CAKE BOX PRODUCTION - MOLHR
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Cake Box Production
Cake Box Production 2017
1 Executive Summary
This report is a detailed feasibility study on the production of cake box in Bhutan. The
proposed business of cake packaging box should be produced with the help of cardboard paper.
However, the idea is not only limited to cake packing box. The whole idea of business is
producing standard packing boxes for various products, viz., cake and gift boxes.
The report presents in detail the justification of the project, market analysis of cake boxes,
resources required, and technology used, plant location, implementation of the project, cost
presentation and financial analysis.
(i) Justification of the Project: It's very essential and high time that we produce our
own boxes since there is huge demand for the cake boxes with the increasing number
of bakeries and confectionaries.
(ii) Market Analysis: Till date, there has not been any business firm producing
packaging boxes with proper handles and decorations. Moreover only few local
suppliers of cake boxes while rest of the suppliers are from India.
(iii) Resources required: The main raw material for production of cake boxes is kraft
papers which will be imported from the neighboring country. Apart from this, the unit
requires skilled workers for designing and making the cake boxes. The primary
product for this proposed business should be cake boxes however it should also
produce gift boxes to supplement the business.
(iv) Technology required: Die cutting machine and printing machine is required for this
business.
(v) Plant Location: Most of the towns have either one or maximum two bakeries in their
area however, Thimphu itself has more than 50 bakeries. Therefore, upon considering
the availability of huge number of bakeries and confectionaries in Thimphu, thus the
proposed business should rent one unit of house in the outskirts of Thimphu to avoid
the noise of machineries and disturbance to its neighbor. The proposed business
should have well equipped production unit and office attached as well
(vi) Environmental Aspects: The Kraft papers are usually easily decomposable and bio-
degradable.
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Cake Box Production 2017
(vii) Implementation of the Project: The implementation of the project will take 12
months including pre-project activities.
(viii) Cost Presentation and Financial Analysis:
Fixed Cost Nu. 10,55,665
Working Capital Nu. 1,78,461
Total Investment Nu. 12,24,126
Break Even Point (BEP) 10,65,835 units
Return on Investment 66%
Payback Period 2 years and 3 months
The total projected cost of the proposed business is BTN. 12,34,126 which consist of a startup
cost of BTN.10,55,665 and a working capital of BTN 178, 461.
The business achieves more than 66% ROI from its first year of production alone because the
total investments includes only one month of operational cost. And there is increment in ROI
every year.
The business has good demand and it should only get better over the period of time with increase
in time. One third of country's population resides in Thimphu, thus, production house has huge
responsibility delivering quality product and scope in curving the market demand.
The sources of finance for the proposed business are as follows:
REDCL (Rural Enterprise Development Corporation Limited, former BOIC)- which
mainly supports production and manufacturing units and this proposed business falls
under the production unit. Therefore, the fund needed for the proposed business can be
availed from the support of REDCL.
Others source of finance is mentioned below;
Loden
Self-funding
Banking institutions at the average rate of 12%.
