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Sugandha Compost Fertilizer Company

Submitted to: Zubair Hussain (ZbH)

Submitted by:

EXECUTIVE SUMMARY

Sugandha Compost Fertilizer Company is a partnership organized company. Our business is to produce compost fertilizer. For that we will collect our raw materials from house hold garbage. So it is both product & service at the same time. We have plans to be the pioneer in both fertilizer industry & waste management service in Dhaka City in future.

Table of contents

Title Page

01. Introduction 04

02. Statement of purpose 05

03. Business description 05

04. Production process 07

05. Market analysis 07

06. Business location 08

07. Management 09

08. Competition 11

09. SWOT analysis 12

10. Current financial records 13

11. Explanation of plans for growth 14

12. Projected profit, loss & operating figures 15

13. Explanation of financing for growth 16

14. Financial Condition 16

15. Summary of business & outlook for the future 18

16. Conclusion 18

01. INTRODUCTION:

Bangladesh is an agricultural country. 85% of the population in here is directly or indirectly related to agriculture. The land of this country is very fertile. The innumerous number of rivers & canals has made the resource of water easier to get. Only lacking we have in terms of agricultural resources is the fertilizers. Our country does not produce enough fertilizers to fulfill the need of it. We have to import a lot of fertilizers from abroad to fulfill this lack. As a result, we are spending a lot of money in purchasing. On the other hand, most of these fertilizers are chemical fertilizers. Companies in Bangladesh are also producing only chemical fertilizers. But chemical fertilizers are harmful for the environment. For using too much of chemical fertilizers, our lands are becoming infertile day by day. When these chemicals are washed away & gone to the rivers & canals, they are polluting the water as well. As a result, the whole environment is getting polluted & people are getting sick for that. For these reasons, environmentalists are suggesting to use more organic fertilizers rather than chemical fertilizers. So we can see that a new market is emerging. We are going to penetrate into this new market & be the pioneer in it.

02. STATEMENT OF PURPOSE:

The main purpose of this business is to create a good market of organic fertilizers in Bangladesh & at the same time, being the pioneer in it. Apart from that, we want to contribute for the betterment of environment as well.

03. BUSINESS DESCRIPTION:

Our plan is to make fertilizers from household garbage. Tons of garbage is creating everyday in Dhaka City. Most of them are kitchen garbage. This has become a matter of concern for environmental issue. These garbage are either getting burnt or getting thrown away to open places or even casted away to the rivers, ponds & other water bodies. As a result, air and water is getting polluted.

We want to use this garbage & make something useful from it. We are going to use this garbage as raw materials & turn them into fertilizers. This is to mention that there is a big demand of fertilizers in Bangladesh. Being an agricultural country, 85% of the population of our country is directly or indirectly involved to the agricultural sector. Fertilizers are one of the most essential elements for agricultural sector. But the irony is, existing fertilizer companies of Bangladesh are not being able to fulfill the increasing demand of it. To fulfill this lacking, our government has to import a lot of fertilizers per year. A huge amount of money is being spent in this regard. So we can see that there is a huge market in our fertilizer industry.

In our business, we are going to provide product & service at the same time. For production, we need raw materials. We are going to collect this raw material from household garbage by providing waste management service in some selected locations of Dhaka city to start with. As a result, we are going to earn money & collect raw materials at the same time. So our business is not just producing fertilizers & selling them but providing wasting management service as well.

All the garbage that we are going to get is not going to be used to produce fertilizers. Only the perishable & decomposable object can be turned into fertilizers. But non-perishable or non-decomposable objects such as plastics & polythene cannot be turned into fertilizers. We are going to use these materials for the packaging of our produced fertilizer. We are not going to set up a plant to produce the packets rather we are going to sell these polythene & plastics to those recyclers who recycle these at a lower price. In return, we are going to buy their produced packets at a lower price.

If we can execute our plan accordingly than we are going to get the production after 2 months of starting. From this time, we are going to get the continuous production.

Our future plan is to expand this business. First we are going to collect garbage from Dhanmondi area. Our plant is going to be set in Savar as it is near to Dhanmondi. After producing for 5-8 years, we are going to expand our service business to Gulshan, Banani & Uttara & another plant in Gazipur. By setting up this new plant, we are going to increase our production as we are going to get more of the raw materials. According to our analysis, we are going to be able to get a production of 252 metric tons of fertilizers from our first plant in Savar per year. So by increasing production, we can increase our sales as well. Not just that, we are hoping that we are going to be able to export these fertilizers in abroad as well.

