PROJECT REPORT

Of

COMPOSTABLE BAG

PURPOSE OF THE DOCUMENT

This particular pre-feasibility is regarding Compostable bag making unit.

The objective of the pre-feasibility report is primarily to facilitate potential entrepreneurs in project
identification for investment and in order to serve his objective; the document covers various aspects
of the project concept development, start-up, marketing, finance and management.

[We can modify the project capacity and project cost as per your requirement. We can also prepare
project report on any subject as per your requirement.]

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Contact : +91 7526000333, 444, 555
 COMPOSTABLE STARCH BAG

Introduction

Compostable Liners and Bags

are the essential waste diversion
product for home, business, or
zero-waste event and are made
with renewable resources.
In typical parlance, the
word compostable is distinct in
meaning from biodegradable.
While biodegradable simply
means an object is capable of
being decomposed by bacteria or
other living organisms, "compostable" in the plastic industry is defined as
able to decompose in aerobic environments that are maintained under
specific controlled temperature and humidity conditions. Compostable
means capable of undergoing biological decomposition in a compost site
such that the material is not visually distinguishable and breaks down
into carbon dioxide, water, inorganic compounds and biomass at a rate
consistent with known compostable materials.

Advantages of Compostable Starch Bag

Unlike standard plastic bags, and even some biodegradable plastic
bags, compostable bags are made of vegetable matter, such as sugar
starch. When exposed to enough moisture, the bags will compost, right
along with whatever was placed inside them.

Standard biodegradable bags may just break down into smaller and
smaller pieces of plastic. While this is better for the environment than a
regular plastic bag, and biodegradable bags will never wind up in the
ocean in a large piece, they can still contaminate the environment with
plastic chemicals.
Benefits:

 Easily accessible
 Certified to be compostable
 Thick bag unlikely to split when carried short distances
 Fits into standard sized trash cans
 Breaks down well with moisture
 Made from renewable plant resources

Compostable Starch Bag Market Analysis

With a population of 1.252 billion, Indian economy is one of the fastest
growing economies of the world and a founding member of SAARC and
G4 nations. Some of the largest cities in India are Mumbai, Delhi,
Bangalore, Hyderabad, Chennai, Jaipur, Ahmedabad, and Kolkata. The
country have low per capita income of USD 1165 and USD 5238 in PPP
terms. Compostable Plastic Market is expected to grow at a CAGR of
7% by 2020.

However, technological advancement and increasing demand from

different sectors such as automobiles, packaging, healthcare, retail and
agriculture, will lead to robust demand in Indian Compostable Starch
Bags industry by 2020. Various regulation laid down by government and
growing concern for environment will lead to increasing demand for
biodegradable plastic in coming years.

Description of Machinery & Equipment

Following machinery are required for Compostable Starch Bag

manufacturing process:

 Extrusion Machine: It is the main machinery which converts small

granules into long sheets.
 Cutting Machine: This cuts the sheets into different sizes.
 Printing Machine: The printing machine prints logos, brands or
trademarks as required.
 Packaging Machine: The printed bags are finally packed into carry
bags of different sizes by this machine.
Manufacturing Process

1. Raw material i.e. starch granules are put into extrusion plant.
2. Long sheets produced after processing is taken through winding
process.
3. Then printing done with the help of printer.
4. After that, as per the size required, the sheets are sealed, cut and
punched.
5. The final product is out.
6. Packaging & transportation of goods.

Machinery & Equipment’s required:

Name Cost
Extrusion machinery 4,00,000
Cutting & sealing Machine 3,00,000
4 Colour Film Printing Machine 2,00,000
Other equipment 3,00,000
Total 12,00,000
GST @ 18% 2,16,000
Total 14,16,000
 Cost of the machine is other than transportation cost.

Land &Building required:

Land required 1,000 square feet

Approximate rent for the same is Rs. 25,000 per month.

Raw Material Requirement

Starch is required as the major raw material for the Compostable Starch
Bag unit. Other requirements are ink for printing, additives etc.

