored by specialists in their field and they would make sure that they manage the distribution channels effectively and smoothly. Moreover, the company plans to hire smaller vehicles, so that it can get more economical transportation modes to cater the much bigger market. Community: The company targets the community that already is deprived with a basic need of life. This would provide them an easy solution that would give them a sigh of relief. This will also spread the word of mouth about the services. But if these services are delivered in a good way, they will

create a positive impact and word of mouth among the community. If the services are not good, we will not create a good impact and we will get deprived of the potential customers as well. Operations model The main concern of the company is to be able to provide on time delivery of the LPG and LPG cylinders. To accomplish this target, we must establish long lasting and strong relations with the suppliers. The main concerns of the company include, on time procurement of LPG from the suppliers, careful storage of the LPG and LPG cylinders and efficient logistics department for on time delivery of LPG to the end consumers. Procurement department The procurement department consists of experienced personnel to deal with suppliers. The main tasks of the procurement department are the following: 1. To choose the right suppliers and to determine the right number of suppliers. 2. Negotiate the best rates for the best quality LPG available in the market. 3. Make sure that the suppliers deliver the promised goods in time, thus enabling on time delivery to the end consumers. 4. Keeping track of the suppliers and maintaining a healthy professional relation with all the suppliers involved. 5. Scheduling the delivery of the LPG and LPG cylinders, keeping in view the demand of the end consumers demand planning. Warehousing department In warehousing, the type of the hub and spoke model that we use is the bulk-brake model. The main supply of the LPG and LPG cylinder comes from two major suppliers. We established the Hub in Johar town, as it suits both our suppliers and is easy for them to reach. As the LPG cylinders reach at our Hub in large numbers, we have hired Shehzor pickups for the delivery of these cylinders from the Hub to spokes located in localities including Wapda town, Valencia town, Eden Gardens, Khayaban e Amin and Nasheman Iqbal. These spokes are the mini warehouses that have storage capacity of more than 300 cylinders at a time. The warehouses are connected with the order taking department to enable efficient delivery of LPG and LPG cylinders to the respective customers. Logistics department The logistics department consists of a fleet of 12 shehzor pickups. We have standardized the logistics department and kept the fleet composition to just one type of pickup. 2 pickups stand at each of the spokes, and 2 pickups stand at the hub. Alternatively, whenever the need arises at any of the spokes for more pickups, the spokes at the hub are used as they are rarely required at most

on alternative days, as the suppliers provide the LPG cylinders in bulk. The maintenance of the vehicles is carried out from a single vendor to minimize the cost and streamline the process.

Marketing department The marketing department consists of a marketing team lead by the marketing manager. The main media used for reaching our target market is cable service provided in our target areas through advertising on private channels. Also, through flyers frequently floated throughout the target population. Another medium that is effective in reaching the target market is the word of mouth of initial customers, as the goodwill created by the services that we provide stimulates the customers to spread the word about our services.

Order taking department As our company is in the takeoff stage, we initially rely on the telephone/ mobile service for order taking. Also, a website is provided on the brochures floated in the houses of the potential customers. Thus, online order taking is also functional. However, the more prevalent method of order taking is through telephone. Financial Projections Sources and uses of funds Initially, the total capital required for the entire project will be 550000 rupees. This money will be generated as equity from the partners who are willing to invest. 100000 rupees of this invested capital would be cash in hand. 277200 rupees will be used to purchase the raw materials and 45000 will be for PPE.

Assumptions The following assumptions have been made in the calculations of pro forma financial statements: There are 500 houses that will be targeted first month and their number will increase by 10 every month.

About 60 % of the houses are deprived of the natural gas and their percentage will decrease by 10% every year

The Cost of Goods Sold will remain constant Our market share will increase by 5% every year starting from 35% the first year. The company is wholly equity financed. Tax rate is assumed to be 35% based on the progressive tax structure followed in Pakistan.

There are 6 partners to the company. Profits of every year are re invested in the next year

Income Statement Year 1 Rs. Sales Less:COGS Gross 75% 3,636,360 (2,727,270) 909,090 Year 2 Rs. 4,212,000 (3,159,000) 1,053,000 Year 3 Rs. 4,408,560 (3,306,420) 1,102,140

Less:OPEX EBIT Less:Ta x NI

8%

(275,565) 633,525

(319,187) 733,813 (256,834) 476,978

(334,083) 768,057 (268,820) 499,237

35%

(221,734) 411,791

Balance Sheet Year 1 Rs. Cash Inventory Total current assets PPE Total Assets Total net assets Equity: Capital Account: A B C D E F Add:Retained Earnings 589,956 327,360 917,316 45,000 962,316 962,316 Year 2 Rs. 626,607 346,896 973,503 54,000 1,027,503 1,027,503 Year 3 Rs. 379,874 605,088 984,962 64,800 1,049,762 1,049,762

91,754 91,754 91,754 91,754 91,754 91,754 411,791 962,316

91,754 91,754 91,754 91,754 91,754 91,754 476,978 1,027,503

91,754 91,754 91,754 91,754 91,754 91,754 499,237 1,049,762