TOILET TISSUE BUSINESS PLAN

TISSUE PAPER and SERVIETTE MANUFACTURING BUSINESS PLAN IN NIGERIA

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toilet-tissue1.0 Executive Summary.. 1

Chart: Highlights. 2

1.1 Objectives. 2

1.2 Mission.. 2

1.3 Keys to Success. 2

2.0 Company Summary.. 3

2.1 Company Ownership.. 3

2.2 Start-up Summary.. 4

Table: Start-up.. 5

Chart: Start-up.. 6

3.0 Products. 6

4.0 Market Analysis Summary.. 6

4.1 Market Segmentation.. 7

Table: Market Analysis. 7

Chart: Market Analysis (Pie). 8

4.2 Target Market Segment Strategy.. 8

4.3 Industry Analysis. 8

4.3.1 Competition and Buying Patterns. 8

5.0 Strategy and Implementation Summary.. 8

5.1 SWOT Analysis. 9

5.1.1 Strengths. 9

5.1.2 Weaknesses. 9

5.1.3 Opportunities. 9

5.1.4 Threats. 10

5.2 Competitive Edge.. 10

5.3 Marketing Strategy.. 10

5.4 Sales Strategy.. 10

5.4.1 Sales Forecast. 10

Table: Sales Forecast. 10

Chart: Sales by Year. 11

6.0 Management Summary.. 11

6.1 Personnel Plan.. 12

Table: Personnel 12

7.0 Financial Plan.. 12

7.1 Start-up Funding.. 12

Table: Start-up Funding.. 12

7.2 Important Assumptions. 13

7.3 Break-even Analysis. 13

Table: Break-even Analysis. 13

Chart: Break-even Analysis. 14

7.4 Projected Profit and Loss. 14

Table: Profit and Loss. 14

Chart: Profit Yearly.. 15

Chart: Gross Margin Monthly.. 15

Chart: Gross Margin Yearly.. 16

7.5 Projected Cash Flow.. 16

Table: Cash Flow.. 16

Chart: Cash.. 17

7.6 Projected Balance Sheet. 17

Table: Balance Sheet. 17

7.7 Business Ratios. 18

Table: Ratios. 18

Table: Sales Forecast. 1

Table: Personnel 2

Table: Profit and Loss. 3

Table: Cash Flow.. 4

Table: Balance Sheet. 6

1.0 Executive Summary

One major achievement of the present civilian administration in Nigeria in the past eleven (11) years is the growth of middle class which has been witnessed in the country. These growths continues to drive the increasing social and sanitary awareness of the need for hygienic and good quality living standard of people coupled with the geometrically exploding population and continued rural-urban drift continues to fuel the demand for toilet roll in the country.

WENAZ Nig. LTD is a Limited Liability Company specializing in the production of toilet rolls with the long term view of recycling of waste paper into jumbo reels to be used for the production of toilet rolls.

1.1 Business Opportunity:

In 2004, the federal government of Nigeria banned the importation of finished toilet roll, serviette and face tissue in order to encourage local production of the product and create the much needed employment.

Though much as been achieved in terms of local production, the market is still experiencing a deficit in supply.

The nations annual toilet roll requirement as been estimated at 105 billion units out of which local production can only meet about 800 million units. The short fall in supply translate to a market gap estimated at about three hundred and seventy five million (N 375,000,000) annually in revenue and an investment opportunity for savvy investors to exploit.

Opportunities also exist for the recycling of waste paper into jumbo reels used as raw material for tissue paper.

The demand for toilet roll would continue to expand as the standard of living of the over one hundred and forty million (140,000,000) population growing at the rate of 5.7% per annum continues to grow.

1.2 Product Description:

Toilet paper is a soft paper product (tissue paper) used to maintain personal hygiene after human defecation or urination. However, it can also be used for other purposes such as absorbing spillages or craft projects. It differs in composition somewhat from facial tissue, and is designed to decompose in septic tanks, whereas some other bathroom and facial tissues do not.

1.3 Current Business Position:

The planning and development of the company has been on going for about a month. Research has been carried out to analyze the market and likely location of the toilet roll production plant. Equipment supply has been negotiated with Ashmirt Technology Limited and prices have been agreed.