Average raw material (cost per KG): Rs. 262

Labour Requirement:

8 Manpower are required for the Compostable Starch Bag unit.

Includes:

2 Skilled Labour

3 Unskilled Labour

1 Supervisor

1 Helper

1 Accountant

Compostable Starch Bag license & registration

For Company:
 Obtain the GST registration.
 Additionally, obtain the Udyog Aadhar registration Number.
 Registration from Central Pollution Control Board.
 Choice of a Brand Name of the product and secure the name with
Trademark if required.

Compostable Starch Bag size

Bags
S.
Item Description Dimensions Per Case Pack
No.
Case
1 3 Gallon Bag 16" x 17" 0.65mil 500 25/roll x 20 rolls
2 5 Gallon Bag 19.5" x 23" 0.7mil 300 25/roll x 12 rolls
3 13 Gallon Bag 23.5" x 29" 0.8mil 250 25/roll x 10 rolls
4 23 Gallon Bag 28" x 44" 0.9mil 200 25/roll x 8 rolls
5 30 Gallon Bag 30" x 39" 0.8mil 200 25/roll x 8 rolls
6 33 Gallon Bag Slim Liner 33" x 40" 0.8mil 200 25/roll x 8 rolls
7 33 Gallon Bag 33" x 40" 1.0mil 200 25/roll x 8 rolls
8 35 Gallon Bag 34" x 48" 0.9mil 100 20/roll x 5 rolls
9 39 Gallon Bag 35" x 44" 1.0mil 100 20/roll x 5 rolls
10 45 Gallon Bag 38" x 48" 1.0mil 100 20/roll x 5 rolls
11 55 Gallon Bag Slim Liner 42" x 48" 0.8mil 100 10/roll x 10 rolls
12 55 Gallon Bag 42" x 48" 1.0mil 100 20/roll x 5 rolls
13 58 Gallon Bag 38" x 58" 0.9mil 100 20/roll x 5 rolls
14 64 Gallon Bag Slim Liner 47" x 60" 0.9mil 60 10/roll x 6 rolls
15 96 Gallon Bag 54" x 59" 0.9mil 60 10/roll x 6 rolls
Implementation Schedule

S.N. Activity Time Required

(in Months)
1 Acquisition Of premises 1
2 Procurement & installation of Plant & Machinery 1
3 Pollution certificate registration 3-4 months
4 Arrangement of Finance 1
5 Requirement of required Manpower 1
Total time Required (some activities shall run 5-6 Months
concurrently)

Conclusion:
After completion of manufacturing process, product is ready to sell in the
market. Compostable Starch Bags are used for daily routine activities.
This machine can be installed & one can earn a good Margin of profit by
doing this business.
 PROJECT AT A GLANCE

1 Name of the Entreprenuer xx

Constitution (legal Status)
2 : xx

3 Father's/Spouce's Name xx
4 Unit Address
Taluk/Block xx
District xx
Pin
E-Mail xx
Mobile xx
5 Product and By Product Compostable Bags
Name of the project / business
6 activity proposed :
7 Cost of Project (in Lacs) Rs. 25.00
capital expenditure Rs. 15.00
8 Means of Finance

Term Loan (in Lacs) Rs. 12.50

Own Capital (in Lacs) Rs. 2.50
Working Capital Limit Rs. 10.00

9 Debt Service Coverage Ratio 2.45

10 Pay Back Period 5 years
11 Project Implementation Period 6 months
12 Employment
13 Power Requirement 40 kW connection
14 Major Raw materials Starch granules
Estimated Annual Sales Turnover 145.20 Lacs (at 55%
15 capacity)
Detailed Cost of Project & Means
16 of Finance
COST OF PROJECT (Rs. In Lacs)
Particulars Amount
Land
Building & Civil Work -
Plant & Machinery 14.16
Furniture & Fixtures 0.84
 Pre-operative Expenses
Contingencies
Working Capital
Requirement 10.00
Total 25.00
MEANS OF FINANCE
Particulars Amount
Own Contribution 2.50
Bank Finance 12.50
working capital from
bank 10.00
Total 25.00
COMPUTATION OF PRODUCTION OF Compostable Bags

