sample of businees plan

8/2/2019 Sample of Businees Plan

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Operations Management

Business Plan:

Manufacturing of Automotive and Industrial

Lube Oil

Torque Lube Oil Corporation

Submitted By:

Amit Yadav 01Asma Khan 02

Bharat Sharma 03

Niraj Thakur 17

Sadik Shaikh 27

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ACKNOWLEDGEMENTS

A mammoth project of this nature calls for intellectual nourishment, professional

help and encouragement of many quarters.

Its a deep insight on the team work and company set up part of Indian lubricant oil

industry. It had really enhanced our knowledge and managerial skills.

We as a team would to like to pay are gratitude to Professor Suhas Rane (Faculty

Operations Management) who allotted us with such a brilliant piece of project and

head of Gold Oil Company Silvassa Mr. Manoj Pandey and Mr. Vinod Sinh who

helped us in extracting details regarding the same.

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Table of Contents

Sr No. Particulars Page

1 Company Information 4

2 Product Details

Indian Oil Industry

Market Research

Product Details

6

3 Process Details

Process Flow

Cost of Machines

Process Flow Diagram

16

4 Project Plan

Project Plan

Manpower Details

Financial Analysis and BEP

Production and Sales

P & L

Raw Materials Cost

Wages

Working Capital

Asstes

BEP

24

5 Location & Layout

Selection of Location

Layout

36

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Chapter 1

Company Information

Company Information

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Name:

Board of Director: Amit Yadav (CEO)

Asma KhanBharat Sharma

Niraj Thakur

Sadik Shaikh

Product Portfolio: Engine OilGear Oil

Hydraulic Oil

Factory Location: Athal Naroli

(D.N.H)

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Chapter 2

Product Details

Indian Oil Industry

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The automotive industry in world is ailing, and the situation is made worse by the

recession. Cars are being held longer, and there is greater attention to maintenance.

As a result, there is renewed interest by lubricant marketers in promoting various

marketing claims, such as fuel economy improvements, engine protection and long

life, and targeting unique requirements of specific customer groups.

On the other hand, the drivers in Asia, where the automotive industry has recovered

nicely, will be volume growth and quality improvements. Passenger car production

and sales have shown strong growth in the last quarter. A key trend here has been

the growth in compact/economy car segment epitomized by the TATA NANO car

launched in 2009. Most car majors have their own version of economy car in

planning or production stage. In large part due to growth in the economy car

segment, vehicle ownership is likely to increase rapidly in most high growth

markets in Asia and in other emerging markets. Europe also seems to be catching

the compact car bug, but North America is likely to remain immune. This trend willhelp grow consumption of consumer lubricants. Similar to the rapidly growing sales

of compact cars, there is also a notable growth in sales of luxury car brands. The

key message from Asia is strong growth in consumer lubricants due to growing car

ownership, as well as an improvement in quality levels due to the modernization of

the passenger car fleet.

The Opportunity

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India is the sixth largest lubricant market in the world with approximate revenues of

over Rs. 70 billion in 2005 and growing at 4-5% annually. The automobile market

accounts for a large share of lubricant sales, particularly the diesel engine-based

vehicles. Key market drivers are the growing demand for four-stroke motorcycles,

passenger cars, tie-ups with original equipment manufacturers, and the

implementation of new pollution norms.

Until 1993, the Indian lubricant market was highly regulated, clearly dominated by

the public sector, with Castrol the only notable private player. As with other sectors,

liberalization of the Indian economy brought many changes in the lubricants

industry including the entry of foreign players. The pricing of base oil was

deregulated in a phased manner and it is market determined now. Reduction of

custom duties, de-canalization and removal of quantitative restrictions under which

base oil stock was allotted to the users on a quota basis, have also led to the growth

in this sector.

In the industrial lubricant segment, consumption is shifting to Asia as well, a trend

that has been accelerated by the recession. Industrial production is shifting to Asia

and Eastern Europe due to cost advantage. Due to the high prices prevalent before

the recession, there has been a significant increase in the interest in re-refined base

oils and lubricants.

Challenges

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The new lubricants market in 2010 will show a mix of challenges and acceleration

of some pre-recession trends. The key to success in the new lubricants market is

to understand:

What are the emerging customer needs in the post recession scenario?

