Business plan of gravity light

ABSTRACT
Gravity light is a light solution that generate light by
just pulling 3-5 kg weight for 3 seconds to generate
light for 60 minutes

BUSINESS PLAN
OF
GRAVITY LIGHT

Mueen Hasan
Entrepreneurship

DEPARTMENT OF MANAGEMENT SCIENCES

Subject:
ENTREPRENURESHIP

Topic:
Business Plan of Gravity Light

Submitted To:
Mr. Adress Awan

Submitted By:
Mueen Hassan

23

Program:
B.B.A 7th (Morning)

i

Contents
1 INTRODUCTRY PAGE .......................................................................................................................... 01
2 EXECUTIVE SUMMARY ....................................................................................................................... 02
3 INDUSTRY ANALYSIS........................................................................................................................... 03
3.1 Future Outlook and Trends ......................................................................................................... 03
3.2 Analysis of Competitors .............................................................................................................. 03
3.3 Market Segmentation ................................................................................................................. 04
3.4 PEST Analysis .............................................................................................................................. 06
3.5 SWOT Analysis ............................................................................................................................ 08
4 DESCRIPTION OF THE VENTURE ......................................................................................................... 09
4.1 Product Introduction................................................................................................................... 09
4.2 Services ....................................................................................................................................... 10
4.3 Size of the Business ..................................................................................................................... 10
4.4 Office Equipment ........................................................................................................................ 10
5 PRODUCTION PLAN ............................................................................................................................ 10
5.1 Manufacturing Process ............................................................................................................... 10
5.2 Physical Plan ................................................................................................................................ 10
5.3 Name of the Supplier .................................................................................................................. 11
6 OPERATIONAL PLANT ......................................................................................................................... 11
6.1 Manufacturing Process ............................................................................................................... 11
6.2 Wharehouse ................................................................................................................................ 11
6.3 Description of Company Operations........................................................................................... 11
7 MARKETING PLAN .............................................................................................................................. 11
7.1 Product ........................................................................................................................................ 11
7.2 Price ............................................................................................................................................ 12
7.3 Placement ................................................................................................................................... 13
7.4 Promotion ................................................................................................................................... 14
8 ORGANIZATIONAL PLAN .................................................................................................................... 16
8.1 Company Ownership................................................................................................................... 16
8.2 Identification of Parterners and shareholders ............................................................................ 16
8.3 Management Team………………………………………………………………………………………………………………..16
Organizational Management Hierarchy Chart Starlight………………………………………………………………..17
9 ASSESSMENT OF THE RISK…………………………………………………………………………………………………………….18
I Weakness of the Product…………………………………………………………………………………………………………..18
ii

II New Technologies .......................................................................................................................... 18
III Contigeny Plan .............................................................................................................................. 18
10. FINANCIAL PLAN.............................................................................................................................. 19
10.1 Pro Forma Income Statement ................................................................................................... 19
10.1.1 Projected Income Statement 2014 .................................................................................... 21
10.1.2 Projected Income Statement 2014, 2015, 2016 ................................................................ 22
10.2 Pro Forma Balance Sheet .......................................................................................................... 23
10.3 Break Even Analysis................................................................................................................... 23
10.4 Source and Application of funds ............................................................................................... 25

iii

ACKNOWLEDGEMENT
We owe our gratitude to Allah Almighty whose shower of blessings and kindness has
been on us throughout the working on these pages. It is His help that we finally able to compile
this document.
We are indebted to our respected teacher Mr. Adrees Awan who’s indispensable and
intricate comments on various aspects conjoined with motivation made us come forth holding
such as project.

iv

MISSION STATEMENT

“To be the Pakistan premier consumer Products Company focused on Quality product
of Lightening. We seek to produce healthy financial rewards to investors as we provide
opportunities for growth and enrichment to our employees, our business partners and the
communities in which we operate. And in everything we do, we strive for honesty, fairness
and integrity.”