1.4 Financial Potential:

The company expects to generate N4,305,000 in net revenues within the first year of operation at a conservative rate of eight (8) hours of operation per day (40% installed capacity) based on sale of toilet roll only. Revenues and earnings are expected to increase if the production hour is extended into double shift operating for eight (8) hours each and eight (8) hours apart.

1.5 The Request:

The company is currently seeking for N 4,700,000 to cover the cost of the plant and initial working capital of the company. We have provided a detailed breakdown of the application of this fund in the Finance section of this document.

The longest lead item is the delivery and installation of the plant which would take approximately 60 days. In essence, operation is expected to start within 90 days of availability of funds.

Chart: Highlights

1

1.1 Objectives

The objectives of WENAZ Nig:

  • To maintain a professionally run organisation through training and retraining of staff to ensure skills acquisition and service efficiency
  • To develop our product to suit the exact requirement of our clientele
  • To develop superior expertise in the production of toilet rolls.
  • To use cutting edge technology in our business processes
  • To market aggressively through channels, adverts, promotional product as well as the electronic and print media

1.2 Mission

The mission of the company is: ‘to operate a production plant committed to excellence in the production of high quality product that will be accepted across the industry.

1.3 Keys to Success

The Vision of the Company is to become the leading toilet roll production company in the Nigerian market.

To fulfil its vision, the company will:

  • Utilise local and available abundant resources
  • Partner with host community
  • Adhere to best practices
  • Recruit and retain the right people
  • Automate its processes from inception in order to produce faster turnaround times and unique capabilities
  • Be goal – oriented
  • Empower our people to deliver customer satisfaction through appropriate training.

2.0 Company Summary

The plant that will be set up will have an initial capacity of one (1) ton per day with a planned expansion within two (2) years of operation subject to the condition of the market to include a waste paper processing plant.

Since the condemnation of bucket latrine and the adoption of water closet system, the demand for toilet roll have been on the rise, though was dominated by foreign brands before year 2004 and at such not much was contributed to the Gross Domestic Product (GDP) of the country.

The equipment and raw material required for production can be sourced locally and both luxury and economy brands can be produced targeting different segments of the market.

Our objective is to process quality product available to the people we work with at the right price, and in the desired quantity.

2.2 Toilet paper Product Description:

Toilet paper is a soft paper product (tissue paper) used to maintain personal hygiene after human defecation or urination. However, it can also be used for other purposes such as absorbing spillages or craft projects. It differs in composition somewhat from facial tissue, and is designed to decompose in septic tanks, whereas some other bathroom and facial tissues do not.

2.3 Location of toilet paper business:

Toilet roll production can be sited in any urban centre populated with people of high hygienic standard and consciousness.

Lagos, the commercial nerve centre of Nigeria is no doubt the largest market for toilet rolls in Nigeria and it is also close to the source of raw materials. There are about 10 toilet roll production companies in Lagos. Other cities where the project can be sited include Aba, Port Harcourt, Abuja, Onitsha, Asaba, Kano, Kaduna amongst others.

In addition, we believe that the choice location of our plant at 11 Ledega Street, Idado Ibuje Lekki, Lagos will attract quality workforce and customers alike.

2.4 Tissue paper manufacturing machine and technology:

The toilet tissue paper manufacturing machine is a stationary one to be sourced locally. However , the tissue paper manufacturing machine cost is not static as the price varies from different company and make of the toilet tissue machine. The plant is made up of the core cutting machine, core gluing machine, jumbo reel winding machine and band saw cutting machine.

The plant would be sourced from an experienced fabricator of plants in Nigeria, hence, the durability of the plant and spare parts would not be a problem.

2.1 Company Ownership

2.5 Ownership Structure:

The company, formed in 2010 is a wholly owned Nigerian company and currently has only 1 shareholder, Mr. Moses.

2.6 Legal Considerations

The federal government grants the owner the right do business with the registered business name of WENAZ Nig, having registered duely with the Corporate Affairs Commission {CAC}

2.2 Start-up Summary

Tissue paper manufacturing machine cost and Equipment:

The relevant toilet roll machinery and equipment, all of which are locally available includes:

  • core cutting machine
  • core gluing machine
  • jumbo reel winding machine
  • band saw machine.