Items to be Manufactured

Compostable Bags

machine capacity per day 300 kg

machine capacity per annum 90,000 kg

Production of Compostable Bags

Production Capacity kg
1st year 55% 49,500

2nd year 60% 54,000

3rd year 65% 58,500
4th year 70% 63,000
5th year 75% 67,500

Details of raw materials

Percentage Rate

Items Mixture (per kg) Amount

Starch Granules 97% 250.00 242.50

Ink for priniting 2% 220.00 4.40

Extra Components 1% 1,520.00 15.20

Total 262.10
Raw Material Cost

Year Capacity Rate Amount

Utilisation (per kg) (Rs. in lacs)

1st year 55% 262.10 129.74

2nd year 60% 269.96 145.78

3rd year 65% 278.06 162.67

4th year 70% 286.40 180.43

5th year 75% 295.00 199.12

COMPUTATION OF SALE

Particulars 1st year 2nd year 3rd year 4th year 5th year
Op Stock - 4,125 4,500 4,875 5,250

Production 49,500 54,000 58,500 63,000 67,500

Less : Closing Stock 4,125 4,500 4,875 5,250 5,625
Net Sale 45,375 53,625 58,125 62,625 67,125
sale price per kg 320.00 329.60 339.49 349.67 360.16
Sales (in Lacs) 145.20 176.75 197.33 218.98 241.76

Utility Charges at 100% capacity (per month)

Particulars value Description
Power connection
required 40 KWH
consumption per day 320 units

Consumption per month 8,000 units

Rate per Unit 7 Rs.

Power Bill per month 56,000 Rs.