VISION STATEMENT

“To be the Pakistan Best Lightening Company”. Being the best means providing outstanding
quality, service, cleanliness and value, so that their every customer is contented and happy
with their products. To increase the value of their shareholder’s investment through sales
growth, cost control and wise investment of resources.”

v

BUSINESS PLAN OF GRAVITY LIGHT

Star Light
Green Town, Lahore
042-9921-4566
www.starlight.com

Co-owners: Mueen Hasan, Mohammad Irfan, Aamir Nadeem

Description of the Business
This business of the company is Light solutions to general public. Light solutions
include electricity lights and new venture that is Gravity light (Light without electrify need).
The specialty of the Gravity light is that it generate light by pulling 3-5 kg for 3 seconds.
Financing:
Initial financing requested is RS. 50 million. 70 % of financing (amounting 35 million)
will be from owners’ equity and 30% finance (amounting 15 million) will be obtain by debt.
This amount will be used to covers office space, office equipment, suppliers, manufacturing
and selling costs etc.
This Report is confidential and is property of the owners listed above. Anyone else
cannot see this report without owners wish and no part of this report can be copied without
company’s owner permission.

THE ISLAMIA UNIVERSITY OF BAHAWALPUR, BAHAWALNAGAR CAMPUS

Page 1


2.0 EXECUTIVE SUMMARY
The gravity light concept was founded in 1992, and in the 21 years since, our growth
and success patterns have far outgrown industry standards. It is matter of pride us to be able
to offer one of the widest arrays of products to our customers through our extensive network
all over the country. However, history has shown that change is only element to remain
competitive in the market for a longer period of time. Just as innovation brings improvement,
similarly progress offers the promise of perfection. Our firm’s commitment to maintaining
excellence standards of quality and services has enabled them to realize that they need to
revolve from within.
The vision of our organization is “TO BE THE FIRST CHOICE IN THE REGION”. Since its
inception, the our company is taking rapid strides in developing new businesses to offer
complete energy services to cater all types of customers. They have entered in to new and
remained focused on delivering to our customers.
The credit for all this goes to none but their employees who love challenge and
excellence in everything is their passion. Our organization is an empowered organization in
which individuals have the knowledge, skill, desire and opportunity to personally succeed in
a way that leads to collective organizational success. We have given those opportunities to
deliver, grow and prosper. Hence we have unlimited opportunities lying ahead of us.
They offer very good growth opportunities and most congenial working environment.
, the company being in its expansion phase, offers unique career development opportunities
for both young graduates as well as experienced employees.
The concept of gravity light is new to Pakistan people. So Star light will have to face
major challenge of introducing new product to general public. Star light will have to spend a
lot of marketing expense to promote the product. Star light have segmented market into
geographic, demographic and buying situation. Star light is targeting lower and middle level ,
people who face electricity crisis and to rural areas of the country.
Star light will manufacture gravity lights in plant that is located in Lahore. Company
will distribute its product through online, through stores and through retailers.
The price of Gravity light is set to 800 rupees per unit. The product will be sold by
online, stores and retailers. Star light will spend 3.6 million rupees on promotional activities
to promote it product. Promotion will be made on advertising on TV, newspapers, bill boards
and radio channels.
There are some technical risk with gravity light that it require a person to pull the
weight after every 1 hour in order to generate light. If product failed to succeed in market,
then Gravity light will be turned into solar lights.


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3 INDUSTRY ANALYSIS
3.1 Future outlook and trends
Current Situation - Electricity crisis. Use of UPS / Generators leads to high utility bills.
Our aim is to reduce expenditures on light and ensure savings on replacement costs. Gravity
light energy is freely available without caring for utility expenses. No import duty on solar
chips – reduction in expenses.

3.2 Competitors Analysis
The marketing concept states that to be successful, a company must provide greater
customer value and satisfaction than its competitors do. Starlight has a tough competition
with Philips while it faces a little competition with the local producers like china lighting
company, Green lighting company etc. The local producers hardly affect the sales of Starlight
in the market.
There are different types of competitor in the market. Some of them in which our
product lies are discussed below:
Close Competitor

Starlight and Philips are close competitors. It means that both have direct competition
in the market, their products are close substitutes for one another. Both the products can
influence the market share of one another through effective strategies made to cope up with
their competitors.
 Distant competitors

Gravity light and Energy sever are distant competitors of one another. It means that
their products satisfy the same want but they are in indirect competition with one another.
 Strong Vs Weak:

Philips and Starlight are strong competitors. In Pakistan Philips is the market leader
and Starlight is its competitor. The Starlight makes defense strategies so that it can maintain
its position in the market. While Philips is a challenger and it makes attack strategies so that
it can become the market leader.
Starlight and green lighting are weak competitors. Starlight is the market leader and
green lighting is the follower. Starlight is not in direct competition with the Green lighting. It
means that Green lighting little effect on the sales of Starlight.