04. PRODUCTION PROCESS:

Production process of our compost fertilizer is very simple. First, we will collect household garbage which is our raw material by our waste management service from the Dhanmondi area. Then we will carry that garbage to our factory. There, we will purify our raw materials by separating the plastic bottles, polythenes etc. Then we dump those house hold garbage (raw materials) by digging holes, which are 10 feet long, 10 feet wide & 6 feet deep. We will fill those holes by those raw materials up to 5 feet. Then we will give soil upon those raw materials up to 1 foot. After that we will give water over that hole so that earth worm, insects, bacteria etc. comes in that hole. Earth worm, other insects & bacteria will divide those raw materials to its smaller & simpler form. We have to keep them for 6-8 weeks in that hole. After 2 months we have to dig the soil & get our product as the compost fertilizer.

05. MARKET ANALYSIS:

Bangladesh has six state-owned, ammonia/urea factories with an aggregate annual capacity of 2.3 million tons urea serving the domestic market, plus one export-oriented ammonia/urea factory, Karnaphuli Fertilizer Co. Ltd. (KAFCO) (Table 1). In addition, the country has one state-owned TSP/SSP complex, which relies entirely on imported rock phosphate and sulphur.
There are currently no compost fertilizer production facilities in Bangladesh. So we are going to start a new market. Whatever the quantity that the fertilizer companies of Bangladesh are producing that are not sufficient. Because there is a huge gap in the supply and demand. To fulfill that demand every year government has to import a big amount of fertilizer every year. But it is also not sufficient. So there is a huge chance for us to enter into this market.

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06. BUSINESS LOCATION:

To start with, we are going to operate our waste management service business in Dhanmondi residential area. We are going to set our first plant somewhere in Savar. The reason behind choosing Savar is that it is just outside Dhaka City & it is near to Dhanmondi. To expand our business, we are going to provide our waste management service in Uttara. We are planning to set up a new plant after 10 years to increase the production. We think that by that time, Uttara area will be populated enough & we are going to get a lot of raw materials from that area. We are thinking about Gazipur to set our second plant up. The reason behind choosing Gazipur is that it is near to Uttara.

07. MANAGEMENT:

The whole management process is done by a hierarchy of the employees of Sugandha Compost Fertilizer Company. First the CEO, the owner of the company, controls the whole business. Different managers such as Production Manager, Marketing Manager, Raw Material Manager, and Finance Manager help him to control the whole process. Plant Manager under the Production Manager will observe the whole process of fertilizer production. Under the Marketing Manager, area managers with the help of marketing executives are going control the marketing process. Raw Material Manager maintains the waste service management. Area Manager and Garbage Collectors work to collect the garbage from door to door. Finally the accountants under the observation of the finance manager maintain the financial side of the company.

MANAGERIAL HIERARCHY:

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08. COMPETITION:

There is not much competition in this market as there is no other company that is producing compost fertilizers from household garbage. But then again, two types of competition can be there. They are-

• Competitions from the other fertilizer companies:
There are about 8 fertilizer factories in Bangladesh that are producing fertilizers. All of them are producing chemical fertilizers. Yet they are not being able to fulfill the total demand of Bangladesh’s demand. Not just those, these factories are not producing throughout the year. Another thing is these factories rely very much on importing in collecting the raw materials. But we are going to produce organic compost fertilizer. Not just that, we are going to produce throughout the year as we are going to get plenty of raw materials. So we hope that we can overcome that.

• Competition from City Corporation:
We may face some competition from City Corporation in terms of garbage collection as well. It’s a duty to City Corporation to collect garbage. They are taking a service charge in some areas in providing this service. For example, they are charging 60 taka in providing this service in Dhanmondi area. To overcome this competition, our plan is to provide better service at a lower cost to the City dwellers. We are going to collect the garbage in covered vans so that the smell does not spread. We are going to collect the garbage right from the doors of every flat. Foremost of all, we are providing this service at a cheap rate. For example, we are planning to provide this service at 40 taka in Dhanmondi area.

09. SWOT Analysis:

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10. CURRENT FINANCIAL RECORDS:

The company will start its business with 5 partners. Each partner will give 6,00,00,000 tk. for the company. The company will take 5,00,00,000 tk. loan on 10% interest from bank. So, the total capital of the company will be 350000000 tk. The expenditure for the start of the business is –

5 trucks expenditure 1,20,00,000 tk.

20 bighas land expenditure 24,00,00,000 tk.

Infrastructure 1,50,00000 tk

5 vans expenditure 50,000 tk.

Office equipments 50,00,000 tk.

Corporate office advance rent payment 40,000 tk.

Total 27,20,90,000 tk.

11. EXPLANATION OF PLANS FOR GROWTH:

There is a very good opportunity to grow this business gradually. We are getting a very good profit from 6 months of starting our business. Not just that, we are getting this profit by operating our service in just one area of Dhaka City & that is Dhanmondi. So we have chances to expand our service business to other populated areas of Dhaka City such as Gulshan, Banani, Baridhara & Uttara. If we expand our service to these areas, we are going to get more raw materials. By using these raw materials, we can produce more fertilizers. But for that, we need to set another factory. That is a big obstacle in expansion of this business. So we are not being able to expand our business in short run. But in the long run, it is possible. We hope that we will be able to set a new factory after 10 years.

