2009

RThree (R3)

Recycling & Recovering To Create a Sustainable Society

MGT 489: Strategic Management | Section - 05

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Prepared By: Name I ID # 061 000 030 Name II ID # 061 000 030 Name III ID # 061 000 030 Name IV ID # 061 000 030 Name V ID # 062 000 030

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12/29/2009

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MGT489: Strategic Management

Section: 5

Term paper on

RThree (R3)
Recycling & Recovering To Create a Sustainable Society

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Name I

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Name II

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Name IV Name V

Date: December 29, 2009

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Group Members

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ID # 061 000 030 ID # 061 000 030 ID # 061 000 030 ID # 061 000 030 ID # 062 000 030

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Course Instructor

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Dilara Afroz Khan

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Prepared For

To, Dilara Afroz Khan, Course Instructor, School of Business, North South University. Subject: Project submission of MGT 489 Dear Madam, Here is the report you assigned for the course MGT 489 - Strategic Management. The report to cover all the necessary points you have asked for and can assure you, we would be prompt in providing in any further information that you may need. We are ever grateful to you for this assignment, which helped us a lot to learn about its process. Sincerely yours,

Name I Name III Name V

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thinking from strategic point of view and gain practical knowledge on the selected topic and

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Name II Name IV

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contains business plan for a waste management and recycling organization. We have tried

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Executive Summary We are a socially responsible company working to ensure minimization of waste and recycle waste and contribute to establish a green society. We hope to generate significant revenue by developing quality products creating a sustainable environment through reduce, reuse and recycle. RThree is an environment friendly manufacturing company dedicated to recycling and converting solid wastes - plastic and metals into commercially viable products, utilizing environmentally friendly recycling and manufacturing methods. The main product of RThree Limited is the plastic flakes, plastic sheets and metal sheets.

The potential customers of RThree are mostly the local companies who work with plastic utilized products to create a sustainable society.

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and metal. We initially aim to reduce, reuse and recycle products with an aim to recover the

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educating the general mass about the benefits of using recycled products.

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company we aim to reduce the waste, reduce carbon emission and play an important role in

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subsequent increase of waste products will increase multiply. And as a socially responsible

Due to high rate of Urbanization in Bangladesh it is expected the increase of products and

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Table of Contents 1.0 Profile of the Team .. 01 2.0 Company Overview .... 03 2.1 Business name and Address ... 03 2.2 Mission Statement .... 03 2.3 Vision Statement .. 03 2.4 Nature of the Business .... 03

3.1 Five Forces Model ... 04 3.1.1 Entry Barrier .. 04

3.2 Core Competence 05

3.4 Competitive Advantage .. 08 3.5 Additional Strategic Consideration . 09 4.0 Market Overview .. 11 4.1 Potential Customers .. 11 4.2 Size and Growth of the market .... 11 4.3 Strategic Group Analysis .... 12

3.3 Industry SWOT 07

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3.1.4 Buyers bargaining power . 04

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3.1.3 Suppliers bargaining power 04

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3.1.2 Exit Barrier .. 04

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3.0 Industry overview and analysis 04

2.5 Strategic Goals and Objective .... 03

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4.4 Product Forecast .. 13 4.5 Control . 13 5.0 Overall Strategy .... 14 5.1 Long term and short term strategy .... 14 5.1.1 Short Term Strategy ... 14 5.1.2 Long term Strategy .. 14 5.2 Short and long term objectives .... 14

5.2.2 Long Term Objectives .... 15 6.0 Company Value Chain Analysis and Operational Plan .... 16

6.2 Future Competencies 16 6.3 Facilities .. 17 6.4 Equipment and Machinery 18 6.5 Production and Manufacturing Process .. 19 6.6 Research and development . 21 6.7 Quality Assurance .. 22 7.0 Marketing Plan .. 23 7.1 Sales and marketing . 23 7.2 Pricing ... 24 7.3 Distributions . 25 7.4 Advertisement /Product Promotion .. 25
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6.1 Existing Core Competencies .... 16

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5.2.1 Short Term Objective .... 14

8.0 Human Resource Strategy and Planning ...28 8.1 Key issues .. 28 8.2 Staff requirements .. 28 8.3 Structure ... 29 8.4 Expectations 30 9.0 Risk Analysis .... 31 9.1 Foreseeable and unforeseeable barriers . 31

9.1.2 Evaluate weakness of business ... 33 9.1.3 New technology: . 34

10.1 10.2 10.3 10.4 11.0 12.0 13.0

Assumptions 35 Income Statement .. 36 Balance sheet .... 38 Capital budgeting and feasibility . 40

Long Term Sustainability .... 47 Conclusion . 49 Bibliography . 50

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10.0

Financial Management . 35

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9.1.1 Critical Risk . 31

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[RTHREE Waste Management] December 29, 2009 1.0 Profile of the Team
1.0

Name I Deputy Director With five years working experience in various business sectors with solid knowledge of business handling and coordination, Name I was taken as the Deputy Director of the Company. He is also a founding member and a member of board of governors.

1.1

Name II

Name II, one of the investors and founding members of RThree Limited; she graduated from North South University with major in marketing and took up the position of Manager Marketing.
1.2

Name III Manager Operations

Finance with working experience in steel industry accepted the position of Manager Operations. He is also a founding member of RThree Limited.

1.3

Name IV

Manager Finance Name IV, who is also a founding member of RThree Limited, passed from North South University with Major in Finance and with diverse work experience in different organizations accepted the position of Manager Finance.

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Name III passed from North South University with Major in Marketing and

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Manager Marketing

[RTHREE Waste Management] December 29, 2009

1.4

Name V Manager Human Resource Name V graduated from North South University with Major in Finance and Human Resource accepted the position of Manager HR. He is also a founding member of RThree Limited.

The position of Director is available and we would ask our honorable faculty member, course instructor, MGT 489, Ms. Dilara Afroz Khan to take up the Limited as a leading Saving the World brand. responsibility of Director of the company and guide us to establish RThree

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[RTHREE Waste Management] December 29, 2009 2.0 Company Overview

2.0

Business name and Address Name: RThree

2.1

Mission Statement We are a socially responsible company working to ensure minimization of waste and recycle waste and contribute to establish a green society.