BREAK UP OF LABOUR & STAFF CHARGES

Particulars Wages No of Total

per Month Employees Salary

Skilled (in thousand rupees) 14,000 2 28,000

Unskilled (in thousand rupees) 7,000 3 21,000

Supervisor 12,000 1 12,000

Total per Month 61,000

Total annual labour charges (in lacs) 7.32

BREAK UP OF STAFF CHARGES

Particulars Wages No of Total

per Month Employees Salary

Helper (in thousand rupees) 4,000 1 4,000

Accountant 10,000 1 10,000

Total Per Month 14,000

Total Annual Labour Charges (in Lacs) 1.68

PROJECTED PROFITABILITY STATEMENT

PARTICULARS 1st year 2nd year 3rd year 4th year 5th year

Capacity Utilisation % 55% 60% 65% 70% 75%

SALES

Gross Sale

Compostable Bags 145.20 176.75 197.33 218.98 241.76

Total 145.20 176.75 197.33 218.98 241.76

COST OF SALES

Raw Material Consumed 129.74 145.78 162.67 180.43 199.12

Electricity Expenses 3.70 4.03 4.37 4.70 5.04

Depreciation 2.21 1.88 1.60 1.37 1.16

Labour 7.32 7.69 8.07 8.47 8.90

Repair & maintennace 0.58 1.77 2.96 4.38 6.04

Wastage 1.95 3.64 4.07 5.41 5.97

Packaging Charges 1.49 1.62 1.76 1.89 2.03

Cost of Production 146.98 166.41 185.49 206.66 228.27

Add: Opening Stock /WIP - 12.25 13.87 15.46 17.22

Less: Closing Stock /WIP 12.25 13.87 15.46 17.22 19.02

Cost of Sales 134.73 164.79 183.90 204.90 226.47

GROSS PROFIT 10.47 11.96 13.43 14.09 15.29

Salary to staff 1.68 1.85 2.03 2.24 2.57

Interest on Term Loan 1.12 0.98 0.70 0.43 0.15

Interest on working Capital 1.10 1.10 1.10 1.10 1.10

Rent 3.00 3.30 3.63 3.99 4.39

TOTAL 6.90 7.23 7.47 7.76 8.21

NET PROFIT 3.58 4.73 5.96 6.33 7.08

Taxation 0.20 0.28 0.43

PROFIT (After Tax) 3.58 4.73 5.76 6.05 6.65

PROJECTED BALANCE SHEET

PARTICULARS 1st year 2nd year 3rd year 4th year 5th year

Liabilities

Capital

opening balance 5.08 7.80 10.56 13.12

Add:- Own Capital 2.50

Add:- Retained Profit 3.58 4.73 5.76 6.05 6.65

Less:- Drawings 1.00 2.00 3.00 3.50 4.00

Closing Blance 5.08 7.80 10.56 13.12 15.76

Term Loan 11.11 8.32 5.54 2.76 -

Working Capital Limit 10.00 10.00 10.00 10.00 10.00

Sundry Creditors 13.84 14.58 16.27 18.04 19.91

Provisions & Other Liab 1.00 1.50 2.25 2.70 3.38

TOTAL : 41.02 42.20 44.62 46.62 49.05

Assets

Fixed Assets ( Gross) 15.00 15.00 15.00 15.00 15.00

Gross Dep. 2.21 4.09 5.69 7.06 8.22

Net Fixed Assets 12.79 10.91 9.31 7.94 6.78

Current Assets

Sundry Debtors 3.87 4.71 5.26 5.84 6.45

Stock in Hand 20.90 25.04 27.93 31.06 34.29

Cash and Bank 3.46 1.53 2.12 1.78 1.54

TOTAL : 41.02 42.20 44.62 46.62 49.05

PROJECTED CASH FLOW STATEMENT

PARTICULARS 1st year 2nd year 3rd year 4th year 5th year

SOURCES OF FUND

Own Margin 2.50

Net Profit 3.58 4.73 5.96 6.33 7.08

Depriciation & Exp. W/off 2.21 1.88 1.60 1.37 1.16

Increase in Cash Credit 10.00 - - - -

Increase In Term Loan 12.50 - - - -

Increase in Creditors 13.84 0.74 1.69 1.78 1.87

Increase in Provisions & Oth lib 1.00 0.50 0.75 0.45 0.68

TOTAL : 45.62 7.85 10.00 9.92 10.79

APPLICATION OF FUND

Increase in Fixed Assets 15.00

Increase in Stock 20.90 4.15 2.88 3.13 3.23

Increase in Debtors 3.87 0.84 0.55 0.58 0.61

Repayment of Term Loan 1.39 2.78 2.78 2.78 2.76

Drawings 1.00 2.00 3.00 3.50 4.00

Taxation - - 0.20 0.28 0.43

TOTAL : 42.16 9.77 9.42 10.26 11.03

Opening Cash & Bank Balance - 3.46 1.53 2.12 1.78

Add : Surplus 3.46 - 1.93 0.59 - 0.34 - 0.24

Closing Cash & Bank Balance 3.46 1.53 2.12 1.78 1.54
COMPUTATION OF CLOSING STOCK & WORKING CAPITAL