How do they carry out maintenance activities? What is the importance of

brands?

What are the lubricant needs for the future car park in Asia? How will the

dominance of compact cars affect the volume and quality of lubricant

consumed?

Will re-refining be a big trend or will it remain a niche market? Are

consumers favorably inclined towards re-refined oils?

How will increased usage of ethanol and biodiesel and the prevalence of

flex fuel vehicles affect the lubricant market?

Market Research

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Data Collection

We as a team personally visited Gold Oil Corporation (Silvassa) and gathered

information regarding lubricant oil industry. Secondly the major source of data

collection was internet.

Most of the information regarding production and plant set up was collected from

the owner of the gold oil corporation and Information regarding the additives wascollected from the internet as it was not disclosed by the owner.

Application of Product

The product we have selected for manufacturing is lube oil, and it is

mainly for Industrial and commercial use. The major part of our customer

base will be industrial user for first phase of the manufacturing. And we

will be targeting automotive segment in further phases.

Market Demand Estimation

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As per the Kline Report of 2008, the size of the Indian lubricants market is 1.7

billion litres a year and contributes 3-4% of the global demand for 38.5 million

tonnes per annum growing at around 6%. By volume terms it is the fifth largest

market in the world. India is one of the highest potential markets in the world and

the launch of the Zandu enhanced products portfolio reiterates our strong

commitment towards India.

Competitors

Castrol India Limited

Gulf Oil Corporation

Silvassa Oil Corporation

Gold Oil Corporation

Environmental Implications

We take good care to protect the environment and we dont go against the rule laid

down by the CPCB (central pollution control board). We sell our all the waste to

CPCB authorised buyer and we also have the ISO 14001:2004 certificate which

deals with the environment management system.

Chapter 2

Product Details

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ENGINE OIL

Size : 500 ml 200 Litres

TORQUE MOTOR OIL 15W40

Torque Diesel Max 15W40 is a Super High Performance Turbo Diesel lubricant. It

is formulated with top quality base oils and additives from international suppliers,

to reduce emissions, improve fuel economy and engine cleanliness, prolong enginelife, reduce the formation of sludge and protect the modern engine.

APPLICATION

Torque Diesel Max 15W40 the product is a new generation, performance lubricant,

suitable for diesel and petrol engines, with or without turbocharger. Equipment

Manufacturers recommendations should be followed.

PERFORMANCE STANDARDS

API (American Petroleum Standards) CH-4/SJ

BENEFITS

Reduces emissions & improves fuel economy

Improves engine cleanliness & reduces oil consumption

Prolongs engine life

Reduces sludge formation

protects the engine

TORQUE SUPER MOTOR OIL 20W50

Best quality base oils are used in the formulation of Torque Super Motor Oil

20W50and the additive package, from international suppliers, has been carefully

selected. The product gives engine protection in moderate operating conditions,

with resistance to formulation of engine varnish and sludge. It also offer protection

against wear, corrosion, rust and foaming, and is useful where oil consumption is a

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problem. Itmeets API Service Classification SF/CCand is recommended for use in

older higher mileage cars. It is not suitable for modern turbo charged vehicles.

APPLICATION

Torque Super Motor Oil 20W50 is formulated for use in general lubricating

situations and recommended for older cars, to give reasonable protection in

moderate conditions.


Meets API- SF/CC

BENEFITS

Reduces wear & inhibits varnish and sludge

Good protection against rust & corrosion

Minimizes foaming

Good general engine protection

Assists in reducing oil consumption

Torque 4T Plus

Gulf Pride 4T Plus series are premium quality 4-stroke gasoline engine oils

developed specifically to meet the special requirements of the latest high

performance air cooled 4-stroke motorcycles. These oils are blended from superior

quality high viscosity index base oils and specially selected performance additives

to provide excellent protection for engine, gearbox and wet clutch used in 4-stroke

motorcycles. They provide high degree of reliability even under severe operating

conditions. Torque 4T plus exceeds the requirements of API SL and JASO MA2 for

4-stroke motorcycle oils as well as those of leading global 4-stroke motorcycle

manufacturers.