12. PROJECTED PROFIT, LOSS & OPERATING FIGURES:

Expenditure per Month:

5 truck drivers 30,000 tk.

10 truck labors (garbage collector) 40,000 tk.

5 van drivers 20,000 tk.

6 security guards 18,000 tk.

20 field labors 60,000 tk.

10 packaging labors 30,000 tk.

4 office peons 12,000 tk.

2 receptionists 16,000 tk.

5 sales executives 50,000 tk.

3 accountants 45,000 tk.

Production manager 20,000 tk.

Raw material manager 20,000 tk.

Finance manager 20,000 tk.

Marketing manager 25,000 tk.

Corporate office rent 20,000 tk.

Office and other utility 1,53,000 tk.

Bank loan payment 2,29,166.7 tk.

Total expenditure per month 8,08,166.7tk.

Total expenditure of a year = 8,08,166.7 * 12 tk.

= 96,98,000.4 tk.

13. EXPLANATION OF FINANCING FOR GROWTH

We have a plan of expanding our business in 10 years. We started our business with a capital of 35 crore taka. Of this 35 crore taka, 27,20,90,000 taka is spent for setting up the structure at first. From the rest of 7,79,10,000 taka, we are going to save 6 crore as a fixed deposit for future capitalization. The approximate amount of 1.5 crore taka we are going to spent in case of emergency such as in any sort of losses. On the other hand, I am going to get an amount of 10,40,2999.8 taka as a profit in the first year & about 12,97,97,996.4 taka in the next 9 years. We are going to get the necessary amount of money from these profits & add them in our next capital to set up a new firm.

14. FINANCIAL CONDITIONS:

• 1st 6 Month:

As our company is new in market we will not be able to provide our waste management service. So in the 1st 6 months we will be able to achieve 75% of our market in waste management and we will sell our compost fertilizer after 6 month of the starting of our company. So in the 1st 6 month we have to manage our money from the waste management service. So at this period our total revenue will be 4320000tk and at this period our total expenditure will be 4849000.2 tk. So at this period our company will be in 529000.2 tk. loss.

• 2nd 6 Month:

At this period we are hoping that we will be able to achieve 100% market in waste management service from the beginning and from the starting of this period we will sell our compost fertilizer. So in this period our revenue from selling fertilizer will be 10500000 tk. And from our waste management service revenue will be 5760000 tk. So in total at this period our revenue will be 16260000 tk. In this period our expenditure will be 5857000.2 tk. So in this period our company will be in 10402999.8 tk. profit.

Revenue from Selling Fertilizer:

Our main product is the organic fertilizer that we produced. Each month we will produce 21 metric ton fertilizer and each year we will produce 252 metric ton fertilizer just from one area of Dhaka city. From selling fertilizer 50 tk. per kg the company will earn 1,26,00,000 tk.

Revenue from Waste Management:

Each month our waste management company will charge 40 tk. per family. Primarily our target is to serve Dhanmondi. From waste management, each month the company will earn 9,60,000 tk. As a result, our projected revenue for 1 year is 1,15,20,000 tk.

Total Revenue:

From selling fertilizer and servicing by waste management the company’s total revenue will be 1,26,00,000 + 1,15,20,000 = 2,41,20,000 tk.

Total Profit:

Our total profit of the year is (2,41,20,000 – 96,98,000.4)tk.

= 1,44,21,999.6 tk.

15. SUMMARY OF BUSINESS & OUTLOOK FOR THE FUTURE:

To summarize, we are going to produce fertilizers from household garbage that are going to be collected through a waste management service. In future, we are going to expand our waste management service business & set up another firm to increase production of compost fertilizer as we are going to get more raw materials then.

16. CONCLUSION:

It is clear that our country has a huge demand of fertilizers. At the same time, it is also undeniable that the chemical fertilizers are not eco-friendly at all. So environmentalists are advising the governments to opt for organic fertilizers. Being the pioneer of the organic fertilizer market in Bangladesh, we are not just going to help the government but also performing our responsibility towards our mother nature as well. Profit making is our main concern, but in achieving that goal, we are not ruining our surroundings.

Listing of Business & Personal References

• http://www.moind.gov.bd/html/index_bcic.htm

• http://media4media.net/bn/index.php?q=node/2401

• http://dcmoulvibazar.org/report/fertilizer_Demand.html

• http://krishikhabor.blogspot.com/2009/01/blog-post_1239.html

• http://www.bbc.co.uk/bengali/news/story/2009/01/090114_mhfertilizer.shtml

• http://www.prothom-alo.com\

• Dr. Shaikh Abdus Salam.

Core Faculty, MPH Program

Life Science Department

North South University.

• Faisal M. Fatheul Islam

Manager

Eastern Bank, Motijheel Branch.