2.2

Vision Statement

2.4

Strategic Goals and Objective

Short term Goals and Objectives:

Long Term Goals and Objectives: Occupy major market share and develop loyal customer base. Start operation in all six divisions and export recycles plastic and metal.

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To create extensive brand awareness of RThree Limited. Turn major users of plastic and metal as our customer. Create brand image and position it as green company. To reach the breakeven point by the end of third year.

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Waste Management and Recycling

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2.3

Nature of the Business:

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sustainable environment through reduce, reuse and recycle.

Generate significant revenue by developing quality products creating a

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[RTHREE Waste Management] December 29, 2009 3.0 Industry overview and analysis The industry is a manufacturing company dedicated to recycling and converting waste plastic and metals into commercially viable products, utilizing environmentally friendly recycling and manufacturing methods. We intend to make enough profit to generate a significant return for our investors and to finance continued growth and continued development in quality products. Currently there is one other organizations working in the private sector and all other organizations in this sector is backed up by government and performs recycling of organic waste materials collected by Dhaka City Corporation.

1951 1961 1974 1981 1991 2001 2025*

1819773 2640726 6273602 13535963 20872204 28808477 78440000

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Year

Total Urban Population

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Percent of Urban Population 4.33 5.19 8.78 15.54 20.15 23.39 40.00

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The table below depicts the rate of Urbanization in Bangladesh:

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products and subsequent increase of waste products will increase multiply.

Average Annual Growth Rate (%) 1.69 3.75 6.62 10.63 5.43 3.27 -

Due to high rate of Urbanization in Bangladesh it is expected the increase of

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[RTHREE Waste Management] December 29, 2009 The waste Collection Efficiency in different areas of Bangladesh:

Apart from food or organic waste, plastic waste ranks top among all other types of waste that are produced daily in the Dhaka City. The following pie chart shows the average composition of solid wastes in Dhaka City
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The following chart shows the growth of plastic waste in DCC area

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[RTHREE Waste Management] December 29, 2009

3.0

Five Forces Model 3.0.1 Entry Barrier

The entry barrier is low since the government is encouraging companies from for the matter. The Dhaka Corporation currently does not have any unit to manage solid waste and there is a high possibility of getting subsidiary from the government. According to the Dhaka City Corporation website:

3.0.2 Exit Barrier The investment cost for such an industry is very high especially of the machineries. As the initial investment of such consultation center is very high, the exit barrier is also very high.
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Dhaka City Corporation is yet to have any Solid Waste re-cycling project. However, waste which has market value are being reclaimed or salvaged for recycling. Recycling contributes to resource conservation as well as environmental protection. (Source: DCC Website)

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private sector to invest in this segment and is providing different incentives

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[RTHREE Waste Management] December 29, 2009 3.0.3 Suppliers bargaining power The suppliers bargaining power is low since the sole supplier in this field is the government and government itself is encouraging private organizations to invest in this sector. 3.0.4 Buyers bargaining power The bargaining power of the buyer is low since there are very few organizations working in this sector and but the number of buyer is very high. There is high demand for different types of plastic and metals among the local companies.

3.2

Industry SWOT

Increasingly, communities are refusing to consider incineration until every effort is made first to recycle; public sentiment is strongly in favor of products that can be recycled or are made of recycled materials. In recent years, the rate of use of recycles materials especially bottles has doubled to 30% of all

soft drink bottles sold.

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Strength Quality product Competitive price,

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and working as a green company with environment friendly technology.

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the industry are recycling, utilizing the energy generated during processing

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which are commercially viable. The core competencies of RThree Limited in

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RThree specializes in recycling and converting solid wastes into safe products

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3.1

Core Competence

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[RTHREE Waste Management] December 29, 2009 Government support, Easy availability resources.

Weakness No direct control in collecting the raw material and unavailability of sufficient raw material. Opportunities Waste from other parts of Bangladesh and exporting our products

PEST analysis:

country. As our political environment is very unstable, the fortune of

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this initiative depends on the future change in power since it will be

the only operational business in this sector. Economical condition is suitable for this business. The citizens, now-a-days are more concerned about the environment pollution and necessity for protective measures. The recent conference on the environment made many people more conscious about our environment and it is expected they would support the use of recycles products more.

Technology required for the business is not so sophisticated. Local technology will be good enough for this startup.

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Political environment for new business is a challenging one in our

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Political condition

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Threats

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to countries like Nepal, Bhutan and other neighboring countries.

[RTHREE Waste Management] December 29, 2009

3.3

Competitive Advantage RThree Plastics' competitive advantage is the support from the government and the experienced management team of RThree Limited.

3.4

Additional Strategic Consideration Although RThree limited is focusing on a coherent and successful strategy implementation however its success will depend on many other key issues. As strategy is an ongoing process RThree limited would consider following facts regarding strategic planning and implementation.

require better communication and understanding especially when the supplier is linked with the Government.

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Bangladesh law and order system is currently going under numerous changes in terms of traffic, taxation, time and so on our strategy should have to flexible so that it could be modified or change according to the changing law and order system. Although RThree have projected financial costs and gains, it is only an assumption based on current and possible facts which may change due to various external and internal factors. So contingency planning and acceptance of short term failure is required. In this case quick responsiveness to the situation is an important factor.

The basic things to consider while making strategy is to colleting and allocating resources according to the capability of the company which should mirror the strategic planning.
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performance matches with the strategic planning which would

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process slow and clogged. So RThree Ltd. must ensure that suppliers

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strategy implementation. Their bureaucratic system may make our

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Corporation, their work effectiveness and efficiency could affect our

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As a big part of our raw material will be collected from Dhaka City

[RTHREE Waste Management] December 29, 2009 Identifying and managing the cost drivers as these are the factors that affect the competency as well the companys overall health. A good strategy needs god strategy execution which can be done by a good management team. So RThree must recruit a strong and fit management team. The industry and risk analysis should to up-to-date to increase the level of responsiveness regarding any sort of barriers and change.