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Table of Contents
1 Executive Summary................................................................................................................. 1
1.1 Business Model Canvassing ............................................................................................. 5
2 Justification of the project ....................................................................................................... 6
2.1 The need of the project ..................................................................................................... 6
2.2 Economical basis .............................................................................................................. 7
2.3 Competition Analysis ....................................................................................................... 7
2.4 Critical Success Factor ..................................................................................................... 7
3 Market Analysis ....................................................................................................................... 8
3.1 Demand vs. Supply .......................................................................................................... 8
3.2 Pricing and Marketing Strategies ..................................................................................... 9
3.3 Competitiveness of the project ....................................................................................... 10
3.4 SWOT Analysis.............................................................................................................. 10
3.5 Special attributes desired by target customers ............................................................... 11
3.6 Assessment of Comparative Advantage ......................................................................... 13
4 Resources ............................................................................................................................... 13
4.1 Sources of raw material .................................................................................................. 13
4.2 Assess the availability of manpower & skills ................................................................ 13
5 The plant ................................................................................................................................ 14
5.1 Choice of the technology................................................................................................ 14
5.2 Source of technology...................................................................................................... 14
5.3 Rate of consumption of power, fuel, utilities & consumables ....................................... 15
5.4 PRODUCTION PROCESS ............................................................................................ 16
5.5 Man power requirement and organization chart ............................................................ 17
6 Plant Location & Infrastructure with layout .......................................................................... 18
6.1 Raw material Availability .............................................................................................. 18
6.2 Availability of Electricity ............................................................................................... 18
6.3 Communication facilities & Presence of approach road ................................................ 18
7 Project Implementation Schedule .......................................................................................... 18
8 Financial Analysis ................................................................................................................. 19
8.1 Total Project capital Costs.............................................................................................. 19
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8.2 Working Capital Costs ................................................................................................... 20
8.3 Cost of Production per unit ............................................................................................ 21
8.4 Human Resource cost ..................................................................................................... 21
8.5 Marketing Cost ............................................................................................................... 21
8.6 Project profit and Loss Statement .................................................................................. 22
8.7 Projected Cash flow statement ....................................................................................... 23
8.8 Projected Balance sheet statement ................................................................................. 24
9 Financial Ratio analysis ......................................................................................................... 25
9.1 Interest on loan ............................................................................................................... 25
9.2 Break Even Point ............................................................................................................ 25
9.3 Return on Investment ..................................................................................................... 25
9.4 Net Present Value ........................................................................................................... 26
9.5 Internal Rate of Return ................................................................................................... 26
10 Final Finding and Recommendation .................................................................................. 27
11 Conclusion ......................................................................................................................... 28
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1.1 Business Model Canvassing
Key Partners Key Activities Value Customer Customer Segments
Propositions Relationship
Shanghai kuko Bakeries
packing In-person Cafes and
Production of Telephone restaurants
machinery
cake box and Durable Stores
co.,ltd based in
gift boxes and Shops
China
Shubam Supply of reusable
enterprise based cake boxes product
in Jaigoan India. and gift boxes Portable
James Gui Marketing packaging
Wuhan Hasary is provided
Equipment Co.
Limited in
Key resource Channels
China,
Banks Designers Online and
REDCL Machine offline medias
Loden Operator Local TV
Skilled Channels
workers
Cost structure Revenue Streams
Raw materials
Equipments
Salaries Market dependent
Marketing Volume dependent
Fixed Price
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2 Justification of the project
2.1 The need of the project
Till date, there has not been any business firm producing packaging boxes with proper handles
and decorations. Moreover, only few local suppliers of cake boxes while rest of the suppliers are
from India.
The systematic recycling of paper creates job opportunities, reduces the load on the landfill,
increases material efficiency and reduces the dependency on imports. This would ensure a better
flow of revenues inside Bhutan and serve as a catalyst for economic growth based on available
resources. It's very essential and high time that we produce our own boxes since there is huge
demand for the cake boxes with the increasing number of bakeries and confectionaries.
Similarly, no high technology needs to be adopted to produce the said product.
The need for the professional packaging for cakes and junks foods has reached the optimum
level based on the number of consumers and the food habits of young generations. Good packing
box adds value to the product and most of the time its about packaging more than the main
product.
Global packaging, by type — 2012
Total market size = US$400b Paper and board 34% Glass 11% Others 12% Flexible plastic
10% Beverage cans 6% Rigid plastic 27% Source: EY analysis
The above Pie chart shows that the paper and board are widely used for packaging in the globe
compared to other types like flexible plastics, glass, and rigid plastics.
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2.2 Economical basis
The project would help the country in realizing one of the pillars of GNH, i.e., self-reliance since
the company can help the government in reducing the imports from the other country and help in
economic development through its functions and activities. The business should create
employment opportunities with our very own product and curve the rupee crunch.
Annually every single confectionary places the demand of 25,000 units of packing boxes and
with few local producer of the product in the country, it is impossible to meet the said demand
thus, ultimately huge import from the neighboring countries. Likewise, Thimphu itself has
demand of 1,250,000 units annually but few producers could meet only 100,000 units with other
remaining shops opting to purchase the neighboring countries. The production house should
supply to other parts of Bhutan and ease the availability boxes at their door steps.