The equipments would be sourced from Ashmirt Technology.

Plant size and Production Volume:

The capacity of the plant is one {1) metric ton of jumbo reel per day ,producing 20,000 double ply toilet roll in 24 hours and working for 250 days in a year, the expected output is five million {5,000,000) toilet rolls.

Plant Location:

The plant would be located at Lagos, which is close to the source of raw material for tissue paper and ready market for the products to be produced.

Accommodation:

The plant requires little space for operations and can be accommodated in a three (3) bedroom apartment, where the tissue paper raw material and finished product would be stored. However for future expansion, it is advisable to hire a warehouse type of accommodation.

Tissue paper raw material:

The essential raw materials needed for toilet roll production are jumbo reels, core paper and white glue while the packaging material are the wrapping paper on which the producers brand name and address will be printed ,cellophane and staple pins.

Utilities:

The plant requires electricity to power the electric motors. However due to the erratic supply of electricity in the country, an electric power generator would be installed for steady supply of power.

Labour Requirement:

The entire production plant of one (1) per day would require about five (5) staffs for production.

Raw Material Suppliers and Fabricators Contact Details:

Below are the contact details of some of the plant fabricators /agents in Nigeria.

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ASHMIRT TECHNOLOGY LTD

SUIT 25, RODEO SHOPPING MALL

148, Obafemi Awolowo Way, Opp. Airport Hotel, Ikeja, Lagos.

08052263267, 08029648064, 08067791031

Turning Point Equipment

65, Abeokuta Express Road,

Ajegunle bus-stop,

Agbado Ijaya,Lagos.

07090822640, 08058438231, 08091882252

[email protected]

STAR PAPER MILLS

CORPORATE OFFICE

114/116, Aba-Owerri Road, Umungasi

P. M. B. 7376, Aba, Abia State, Nigeria

234- 01-5875388

Fax: 01-5450495

Website: www.starpaperml.com

E-mail: [email protected]

 HALLMARK PAPER PRODUCT PLC

99, Palm Avenue,Mushin,Lagos.

+234 1 452 095

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4.0 Market Analysis Summary.. 6

4.1 Market Segmentation.. 7

Table: Market Analysis. 7

Chart: Market Analysis (Pie). 8

4.2 Target Market Segment Strategy.. 8

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Table: Start-up

Start-up
Requirements
Start-up Expenses
Start up cost

₦200,000

Total Start-up Expenses

₦200,000

Start-up Assets
Cash Required

₦700,000

Start-up Inventory

₦1,300,000

Long-term Assets

₦2,500,000

Total Assets

₦4,500,000

Total Requirements

₦4,700,000

Chart: Start-up

2

3.0 Products

WENAZ Nig deals exclusively in the manufacturing of toilet tissues in western part of Nigeria. Concentrating its market on Lagos Metropolis.

Manufacturing Process:

The production of toilet rolls involves the following processes. First, the core paper is fed into the core making machine from two different rolls and glue applied. The core pipe length is determined and cut. Jumbo reels are then fed into the jumbo reel making machine with the core pipe from the core making machine. The jumbo reel sheets are wound or wrapped round the reel to be made. The jumbo reel sheets are wound or wrapped round the core pipe automatically by the reel to be made.

This is now sent to the band cutting machine where the toilet rolls paper is cut into the desired market size. The cut toilet rolls are then manually wrapped and packaged in cellophane wraps, stapled and sent to the store, ready for sale.

The cost of tissue paper manufacturing machine cost is analysed under costing

Tissue paper Raw Material:

The essential raw materials needed are jumbo reels, core paper and white glue while the packaging material are the wrapping paper on which the producers brand name and address will be printed ,cellophane and staple pins.

4.0 Market Analysis Summary

Market Overview:

The market for toilet roll is national .With a population of over one hundred and forty million (140,000,000) people and an estimated national population growth rate of 5.7% per annum , average economic growth rate of 3.5% per annum in the past five (5) years ,Nigeria is a large ,expanding and sustainable market for toilet rolls.

Toilet roll is consumed on daily basis by all and sundry irrespective of age, social class or religion for sanitary and cleaning purposes.