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3.3 MARKET SEGMENTATION
It means that you divide the target market in to different groups. Market consists of
buyers and buyers differ in one or more ways. They may differ in wants, resources, locations
and buying practices. Through market segmentation companies divide large, heterogeneous
markets into smaller segments that can be reached more efficiently and effectively with
products and services that match their unique needs.
Segmentation is done on basis of the previously mentioned external factors and the
following:

Geographic
Star Light has segmented its new product Gravity light to southern Punjab specially
and generally all middle cities.

Demographic
Star Light has segmented its new product Gravity Light to demographic characteristic
of low income. New product will be promoted to low income persons that have worry over
increasing prices of the electricity.

Buying Situation
Gravity Light need no operating cost at all and can be used for a long period of time.
It is portable lamp and can be used anywhere. So Star Light has segmented Gravity light on
the base of purchasing. Consumer have to buy the product only once for a long period of time
and not reapeaditly.

3.3.1 Targeting:
Star Light is doing targeting of its Gravity Light on these bases.
I.

Lower and Middle Level

II.

Load-shedding

III.

Rural Areas

I.

Lower and Middle Level

As a large numbers of populations is lower level and middle level. So, Star Light new
product Gravity light will target lower and middle level.
II.

Load-Shedding

Pakistan is a country which is always facing load shedding problem throughout the
whole year. Gravity Light is perfect solution for areas which face load-shedding problems.


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Gravity Light will overcome the problem of Load-shedding by producing light without any use
of electricity and without any massive physical efforts.
III.

Rural Areas

A majority of population is living in rural areas and moreover many rural areas have
no facility of Electricity. In those areas, People are still using very old method or bound to use
expensive method of lightening. Gravity Light will be very effective for those areas with no
need of electricity or of oil use.
3.3.2 Positioning:

The positioning of Gravity light will be done in this way “A Light solution that will never
require any operating charges as well as heavy physical efforts”.
3.3.3 CONSUMER DECISION PROCESS:
Consumer decision process or consumer buying behavior is explained in some steps
which are discussed below:


Need Identification

Consumer needs inexpensive light solution with low purchasing price of the product.


Information Search

Consumer will search as to what will satisfy their inexpensive light solution to the
most.


Evaluation of Alternatives

He will now evaluate from different Light solutions that are inexpensive in operating
cost as well as low price of purchase.


Selection

After evaluating the product, they will select a product.


Purchase

The consumer will buy the selected product.


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 Post-Purchase Experience:

It is the experience that the consumer gets after using the product. He will use the
product again if he feels that his satisfaction after use is more or equal to the price of
the product.
After looking at above mentioned example, we can get an understanding that a
product should be so desirable that whenever a person identifies his need, he selects our
product among various substitute products and he feel satisfies so that he retains the use of
that product.

3.4 PEST ANALYSIS
A. ECONOMIC EFFECT ANALYSIS
 Inflation

If the country faces inflationary trend in the market, the price of the Starlight gravity light
will ultimately increase which will lower its demand.
 Economic Policies

Some of the economic policies which can affect the market of Starlight are discussed
below:
 Fiscal Policy

It is the policy of taxes. If heavy tax is levied on Starlight products then its price will rise
having negative effect on its sales.
 Monetary Policy

Monetary policy is made to restrict or increase the supply of money in the market. If
policies are made to restrict the flow of money in the market, inflation can be controlled
hence increasing the real income of the people which will ultimately affect the sales of
Starlight products.
 Price Policy

If price of Starlight products is increased its demand will decrease and vice versa.
 Income Policy

If income of the people will increase their purchasing power will increase and hence
increasing the market share of Starlight.