2.3 Competition Analysis
As per the survey made, there are only handful of businesses that produces and supplies cake
packaging boxes. It is known that most of the suppliers are from India. For now, Druk Menjong
Fabric Unit is the only production house producing cake packing boxes which is located at
Babesa. With only one player in the market there is huge shortage of supply thus enabling the
new entrant in the market. There is no question competition since the single seller is not being
able to meet the demand.
2.4 Critical Success Factor
The critical success factors for the proposed business are as mentioned below:
Constant supply of board paper: For the proposed business to grow and succeed there
must be constant supply of cardboard paper which is essential for making the product.
Location: The location for the proposed business should be in the Serbithang area since
there is huge space required for the setup of business and the house rent are quite lower
compared to the ones in the towns.
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3 Market Analysis
3.1 Demand vs. Supply
There are more than 50 numbers of bakeries in Thimphu and yet only few suppliers of cake box
in Thimphu. One of the competitors, Druk Menjong Fabric Unit located at Babesa is said to
have received more demand from the customers about 25,000 units from each and they are able
to produce 100000 units monthly. Thus from here one can clearly understand that there is more
demand than the actual supply. Thimphu has the highest number of population in the country and
the number of pastries shop, bakeries, cafes and hotels has also increased. There is a huge market
demand for the cake boxes and gift boxes in Bhutan. The demand in the country is currently met
by supplies that are imported from India, resulting in a significant outflow of Rupee. Thus the
proposed business should aim in reduction of imports from neighboring country. The firm should
also bridge the gap between demand and supply in the market.
List of Bakeries in Thimphu
SL.No Name of confectionery & Bakeries in Thimphu Location
1 Coffee culture Changlam squre
2 Tshernyen Bakes Changangkha, Lhaki Lam
3 Café Himalaya & Bakery Karsang Building, chorten Lam
4 Om Bakery Near Sabji Bazar
5 Sky Bakery Babesa
6 Dorji Bakery Phendey Lam
7 Busy Bean Café Hotel Pedling Building
8 Jichu Drakey Bakery Above Kelki School
9 Swiss Bakery Chorten Lam
10 Asha Bakery Olakha Lam
11 Lama Bakery Norzin Lam
12 Big Bakery Kawajangsa
13 Art Café Doebum Lam
14 Lhazey Confectionery & Bakery
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15 Jigme selden Bakery
16 Rabkar sweet shop
17 Woeseling Bakery Opposite to main traffic
3.2 Pricing and Marketing Strategies
The existing price for the various shapes of cake boxes in the market ranges from Nu.1.5-12.5
depending upon the shapes and sizes. However, the price of the proposed business would be
charged on average of Nu. 5 per box. In addition to it the proposed business should have
handmade gifts which should be priced at Nu. 15. The price of gift wrappers made with plastics
in the market is priced at Nu.10. However, the proposed business should be having handmade
gift boxes with special designs at reasonable prices. The products should be marketed with the
help of print Medias such as Yeewong magazine and Kuensel.
To attract the customer, the proposed business should determine its selling price by following
penetration pricing method. After comparing the price at which the competitor sells its product in
the market, the average price for the proposed business should be for its products at:
Price according to the sizes:
Sizes available Nu. Per piece
1x1 2.5
2x2 3.5
4x4 4
6x6 5.5
8x8 6.5
10x10 7
12x12 8
15x15 8.5
However, the average price has been taken as shown below for the cake box;
SL.No Product Price
1 Cake Boxes Nu.5
2 Gift Boxes Nu.15
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3.3 Competitiveness of the project
The market still has very less number of cakes packing box production in Bhutan. On an average,
the existing selling price ranges from BTN to 6 for the 8*8 size. The proposed business provides
product at comparatively low compared to its competitor. However, the existing products are
plain and no handles to carry but the product of the proposed business should have proper
handles to carry and attractive.
Unique selling Proposition: The proposed business provides a wide range of goods varied in
sizes, shapes and most importantly easy to carry with proper handles on it. It also has labeling on
the product bearing brand name and trademarks.
3.4 SWOT Analysis
Strength Weakness
Less competition Slow market penetration
Low machinery requirement Existence of suppliers
Availability of Labor locally
Presence of the raw materials supplier
Central and accessible location
Opportunities Threats
Potential to create employment Availability of packaging box in bakeries
opportunities already
Possible business expansion to other Entrance of similar businesses
regions
Analysis
The strength of the business lies in having the less competitors, low machinery requirement,
availability of labor locally, presence of the raw materials supplier and central and accessible
location. It has some weaknesses such as existence of suppliers who are mainly the Indian
suppliers, and there is huge volume of imports from India. However, this business will capitalize
the market by introducing boxes of unique and proper handles to carry.