The fact that over 60% of the over one hundred and forty million (140,000,000) population of Nigeria are youths which also constitutes a greater majority of the middle class ,two (2) group of consumers that seeks for hygienic and good quality living standard further deepens the market. Also the product can be exported to the Economic Community for West African State (ECOWAS) market.

In tandem with this highly profitable market, the company will achieve N 24,900,000 in annual sales of its toilet roll products.

Our plan is to use the plant to connect to major distributors, expanding the market for our product and gaining good experience the industry before launching our waste paper recycling plant.

4.1 Market Segmentation

We have created a segment analysis of our customers in order that we understand the nature of our customers and provide a scientific basis to understand competition.

Current location distribution of the toilet roll usage in Lagos reveals that about 58% of toilet roll produced in Lagos is consumed by household/family, 25% in by hotel, restaurants and fast food outlets, 12% by schools and 5% by hospitals.

Expectedly, our customer concentration will follow the distribution pattern identified above

In the household/family segment, we strive to supply economy brand of the product to the distributors at the lowest rate possible by delivering same to the various shops in Ojuwoye market in Mushin, Eko market on Lagos Island and other places. The product can also be marketed in other markets in the major cities mentioned earlier on. These group of client do not need any special branding to be done on the product but we would endeavour to design the product in an attraction way.

In the Hotels and Restaurants segment, branding of the product is key to the success of getting large and continues orders. Efforts would be put in place to make sure that the product is produced in an attractive way like adding details of the patronizing company.

Table: Market Analysis

Market Analysis

2015

2016

2017

2018

2019

Potential Customers

Growth

CAGR

Household/family

5%

1,160,000

1,218,000

1,278,900

1,342,845

1,409,987

5.00%

Schools

5%

240,000

252,000

264,600

277,830

291,722

5.00%

Hospitals

5%

100,000

105,000

110,250

115,763

121,551

5.00%

Hotels

5%

500,000

525,000

551,250

578,813

607,754

5.00%

Total

5.00%

2,000,000

2,100,000

2,205,000

2,315,251

2,431,014

5.00%

Chart: Market Analysis (Pie)

3

4.2 Target Market Segment Strategy

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4.3 Industry Analysis. 8

4.3.1 Competition and Buying Patterns. 8

5.0 Strategy and Implementation Summary.. 8

5.1 SWOT Analysis. 9

5.1.1 Strengths. 9

5.1.2 Weaknesses. 9

5.1.3 Opportunities. 9

5.1.4 Threats. 10

5.2 Competitive Edge.. 10

5.3 Marketing Strategy.. 10

5.4 Sales Strategy.. 10

5.4.1 Sales Forecast. 10

Table: Sales Forecast. 10

Chart: Sales by Year. 11

6.0 Management Summary.. 11

6.1 Personnel Plan.. 12

Table: Personnel 12

7.0 Financial Plan.. 12

7.1 Start-up Funding.. 12

Table: Start-up Funding.. 12

7.2 Important Assumptions. 13

7.3 Break-even Analysis. 13

Table: Break-even Analysis. 13

Chart: Break-even Analysis. 14

7.4 Projected Profit and Loss. 14

Table: Profit and Loss. 14

Chart: Profit Yearly.. 15

Chart: Gross Margin Monthly.. 15

Chart: Gross Margin Yearly.. 16

7.5 Projected Cash Flow.. 16

Table: Cash Flow.. 16

Chart: Cash.. 17

7.6 Projected Balance Sheet. 17

Table: Balance Sheet. 17

7.7 Business Ratios. 18

Table: Ratios. 18

Table: Sales Forecast. 1

Table: Personnel 2

Table: Profit and Loss. 3

Table: Cash Flow.. 4

Table: Balance Sheet. 6

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4.3 Industry Analysis

4.3.1 Competition and Buying Patterns

Primary Competition

We have identified our immediate competition to only include toilet roll producing companies owned by large paper producing and recycling companies including:

  • Imperial Standard Luxury Bathroom Accessories
    Orile, Apapa, Lagos, Nigeria
  • Fidson Healthcare Plc
    Obanikoro, Shomolu, Lagos, Nigeria
  • Fidson Healthcare Limited
    Ilupeju, Mushin, Lagos, Nigeria
  • The LSA Company
    Victoria Island, Eti Osa, Lagos, Nigeria
  • Wemy Industries Limited
    Badagry Expressway, Ojo, Lagos, Nigeria

It is safe to say that the demand far outstrips the supply meaning that a reasonable percentage of the total market requirement has remained unsatisfied. This then means that any one going into production can still operate profitably.