Page 6

B. POLITICAL EFFECT ANALYSIS
 Political Stability:

Whenever the government is considered to be stable, the business will flourish. If there is
political stability in the country the policies and strategies made by Starlight can be
consistent to be implemented. Foreign companies are also keen to invest in those
countries which are politically stable where they have no fear of decline in their market
share or shut down due to sudden change of government.
 Mixed Economy

In mixed economy government and private sector both plays their role in developing the
economy of the country. Investment by foreign companies like Starlight is more likely to
flourish in mixed economy.
 Laws Formulation

Government has given copy rights to Starlight so that another company cannot sell their
product by the name of Starlight. The countries where laws are formulated, the strategies
and activities of the company are different.
C. TECHNOLOGICAL FACTORS:
 Research and Development

Through research and development quality of the product can be improved or better
techniques or machinery can be developed which can increase the production. When
technology is advance the supply of the product increase hence the company experiences
growth in their business.
D. SOCIAL AND CULTURAL ANALYSIS
 Psychographic

It is a combination of demographic and psychological factors. Psychological attributes
mean how you perceive things. The company will focus on the behavior of consumers and
make different changes in their product quantity or quality and in promoting their product
so that they can attract the customers. Keeping in view that the behavior of different
consumers is not alike they have to make their marketing strategies in accordance with
their requirements so that they are convinced to buy the product.


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 Social Status

Starlight is a very new concept especially in Pakistan. People who are low income they are
not purchase the solar energy lamp and the price of electricity is increase day by day in
Pakistan due to low supply.

3.5 SWOT ANALYSIS OF STARLIGHT
SWOT Analysis, which is based on thorough review of the business (corporation,
product category competition, customers and products), identities and evaluates the internal
strengths and weakness of the companies well as its external threats and opportunities. The
marketing mix is driven by the results of the SWOT analysis.
STRENGTHS
 Demand of Starlight product is more than its competitors.
 Company has a very established name and a good reputation.
 As the target customers of gravity light is mostly poor nations, so Starlight product has
more brand loyal customers.
 Most of the customers are satisfied with the price of the Starlight.
 Starlight is a national company and it has a very strong position nationally.
 Starlight has a very vast distribution channel and it is easily available everywhere.
WEAKNESSES
 Starlight does not offer any sort of incentive or discount to its retailers.
 Starlight target only poor and middle customers in their promotions.
 Starlight have minimum recourses.
OPPORTUNITIES
 Company may start entering urban areas also.
 The company may also diversify its business in some other potential business.
 Increased interest of people in musical groups, cultural shows and sports has provided an
opportunity for Starlight to increase its sales through them.
THREATS
 The main competitor of the company is the Philips.
 At the national level, Starlight has a very strong competition with Philips. Philips has started
its advertisements more effectively to increase their demand and it is a very strong threat
for Starlight.

Page 8


4 DESRIPTION OF THE VENTURE
4.1 Product Introduction
Gravity Light
The Gravity Light is simply charged by a bag that is filled with around 3-5 kg of material
and hung from a cord below the light. As the bag descends, a series of gears inside the device
translates this weight into energy, providing 60 minutes of light. The light strength can be
adjusted, from strong task lighting to a longer-lasting low-level glow, and two terminals on
the front allow it to be used as a generator so it can recharge other devices including radios
and batteries.

The project originally emerged from a brief by charity Solar Aid to come up with a lowcost light source as an alternative to the ubiquitous kerosene lamps that provide the main
source of light across the developing world – but which come with their own set of health
problems.
While there have been other attempts at creating battery-free light sources in the
past, there has often been a surprising reluctance to adopt them. The Gravity Light just needs
three seconds of lifting for 60 minutes light.

CHALLENGE
The Idea of light by gravity is very unique. As this concept is totally new to the market,
Company will enjoy many advantages as well as will face many challenges. The main challenge
that the company will face is to make the product well know, company will have to make
intensive efforts (Advertising, Promotion Etc.).


Page 9


4.2 Services
We are giving the home delivery facilities and we also lurching the web site for online
ordering Here customer will order place on online than we are provide the order within one
week. And we are expending the offices and warehouse where customer easily buys our
products.

4.3 Size of business
Starlight consists of partnership business. Starlight has medium size. But now starlight
want to expend the business according to product line.