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[RTHREE Waste Management] December 29, 2009 4.0 Market Overview

4.0

Potential Customers The potential customers of RThree are mostly the local companies who work with plastic and metal. There are several mineral water companies along with the beverage industry who will be our target and potential customer. Besides, there is a high demand of different types of plastic among the plastic furniture companies and the companies who make daily necessities. Initially we will be focusing on the beverage and food industry that use plastic and metals to make their containers.

approximately BDT 0.20 per lb. Beside PET resin, PET Film & Sheet has a total reported market of extruded

4.1

film and sheet is 872 million pounds, of which identified industry usage of RPET is 160 million pounds. The reported market demand (to replace virgin

PS, PVC and PET) if RPET was available is estimated at 1 billion pounds. Current pricing for RPET sheet is BDT0.70-0.79 per lb.

Size and Growth of the market The primary market of Plastic and metal can be broken down in the following way and grouped according to geographic areas. The market is expanding and many companies are shifting location for easy availability of raw
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RPET flake. The spread between the two has traditionally been maintained at

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The current pricing for virgin resin is BDT0.65-0.73 per lb. and BDT0.42-.53 for

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consider exporting such type of plastic.

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prices, but still higher than recycled (RPET) pricing. In future we would also

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outside of spec but still usable) which is normally sold at a discount to virgin

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consumers are forced to look at wide spec virgin PET (virgin resin that is

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pounds per year. Since only 800 million pounds are processed in the USA,

Worldwide the total market demand for PET plastic is reported as 1.2 billion

[RTHREE Waste Management] December 29, 2009 materials. Tejgaon used to be a major market for plastic materials since most of the industries were located there however the majority has moved towards Uttara and Tongi areas. Within Dhaka city the consumer base of PET materials is as follows. Consumers of PET in: Uttara and Tongi: 62* Bashabo: 8* Siddeshari: 9*

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Profitability

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Dhaka City Corporation Waste Concern

Technology

(Fig: The Strategic Group Map) There are no direct competitors to RThree Limited however there are indirect competitors who are serving in waste management sector. Considering Dhaka City Corporation and Waste Concern, a non government organization which is working with organic waste and composting; the strategic group map shows the position of RThree Limited which is well above Waste
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RThree Limited

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Strategic Group Analysis

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(*All information is based on the data provided by the BPMEA.)

[RTHREE Waste Management] December 29, 2009 Concern and Dhaka City Corporation in terms of profitability and technology. The size of the circle also represents the market share of the organization.

4.3

Product Forecast We will try to increase the rate of recycling so that we can develop the other solutions to the solid waste problem. Since the population is increasing day by day so they will be consuming more. If they consume more then there will be more waste so waste management will be needed. As days will pass we forecasting that we will not face that much problem in future in collecting the the waste in even more efficient manner. will be able to collect more waste which we will be recycling. We are waste. And time to time we will adapt new technologies and ways to recycle

4.4

Control

and re- manufacture this. Moreover, at the beginning stage we will be only collecting the waste form the Dhaka city corporation and intermediaries form Dhaka who will collect waste only form Dhaka city. But we want to collect waste from other parts of Bangladesh also. Initially we will not be able to do

so because if we do this then we will have higher cost of operation because the transportation cost is higher because of inflation.

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Currently there is no local cleaning and refining facility converting the waste

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[RTHREE Waste Management] December 29, 2009 5.0 Overall Strategy

5.0

Long term and short term strategy 5.0.1 Short Term Strategy Purchase environment friendly equipments and apply for ISO certificate to establish RThree as a socially responsible and green company. Arrange training sessions for the management and labors to increase efficiency.

5.1

Short and long term objectives 5.1.1 Short Term Objective Increase revenue. Reduce Carbon Emission. Improve chemical handling system. Create social awareness about using recycled products.

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which are - reduce, reuse and recycle and RThree would introduce recovery of the waste making it a 4R principle.

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The strategy for solid waste management is based on 3 R's

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collect waste locally through own network.

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Create operational plant in all major cities in Bangladesh and

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5.0.2 Long term Strategy

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Hire Quality Control Officer and monitor quality of the products.

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[RTHREE Waste Management] December 29, 2009 5.1.2 Long Term Objectives Enhance and improve recycling line. Recycle all kinds of wastes. Export recycled products.

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[RTHREE Waste Management] December 29, 2009 6.0 Company Value Chain Analysis and Operational Plan
6.0

Existing Core Competencies As mentioned earlier the RThree Limited specializes in recycling and converting solid wastes into safe products which are commercially viable. The core competencies of RThree Limited in the industry are recycling, utilizing the energy generated during processing and working as a green company with environment friendly technology. High quality recycled plastic and metal sheets.

recycling business to ensure a healthy environment and reduce overall waste.

6.2

Products/Service Overview

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creation of a network to collect waste from door to door and diversify the

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The future competencies that RThree Limited hopes to achieve will include

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Future Competencies

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Operate as a green company.

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Proper utilization of Bi-Products.

[RTHREE Waste Management] December 29, 2009 RThree Limited is an environment company. Reflecting the name RThree (R3) we follow the universal motto of reuse, reduce and recycle. The main service of RThree Limited is to collect solid waste from the City Corporation and convert the solid waste into high quality plastic and metal sheet which will be sold to domestic buyers. The main product of RThree Limited is the plastic flakes, plastic sheets and metal sheets.

6.3

Facilities Location

location we will have advantage in collecting the waste and selling our products to our customers. We can collect the waste not only from Dhaka city but also from other adjacent areas, so we will have sufficient amount because its an industrial area and most of the manufacturers factories of waste to convert it into recycled products. Another thing is that are established over there. So after selling the product we can deliver the products to the door step of our customers at a lower transportation cost and we will be able to deliver the products quickly. Because we will be

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able to deliver the products to our customers as soon as possible we will be their first choice from where they will buy their raw materials. Because it will lower down their inventory ratio and increase their inventory turnover ratio. This is how we will create value in our company and we will create our loyal customers who will help us to grow in future.

