BUSINESS PLAN

SALEM MGO



Prepared by
Akshay kumar.P
Jaffer
Monica.I
Naveen Pandiyan
Revathi.R
Vivek.K

Executive summary

SALEM MGO
VISION
To be the supplier of choice in every industry we serve

MISSION
To exceed our customers expectations in quality, delivery, and cost
through continuous improvement and customer interaction.
Operate and grow at a promising rate.
Serve high quality MgO.

KEYS TO SUCCESS
Product quality, world-class customer service and support.
Excellence in fulfilling the promise.
Labor flexibility.

Company description
Our business is a manufacturing oriented business. The output
product of our manufacturing process is MAGNESIUM OXIDE which
will be obtained from magnesium carbonate when heated at
1200
o
C.
Our factory is located in Salem, Tamil Nadu. We mainly focus on
producing MgO at a grade of 75%
Working time of our factory is 25 days per month from 9.00 am to
7.00pm.
On an average we produce 45 tonnes of MgO per day and
production output per month is 1125 tonnes. Overall we supply our
product to 38 companies (approx.) all over India.

This business will be profitable because it has more demand for
fertilizer where the major consumption of MgO is made. It is used in
the field of medicine, refractory bricks, abrasives (granite polishing),
ceramic and chemical industries.

CONVENIENCE:
Plant location near to mine to reduce the cost of transportation.
Deposit of Magnesium Carbonate found widely in and around
Salem, Mysore and Trichy.

Target market:
Magnesium oxide used as base & bonding agent.

Medicine- Special grades of magnesium oxide is used in antacids,
cosmetics, toothpaste, and ointments
Refractory bricks- Magnesia bricks often in combination with spinel
or chrome are also used in ferroalloy, non-ferrous, glass and cement
industries.
Abrasives- As a binder in grinding wheels
Ceramic- Basic ingredient in product formulations for the steel
industry
Chemical industries- Starting point for the production of other
magnesium salts such as sulfate and nitrate.

Competitors
These are the major competitors
TANMAG
BURNS STANDARD
DALMIA
Few other private firms

Manufacturing/production plans

Facility:
Land of 1 acre to setup plant. Plant is located in kuruvampatti area,
foot hills of yercaud. Coal is imported from Chennai and tuticorin.
Requirements :
Raw Materials :Magnesium Carbonate(MgCo
3
), Coal
Equipment and power source :Industrial Power supply, three small
shaft Kiln(furnace), three roller mill
Testing : Lab and lab chemicals
Packing :HDPE bags with thick inner liners(packing)
Labors: Skilled(for salary), unskilled(daily wages)
Delivery: Roadways and Railways
Production

The reaction involved in manufacturing Magnesium Oxide (MgO)
MgCO
3
(s) MgO(s) +CO
2
(g).

GRADE OF MgO
We produce only 75% grade.

Procedure

Magnesium carbonate rocks are taken to the factory and loaded
into furnace with the machine. The furnace is heated at 1200
o
C with
the help of coal for 8 hours. The output is magnesium oxide in lump
form which is then grinded with the help of 3 roller mill. The output is
fine particles.
The good quality of MgO depends on low presence of calcium
content in MgCO
3
.
From 2 tonne of MgCO3 we get 1 tonne of MgO.
Per day a kiln will produce 15 tonne of MgO
Per day we are capable of sending 3 loads for customer (i.e.)
1load=15 tonne

Environmental concerns
Rainy seasons, pollution control, permits for transportation, taxes,
VAT etc.
Skilled Labor
Manager, Marketing Manager, Production Manager, Factory
Supervising, Clerical Job.
Unskilled labor
Office boys.
For wages(daily basis)
In rainy season demand in North India is high. So when the
demand increases the supply also has to be increased. Three plants
are installed and two are continuously run and one is kept as substitute
at normal situation. During the period of more demand three plant will
be running in two shifts (morning and night shift).

Management structure


POSITION

REQUIREMENTS
General Manager MBA, PhD.
Marketing Manager MBA in marketing
Production Manager MBA in production
Clerical Job Any UG degree.
Factory Supervising Any UG with Engineering background
Office boys
10
th
pass
Structure:
Swot Analysis

STRENGTH

Location
Low cost for startup(Mark up pricing)
Quality
Oligopoly market structure
Direct contact
All partners are MBA
graduates


WEAKNESSES

Availablility of resources
Rainy season
Coal import
Less resources less supply
Competition
Submission of C-forms

OPPORTUNITIES

Expansion
Demand for product
Size of market
Grow to big brand
A market vacated by an inefficient competitor

THREATS

A new competitor in home town
Price wars with competitors
A competitor have new, innovative product or service
If they start to import(Major-China)
Competitors have superior access to channels of
distribution
Taxation is introduced on your product
Financial statement

Assuming 20% profit on selling price
Fixed investment involves for plant, machineries and transport
charges
We manufacture MgO of Grade 75% which is Rs.12000/tonne
We purchase 300kg of coal which is Rs.6/Kg
Coal cost=Rs.1800/tonne MgO
MgCO
3
: MgO=2:1
Fixed Investment=Rs.30, 00,000/-
Coal cost=Rs.6000/tonne


Workers:

POSITION

SALARY
General Manager Rs.20,000/-
Marketing Manager Rs.15,000/-
Production Manager Rs.15,000/-
Clerical Job (7500*6) Rs.45,000/-
Factory Supervising Rs.10000/-
Office boys
Rs.5000/-
Fixed Cost Per month is Rs.110000/-

Depreciation 10% per annum Rs.3,00,000/-
Depreciation 10% per month Rs.25000/-
Fixed Cost per month Rs.1,10,000/-
Total Rs.1,35,000/-
Production of MgO per month
is1125 tonnes

PARTICULARS FOR PER TONNE

Fixed cost Rs.20
Coal cost Rs.1800
Electricity Rs.200
Bags & Packing Rs.200
MgCO
3
Rs.8636
NET PROFIT Rs.44
SELLING PRICE (b/f) Rs.12000
Break even analysis
A point when no profit no loss occurs

Fixed cost per annum Rs.1320000
Depreciation 10% per annum Rs.300000
Total Rs.1620000
Contribution=(-variable cost+selling price) =(-
11836+12000)
Rs.164
Break-even point=1620000/164 9878 units
Government policies

Pollution control
Violation act
Sales tax
EPT,VAT
Income tax
Industrial Registration board.
Business name registration
Supporting documents

Exit strategy

Plant is built in a way that, it can be easily detachable.
The same kilon can be shifted to some other place and
can be used to process some other materials with little
modification.
Why exit strategy?
These three are high priced factor. If the price of these is
reduced the demand for MgO will decrease.
Calcium oxide
Barium oxide
Magnesium sulfide.

THANK YOU