The proposed business has the potential to create employment opportunities and in future the
business aims to expand its business in other regions as well. The only threat to this business is
the existing packaging boxes in the market, and it should be overcome by providing unique
selling proposition.
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3.5 Special attributes desired by target customers
Portability
The special attributes that this proposed business provides to its target
customers is comfort that is they can to take it anywhere.
Figure 1: brown Cardboard cake box
Design
The proposed business also offers special design which is appealing to
the customers especially the youngsters.
Figure 2: White cardboard cake box
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Other samplers of cake Box
Heart Shapes Cake box Window cake box
Gift- cake box white handles cake box
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3.6 Assessment of Comparative Advantage
a) Abundance of Hydroelectric Power
Bhutan is an energy surplus state. 97% of its energy is obtained from hydro power. During
the summer months Bhutan exports quite a bit of electricity to India. Total exports to India
were Nu. 10,633.639 million for 2013 – 14. The cost of electricity is lower than many
power deficient economies.
b) Availability of raw materials
The raw materials needed for this business is card board paper which can be procured from
Indian suppliers.
4 Resources
4.1 Sources of raw material
Inventories and the other miscellaneous items would be purchased from the local retailer of
Phuentsholing, which is located in the border part of the country; while for the raw materials that
is paper for making cake boxes should be purchased from the Indian suppliers and it should be
purchased in rolls.
4.2 Assess the availability of manpower & skills
The proposed business requires skilled labor and machine operator for operating the machine and
others for making the various shapes and designs of the box. Highly skilled personnel are also
required for making the secondary product, the handmade gift boxes.
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5 The plant
5.1 Choice of the technology
For the production of the cake boxes, the proposed business has the die cutting machine which
cuts the roll of the cardboard paper into various required shapes. The business also has the
printing machine for printing logos and contact details on the box which serves as the indirect
marketing for the particular bakery or any other firm.
5.2 Source of technology
The machineries on the cake packaging box production would be brought from dealer of Alibaba
as follows:,
Shanghai kuko packing machinery co.,ltd
E-mail: export607@goodpacking.com.cn
Add: No. 658-E, Qiangye Rd, Songjiang District, Shanghai, 201602, China
Tel: +86-(0)21-6974 6020#802 Fax: +86-(0)21-6221 9769
Shubam enterprise located in Jaigaon, Phuntsholing.
The main raw material is the kraft paper which should be
used for making cake packing boxes. It will be purchased
from Indian Suppliers.
Supplier Detail:
Navbharat Industries
Janmesh N. Thaker (Partner)
Flat No. 2, Ground Floor, Mangesh Krupa CHS, Datta Mandir Cross Road Near Datta Mandir,
Dhanukarwadi, Kandivali West,
Mumbai - 400067, Maharashtra, India
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5.3 Rate of consumption of power, fuel, utilities & consumables
Technical Parameters
Valid Size 1200*1200mm/1200*2400mm/1300*2500mm (single laser head)
Laser Tube Type CO2 Sealed Laser Tube
Laser Power 300W (work bidirectional with two laser heads) /400w
Cutting Speed 18m/min
Power Supply 220V 10A
Cutting Width 0.3-3mm(optional)
Max. Thickness 25mm
Color Separation Yes
Cutting Precision ±0.02mm
Image Form PLT, EPS, BMP, DXF
Control System: Movement Control Board/CNC
Transmission Ball screw
Driving System big motor
Air Feed Means Air
Applicable industries
1. Widely used in package and printing industry for different template making.
2. This equipment can be used to cut die board for carton box, label, cartoon, cards etc.
3. Applicable materials include plywood, plastic, organic materials, and other non-metal materials.
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5.4 Production process
The production process and the recipes for both the products are same. The process is given
below:
Die cutting machine
Paper Roll
Final cake Box
Figure 1.1 Production process of a cake box
Description: The process for making cake box is simple. Firstly, the cardboard paper roll should
be cut into the required shapes with the help of die cutting machine. Then the next step is, it
should be further made into box shape with the help of some labors and then finally it should be
made into the cake box.