APPLICATIONS

Recommended for new generation 4-stroke gasoline engines in high performance

motorcycles of all leading global manufacturers

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GEAR OIL

TORQUE GEAR OIL90

Torque Gear oil is mineral gear oil formulated from premium quality solvent

refined base oils, with additives for oxidation, corrosion and foam inhibition. The

product is for manually operated transmissions and spiral-bevel axles operating

under mild conditions.

APPLICATION

Torque Gear oil is suited for all applications where straight mineral gear oil is

required. It can be used in gear sets with low tooth pressure and rubbing velocities.

It is suitable for rear axles with spiral bevel gears, which do not require an extreme

pressure product, manual transmissions and tractor transmissions and final drives

calling for a GL-1 fluid. It can also be used in various industrial applications, which

include helical gear sets and journal bearings, where GL-1 is required. Always refer

to manufacturer's recommendations.

PERFORMANCE STANDARD

API GL-1

BENEFITS

Controls Wear

Superior performance in various applicationsAnti-foaming

High chemical and thermal stability

Good oil service life

HYDRAULIC OIL

TORQUE HYDRAULIC AW32, 46,

68,100,150& 220

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Top quality virgin base oils are used to formulate Torque quality hydraulic

products. Additives from international suppliers are used to inhibit oxidation and

prevent rust, foaming and wear. Oxidation inhibitors used in Torque Hydraulic

AW Oilsprevent formation of varnish and gum deposits in hydraulic systems that

can affect valves and cause operational problems. Anti-wear additive protectsequipment, while corrosion inhibitor prevents rust and de-foment the problem of

foaming none adversely affect synthetic rubber seals and O rings.

APPLICATION

Torque Hydraulic AW Oils are ideal for use in hydraulic systems which

incorporate piston type, gear type and/or high pressure vane pumps, and can also be

used as general lubricating oils. High viscosity indices make Toque Hydraulic AW

Oils suitable for use over a wide temperature range. These oils meet ISOspecifications


Denison Hydraulic HF

Vickers M-2952

Mannesmann Rexroth requirements

DIN 51524

US Steel 126 & 127

BENEFITS

Protect against rust, corrosion and wear

Prevents varnish & sludge & foaming

Resists oxidation

Reduced downtime

Trouble-free operations

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Chapter 3

Process Details

Process Details

RAW MATERIAL:

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Base oil and Additives are used as raw materials for making lubricant oil. We have

products as Engine oil, Gear oil & Hydraulic oil. Raw material will be stored before

hand for 6 days.

Base oil details:

Typically lubricants contain 90% base oil (most often petroleum fractions, called

mineral oils) and less than 10% additives. Vegetable oils or synthetic liquids such as

hydrogenated polyolefins, esters, silicones, fluorocarbons and many others are

sometimes used as base oils.Base oil, also called base stock, is the name given to

the main liquid component (or components) of a lubricant. Base oils may be mineral

oil based (mineral refers to the fact it was extracted from rocks in the form of crude

oil), vegetable, or synthetic in origin. Synthetics may be petroleum-based or

chemical-based. The base stock provides the basic lubricating requirements of alubricant i.e. the "oiliness". In most modern lubricants, a base oil mixture alone is

insufficient to deliver the technical performance characteristics required. Therefore,

the base oils are mixed with a variety of different additives, each chosen to impart

additional performance benefits to the finished oil.

Additives details:

A large number of additives are used to impart performance characteristics to the

lubricants. Additives deliver reduced friction and wear, increased viscosity,improved viscosity index, resistance to corrosion and oxidation, aging or

contamination, etc. The main families of additives are:

Antioxidants

Detergents

Anti-wear

Metal deactivators

Corrosion inhibitors, Rust inhibitors

Friction modifiers

Extreme Pressure

Anti-foaming agents

Viscosity index improvers

Demulsifying/Emulsifying

Stickiness improver, provide adhesive property towards tool surface (in

metalworking)

Complexion agent (in case of greases)

Note that many of the basic chemical compounds used as detergents (example:

calcium sulfonate) serve the purpose of the first seven items in the list as well.

Usually it is not economically or technically feasible to use a single do-it-alladditive compound. Oils for hypoid gear lubrication will contain high content of EP

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additives. Grease lubricants may contain large amount of solid particle friction

modifiers, such as graphite, molybdenum sulfide, etc.