There is currently no stiff competition in the market due to the demand/ supply ratio. For this reason, price war does not exist in the market yet. In order to establish a brand name, one may introduce a simple identifiable design on the products and in this case ensure that the product is of good and reliable quality.

5.0 Strategy and Implementation Summary

Marketing Plans

Our marketing would centre on the larger percentage of the market that requires the product which is the household/family segment through the use of middleman in major markets across the state.

We would also strive to produce customize products for hotel, restaurants and fast food outlets.

5.1 SWOT Analysis

The SWOT analysis provides us with an opportunity to examine the internal strengths and weaknesses WENAZ Nigmust address. It also allows us to examine the opportunities presented to WENAZ Nig as well as potential threats.

5.1.1 Strengths

  1. There is a ready market for toilet roll all year round Availability of labour locally
  2. The presence of the equipment suppliers and technical partners Professional input through professional managers and Consultants Central and accessible location
  3. Clear vision of the market need. WENAZ Nig. knows what it takes to build an upscale toilet tissue patronage. We know the customers, we know the technology, and we know how to build the product that will bring the two together.

5.1.2 Weaknesses

  1. Unavailability of raw materials
  2. Availability of experts for plant maintenance
  3. Lack of adherence to business plan recommendations Opportunities
  4. Proximity to the largest toilet roll market in Nigeria. Competitive pricing
  5. Government incentive supports small and medium scale investment Potential to create employment opportunities.
  6. Possible business expansion into waste paper recycling plant, production of serviette and face towel.
  7. Improving national economic environment.
  8. High prospects due to continuing economic stability.

5.1.3 Opportunities

  1. Access to capital: It is important to have access to capital to acquire, upgrade and maintain equipment and facilities and keep afloat working capital. Also funds must be available to meet contingent needs of the company.
  2. Tenured Sales Contract: the company shall endeavour to discover and secure long term supply contracts with major toilet roll users.
  3. Professional Management of Project: the plant shall be managed by experienced and technically competent professionals to ensure that the organisation’s plan, as well as targets can be realised in good time.
  4. Organisational Structure: Controls must be put in place to avoid theft and maintain product quality. A lean and entrepreneurial organization structure ensures that the interest of staff and that of the owners are closely aligned
  5. Innovation: The Company needs to take into consideration customers’ judgment of their service. They must also be proactive in anticipating customer’s future demands and position themselves to meet such demands.
  6. Product Quality Standardisation: This guarantees that at any time, the quality of toilet rolls produced will be maintained.
  7. Trained Manpower: There must be continuous in-house and external training suited to the needs of both the skilled and semi-skilled staff.
  8. Identification and Management of Channels: Marketing through Channels and distribution will be critical to the success of the marketing efforts.
  9. Health, Safety & Environment: One of the important success factors will be the strict adherence to health, safety and environmental issues in the running of the plant.
  10. Faster Turnaround Time: We will ensure that delivery time is adhered to and as much as possible deliveries are made possible in advance of set dates
  11. In order to ensure that we succeed in meeting the most critical requirement, the following steps must be followed
  • Develop a business plan for our growth requirement
  • Share our plans and dreams indicated and enumerated in our business plan
  • Implement the plan properly as conceived, develop a strategy and move from “Plan” to “Action” and mobilizing all stake holders in the process
  • Review progress regularly with clearly defined milestones to measure performance.

5.1.4 Threats

  1. Availability of quality spare parts
  2. Political instability in the years to come Instability in Government’s policies
  3. Disruption of power supply thereby causing over-reliance on generators Other competing toilet roll production plant.

5.2 Competitive Edge

Our competitive advantage over our peer is that we have a better understanding of the market and at such we would be able to serve the needs of the market at the right price possible. Also our choice of location would also help to reducing operating cost and reach our target customers at the lower cost possible.

We would also brand client’s company names on our product for hotels, big resturants etc. which will also boost their brand image. This penetration strategy will keep us above our competitors.

