Everest Dairy Private Limited

Business Development Plan

Complete Business Development Plan for a
dairy project

Submitted to:

Ace Institute of Management

Pokhara University

Submitted by:
Sharmila Rai
EMBA Spring 2017
15 March, 2019
 DECLARATION

I hereby declare that the Business Development Plant has been prepared as a per the
course of Executive MBA degree from Pokhara University. This is an academic plan that
is submitted to Ace Institute of Management. Dairy is totally a new business venture in
Lukla area. So, there are no any companies in that region which makes us with no
detailed study and demand forecasting of the dairy.

The businessmen buy powder milk from Kathmandu thus there is not ample research and
statistical data provided by the government. So, I have less data to present here.

...........................................
Sharmila Rai
EMBA Spring 2017
Ace Institute of Management

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 ACKNOWLEDGEMENT

It would not have been possible without the support and help of my academic supervisors
and other individuals directly or indirectly involved in this plan. I would like to extend
my sincere thanks to all of them.

I wish to express my deep gratitude to our project guide, Dr. Pradeep Rajopadhya, Mr.
Sohan Babu Khatri and Mr. Rabindra Silwal for guiding me throughout the process of
this Business Development Plan. I sincerely acknowledge them for their constant
supervision and for giving me their valuable guidance, critical reviews and comments for
helping me to complete the plan successfully.

I would like to thank and give appreciation to my colleagues of Ace Institute of

Management for their kind support and cooperation. And I would also extend my
gratitude to Mr. Fahim Shah and Mr. Ajab Lal Yadav for giving me a clear idea on the
Dairy business in Nepal. I would also like to thank C.A/C.F.A Mrs. Apsara Upreti for
financial planning, Mr. Raj Giri and my family members for their support

...........................................
Sharmila Rai
EMBA Spring 2017

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 TABLE OF CONTENT

Content Page No.

DECLARATION ................................................................................................................. I
ACKNOWLEDGEMENT .................................................................................................. II
TABLE OF CONTENT ..................................................................................................... III
SAILENT FEATURES OF BUSINESS ............................................................................VI
EXECUTIVE SUMMARY ............................................................................................ VIII
LIST OF ABBREVIATION ............................................................................................ IIX
CHAPTER-I......................................................................................................................... 1
INTRODUCTION ............................................................................................................... 1
1.1. Background ..................................................................................... 1
1.2. Nature of Business .......................................................................... 2
1.3. Opportunities / Scope of Business .................................................. 3
1.4. Vision ............................................................................................. 3
1.5. Mission ......................................................................................... 20
1.6. Goals & Objectives of Company .................................................. 20
1.7. Values ........................................................................................... 20
1.8. Business Model Canvas ................................................................ 21
1.8.1. Customer Segmentation ............................................................. 21
1.8.2. Value Proposition ...................................................................... 21
1.8.3. Channels .................................................................................... 22
1.8.4. Customer Relationship .............................................................. 22
1.8.5. Revenue Stream ......................................................................... 22
1.8.6. Key Activities ............................................................................ 22
1.8.7. Key Resources ........................................................................... 23
1.8.8. Key Partners .............................................................................. 23
1.8.9. Cost Structure ............................................................................ 23
1.9. VALUE PROPOSITION CANVAS ............................................ 23
1.9.1. Customer Side ........................................................................... 23
CHAPTER 2 ...................................................................................................................... 25
PRODUCT PORTFOLIO .................................................................................................. 25
2.1. Product Description ...................................................................... 25
2.2. Benefits to Consumers .................................................................. 25
2.3. Product Life Cycle ........................................................................ 26
1.3.1. Introduction Stage...................................................................... 26
1.3.2. Growth Stage ............................................................................. 26
1.3.3. Maturity Stage ........................................................................... 26