OIL MAKING PROCESS: Its a process focus layout.we will manufacture engine

oil, gear oil &hydraulic oil by supplying base oil and additives to the blending

vessel were both the materials will get mixed and sludge will be removed and final

product is send for filling, packaging and weighing according to the capacity

demanded.

FACILITES REQUIRED AND THEIR APPROXIMATE COST:

Major facilities required for lubricant oil industry is raw material, machineries &

electricity. Electricity is the biggest contributor in cost after raw material.

MACHINERIES REQUIRED AS PER THE PROCESS EXPLAINED ABOVE:

Storage tank

Blending vessels

Filling machine

Weighing machine

Their Approximate Cost

Sr Particulars Amount

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No.

1 Blending Vessels 2400000

2 Storage Tanks 1200000

3 Semi Automatic Filling Machines 5250004 Weighing Machine 125000

5 Lab Instruments 450000

6 Computer 60000

7 Furniture & Fixtures 500000

8 Land and Building 3800000

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Process Flow

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Simultaneous Metering Blender.

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Weighing Machine.

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Semi-Automatic Filling Machine.

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Chapter 4

Project Plan

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Project Plan

Here we are targeting major on industrial customer and slowly will enter into

consumer market.

Our project plan is as follows:

PHASE 1:

In first year we will manufacture Engine Oil which will require

following machinery:

Blending Vessel of 6kl.

Semi automated filling machine Weighing machine

Initially we are targeting to achieve operational efficiency. As we are new in

market we will gradually try to attain 100% operational efficiency. Engine oil will

continue for 2 years.

PHASE 2:

In Third year we will manufacture Gear Oil which will require

following machinery: Blending Vessel of 3kl

Semi automated filling machine

Weighing machine

As we are two year old in business we have better knowledge and customer base

so we can expand our network through them and experiment with our product. In

third and fourth year we will try to stick to earlier mentioned products.

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PHASE 3:

In fifth year we will be established in the industry and will have good

customer base and great potential customer to expose. So hear we will go for

hydraulic oil. Its requirement is as follows:

Blending Vessel of 3kl Semi automated filling machine

Weighing machine

In the entire phases only blending machine set up cost will be their other two

cost of semi automated machine and weighing machine is a fixed cost which will

be held at the commencement of business.

PHASE 4:Our future plans consist of launching two different products i.e. Grease and

Compressor oil. And in fifth year we will try to grab the untapped market in

Gujarat, Maharashtra&goa.

Production and sales:

In phase 1 we will commence with our engine oil product and will continue for 2

years.

Year 1

Engine oil machine calculation:

Machine speed: 750 Litre /hr

Operational efficiency: 50 %

Production of machine/hr in Litre: 750X0.5 = 375 Litre / hr

Production in first phase: 375X8X13X12 = 468000

Sales price/ Litre: 75

Total sales of the year 1: 468000X75 = 35100000

Year 2




Production of machine/hr in Litre: 750X0.6 = 450 Litre / hr

Production in first phase: 450X8X13X12 = 561600

Sales price/ Litre: 75Total sales of the year 2: 561600X75 = 42120000

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In phase 2 as mentioned earlier we have introduced new machine for Gear oil:

Year 3




Production of machine/hr in Litre: 750X0.65 = 487.5 Litre / hr

Production in first phase: 487.5X8X13X12 = 608400


Sales for second phase: 608400X75 = 45630000

Gear oil machine calculation:Machine speed: 375 Litre /hr


Production of machine/hr in Litre: 375X.50 = 187.5 Litre /hr

Production in second phase: 187.50X8X13X12 = 234000

Sales price/kl: 90


Total sales of the Year: 66690000

Year 4




Production of machine/hr in Litre: 750X0.65 = 487.5 Litre / hr




Gear oil machine calculation:



Production of machine/hr in Litre: 375X.60 = 225 Litre /hr

Production in second phase: 225X8X13X12 = 280800

Sales price/kl: 90



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Year 5

In phase 3 as we are old in business now will introduce new machine for hydraulic

oil:




Production of machine/hr in Litre: 750X.65= 487.5 Litre / hr



Total sales of the year 5: 608400X75 = 45630000

Gear oil machine calculation:Machine speed: 375 Litre /hr


Production of machine/hr in Litre: 375X.60 = 225 Litre /hr

Production in second phase: 225X8X13X12 = 280800

Sales price/kl: 90


Hydraulic oil machine calculation:



Production of machine/hr in Litre: 375X.30 =112.5 Litre /hr

Production in second phase: 112.5X8X13X12 = 140400

Sales price/kl: 110

Sales for second phase: 140400X110 =15444000


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Manpower Details

Particulars Year 1 Year 2 Year 3 Year 4 Year 5

Administration S US S US S US S US S US

Accounts 1 1 1 1 1

Marketing 3 4 4 5 5

Factory

Production 1 1 1 1 1

QCM 1 1 1 1 1

Stores 1 1 1 1 1

Workers 4 2 4 2 5 4 5 4 6 4

Security 1 3 1 3 1 3 1 3 1 3

Total 12 5 13 5 14 7 15 7 16 7Grand Total 17 18 21 22 23

S = Skilled Employee

US = Unskilled Employee

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Financial Analysis and BEP

Production and Sales:

Product Type Year 1 Year 2 Year 3 Year 4 Year 5

Engine Oil (ltr) 468000 561600 608400 608400 608400

Efficiency 50 60 65 65 65

Price 75 75 75 75 75

Sales 35100000 42120000 45630000 45630000 45630000

Opening Debtor 0 1755000 2106000 3334500 3545100

Closing Debtor 1755000 2106000 3334500 3545100 4317300

Gear Oil (ltr) 234000 280800 280800

Efficiency 50 60 60

Price 90 90 90

Sales 21060000 25272000 25272000

Opening Debtor

Closing Debtor

Hydraulic Oil (ltr) 140400

Efficiency 30

Price 110

Sales 15444000Opening Debtor

Closing Debtor

Total Sales 35100000 42120000 66690000 70902000 86346000

Total Avg. Debtor 877500 1930500 2720250 3439800 3931200

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Budget P & L Account

Particular Year 1 Year 2 Year 3 Year 4 Year 5

INCOME

Sales 35100000 42120000 66690000 70902000 86346000

TOTAL

EXPENDITURE

A Variable cost

Raw material 31590000 37908000 60021000 63811800 77711400

Wages 372000 372000 528000 528000 600000

Electricity

consumed 91500 114375 411750 494100 1216950

Maintenance &

spares 80000 90000 150000 160000 180000

Stationary 6000 8000 10000 12000 14000

Telephone 84000 96000 96000 108000 108000

Total VC 32223500 38588375 61216750 65113900 79830350

CONTRIBUTION 2876500 3531625 5473250 5788100 6515650

B Fixed cost

Salary 1248000 1392000 1392000 1536000 1536000

Depreciation 471000 423900 541400 487260 587260

Mis.expence 10000 12000 15000 18000 20000

License fees 290000 10000 10000 30000 10000

Insurance 94200 84780 108280 97452 117452

Incorporation

expense 4000 4000 4000 4000 4000

Total FC 2117200 1926680 2070680 2172712 2274712

PROFIT 759300 1604945 3402570 3615388 4240938

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Raw Material Cost

Product Type Year 1 Year 2 Year 3 Year 4 Year 5

Engine Oil (ltr) 468000 561600 608400 608400 608400

Base Oil, Addtives 67.5 67.5 67.5 67.5 67.5

Inventory Holding period 6 6 6 6 6

RM Cost 31590000 37908000 41067000 41067000 41067000

Opening Inventory 1215000 1458000 1579500 1579500

Closing Inventory 1215000 1458000 1579500 1579500 1579500

Purchase 32805000 38151000 41188500 41067000 41067000

Gear Oil (ltr) 234000 280800 280800

Base Oil, Addtives 81 81 81

Inventory Holding period 6 6 6

RM Cost 18954000 22744800 22744800

Opening Inventory 0 729000 874800

Closing Inventory 729000 874800 874800

Purchase 19683000 22890600 22744800

Gear Oil (ltr) 140400

Base Oil, Addtives 99

Inventory Holding period 6

RM Cost 534600

Opening Inventory 0

Closing Inventory 26730

Purchase 561330

Total Cost 31590000 37908000 56862000 60021000 69498000

Total Purchase 31590000 37908000 60021000 63811800 64346400

Total RM Inventory 1215000 2673000 3037500 3159000 3159000

