Business plan of gravity light

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

Mueen Hasan Entrepreneurship

i

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)

ii

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

iii

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

iv

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.

v

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.”

BUSINESS PLAN OF GRAVITY LIGHT

THE ISLAMIA UNIVERSITY OF BAHAWALPUR, BAHAWALNAGAR CAMPUS

Page 1

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.

http://www.starlight.com/



Page 2

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.



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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.



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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 low-

cost 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.).



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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 11

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.



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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.



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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,

Faisal Abad

Najam chowk,

Sahiwal

Shaheed road,

Islambad

Madina chowk

Hasilpur

University chowk

Bahwalpur

Abid Market,

Multan

Baldia road

Bahawalnagar

Saqib Chowk

Okara

G.C.C chowk

Minchinabad

Atif chowk,

Rawalpindi G.C.C chowk

Arifwala

Retailers



Page 14

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



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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.



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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 17

Organizational Management Hierarchy Chart Starlight International Limited

Chairman

Company Secretary

Director

Finance

Supply Chain

Director

Director Marketing

Purchases

Manager

S-Accounts

Manager

HR

Manager

Assistant

Manager

Assistant

Manager

Distribution

Manager

Area Sales

Manager

Promotions

Manager

Regional

Sales manger

Forecasting

Manager

Supply Chain

Department

Corporate Affairs

Sales Officer

Chief Executive

G.M. Internal Audit

Marketing

Manager

Director

Production

Production

Manager

Production

Officer

Supervisor



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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 20

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 21

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 22

10.1.2 Projected Income Statement 2014, 2015, 2016

Projected Income statement for the year 2015, 2016, 2017

Description 2015 2016 2017

Sales 17278272 18660534 20153376

Less; CGS 6480000 6998400 7558272

Gross Profit 10798272 11662134 12595104

Less: Selling & admin expense

Salaries 1557600 1713360 1884696

Telephone expenses 361400 371400 381400

Electricity 395000 405000 415000

Stationary 132000 142000 152000

Rent 504000 529200 555660

Marketing expenses 3600000 3600000 3600000

Miscellaneous Expenses 571000 671000 871000

Expense

Dep. Of Eq & machinery 70000 80000 95000

Dep. Of furniture 60052 70052 85052

Total Expense 5,424,052 5,855,012 6,432,808

Net profit/Lose 3,547,220 4,080,122 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 23

10.2 Pro forma Balance Sheet

Star Light

Projected Balance Sheet 2014

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

Assets Amount Liabilities Amount

Current Assets

Cash 5,500,000

Merchandize inventory 1,500,000

Prepaid rent 2,000,000 Owner Equity 35,000,000

Prepaid advertisement 2,500,000 Notes Payable 15,000,000

Fixed assets

Furniture & fixture 8,500,000

Equipment & machines 30,000,000

Total 50,000,000 Total 50,000,000



Page 24

Fixed Cost

Descriptions Amount annually

Salaries 118000 1416000

Stationary

10000

120000

Rent 40000 480000

Depreciation of Equipment 5000 60000

Depreciation of Furniture 4171 50052

Total Fixed cost annually 5,726,052

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 25

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