5.3 Marketing Strategy

WENAZ Nig will use word of mouth basically and radio advertisement on planet FM which is currently has a wide range of listenship and our target market.

We also intend to pull out a sanitary/medically promotion strategy with major pharmaceutical stores around town. Giving out free monthly toilet tissue to them in exchange for a strategically position recommendation banner or sticker

5.4 Sales Strategy

Our strategy focuses on building a customer base by providing good customer experience. WENAZ Nig. will carry out monthly coupon to encourage customers to buy more

5.4.1 Sales Forecast

Table: Sales Forecast

Sales Forecast

FY 2016

FY 2017

FY 2018

Sales
Toilet Tissue

₦24,900,000

₦24,900,000

₦24,900,000

Total Sales

₦24,900,000

₦24,900,000

₦24,900,000

Direct Cost of Sales

FY 2016

FY 2017

FY 2018

Raw material and Packaging

₦16,250,000

₦16,250,000

₦16,250,000

Subtotal Direct Cost of Sales

₦16,250,000

₦16,250,000

₦16,250,000

Chart: Sales by Year

4

6.0 Management Summary

6.0  Organizational Structure

We have developed a functional organisational structure suitable for a toilet roll production plant, which enables quick decision making and brings clarity to accountability at all levels. The corporate structure includes both SBU’s [Strategic Business Units] and MSU’s [Management Support Units]. Each Unit will be headed by a Manager.

Factory Workforce

The total workforce requirement for the company has been estimated to be about five (5) persons.

6.2 Strategic Business Units

The Company operations will revolve around two strategic business units [SBU’s]. They are the following

–                      Raw material sourcing & Marketing

–                      Production

6.3 Management Support Units

The Management Support units [MSU’s] will be made up of

–           Finance Administration

There will also be a Planning & Internal Control Unit reporting to the Managing Director responsible for reconciliation, audit, statistics, budgetary control & planning, statutory compliance & reporting.

6.4 Management Team

The Company shall assemble a team of professionals who are tested and experienced in their own rights to join the promoters in steering the affairs of the company.

The team will be led by the founder of the company, Mr. Moses.

6.5 Human Capital

The Human Capital plan is aimed at attracting and sustaining the best professionals. The plant will have experienced people at all levels and units who will approach the company as a business concern capable of sustaining itself.

Recruitment of core production staff would occur in two phases. First phase will involve the selection of suitable candidates to work with our technical partners during the

Commissioning of the plant. It is the intention of the company that these individuals acquire hands – on – experience in operating, servicing and maintenance of the plant.

We have concluded arrangement with Ashmirt Technology Limited for the training of our staff in the handling of the plant.

6.1 Personnel Plan

WENAZ Nig personnel plan requires of 6 full time workers which includes: A manager, a driver, a marketer, and 3 Factory workers

Table: Personnel

Personnel Plan

FY 2016

FY 2017

FY 2018

Manager

₦409,992

₦409,992

₦409,992

Marketer

₦150,000

₦150,000

₦150,000

Driver

₦150,000

₦150,000

₦150,000

Factory worker 3

₦540,000

₦540,000

₦540,000

Total People

6

6

6

Total Payroll

₦1,249,992

₦1,249,992

₦1,249,992

7.0 Financial Plan

7.1 Start-up Funding

Table: Start-up Funding

Start-up Funding
Start-up Expenses to Fund

₦200,000

Start-up Assets to Fund

₦4,500,000

Total Funding Required

₦4,700,000

Assets
Non-cash Assets from Start-up

₦3,800,000

Cash Requirements from Start-up

₦700,000

Additional Cash Raised

₦300,000

Cash Balance on Starting Date

₦1,000,000

Total Assets

₦4,800,000

Liabilities and Capital
Liabilities
Accounts Payable (Outstanding Bills)

₦0

Total Liabilities

₦0

Capital
Planned Investment
Owner

₦3,500,000

Investor

₦1,500,000

Total Planned Investment

₦5,000,000

Loss at Start-up (Start-up Expenses)

(₦200,000)

Total Capital

₦4,800,000

Total Capital and Liabilities

₦4,800,000

Total Funding

₦5,000,000

7.2 Important Assumptions

ASSUMPTIONS

The key assumptions underlying the above projection include the following:

Average working hour of 8hr/day for a 250 days work in year making allowance or holidays and week ends

  • That all the products produced were sold
  • That there would be no downtime
  • Capacity Utilization of 40% in Year 1, Year 2 and Year 3
  • 10% allowance for wastage
  • Conservative production of 8000 units of toilet rolls operating at 40 % installed capacity per day. Which amounts to 2000,000 units of toilet tissue annually.
  • Price used is N600 for 48 pieces
  • The raw material used in the estimated is off white which cost N100,000 / ton.
  • Depreciation is calculated at 20% of long term asset

7.3 Break-even Analysis

Table: Break-even Analysis

Break-even Analysis
Monthly Revenue Break-even

₦848,829

Assumptions:
Average Percent Variable Cost

65%

Estimated Monthly Fixed Cost

₦294,874

Chart: Break-even Analysis

5

7.4 Projected Profit and Loss

Table: Profit and Loss

Pro Forma Profit and Loss

FY 2016

FY 2017

FY 2018

Sales

₦24,900,000

₦24,900,000

₦24,900,000

Direct Cost of Sales

₦16,250,000

₦16,250,000

₦16,250,000

Total Cost of Sales

₦16,250,000

₦16,250,000

₦16,250,000

Gross Margin

₦8,650,000

₦8,650,000

₦8,650,000

Gross Margin %

34.74%

34.74%

34.74%

Expenses
Payroll

₦1,249,992

₦1,249,992

₦1,249,992

Marketing/Promotion

₦400,000

₦400,000

₦400,000

Depreciation

₦235,000

₦235,000

₦235,000

Rent

₦216,000

₦216,000

₦216,000

Mentainance

₦125,000

₦125,000

₦125,000

Diesel &Transport

₦1,000,000

₦1,000,000

₦1,000,000

Payroll Taxes

₦187,499

₦187,499

₦187,499

Office Upkeep

₦125,000

₦125,000

₦125,000

Total Operating Expenses

₦3,538,491

₦3,538,491

₦3,538,491

Profit Before Interest and Taxes

₦5,111,509

₦5,111,509

₦5,111,509

EBITDA

₦5,346,509

₦5,346,509

₦5,346,509

  Taxes Incurred

₦1,533,453

₦1,533,453

₦1,533,453

Other Income
Other Income Account Name

₦0

₦0

₦0

Other Income Account Name

₦0

₦0

₦0

Total Other Income

₦0

₦0

₦0

Other Expense
Other Expense Account Name

₦0

₦0

₦0

Other Expense Account Name

₦0

₦0

₦0

Total Other Expense

₦0

₦0

₦0

Net Other Income

₦0

₦0

₦0

Net Profit

₦3,578,056

₦3,578,056

₦3,578,056

Net Profit/Sales

14.37%

14.37%

14.37%

Chart: Profit Yearly

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6

Chart: Gross Margin Monthly

7

Chart: Gross Margin Yearly

8

7.5 Projected Cash Flow

Table: Cash Flow

Pro Forma Cash Flow

FY 2016

FY 2017

FY 2018

Cash Received
Cash from Operations
Cash Sales

₦24,900,000

₦24,900,000

₦24,900,000

Subtotal Cash from Operations

₦24,900,000

₦24,900,000

₦24,900,000

Additional Cash Received
Non Operating (Other) Income

₦0

₦0

₦0

Sales Tax, VAT, HST/GST Received

₦0

₦0

₦0

New Current Borrowing

₦0

₦0

₦0

New Other Liabilities (interest-free)