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5.5 Man power requirement and organization chart
Proprietor
Production Administration and Marketing
Section Accounts department
Accountant cum
Machine manager Marketing
operator – 1 -1 executive – 1
Skilled workers
–5
The project has a good employment potential for skilled workers, which would be employed in
the production unit. Beside the project would generate employment potential in marketing .The
project would thus create opportunities for the employment.
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6 Plant Location & Infrastructure with layout
6.1 Raw material Availability
Unlike the other businesses the proposed business does not require much raw materials rather it
only requires the cardboard paper and it could be easily procured within the country.
6.2 Availability of Electricity
Abundance of Hydroelectric Power as Bhutan is an energy surplus state. 97% of its energy is
obtained from hydro power. During the summer months Bhutan exports quite a bit of electricity
to India. Total exports to India were Nu. 10,633.639 million for 2013 – 14. The cost of electricity
is lower than many power deficient economies.
6.3 Communication facilities & Presence of approach road
Since the location of the proposed business is right in the capital city, there is the reach of
various facilities which includes both the communication facilities and road connectivity.
7 Project Implementation Schedule
PROJECT TIMELINE
2017
Activities 5th
1st Month 2nd Month 3rd Month 4th Month
Month
Feasibility study and
development of the
project proposal
If the project is going
to be funded:
Purchase of
Machineries and
Installation
Purchase of
Inventories and Start
of Production
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8 Financial Analysis
8.1 Total Project capital Costs
Forex. Domestic
PARTICULARS Total Cost Remarks
Component Component
Production Unit (Security Deposit) 16,000 16,000
Plant & Machinery
Cake box cutting machine 715,000
printer machine 162,000
Installation Cost 30,000
Total 907,000 907,000
Miscellaneous Fixed Assets:
Office Furniture 42,000
Worker's Uniform 1,250
Tools 415
Stationary 6,000
Computer 50,000
Telephone (Fixed line) 5,000
Electrical Fittings 8,000
Total Cost 112,665 112,665
Preliminary Expenses 20,000 20,000
Total Project Startup Cost 1,055,665
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Note: Since the proposed business should rent a house, the security deposit is taken into
consideration
The cost breakdown for the cost of construction, labor cost and details of the miscellaneous
fixed assets are attached in the annexure.
8.2 Working Capital Costs
WORKING CAPITAL
Particulars Monthly Yearly
Advertising 500 6,000
Bank Charges - -
Credit Card Fees - -
Delivery Expenses 1,500 18,000
Inventory Purchases 49,746 596,952
Miscellaneous - -
Office Expenses 1,000 12,000
Payroll 50,000 600,000
Payroll Taxes - -
Professional Fees - -
Rent or Lease 8,000 96,000
Subscriptions & Dues - -
Supplies - -
Taxes and Licenses 29,215 350,579
Utilities & Telephone 500 6,000
Others: 38,000 456,000
Loan Principle
Total 178,461 2,141,531
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8.3 Cost of Production per unit
Year 1 Year 2 Year 3 Year 4 Year 5
Total Units
374,400 411,840 453,024 498,326 548,159
Cost of Production
1,791,405 1,911,900 2,042,525 2,184,195 2,337,915
Unit Cost of
Production 4.78 4.64 4.51 4.38 4.27
8.4 Human Resource cost
MANPOWER COST
Particulars Monthly Year 1 Year 2 Year 3 Year 4 Year 5
Direct Labor
31,000 372,000 390,600 410,130 430,637 452,168
Salary &
Allowances 19,000 228,000 239,400 251,370 263,939 277,135
Wages
3,000 36,000 37,800 39,690 41,675 43,758
Total
53,000 636,000 667,800 701,190 736,250 773,062
8.5 Marketing Cost
The cost of marketing the products is Nu. 6000 on a yearly basis which should be done
through print Medias like Yeewong magazines and social media.