4.4 Offices equipment and personals
The main office of starlight in green town Lahore .starlight has no other sub branches
or offices in other different cities. But now starlight wants to expend the business in different
cities of Pakistan. Our production plant is near the main office in green town Lahore. We
import the raw material Korea. And completing production process in our plant. Star Light has
approximately 100 peoples work in production plant and different other stages.

5 PRODUCTION PLAN
5.1 Manufacturing Process
Manufacturing of the gravity light will be made in the plant of Star light that is in
Lahore. Raw material that is required is given below





15 watt energy panel
Energy Gears
Pins and wires
Covers

Total expenses on manufacturing of one piece of the Gravity Light is 300 rupees. These
expense also includes price of purchasing raw material from suppliers. All manufacturing
process in the plant is completed in all or at least one owner presence in the physical plant.
The partners that are there in plant are responsible for all manufacturing pieces of the Gravity
Light.

5.2 Physical Plant
Plant of Star Light is in Green town, Lahore. All manufacturing of star light product is
made in this plant. Plant is constructed in 2012 when the Star Light has started its operations
in Pakistan for first time. Plant was established mainly by borrowing funds through financial
intermediaries. Now, all debt for physical plant has been paid. Now all manufacturing of Star
Light products is done in this plant.

Page 10


5.3 Name of the suppliers
Raw material will be purchase from local supplier, Alkhawaja Wholesale store, Green
town, Lahore. Second supplier is Pak Store Corporation that is also in Green town Lahore.
Third Supplier is Moon Material store that is on G.t road Lahore.

6 OPERATIONAL PLANT
6.1 Distribution Strategy
Our initial distribution strategy will involve a combination of distributor and direct
sales. Relationships with local south Punjab distributors will be established to increase
promotional reach and potential users. The first orders will be available immediately through
direct delivery by our executive team.
Distributors will pay for the inventory up-front, and although this cuts our profit
margins it helps by the start of 2012, distribution will be entirely outsourced to distribution
companies, and direct deliveries from the executive team will cease. The management team
of Starlight will initially use a residential apartment in Lahore to run operations. In Year 2, we
will move to a rented office. Distribution will remain outsourced.

6.2 Warehouse
The main and big warehouse of starlight is green town Lahore. And we sale the product direct
our retailers and distributer from main warehouse.

6.3 Description of company operations
translates this weight into energy, providing 60 minutes of light.

7 MARKETING PLAN
I.

PRODUCT

In marketing, a product is anything that can be offered to a market that might satisfy
a want or need. Until unless the product of the company is not strong in the market it cannot
survive in the longer run.
translates this weight into energy, providing 60 minutes of light. The light strength can be
adjusted, from strong task lighting to a longer-lasting low-level glow, and two terminals on
the front allow it to be used as a generator so it can recharge other devices including radios
and batteries.


Page 11

Full details of the product are given in description of the venture.
BRANDING:

Consumer view a brand name as an important part of the product and branding can
add value to the product. A name, term, sign, symbol or design or a combination of these
intended to identify the goods and services of one seller or group of seller and to differentiate
them from their competitors.
LOGO

Logo is what establishes a brand name in the consumer mind. It is the brands identify,
signature, image and more often it is a logo that makes of breaks a product logo plays a very
effective role to improve the product or brand.

Gravity Light Slogan
The Slogan of Gravity Light is
The low-cost lamp powered by sand and gravity

II.

PRICE

The amounts of money charged for a product or service, or sum of the values that
consumers exchange for the benefits of having or using the product or services. As price gives
us the profit so this P is very important for business price of product should be that which
gives maximum benefit to the company and which gives maximum satisfaction to the
customer.
Following factors Star Light kept in mind while determining the pricing strategy.






Price should be set according to the product demand of public.
Price should be that which gives the company maximum revenue.
Price must be keeping the view of your target market.
Price should justify the worth of product.

The price of Star Light is set considering the needs of lower and middle level people.
So, the price of a piece of Gravity Light lamp is 800 rupees.
This price justifies all the factors mentioned above and suitable for both customers
and company. So, Company will charge 800 rupees for one piece of Gravity Light Lamp.