Building The RThree Limited owned facilities include a building of 40,000 S.F. of manufacturing and warehouse space with 100% sprinkler system coverage and SONITROL fire and intruder detection system and refrigerated material storage located in Tongi Industrial Area.
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price is comparatively lower than the main Dhaka city. Because of the

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Our factory will be in Tongi, because this is an industrial area and the land

[RTHREE Waste Management] December 29, 2009

6.4

Equipment and Machinery We will purchase main machine and equipments from China. Another option was to buy these from Italy but because of the higher price charged by the Italian company we will be buying the machine and equipments from a Chinese company. They will not only provide us a good machine with warranty but also they will give us some after sales facilities which will be helpful for us. Moreover, at the time of purchase they will train our people how to use the machine efficiently. So it will be helpful for us, because if they give the training then our people will be well trained and can operate the end of the day the machine will be lasting long and we will not need to repair machine in a proper way so that the machine will not be hampered. At the the machine and equipments over and over.

They have assured us another thing that is in future if we need any equipment or any parts then they will give us at a lower price than the market price which is our plus point.

Though the machine is going to be purchased from China and the price is going to be comparatively lower than the Italian company, our machine and tax and the import tariff for importing these heavy industrial machine and equipments since its a new industry and new concept in Bangladesh. Without the government help it will cost more than the assumed price. Production Equipment The RThree has state of the art production equipment to produce recycled plastic. The production equipment includes 15 Compression and Transfer molding presses ranging from 15 tons to 300 tons capacity, 5 Solid State microwave Pre-heaters, 3 Hydraulic performers, 2 Automatic tapping and drilling machines, 2 Vertical milling machines, and various other manual and semi manual equipments which are flexible in nature and can be used for multiple purposes.
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equipments total price is very high. We hope our government will reduce the

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[RTHREE Waste Management] December 29, 2009 Quality Equipment To ensure quality of the products RThree Limited uses latest equipments such as Trimos TVD 800A digital measuring machines, Trimos TVM 6006 vertical measuring machine, Micro-Vu 600-14 optical comparator, Starret 36" x 48" laboratory grade surface plates, etc.

6.5

Production and Manufacturing Process We will collect the waste from two sources. First one is the intermediaries intermediaries will sort these waste. Then they will sell those to us. Second sources one team will do final sorting and then the recycling process will start. We will recycle these wastes by using our equipments, machines. We will be using the manufacturing technique which is used in USA also to will have efficiency in production. The output will be the flakes and sheets. these two types, flakes and sheets. Suppliers: recycle the waste, meaning we are going to use high technology so that we For the convenient of our customers we will make available our products in

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The suppliers will provide us our raw materials meaning the sorted out waste. We will collect these wastes from two sources. The first type of suppliers will be those who will collect the waste form the individual collectors. Then these suppliers will sort these waste. Then they will sell those to us. Second source is Dhaka City Corporation. After collecting the waste from these two sources one team will do final sorting and then the recycling process will start. In future we have a plan to start using waste collection concept that developed countries use. In this concept there will be two types of
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source is Dhaka City Corporation. After collecting the waste from these two

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who will collect the waste form the individual collectors. Then these

[RTHREE Waste Management] December 29, 2009 baskets outside every house. People will be encouraged to dispose of waste by their type according to the bin provided with one being the recyclable and in the other non recyclable wastes which will be later collected through our network. Transportation: After purchasing the waste from our suppliers we will need to deliver these to our factory and to do so we will need transportation. Basically we are going to purchase a truck which will do this important activity. Another reason for purchasing a truck rather than hiring truck will be our own truck and we dont need to pay extra amount of

without making any delay. Labor supply:

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There is no scarcity of labor in Bangladesh because it is a densely populated country. We can very easily collect the labor form the

market at a cheap price. After recruiting the labor force we need to train them because they are inexperienced and this is a new industry. Two of our employees will go to china to learn that how to use the machine at the time of making the purchase of machine and equipments and after they will come back they will train the rest of the labor who will be using the machine and equipments. In this way we will convert these labors into experienced labor force. We believe that if the labor force is experienced and if they are motivated them the operation cost will go down automatically because of their input in work.
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own vehicle and we can deliver our products as soon as possible

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customers. By this we will again save some cost because this is our

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By using this truck we can also deliver our finished products to our

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money but just the gas price. And it will be counted as our fixed asset.

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every time is that the we will have less operation cost because this

[RTHREE Waste Management] December 29, 2009 Manufacturing cost structure: Our manufacturing cost will be low because we will have a highly talented management team with a vision of progress. This management team will train the unskilled labor force and will convert them into skilled work force. If the labor force is skilled then we will have cost advantage. We will be collecting our raw materials at the lower price and the transportation cost will be low because we will be using our truck and Tongi is just beside Dhaka city.

various purposes like finding new product opportunities, market demand, potential buyers and so on. Technical Development

Proper query about the requirement would be carried out consulting experts and foreign companies. Extensive research will be carried out to find new ways to recycle and reduce production of carbon to make the operation an environment friendly one. Research Team: A group of five persons will be employed for the purpose. They will be hired on contract basis as per need of the company.

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Detailed plan for research would be designed and developed in order for

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out as to preparation for obstacles from dealing with external affairs.

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Before jumping into the real world, extensive research work will be carried

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Development and Design Plans

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6.6

Research and development

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[RTHREE Waste Management] December 29, 2009

6.7

Quality Assurance The Quality System of RThree will conform to the requirements of ISO 9001:2000 and the Company will remain committed to maintaining, and improving upon, the levels of excellence encouraged by this International Standard. At the same time adopt a sound and responsible approach to all environmental issues.

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[RTHREE Waste Management] December 29, 2009 7.0 Marketing Plan

7.0

Sales and marketing We are confident about our products and our management capabilities. We believe that we can identify our potential customers and influence them to but our products. While doing business our main focus will be to increase our sales volume and concentrate in the growth of our business. To promote our products to our customers we are going to use direct selling because our customers are basically business organizations who will buy our So we are considering this as industrial products. products as their raw material and they will use it to make finished products.

directly. They will influence our customers to buy our products because this is almost a new concept in Bangladesh. We need to convince our customers to use our recycled products and if they use it then what are the benefits they things. are going to get, we really need to make them understand about these

incur higher cost but we believe that we need to use them because our customers will be some big companies. For example: the companies related with providing purified water, like: MUM, FRESH. They will buy the plastic In this industry the number of buyers is less but they buy in huge quantity and to influence them to buy our product we need to use a dynamic sales force. Because our product is not for mass people and only companies are going to use our product so we have decided we will only use our sales force to sale our product and their motive will be to increase the sales number.

flakes from us and by using this raw material they will produce plastic bottles.