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8.6 Project profit and Loss Statement
INCOME STATETMENT PROJECTION FOR 5 YEARS
YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
Revenue
2,736,000 3,009,600 3,310,560 3,641,616 4,005,778
Cost of Goods Sold
1,004,952 1,055,200 1,107,960 1,163,358 1,221,525
Gross Profit / (Loss)
1,731,048 1,954,400 2,202,600 2,478,258 2,784,252
Expenses
562,450 583,150 604,885 627,707 651,669
Net Operating
Income / (Loss) 1,168,598 1,371,251 1,597,716 1,850,552 2,132,583
30% BIT on NOI
350,579 411,375 479,315 555,166 639,775
Net Income / (Loss)
after BIT 818,019 959,875 1,118,401 1,295,386 1,492,808
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8.7 Projected Cash flow statement
Year 1 Year 2 Year 3 Year 4 Year 5
Beginning Cash
Balance - 526,104 997,004 1,606,900 2,373,274
Accts. Rec.
Collections 273,600 300,960 331,056 364,162 400,578
Loan Proceeds
1,234,126
Sales & Receipts
2,462,400 2,708,640 2,979,504 3,277,454 3,605,200
Total Cash
Inflows 3,970,126 3,009,600 3,310,560 3,641,616 4,005,778
Available Cash
Balance 3,970,126 3,535,704 4,307,564 5,248,516 6,379,052
Advertising
6,000 6,300 6,615 6,946 7,293
Delivery
18,000 18,900 19,845 20,837 21,879
Inventory
Purchases 596,952 626,800 658,140 691,047 725,599
Office
12,000 12,600 13,230 13,892 14,586
Payroll
600,000 630,000 661,500 694,575 729,304
Rent or Lease
96,000 100,800 105,840 111,132 116,689
Taxes &
Licenses 350,579 411,375 479,315 555,166 639,775
Utilities &
Telephone 6,000 6,300 6,615 6,946 7,293
Other:
456,000 478,800 502,740 527,877 554,271
Subtotal
2,141,531 2,291,875 2,453,839 2,628,416 2,816,688
Capital
Purchases 1,055,665
Loan Principal
246,825 246,825 246,825 246,825 246,825
Subtotal
1,302,490 246,825 246,825 246,825 246,825
Total Cash
Outflows 3,444,022 2,538,700 2,700,664 2,875,242 3,063,513
Ending Cash
Balance 526,104 997,004 1,606,900 2,373,274 3,315,538
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8.8 Projected Balance sheet statement
Projected Balance Sheet For 5 Years
Year 1 Year 2 Year 3 Year 4 Year 5
Assets
Cash & Bank
526,104 997,004 1,606,900 2,373,274 3,315,538
Accounts Receivable
273,600 300,960 331,056 364,162 400,578
Prepaid Expenses
66,000
Other Current Assets
Total Current Assets
865,704 1,297,964 1,937,956 2,737,436 3,716,116
Net Fixed Assets
841,215 692,766 544,316 395,866 247,416
Other Assets
Total Assets
1,706,920 1,990,730 2,482,272 3,133,302 3,963,532
Liabilities &
Capital
Accounts Payable
(98,400) 290,379 870,220 1,591,090 2,470,724
Total Current
Liabilities (98,400) 290,379 870,220 1,591,090 2,470,724
Long-Term Notes
Payable 987,301 740,476 493,650 246,825 (0)
Total Long-Term
Liabilities 987,301 740,476 493,650 246,825 (0)
Total Liabilities
888,901 1,030,855 1,363,870 1,837,915 2,470,724
Net Profit
818,019 959,875 1,118,401 1,295,386 1,492,808
Total Capital
818,019 959,875 1,118,401 1,295,386 1,492,808
Total Liabilities &
Capital 1,706,920 1,990,730 2,482,271 3,133,302 3,963,532
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9 Financial Ratio analysis
9.1 Interest on loan
Year 1 Year 2 Year 3 Year 4 Year 5
Interest 137,782 113,476 86,088 55,226 20,450
Loan Principle 191,648 215,953 243,342 274,204 308,979
Loan Balance 1,042,478 826,525 583,183 308,979 0
EMI 329,429 329,429 329,429 329,429 329,429
9.2 Break Even Point
BREAK EVEN X BREAK EVEN Y LABEL
919,840 6,721,908 break even unit =919840
UNIT COST = TOTAL SALES/TOTAL UNITS
Total sales Total Units
2,736,000 374,400 7
9.3 Return on Investment
RETURN ON INVESTMENT
Product Year 1 Year 2 Year 3 Year 4 Year 5
Cake box 64% 76% 89% 103% 118%
Gift box 58% 68% 80% 92% 106%
Total ROI 122% 144% 168% 195% 225%
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9.4 Net Present Value
Number of Years
0 1 2 3 4 5
Net Cash Flow (1,234,126
402,821 501,772 613,379 738,996 880,110
)
Accumulated
(1,234,126
Cash Flow (831,305) (329,533) 283,846 1,022,842 1,902,952
)
Payback Period 2 Years and 9 Months
9.5 Internal Rate of Return
Net Present Value (NPV) 1,058,826
Internal Rate of Return (IRR) 35%
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10 Final Finding and Recommendation
Packaging plays a significant role in bakery products in increasing its durability, preventing
mechanical damages, marketing, nutrition value and displaying food safety related warnings.