Page 12


PLACEMENT/DISTRIBUTION CHANNEL
The gravity light uses the following two channels for the distribution of their products.
Online order DISTRIBUTION

Our company designed the online purchasing web site system by which company
receive the order from customer and then deliver the order according the customer
addresses. The time of the delivery depends on the mileage but the delivery would not take
more than 7 working business days to deliver the product.
DIRECT DISTRIBUTION

We are using direct marketing distribution technique to avoid any intermediary
because our product is unique. For this purpose, we will open our company outlet at Firdoss
Market, Lahore, Najam Chowk Sahiwal, University chowk Bahawalpur, Madina Chowk
Hasilpur, City Chowk Bahawalnagar, Abid Market Multan, Nazir market Fasial Abad.Company
will open more stores in different cities soon. Direct selling to customer is planned because
involvement of intermediaries would increase price.
Sun Light
Warehouse
Firdoss Market
Lahore

Nazir market,

Shaheed road,
Islambad

Abid Market,
Multan

Najam chowk,
Sahiwal

Madina chowk
Hasilpur

University chowk
Bahwalpur

Baldia road
Bahawalnagar

Saqib Chowk
Okara

G.C.C chowk
Minchinabad

Atif chowk,
Rawalpindi

G.C.C chowk
Arifwala

Faisal Abad

Retailers


Page 13

Retailers
Starlight will also supply it Gravity light to different retailers of different cities. Supply
would be made to selected retailers only in all cities.

III.

PROMOTIONS

Star Light has allocated 3.6 million rupees on promotion of new product Gravity Light.
For each amount that has to be spent on different category in promotional tools, details are
given with the tool used.
Through pull strategy we will aware the customers about our offering. For this
perspective there are different tactics that we are going to use to promote our offering.
Following are the different tactics that we are going to use:
Social Networking:
We will spread our campaigns on social media like Facebook and twitter. Impact of
social media on youngsters has increased very much.
A. Television:
Today almost every person watches TV daily. Star Light will promote its new product
Gravity Light on different channels. Star Light will give its ads on these channels. An amount
of 3 million rupees is allocated to Television.
-Geo

Geo News, Super and Geo Taiz will be used for advertising. Company will advertise on these
channels on prime time. A maximum of 1 million rupees will be spent on Geo Channels.
-PTV

Ptv sports, home will be used for advertising. Both channels are watched by a large number
of population in the country. Star Light will also spend 1.5 million rupees for PTV channels. On


Page 14

Ptv home, Star Light will advertise on night time. On PTV Sports, Star Light will advertise in
live matches.
-Other Channels:

Star Light will advertise on different channels like Dunya News, Aaj News, Express News, Ary
News etc. Star Light will spend 0.5 million rupees on these channels.
News-Paper
Star Light will also advertise its product on different newspapers. An amount of 0.4 million
will spend on newspaper. Star Light will give its ads on last page of newspaper. Different
Newspaper will be used for advertising such as Daily news, Dawn news, Jang newspaper, Urdu
news etc.
B. Bill Boards
Star Light will spend 0.1 million rupees on bill boards in different cities in Pakistan.
C. Radio
Star Light will spend 0.1 million rupees on different radio channels.

IV.

Product Forecast

In 2014, 20,000 pieces of Gravity light are expected to be sold. That will generate a huge
revenue for the company in first year. Then Sales are expected to increase at 8 % per annum
at least.


Page 15


8 ORGANIZATIONAL PLAN
8.1 Company Ownership
Starlight is owned by the initial founders, M.Irfan, Mueen hussan and M.Aamir, who
are the proposed three executives of the operating entity. The plan was conceived and
developed by these individuals, with the intent to apply their extensive experience and
contacts in the industry to building a successful profitable corporation.

8.2 Identification of partners or principle shareholders
The executive team will retain at least 70% of the equity in the company. Remaining
finance will be provided by obtaining loans from financial institution. There will be no more
shareholders of the company. All the profit of the company will be shared by owners after
paying off debt.

8.3 Management team
8.3.1 Organizational Structure
The Organizational Structure of Replay Starlight is planned to be a simple and
traditional one. All manufacturing operations will report to the COO. All administrative and
finance functions will report to the CFO. Both the COO and CFO will report to the CEO, who
will also have the responsibility for Sales and Marketing.