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We know that if are going to use sales representatives then we are going to

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We will have a dynamic sales force, they will contact with our customers

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[RTHREE Waste Management] December 29, 2009

7.1

Pricing We know pricing is very important because it manipulates the buyers decision. The companies who are going to buy their raw materials form us if they dont get these at a competitive price or lower price then they will look elsewhere. So we know that we have to be very careful to set our products price because at the end of the day it is a sensitive issue.

The price that we are going to charge for our products is going to be as their raw material. We will charge a competitive price and we will be able management and dynamic team will make it possible. At the current scenario the raw materials cheaper than that (Source: Azzizul Haque Shikdar, Owner

hampering the business. We will look for economies of scale in production and by the proper utilization of resources and capabilities we will make this a reality and we will be running our business effectively and efficiently so that

we can reach to our goal. Though the product manufacturing price or after doing the recycling the price of the recycled product will be higher than the usual product, we will be able to charge our customers a competitive price. Because, as said earlier, we are not only going to be efficient and have economies of scale but also the government will help us to charge a competitive price.

Government will help us to charge a competitive price by providing us incentives and giving tax benefits. Because this is almost a new concept and we will be in the marketer to do a sustainable business and helping the
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challenge that we want to minimize the cost of doing business not by

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From the very beginning of our project we will be considering this as a

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of Sunny Chemicals, Tongi).

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they cost of about 25kg raw materials is BDT 3,000 and we will try to provide

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to do that because government will help us to do so and our efficient

competitive, so that we can easily convince our customers to buy our product

[RTHREE Waste Management] December 29, 2009 country. This is going to be a new industry and to save this industry form being vanished government will give us some benefits and by this we will be charging a competitive price to our customers.

7.2

Distributions After collecting our raw materials from the intermediaries and the Dhaka city corporation we are going to recycle this waste and convert these into sheets and flocks. Then we will be selling these according to our customer demand.

companies. Then they will place the order to the factory and then factory will then our factory will send the products to our delivery unit. Then delivery unit will deliver the products to the actual customer. This is how we are going to get the order and place our product to our customers. In this process we customers, meaning we will do everything by ourselves. are not going to use any intermediaries to place the product to our

7.3

Advertisement /Product Promotion

Basically we will do two things in our promotion. First of all we will promote our products to our customers so that they will know about us, our product and benefits of using our product. The second thing that we are going to do is to undertake an advertising campaign for creating awareness among people about the total recycling concept. Through this campaign we will educate people or aware people about the benefit usage of recycled products. When we will be promoting our products to our customers at that time our motive will be to increase our sales. Through direct advertising we will influence them to buy our products. Our representatives will convince them to use our recycled products as their raw material. If we use direct promotion
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pack the products for the customer according to our customers demand and

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Our sales force will take the orders from our customers meaning the

[RTHREE Waste Management] December 29, 2009 meaning a one to one promotion then we can make them understand very easily because we will have time and if they have any question then we can answer the question on the spot. We have chosen direct promotion because our product is an industrial product. When we will be promoting our recycled products to our customers at that time we will convince them by proving all necessary information about the product. We will be selling them standard products at a competitive price. This will be a significant factor that we are going to provide them quality products at a competitive price. So this will help us to sell faster and promote quickly tour customers.

the quality so if we follow the push strategy we will not face any problem in future because we have the capability to produce more and at the end of the day we will have economies of scale.

Because we are going to be a new company so at the beginning we will give them some raw materials as sample and after using that when they will be the quality to them so that in future we can sell even more to them and establish a good relation with them. convinced at that time we will start selling our products. We want to assure

The second thing that we are going to do is creating mass awareness about using recycled products. We will intensively advertise in radio, newspaper and television. We will do this as a CSR activity. By this the advertising campaign we will educate the mass people and we will influence them to buy

the products which are made of recycled raw materials. We will show them all the positives sides of using this kind of product. In this second way, because we are educating consumers so we will be creating demand for products which are made by using recycled raw materials. People will prefer to buy this kind of products, so our actual
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to grow faster and by this we will not hamper the business. We will maintain

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We will be using hard sell strategy meaning push strategy. Because we want

[RTHREE Waste Management] December 29, 2009 customers (companies) will consider this demand and will purchase our products to fulfill this demand. In this way we are basically saving our customers promotion cost. For them it will be a positive side and also for us. Its a positive side for us because the end users will demand the products from the companies and companies will have to fulfill the demand. So at the end of the day, its a win-win scenario.

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[RTHREE Waste Management] December 29, 2009 8.0 Human Resource Strategy and Planning
8.0

Key issues Management The Organizational Structure of RThree is planned to be a simple and flat one. At the top of the Management sits Director followed by Deputy Director. Under Deputy Director there will be Manager - Operations, Manager - Human Resource, Manager - Marketing and Manager - Finance. Deputy Mangers will report to Managers.

Managers who will be responsible for

making the functional decisions and at the made by the deputy managers who will implement the plans to achieve the goals of the organization.

8.1

Board of Governors The five founders along with the Director and Deputy Director will be in the Board of Governors. The Strategic decisions will be made by consulting with the board of governors.

Staff requirements RThree initially plans to recruit 17 people in different divisions and positions for the management team. There will be a clear hierarchy which will be
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bottom the operational decisions will be

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decisions. In the Business Level there will be

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responsible for making the strategic

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and Deputy Director. They will be

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In the Business level there will be Director

[RTHREE Waste Management] December 29, 2009 followed. Since the majority of the task will be related to manufacturing the metal and plastic sheets more people will be required in the Operations. The number of labors required in the operations will be increased gradually and production increases.

8.2

Structure The RThree Limited is a flat organization and will have the following organizational structure. In Functional Level there will be in Operations there ensuring the tasks are completed by the labors and in Marketing Division of experience and the time working in the organization. And as company will be supervisor who will report to Deputy Manager and responsible for there will be Officer Sales. There will be grades to distinct between the level expands, will recruit more as required.

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[RTHREE Waste Management] December 29, 2009

8.3

Expectations The organization has been kept flat to ensure proper fast two way flow of information from top to bottom and vice versa. It is expected that the organization will provide necessary incentives and hire competent officials for ensuring the smooth running of the RThree Limited.