PARTICULARS 1st year 2nd year 3rd year 4th year 5th year

Finished Goods 12.25 13.87 15.46 17.22 19.02

Raw Material 8.65 11.18 12.47 13.83 15.27

Closing Stock 20.90 25.04 27.93 31.06 34.29

COMPUTATION OF WORKING CAPITAL REQUIREMENT

TRADITIONAL METHOD

Particulars Amount

Finished Goods & Raw Material 20.90

Less : Creditors 13.84

Paid stock 7.06

Sundry Debtors 3.87

10.93

WORKING CAPITAL LIMIT DEMAND ( from Bank) 10.00

2nd Method

PARTICULARS 1st year 2nd year

Total Current Assets 28.23 31.29

Other Current Liabilities 14.84 16.08

Working Capital Gap 13.39 15.21

Min Working Capital

25% of WCG 3.35 3.80

Actual NWC 3.39 5.21

item III - IV 10.04 11.41

item III - V 10.00 10.00

MPBF (Lower of VI & VII) 10.00 10.00

3rd Method

PARTICULARS 1st year 2nd year

Total Current Assets 28.23 31.29

Other Current Liabilities 14.84 16.08

Working Capital Gap 13.39 15.21

Min Working Capital

25% of Current Assets 7.06 7.82

Actual NWC 3.39 5.21

item III - IV 6.33 7.39

item III - V 10.00 10.00

MPBF (Lower of VI & VII) 10.00 10.00

COMPUTATION OF DEPRECIATION

Description Plant & Machinery Furniture TOTAL

Rate of Depreciation 15.00% 10.00%

Opening Balance - - -

Addition 14.16 0.84 15.00

Total 14.16 0.84 15.00

Less : Depreciation 2.12 0.08 2.21

WDV at end of Year 12.04 0.76 12.79

Additions During The Year - - -

Total 12.04 0.76 12.79

Less : Depreciation 1.81 0.08 1.88

WDV at end of Year 10.23 0.68 10.91

Additions During The Year - - -

Total 10.23 0.68 10.91

Less : Depreciation 1.53 0.07 1.60

WDV at end of Year 8.70 0.61 9.31

Additions During The Year - - -

Total 8.70 0.61 9.31

Less : Depreciation 1.30 0.06 1.37

WDV at end of Year 7.39 0.55 7.94

Additions During The Year - - -

Total 7.39 0.55 7.94

Less : Depreciation 1.11 0.06 1.16

WDV at end of Year 6.28 0.50 6.78

Additions During The Year - - -

Total 6.28 0.50 6.78

Less : Depreciation 0.94 0.05 0.99

WDV at end of Year 5.34 0.45 5.79

Less : Depreciation 0.80 0.04 0.85

WDV at end of Year 4.54 0.40 4.94

Less : Depreciation 0.68 0.04 0.72

WDV at end of Year 3.86 0.36 4.22

CALCULATION OF D.S.C.R

1st 2nd 3rd 4th 5th

PARTICULARS year year year year year

CASH ACCRUALS 5.78 6.61 7.36 7.42 7.81

Interest on Term Loan 1.12 0.98 0.70 0.43 0.15

Total 6.90 7.59 8.07 7.85 7.96

REPAYMENT

Instalment of Term Loan 1.39 2.78 2.78 2.78 2.76

Interest on Term Loan 1.12 0.98 0.70 0.43 0.15

Total 2.51 3.77 3.49 3.21 2.90

DEBT SERVICE COVERAGE

RATIO 2.75 2.01 2.31 2.44 2.74
AVERAGE D.S.C.R. 2.45
 REPAYMENT SCHEDULE OF TERM LOAN
Interest 10.00%
Closing
Year Particulars Amount Addition Total Interest Repayment Balance
1st Opening Balance