8.3.2 Management Team
M.irfan President and CEO, has an experience encompassing all aspects of Raw
Material, Venture Development. He founded starlight Company. He also assisted in the launch
of five energy lights manufacturing plants. His clients have included [proprietary and
confidential information removed].
Mr.Faisal, Executive VP and COO, is a graduate engineer with over 20 years’
experience in the post-consumer starlight electronic industry. Mr.Faisal has played a major
role in the design and manufacture of specific equipment as well as playing a key management
role in the design, construction, installation, commissioning and operation of several
independent businesses.


Page 16

Organizational Management Hierarchy Chart Starlight International Limited
Chairman

Chief Executive
Company Secretary

Director
Production

Production
Manager

Production
Officer

Supervisor

Director Marketing

Promotions
Manager

Distribution
Manager

Forecasting
Manager

Supply Chain
Director

Director
Finance

Marketing
Manager

Purchases
Manager

S-Accounts
Manager

Regional
Sales manger

Supply Chain
Department

Assistant
Manager

Area Sales
Manager

HR
Manager

Assistant
Manager

G.M. Internal Audit

Corporate Affairs

Sales Officer


Page 17


9 ASSESSMENT OF THE RISK
a. Weakness of the Product

There are few weakness of the product that can decrease revenues of Star Light. The
weakness that is high in nature is that Gravity Light requires pulling of the weight for 3 seconds
after every 60 minutes of time. This weakness can urge consumer not buy gravity light product
for their use. Other weakness that are low in nature are solar energy savers that requires now
physical efforts at all and also generate light without operating cost.
To overcome this problem, Star Light will improve Gravity light gradually with the
passage of time to compete it with solar energy powers.
b. New Technologies

Today everything is changing very fast. Technology is improving day by day.
Improvement in technology is changing life of every person and as well as companies
revenues. Changing technology requires every firm to adopt new technology as soon as it
available otherwise company will struggle to keep its place in the market.
Keeping this view in mind, Star Light will always seek new technology to improve its
product and to remain solid in front of its competitors
c. Contingency Plan

If Gravity Light failed to gain its name in consumers, Star Light has allocated 3 million
rupees to know causes for failures. If causes will persistent, then Star Light will change its
product of Gravity Light to Solar system light. Solar system light converting will require 10
million rupees and need fewer marketing expenses as solar system is already know to general
public.


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10 FINANCIAL PLAN
10.1 Pro Forma Income Statement
Star Light
Projected Income Statement
For year ending December 2014
Description

Jan

Feb

Mar

Apr

May

Jun

%age of total
yearly sale

1.50%

2%

3.15%

5.85%

7%

8.50%

Sales

240000

320000

504000

936000

1120000

1360000

Less; CGS

90,000

120,000

189000

351600

420000

510000

Gross Profit

150,000

200,000

315,000

584,400

700,000

850,000

Less: Selling & admin exp
Salaries

118000

118000

118000

118000

118000

118000

Telephone exp

11500

12700

22100

22200

21800

31100

Electricity

23500

24000

24500

25500

26000

26500

Stationary

10000

10000

10000

10000

10000

10000

Rent

40000

40000

40000

40000

40000

40000

Marketing exp

300000

300000

300000

300000

300000

300000

Miscellaneous
Expense

15000

15000

14000

16000

14000

22000

Dep. Of Eq &
machinery

5000

5000

5000

5000

5000

5000

Dep. Of furniture

4171

4171

4171

4171

4171

4171

Total Expense

527171

528871

537771

540871

538971

556771

Net profit/Lose

(377,171)

(328,871)

(222,771)