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[RTHREE Waste Management] December 29, 2009 9.0 Risk Analysis 9.1 Foreseeable and unforeseeable barriers 9.1.1 Critical Risk Delay: The political condition is not good in Bangladesh and another problem in this country is that, here we will need to go through huge paper work which will consumes so much time and that may hamper us very badly. Because of delay in starting our business we may face hampering our way of doing business. So this is a risk that we want to relation with the political leaders so that we can start our business as quickly as possible. competition in the beginning stage of our business which will be minimize by doing lobbing. Moreover, we will try to have good

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expensive and our labor force will not be experienced at the very beginning so it may happen that they will hamper the machine and equipments by using these in a wrong manner. So this is also a risk because we will have only one machine and if the machine is have to stop the production for a long time. Because in the mean time we will have to repair the machine and if parts are damaged then we

hampered in the very beginning of starting the business then we will

will have to import those parts from China and that will definitely need time. And in the mean time we will lose our valuable customers and obviously the operating cost will be higher. So we are considering the mal function of the machine and break down of parts as our risk because currently these are not available in Bangladeshi market.

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The equipments and machine that we are going to use are going to be

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Machine and Equipments:

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[RTHREE Waste Management] December 29, 2009 Management Experience: As mentioned earlier that this is a new industry and a new concept so our management will not have the experience of handling this kind of company. But our management team will be dynamic because it will be full of graduated students from NORTH SOUTH UNIVERSITY (NSU) which is a well know university which produces the world class entrepreneurs and top level management team. We know that experience is a vital issue and if any company has experience then that company can do a better business than an inexperienced Bangladesh and there is a risk in this regard that if we dont have efficiently. If we start doing this business with a dynamic work force able to do a profitable business because we have confidence on our company. But we have to face the fact that it is a new concept in

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We have a disadvantage in this regard that most of our population is illiterate. Meaning they are not educated that why they will not understand the concept of using the waste products and through recycling converting these into usable products. They may not accept the products and this is also a risk. For this reason when we will be promoting our product at that time we will not only promote our products to our customers through sales representatives but also to create a general awareness among mass people and influence them to buy products which are made by using the recycled raw materials we will use television, newspaper and radio. In this way we will change the way people think about these products so that we will increase the demand of using these products. At the end of our main

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Public acceptance:

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management team.

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then we will have the competitive advantage and obviously we will be

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experience then we may be unable to do the business effectively and

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[RTHREE Waste Management] December 29, 2009 focus is to maximize of shareholders wealth and maximize the profit of our organization. Competition: Basically we will not have any direct competition from any company in Bangladesh. But there is one company doing similar kind of business that waste concern. Their presence in the market is ignorable. Our indirect competitors are the suppliers who provide usual raw materials to our customers. If they start providing the raw materials at a lower price than us then it may happen that our customers switch

Because this is a new industry and we are just assuming that we will make our desire level of profit but in reality it may not happen because of the macro and micro environmental factors. It may But we have confidence on our management team and know that we happen that our actual return will be less than our expected return. can run this business and make our desirable profit.

9.1.2 Evaluate weakness of business

We dont have any experience in this business because this is a new industry.

Our labor force is not skilled. Because of these reasons it may happen that our cost of operation will be higher than the producer of general raw material for the companies who will buy these products to make their final products. If the cost of operation in producing the products is higher than the product unit price will be higher so ultimately our customers will hesitate to buy from us. Our another weakness is the illiteracy rate of this country people is very high so that they may not except the products made of recycled raw materials. All these are our weaknesses and we can only tackle
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Return on investment:

to them. So we are considering competition as a risk.

[RTHREE Waste Management] December 29, 2009 these by taking proper strategies which will make us to do business efficiently. 9.1.3 New technology: The technology that we are going to use in this business is new. So there is a risk that if any new rival enters in the market with updated technology then we will have the disadvantage. Because of the updated technology they will be able to do the business more efficiently than us and at the end of the day they can offer our customers lower price than us and we may lose our valuable customers.

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[RTHREE Waste Management] December 29, 2009 10 Financial Management 10.1 Assumptions Revenue to be increased @ 25% per year Accounts Payable to be increased @ 5% per year Tax @ 37.5% Depreciation calculated using straight line method over 5-year period. Expenses to be increased @ 5% per year

getting a tax benefit on debt capital.

Weighted Average Cost of Capital: Total Investment:

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Debt Financing: BDT 50, 00,000 @ 15% for 5 years Equity Financing: BDT 60, 00,000 (5 member each contributing BDT 12, 00,000)

Weight of debt financing 100 = 45 %

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Weighted Average Cost of Capital is 14%

Weight of equity financing 100 = 55 %

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Cost of equity is 18%

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= (BDT 50, 00,000/ BDT 11,000,000) x = (BDT 60, 00,000/ BDT 11,000,000) x

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After tax Cost of debt is 4.3 %, as interest is tax deductible we are

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Cost of debt is 15%

[RTHREE Waste Management] December 29, 2009 WACC = WdKd (1-T) + WeKe = .45 x .15 x (1- .375) + .55 x .18 = 14 % 10.2 Income Statement
Pro Forma Income Statement Year 1 Sales Year 2 3,750,000 Year 3 4,500,000 Year 4 5,400,000 Year 5 6,480,000 Year 6

3,000,000

7,776,000

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Production payroll Packaging Sales commissions Cost of goods sold

750,000 75,000 60,000 150,000 1,035,000

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54,000

Direct cost of goods

750,000 93,750 75,000 187,500

450,000 112,500 90,000

540,000

648,000 162,000 129,600 324,000

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777,600 194,400 155,520 388,800 1,516,320

135,000 108,000

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225,000 877,500

Gross Profit

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Sales and marketing expenses 150,000 Sales and marketing 30,000 payroll Advertising 300,000 Total sales and marketing 480,000 expenses