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Wages and Salary

Particulars Year 1 Year 2 Year 3 Year 4 Year 5

Administration S US S US S US S US S US

Accounts 8000 0 8000 0 8000 0 8000 0 8000 0

Marketing 36000 0 48000 0 48000 0 60000 0 60000 0

Factory 0 0 0 0 0 0 0 0 0 0

Production 15000 0 15000 0 15000 0 15000 0 15000 0

QCM 12000 0 12000 0 12000 0 12000 0 12000 0

Stores 10000 0 10000 0 10000 0 10000 0 10000 0

Workers 24000 7000 24000 7000 30000 14000 30000 14000 36000 14000

Security 8000 15000 8000 15000 8000 15000 8000 15000 8000 15000

Total113000 22000 125000 22000

131000 29000

143000 29000

149000 29000

Grand Total 135000 147000 160000 172000 178000

Year 12 1620000 12

176400

0 12

192000

0 12

206400

0 12 2136000

WORKING CAPITAL CALCULATION

Woking

CapitalParticulars Year 1 Year 2 Year 3 Year 4 Year 5

Current

Assets

A Debtors 877500 1930500 2720250 3439800 3931200

B Stock

Raw Material 1215000 2673000 3037500 3159000 3159000

Finished Goods

(MTO)

Cash & Bank Balance 150000 160000 185000 185000 190000

Total CA 2242500 4763500 5942750 6783800 7280200

Current

Liability

A Creditors 0 0 0 0 0

Total CL 0 0 0 0 0

Net Working

Capital 2242500 4763500 5942750 6783800 7280200

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Investment In AssetsSr

No Particulars Year 1

Year

2 Year 3

Year

4 Year 5

1 Blending Vessels 1200000 - 600000 - 600000

2 Storage Tanks 600000 - 300000 - 300000

3 Semi Automatic Filling Machines 175000 - 175000 - -

4 Weighing Machine 125000 - - - -

5 Lab Instruments 250000 - 100000 - 100000

6 Computer 60000 - - - -

7 Furniture & Fixtures 500000 - - - -

8 Land and Building 3800000Total Investment 6710000 - 1175000 - 1000000

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Financial Break Even Analysis

Present Value of Investment

Break Even Sales = --------------------------------------------------

P/V Ratio

14131122.12

= -------------------------------------------------

0.080992667

= 174474094

Present Value Of Investment

Year of

Investment Investment

P.V

Factor

P.V of

Investment

1 8827200.08 0.869 7670836.871

2 1926680.08 0.756 1456570.143

3 3239680.08 0.658 2131709.494

4 2167312.08 0.572 1239702.511

5 3284312.08 0.497 1632303.102

Total 14131122.12

So we can conclude that we can attain Break Even in approximately 4th year.

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Chapter 5

Location & Layout

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Location and Layout

As Factory Location is one time strategic decision and so one of the most important

decisions in business plan. In manufacturing industries profit maximization can be

done by only cost minimization. So location depends on various factors like

1- Tangible cost

Availability of raw material

Availability of labour

Availability of power

Availability of water and other amenitiesInfrastructure facilities

2-Intangible and future costs

Attitude toward union

Quality of life

Education expenditures by state

Quality of state and local government

For the Location of our factory we have chosen Silvassa, U.T of D&NH

The reason for considering Silvassa is that being Union Territories it is tax free andoffers various excise and sales tax exemption. It is also near to Vapi and Daman

which are known for their industries and we can taped the areas of it. As the base

oil can be purchased by the local dealer Ghandhar oil & Refinery on affordable

prices.

It has large industrial areas and is connected with border of Gujarat and

Maharashtra.

Easy availability of skilled and unskilled labour

Nearer to N.H no. 8 Tax Benefit (

1. 15 % Exemption in Sales Tax and Income

2. No Income Tax for 5 years.

Subsidy on electricity

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Plant Layout

sample of businees plan

Documents