People all around the world prefer deserts despite their age gap and keeping that on account our
business aims to provide attractive and durable packaging box for those bakery products. It’s not
only about the durability and eye catching designs but for those businesses that are into selling
bread, cake, or bakery, delicious package designs should definitely get hungry buyers to buy.
Bhutan has limited population strength and our business ought to provide to our valued
customers, the finest packing boxes varied in sizes, shapes, and color.
Paper cake box is healthy, fashionable and also it can keep your product fresh. It’s perfect for
any occasion, whether bakeries, cafes, supermarkets or wedding, etc. It is quick and easy to
assemble. We use eco-friendly natural paper material. Also we can customize logo, color and
size for paper cake box as per their need and preferences.
For a business to run smoothly and boost up its sales, the location of the business plays a vital
role in here. Therefore, the location of our business would be Thimphu only, with aim to attract
the bakery shops and other customers of largely populated area in the country. Gradually our
business aims to expand to other region as well.
The total projected cost of the proposed business is BTN. 1,036,425 which consist of a startup
cost of BTN.893, 725 and a working capital of BTN 142,700. The proposed business should rent
one unit of house near Serbithang area in Thimphu because it should be perfect location since the
area isn’t densely populated and the noise of machinery would not be much of a disturbance to
its neighbor. The proposed business should have its production unit and office attached as well.
The primary product for this proposed business should be cake boxes however it should also
produce gift boxes.
The project has estimated to produce and sell 3200 units in total. It should produce 1500 of cake
boxes, 700 of gift boxes and 1000 of Pop-corn boxes during its first year which has its total
sales worth of BTN 1,800,000. In the fifth year it aims to achieve total sales worth BTN
2,635,380. The estimated profit for this business is 9.27 %
27 Compiled By iBEST Consultancy ServicesCake Box Production 2017 11 Conclusion The project is feasible since: The Internal Rate of Return of the project is 35%, significantly higher than the bank return rate of 12%. Hence, the project is deemed financially viable. The NPV of the project is positive (Nu. 1, 03, 7827) during the first 5 years of operation considered. This implies that the project generates sufficient funds to cover all its cost, including loan repayments and interest payments during the period. The project has huge scope from both the financial and market aspects. There are no obligations from legal and environment sector. Looking at the current scenario the demand should only increase over the period of time and business has ample scope where ever we place the production house. However, Thimphu has be selected as the location for business since maximum of the bakeries and confectionaries are established in the capital. Machines and equipment would be the challenging part of the startup phase since it has to be brought either from India or china. In doing so there is huge lead time gap and logistic challenges usually faced by the promoter. Likewise, promoter has to build the networks for collecting the raw material in making hard board paper. Printing add the additional value and selling point thus for decorative printing the business needs good printing machine. Current trend shows that the only local production house is not being able to meet the demand and about 70% of the supply comes across the border. Thimphu has the major share of the market and due to insufficient supply most of confectionaries import from India. So, the new entrant would curve the shortage of production and also benefit the society economically and financially. 28 Compiled By iBEST Consultancy Services
Cake Box Production 2017
12 References
CSI Report 2014, Department of Cottage and Small Industry, Minstry of Economic Affairs,
Royal Government of Bhutan (2014)
www.alibaba.com
www.indiamart.com
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