₦0

₦0

₦0

New Long-term Liabilities

₦0

₦0

₦0

Sales of Other Current Assets

₦0

₦0

₦0

Sales of Long-term Assets

₦0

₦0

₦0

New Investment Received

₦0

₦0

₦0

Subtotal Cash Received

₦24,900,000

₦24,900,000

₦24,900,000

Expenditures

FY 2016

FY 2017

FY 2018

Expenditures from Operations
Cash Spending

₦1,249,992

₦1,249,992

₦1,249,992

Bill Payments

₦1,159,565

₦39,256,107

₦18,710,582

Subtotal Spent on Operations

₦2,409,557

₦40,506,099

₦19,960,574

Additional Cash Spent
Non Operating (Other) Expense

₦0

₦0

₦0

Sales Tax, VAT, HST/GST Paid Out

₦0

₦0

₦0

Principal Repayment of Current Borrowing

₦0

₦0

₦0

Other Liabilities Principal Repayment

₦0

₦0

₦0

Long-term Liabilities Principal Repayment

₦0

₦0

₦0

Purchase Other Current Assets

₦0

₦0

₦0

Purchase Long-term Assets

₦0

₦0

₦0

Dividends

₦0

₦0

₦0

Subtotal Cash Spent

₦2,409,557

₦40,506,099

₦19,960,574

Net Cash Flow

₦22,490,443

(₦15,606,099)

₦4,939,426

Cash Balance

₦23,490,443

₦7,884,344

₦12,823,770

Chart: Cash

9

7.6 Projected Balance Sheet

Table: Balance Sheet

Pro Forma Balance Sheet

FY 2016

FY 2017

FY 2018

Assets
Current Assets
Cash

₦23,490,443

₦7,884,344

₦12,823,770

Inventory

₦16,250,000

₦2,545,833

₦2,545,833

Total Current Assets

₦39,740,443

₦10,430,177

₦15,369,604

Long-term Assets
Long-term Assets

₦2,500,000

₦2,500,000

₦2,500,000

Accumulated Depreciation

₦235,000

₦470,000

₦705,000

Total Long-term Assets

₦2,265,000

₦2,030,000

₦1,795,000

Total Assets

₦42,005,443

₦12,460,177

₦17,164,604

Liabilities and Capital

FY 2016

FY 2017

FY 2018

Current Liabilities
Accounts Payable

₦33,627,387

₦504,065

₦1,630,434

Subtotal Current Liabilities

₦33,627,387

₦504,065

₦1,630,434

Total Liabilities

₦33,627,387

₦504,065

₦1,630,434

Paid-in Capital

₦5,000,000

₦5,000,000

₦5,000,000

Retained Earnings

(₦200,000)

₦3,378,056

₦6,956,113

Earnings

₦3,578,056

₦3,578,056

₦3,578,056

Total Capital

₦8,378,056

₦11,956,113

₦15,534,169

Total Liabilities and Capital

₦42,005,443

₦12,460,177

₦17,164,604

Net Worth

₦8,378,056

₦11,956,113

₦15,534,169

7.7 Business Ratios

Table: Ratios

 

Ratio Analysis

FY 2016

FY 2017

FY 2018

Industry Profile

Sales Growth

n.a.

0.00%

0.00%

0.00%

Percent of Total Assets
Inventory

38.69%

20.43%

14.83%

0.00%

Other Current Assets

0.00%

0.00%

0.00%

100.00%

Total Current Assets

94.61%

83.71%

89.54%

100.00%

Long-term Assets

5.39%

16.29%

10.46%

0.00%

Total Assets

100.00%

100.00%

100.00%

100.00%

Current Liabilities

80.05%

4.05%

9.50%

0.00%

Long-term Liabilities

0.00%

0.00%

0.00%

0.00%

Total Liabilities

80.05%

4.05%

9.50%

0.00%

Net Worth

19.95%

95.95%

90.50%

100.00%

Percent of Sales
Sales

100.00%

100.00%

100.00%

100.00%

Gross Margin

34.74%

34.74%

34.74%

0.00%

Selling, General & Administrative Expenses

20.37%

20.37%

20.37%

0.00%

Advertising Expenses

1.61%

1.61%

1.61%

0.00%

Profit Before Interest and Taxes

20.53%

20.53%

20.53%

0.00%

Main Ratios
Current

1.18

20.69

9.43

0.00

Quick

0.70

15.64

7.87

0.00

Total Debt to Total Assets

80.05%

4.05%

9.50%

0.00%

Pre-tax Return on Net Worth

61.01%

42.75%

32.90%

0.00%

Pre-tax Return on Assets

12.17%

41.02%

29.78%

0.00%

Additional Ratios

FY 2016

FY 2017

FY 2018

About umoh

The CEO and founder of Business Ideas Incubation Services.Our services includes: Professional business plan writing for venture capital, market research and analysis, Feasibility studies and startup business consulting.+2348140970926

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