43,529

161,029

293,229


Page 19


Description

Jul

Aug

Sep

Oct

Nov

Dec

%age of total
yearly sale

11%

13%

14%

13%

11%

10%

Sales

1760000

2080000

2240000

2080000

1760000

1598400

Less; CGS

660000

780000

840000

780000

660000

599400

Gross Profit

1,100,000 1,300,000 1,400,000 1,300,000 1,100,000 999,000

Less: Selling & admin exp
Salaries

118000

118000

118000

118000

118000

118000

Telephone exp

31600

31900

41200

42100

37100

36100

Electricity

29500

31500

37500

44500

45500

46500

Stationary

10000

10000

10000

10000

10000

10000

Rent

40000

40000

40000

40000

40000

40000

Marketing exp

300000

300000

300000

300000

300000

300000

Miscellaneous
Expense

23000

290000

40000

40000

30000

32000

Dep. Of Eq &
machinery

5000

5000

5000

5000

5000

5000

Dep. Of furniture

4171

4171

4171

4171

4171

4171

Total Expense

561271

830571

595871

603771

589771

591771

Net profit/Lose

538,729

469,429

804,129

696,229

510,229

407,229


Page 20


10.1.1 Projected Income Statement 2014
Star Light
Projected Income Statement
For year ending December 2014
Description

Amount

Sale

15998400

Less Cost of goods sold

6000000

Gross profit

9998400

Less Selling & admin expenses
Salaries

1416000

Telephone

341400

Electricity

385000

Stationary expense

120000

Rent

480000

Marketing expense

3600000

Other expenses

551,000

Depreciation expense for Eq& Machinery

60,000

Depreciation expense for furniture & fixture

50,052

Total Expenses

7,003,452

Net Profit

2,994,948


Page 21


10.1.2 Projected Income Statement 2014, 2015, 2016

Projected Income statement for the year 2015, 2016, 2017
Description

2015

Sales
17278272
Less; CGS
6480000
Gross Profit
10798272
Less: Selling & admin expense
Salaries
1557600
Telephone expenses
361400
Electricity
395000
Stationary
132000
Rent
504000
Marketing expenses
3600000
Miscellaneous
Expenses
571000
Expense
Dep. Of Eq & machinery
70000
Dep. Of furniture
60052
Total Expense
5,424,052
Net profit/Lose
3,547,220

2016

2017

18660534
6998400
11662134

20153376
7558272
12595104

1713360
371400
405000
142000
529200
3600000

1884696
381400
415000
152000
555660
3600000

671000

871000

80000
70052
5,855,012
4,080,122

95000
85052
6,432,808
4,555,296

Note; we assumed that the sale of this business will increase 8% in future every year. Salaries
will increase by 10 % and Rent by 5% after 1 years. While marketing expenses will remain
same.


Page 22


10.2 Pro forma Balance Sheet

Star Light
Projected Balance Sheet 2014
Assets
Current Assets
Cash
Merchandize inventory
Prepaid rent
Prepaid advertisement
Fixed assets
Furniture & fixture
Equipment & machines
Total

Amount

Liabilities

Amount

5,500,000
1,500,000
2,000,000
2,500,000

Owner Equity
Notes Payable

35,000,000
15,000,000

8,500,000
30,000,000
50,000,000

Total

50,000,000

10.3 Break Even Analysis:
For calculating break even analysis we required one unit
Our one unit include the following product that sale on daily basis.

Calculate per unit price
Basic parts used in the product

Unit price

15 watt energy panel

150

Energy Gears

50

Pins and wires

40

Covers

60

Per unit price

300


Page 23


Fixed Cost
Descriptions

Amount

annually

Salaries

118000

1416000

Stationary

10000

120000

Rent

40000

480000

Depreciation of Equipment

5000

60000

Depreciation of Furniture

4171

50052
5,726,052

Total Fixed cost annually

Total Fixed cost annually

=

5,726,052

Unit Price

=

800

Unit cost

=

300

Break even sale (Units)

= Fixed cost/unit price – variable cost per unit
= 2126052/800-300
=11452 units annually
=955 units monthly

We must sell at least 11452 units annually in order to break even, including fixed cost
annually.


Page 24


10.4 Source and application of funds
Source of Funds

Amount

Application of Funds

Amount

Owner A Equity

11,700,000

Cash

5,500,000

Owner B Equity

11,700,000

Merchandize
inventory

1,500,000

Owner C Equity

11,700,000

Prepaid rent

2,000,000

Notes Payable

15,000,000

Prepaid advertisement

2,500,000

Furniture & fixture

8500000

Equipment &
machines

30,000,000

Total

50,000,000

Total

50,000,000


Page 25

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