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1,965,000

2,643,750

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1,106,250

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270,000 1,053,000

1,263,600

3,622,500

4,347,000

5,216,400

6,259,680

187,500 37,500 375,000 600,000

225,000 45,000 450,000 720,000

270,000

324,000 64,800 500,000 888,800

388,800 77,760 550,000 1,016,560

450,000 774,000

General administrative payroll Depreciation Office supplies Utilities

and

150,000 150,000 210,000 150,000

187,500 150,000 262,500 187,500

225,000 150,000 315,000 225,000

270,000 150,000 378,000 270,000

324,000 150,000 453,600 324,000

388,800 150,000 544,320 388,800

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[RTHREE Waste Management] December 29, 2009

Entertainment 30,000 expenses Plant maintenance expenses 240,000 Total General and administrative 930,000 expenses Earnings Before Interest and Taxes 555,000 Interest 37,500 300,000 45,000 360,000 54,000 432,000 64,800 518,400 77,760 622,080

1,125,000

1,320,000

1,554,000

1,834,800

2,171,760

918,750

1,582,500

2,019,000

2,492,800

3,071,360

750,000 Before

750,000

750,000

750,000

750,000

750,000

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Taxes @ 37.5%

63,281

312,188

475,875

Earnings Taxes

(195,000)

168,750

832,500

1,269,000

1,742,800

2,321,360

653,550

(195,000)

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Net Income

105,469

520,313

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870,510

793,125

1,089,250

1,450,850

1,500,000 1,000,000

500,000

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Net Income

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Net Income

(500,000)

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[RTHREE Waste Management] December 29, 2009 10.3 Balance sheet

Pro Forma Balance Sheet

Year 1 Assets Current Assets Cash 1,500,000 Accounts Receivables Inventory 175,000 Bank balance 800,000 Total Current Assets Long term Assets Machinery 2,675,000 880,000 179,375 183,859 924,000 200,000 205,000 210,125 215,378 1,575,000 1,653,750 1,736,438 1,823,259 220,763 193,167 1,018,710 1,914,422 226,282 197,996 1,069,646 Year 2 Year 3 Year 4 Year 5 Year 6

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900,000 150,000

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900,000 150,000 2,625,000

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2,839,375

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2,971,734

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188,456 970,200

3,110,471

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3,255,899 3,408,346 900,000 150,000 2,690,625 900,000 150,000 2,757,891 900,000 150,000 2,826,838 900,000 150,000 2,897,509

Less: depreciation Land

2,500,000 Total Long term assets Total Assets 6,225,000 Liabilities and Capital 3,550,000

3,675,000

3,740,625

3,807,891

3,876,838

3,947,509

6,514,375

6,712,359

6,918,362

7,132,737

7,355,855

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[RTHREE Waste Management] December 29, 2009

Current Liabilities Accounts Payable 750,000 Short term loan 787,500 325,000 Long term liabilities Bank loan 250,000 150,000 826,875 868,219 911,630 957,211

Capital Paid up capital 1,200,000 Retained Earnings 2,076,875 150,000

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2,390,484 420,000

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5,025,000

4,287,500

3,901,875

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Total liabilities

3,118,219

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2,311,630 957,211 2,850,143 950,000 3,571,107 1,250,000 4,598,644 1,800,000

Total liabilities and Capital

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6,225,000

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6,514,375

6,712,359

6,918,362

4,275,000

3,500,000

2,750,000

2,000,000

1,250,000

7,132,737

7,355,855

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[RTHREE Waste Management] December 29, 2009 10.4 Capital budgeting and feasibility

Capital Budgeting
Year 0 Earnings Before Interest Taxes NOPAT 346,875 Add: Depreciation Operating Cash Flow Less: Capital expenditure FCF ( Capital spendingOCF) Discounted FCF NPV (600,000) 1,456,514 (89,719) (600,000) (103,125) 600,000 496,875 124,219 724,219 1,139,063 150,000 150,000 150,000 574,219 989,063 1,261,875 150,000 1,558,000 150,000 150,000 1,919,600 and 555,000 918,750 1,582,500 2,019,000 2,492,800 3,071,360 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6

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1,411,875 -

1,708,000 -

2,069,600 -

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539,063

811,875 1,108,000 470,888 565,080 661,320 1,469,600

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93,164

Discounted pay back period

WACC

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355,781

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[RTHREE Waste Management] December 29, 2009 Ratio Analysis

Ratio Analysis Year 1 Current ratio ( times) 0.36 Year 2 3.61 Year 3 2.58 Year 4 2.78 Year 5 3.07 Year 6 3.56

cash ratio ( times) Net working capital to total assets

0.20

2.00

1.44

1.55

1.72

2.00

Inventory turnover ratio

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6 7

-78%

31%

27%

29%

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0.91 1.48

31%

33%

Total asset turnover ratio Return on Asset Return on Equity Net profit margin

0.48 -3%

0.58

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0.67 8% 18.51% 12% 0.78 11% 20.87% 15%

1.06 20% 22.67% 19%

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-16.25% -7%

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2%

15% 22.59% 17%

4.74% 3%

Equity multiplier

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5.19

2.93

2.39

1.82

1.15

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[RTHREE Waste Management] December 29, 2009 Graphical presentation of ratios Current ratio: Current Ratio = Current Assets / Current Liabilities For Short Term Creditors, high current ratios indicate good financial conditions. A high current ratio indicates liquidity, but it may indicate an inefficient use of cash and other short-term asset.
Curren ratio ( times) 4.00 2.00 0.36 1 2 3 4 5 6 3.61 2.58 2.78 3.56

3.07

than current assets. But after that its current ratio become 3.61, 2.58, 2.78, 3.07 and 3.56 in the following years indicating that it will have more current assets than current liabilities in order to meet its current obligations. It also indicates that gradually our company will attain short term solvency after year 1.

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In year 1, R Three has current ratio less than 1 indicating that it has more current liabilities

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Year

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Curren ratio ( times) 0.36 3.61 2.58 2.78 3.07 3.56

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Curren ratio ( times)

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[RTHREE Waste Management] December 29, 2009 Inventory turnover ratio Inventory Turnover Ratio = COGS / Average Inventory
Inventory turnover ratio 8 6 4 2 Inventory turnover ratio 1 6 2 6 3 5 4 6 5 7 6 8 Inventory turnover ratio

indicates that in that particular year we sold off our inventory 8 times that indicates our

Net profit margin

This ratio measures what is the percentage of net income of sales. This should be good if the ratio is more as the company as it indicates more revenue.