1st month - 12.50 12.50 - - 12.50

2nd month 12.50 - 12.50 0.10 - 12.50

3rd month 12.50 - 12.50 0.10 - 12.50

4th month 12.50 - 12.50 0.10 12.50

5th month 12.50 - 12.50 0.10 12.50

6th month 12.50 - 12.50 0.10 12.50

7th month 12.50 - 12.50 0.10 0.232 12.27

8th month 12.27 - 12.27 0.10 0.232 12.04

9th month 12.04 - 12.04 0.10 0.232 11.80

10th month 11.80 - 11.80 0.10 0.232 11.57

11th month 11.57 - 11.57 0.10 0.232 11.34

12th month 11.34 - 11.34 0.09 0.232 11.11

1.12 1.392
2nd Opening Balance

1st month 11.11 - 11.11 0.09 0.232 10.88

2nd month 10.88 - 10.88 0.09 0.232 10.64

3rd month 10.64 - 10.64 0.09 0.232 10.41

4th month 10.41 - 10.41 0.09 0.232 10.18

5th month 10.18 - 10.18 0.08 0.232 9.95

6th month 9.95 - 9.95 0.08 0.232 9.72

 7th month 9.72 - 9.72 0.08 0.232 9.48

8th month 9.48 - 9.48 0.08 0.232 9.25

9th month 9.25 - 9.25 0.08 0.232 9.02

10th month 9.02 - 9.02 0.08 0.232 8.79

11th month 8.79 - 8.79 0.07 0.232 8.56

12th month 8.56 - 8.56 0.07 0.232 8.32

0.98 2.784
3rd Opening Balance

1st month 8.32 - 8.32 0.07 0.232 8.09

2nd month 8.09 - 8.09 0.07 0.232 7.86

3rd month 7.86 - 7.86 0.07 0.232 7.63

4th month 7.63 - 7.63 0.06 0.232 7.40

5th month 7.40 - 7.40 0.06 0.232 7.16

6th month 7.16 - 7.16 0.06 0.232 6.93

7th month 6.93 - 6.93 0.06 0.232 6.70

8th month 6.70 - 6.70 0.06 0.232 6.47

9th month 6.47 - 6.47 0.05 0.232 6.24

10th month 6.24 - 6.24 0.05 0.232 6.00

11th month 6.00 - 6.00 0.05 0.232 5.77

12th month 5.77 - 5.77 0.05 0.232 5.54

0.70 2.784
4th Opening Balance

1st month 5.54 - 5.54 0.05 0.232 5.31

2nd month 5.31 - 5.31 0.04 0.232 5.08

 3rd month 5.08 - 5.08 0.04 0.232 4.84

4th month 4.84 - 4.84 0.04 0.232 4.61

5th month 4.61 - 4.61 0.04 0.232 4.38

6th month 4.38 - 4.38 0.04 0.232 4.15

7th month 4.15 - 4.15 0.03 0.232 3.92

8th month 3.92 - 3.92 0.03 0.232 3.68

9th month 3.68 - 3.68 0.03 0.232 3.45

10th month 3.45 - 3.45 0.03 0.232 3.22

11th month 3.22 - 3.22 0.03 0.232 2.99

12th month(Subsidy
adjusted) 2.99 - 2.99 0.02 0.232 2.76
0.43 2.784
5th Opening Balance

1st month 2.76 - 2.76 0.02 0.232 2.52

2nd month 2.52 - 2.52 0.02 0.232 2.29

3rd month 2.29 - 2.29 0.02 0.232 2.06

4th month 2.06 - 2.06 0.02 0.232 1.83

5th month 1.83 - 1.83 0.02 0.232 1.60

6th month 1.60 - 1.60 0.01 0.232 1.36

7th month 1.36 - 1.36 0.01 0.232 1.13

8th month 1.13 - 1.13 0.01 0.232 0.90

9th month 0.90 - 0.90 0.01 0.232 0.67

10th month 0.67 - 0.67 0.01 0.232 0.44

11th month 0.44 - 0.44 0.00 0.232 0.20

12th month 0.20 - 0.20 0.00 0.204 -

 0.15 2.76

DOOR TO DOOR 60 MONTHS

MORATORIUM PERIOD 6 MONTHS
REPAYMENT PERIOD 54 MONTHS
 DISCLAIMER

The views expressed in this Project Report are advisory in nature. SAMADHAN assume no
financial liability to anyone using the content for any purpose. All the materials and content
contained in Project report is for educational purpose and reflect the views of the industry
which are drawn from various research material sources from internet, experts, suppliers and
various other sources. The actual cost of the project or industry will have to be taken on case
to case basis considering specific requirement of the project, capacity and type of plant and
other specific factors/cost directly related to the implementation of project. It is intended for
general guidance only and must not be considered a substitute for a competent legal advice
provided by a licensed industry professional. SAMADHAN hereby disclaims any and all
liability to any party for any direct, indirect, implied, punitive, special, incidental or other
consequential damages arising directly or indirectly from any use of the Project Report
Content, which is provided as is, and without warranties.