Profit Margin on Sales = (Net Income / Sales) * 100

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efficiency in inventory management system.

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in 3rd year, 6 in 4th year, 7 in 5th year and 8 in 6th year. In year 6 inventory turnover ratio of 8

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the calculation we can see that our inventory turnover ratio will be 6 in year first 2 years, 5

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This ratio indicates how many times the entire inventory was turned over in 1 year. From

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[RTHREE Waste Management] December 29, 2009

Net profit margin 20% 10% 0% -10% Net profit margin 1 2 3 4 5 6

Net profit -7% 3% 12 15 17 19 % % % % margin year

In the 1st year as we are in loss and that is why our profit margin is negative. But after that our profit margin increases that indicates our company is becoming profitable and we are increasing our net profit in proportion to our sales

Total Asset Turnover:

that is a good sign for investors of our company.

Total asset turnover ratio

1.50 1.00 0.50 -

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that indicate that we are generating more sales in proportion to the assets as years move on

0.4 0.5 0.6 0.7 0.9 1.0 Total asset turnover ratio 8 8 7 8 1 6 year

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current and fixed assets. Here we see that our total asset turnover is increasing over years

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The Total Asset Turnover ratio measures the turnover of all the firms assets, which includes

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Total Asset Turnover = Sales / Total Assets

Total asset turnover ratio

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[RTHREE Waste Management] December 29, 2009

ROA:

ROE = (Net Income / Total Assets) * 100 The ratio suggests how much net income we are generating from our assets.
Return on Asset
20% 10% 0% -10% 2% -3% 1 2 2% 3 8% year 4 5 6
Return on Asset

20% 8% 11% 15%

From the above analysis we see that our ROA is increasing as years goes on indicating that we generating more net profit from our total assets in the following years.
Return on Asset 30% 20% 10% 0% -10%

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-3%

2%

8%

11%

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15% 5 6 20%

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20%

Return on Asset

-3%

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8%

11%

15%

year

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Return on Asset

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Return on Asset -3%

11% 15% 20%

[RTHREE Waste Management] December 29, 2009

ROE:

ROE = (Net Income / Total Equity) * 100 The ratio suggests that for each taka of equity how much the stockholders are gaining as revenue.
Return on Equity

30.00% 20.00% 10.00% -10.00% -20.00% 1 2 3 4 5 6

Return on Equity

year

Return on Equity 30.00% 20.00% 10.00% 0.00% -10.00% -20.00%

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Return on Equity

Return on -16.25 4.74% 18.51 20.87 22.59 22.67 % % % % % Equity year

From the above analysis we see that our ROE is increasing over years that indicate that our company is going to give TK .474, TK .1851, TK .2087, TK .2259, TK .2267 in year 2, 3, 4, 5, 6 respectively as net profit to equity holders for their each TK invested.

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Return on -16. 4.74 18.5 20.8 22.5 22.6 25% % 1% 7% 9% 7% Equity

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0.00%

[RTHREE Waste Management] December 29, 2009 11 Long Term Sustainability Long term sustainability would depend on companys performance and strategic choices. As the demand for recycling materials are high worldwide our company has a chance to operate for a long time. Even in Bangladesh there are very few companies that produce recycled materials which increases the chance of RThree Limited to venture this filed successfully. As government is very keen to encourage the privatization of this kind of company, RThree limited would have the support in dealing with internal and external barriers which could hamper the sustainability of the company. Although the whole world is extremely concern about global warming still at a risk as people only became concern about it in recent times. and its effect Bangladesh is still counting its baby steps. Environmental condition is

concern in Bangladesh. It has been found out that a ten-feet layer of discarded polythene bags, plastics, coconut shells, and heavy sludge created by millions of tons of biodegradable waste from kitchen markets cover the bed of the river Buriganga.

However dozens of female workers can be regularly found washing and drying huge polythene sheets. They said they buy those sheets from business establishments in Nawabpur and Mitford areas, from garment factories, and from the street urchins. If RThree limited collects those plastic materials before it gets to others hand then the dumping and use of contaminated plastic can be stopped which would eventually
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The environmental pollution from waste materials especially from plastic is a big

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[RTHREE Waste Management] December 29, 2009 help the environment as well as being of people. As the recycling filed is still have lots of potential in this country RThree limited has a very good chance of sustaining in the long run.

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[RTHREE Waste Management] December 29, 2009 12 Conclusion Problems arising from solid waste are increasing drastically. The creation of new garbage management systems has added social problems to the existing environmental ones. The concept waste is wealth is now gaining ground. The present trend for urbanization and development is increasing the demand for waste management. Dhaka, the capital of Bangladesh everyday produces more or less 5000 tons of household waste. Though Dhaka City Corporation and the NGOs are collecting those still it remains on roads, in open drains and in low-lying areas. It has negative impacts on city dwellers as well as the citys environment. Sustainable population and environment and RThree Limited is dedicated to turn waste into waste management can be the way out to provide a livelihood in the city for its resources and create employment opportunity being a part of the sustainable world

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[RTHREE Waste Management] December 29, 2009 13 Bibliography Waste management, retrieved on December 27, 2009 from http://en.wikipedia.org/wiki/Waste_management Household Waste management in Dhaka, retrieved on December 27, 2009 from http://tilz.tearfund.org/Publications/Footsteps+5160/Footsteps+59/Household+waste+management+in+Dhaka+Bangladesh.ht m

http://www.mbendi.com/indy/wste/as/bd/index.htm

http://www.wasteconcern.org/Publication/SAARC%20Country%20Paper_Ban glaadesh.pdf

Solid Waste management Bangladesh, retrieved on December 27, 2009 from http://www.ceeindia.org/esf/download/paper16.pdf Dhaka City Corporation, retrieved on December 26, 2009 http://www.dhakacity.org/

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2009 from

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SAARC Country Paper on Waste management, retrieved on December 27,

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http://www.env.go.jp/recycle/3r/en/asia/02_03-3/06.pdf

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Municipal Waste management, retrieved on December 27, 2009 from

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27, 2009 from

Waste management, Pollution Control and Recycling, retrieved on December

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