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 1.3.4. Decline Stage ............................................................................. 26
1.3.5. Costing and Pricing Basis .......................................................... 26
1.3.6. Quality and Assurance ............................................................... 27
2.4. Sourcing of raw materials and supplies ........................................ 27
2.5. Research and Development Effort ................................................ 27
CHAPTER 3 ...................................................................................................................... 28
INDUSTRY AND MARKET ANALYSIS ....................................................................... 28
3.1. Industry Structure and Market Characteristics ............................. 28
3.2. Environmental Analysis ............................................................... 28
3.3. PESTLE Factors ........................................................................... 29
3.4. PORTERS Five Forces Model ..................................................... 30
3.5. SWOT Analysis of Everest Dairy ................................................ 32
3.6. Business Strategy Diamond .......................................................... 33
1. ARENAS .......................................................................................... 33
2. VEHICLES....................................................................................... 33
3. DIFFERENTIATORS ...................................................................... 33
4. STAGING ........................................................................................ 33
5. ECONOMIC VALUE ...................................................................... 33
CHAPTER 4 ...................................................................................................................... 34
MARKETING PLAN ........................................................................................................ 34
4.1. Marketing Objectives and Goals .................................................. 34
4.2. Consumer Analysis ....................................................................... 34
4.3. Positioning Strategy...................................................................... 35
4.4. Positioning Statement ................................................................... 35
4.5. Branding Strategy ......................................................................... 36
A. Brand Name...................................................................................... 36
B. Brand Logo ....................................................................................... 36
C. Brand Mantra.................................................................................... 36
4.6. Competitive Advantage ................................................................ 37
4.7. Marketing Strategy ....................................................................... 37
4.8. Marketing Mix .............................................................................. 38
4.9. Sales Strategies, Management and Techniques ............................ 39
CHAPTER-V ..................................................................................................................... 40
PRODUCT OPERATION PLAN ...................................................................................... 40
5.1. Description of product .................................................................. 40
5.2. Process Strategy and Process Design ........................................... 40
5.3. PROCESS DESIGN ..................................................................... 41
5.3.1. Raw Materials ............................................................................ 42
5.3.2. Inventory and Supply Chain ...................................................... 42
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 5.3.3. Production.................................................................................. 42
5.3.4. Packaging .................................................................................. 43
5.3.5. Sales ........................................................................................... 43
5.3.6. Capacity need and Aggregate Planning ..................................... 43
5.4. Location ........................................................................................ 44
5.5. Layout ........................................................................................... 46
5.6. Quality .......................................................................................... 48
5.7. Supply Chain ................................................................................ 48
5.8. Inventory Management ................................................................. 49
CHAPTER-VI .................................................................................................................... 50
HUMAN RESOURCE PLANNING ................................................................................. 50
6.1. Stakeholder Analysis .................................................................... 50
6.2. Organization Structure.................................................................. 50
6.3. Departmentalization and their core functions:.............................. 52
6.4. Job responsibilities of Key Positions and Employees .................. 53
6.5. Human Resource Management Aspects ....................................... 54
6.6. Reporting/Communication Structure:........................................... 56
CHAPTER-VII .................................................................................................................. 57
FINANCIAL PLAN........................................................................................................... 57
7.1. Financial Objectives ..................................................................... 57
7.2. Projected Income Statement ......................................................... 58
7.3. Projected Balance sheet ................................................................ 60
7.4. Cash flow Statement ..................................................................... 62
7.5. Schedules ...................................................................................... 64
CHAPTER-VIII ................................................................................................................. 72
RISK AND CONTINGENCY PLAN ............................................................................... 72
8.1. Risk Contingency Plan ................................................................. 72
8.2. Exit Plan ....................................................................................... 72
REFERENCES .................................................................................................................. 73
TOOLS AND MACHINARY ........................................................................................... 74

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 SAILENT FEATURES OF BUSINESS
Name of the Company Everest Dairy Private Limited

Name of the Venture Dairy

Name of the Product Everest Dair

Tag line of the Product Direct from the Himalayas

Nature of Business Private Limited

Legal Status of Business Not yet Registered

Address of Office Lukla, Solukhumbu

Contact Person Miss. Sharmila Rai

Contact Number 00977-9862975592

Email Address [email protected]

Virtual Address www.everestdairy.com.np (Yet to go online)

Innovative Products Milk

Hotels and Restaurants

Target Customers Local People

Coffee Shop

Lukla

Chaurikharka

Phakding

Major Market Namche Bazaar

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Working Schedules Annual Working Days as per the Labor Act,
2048.

Project Timeline 7 Months (Land Purchase to Commercial

Production)

Capacity Utilization 1000 liters per day for 1st year

Total Investment NPR 10,000,000.00

Investment through Equity NPR 10,000,000.00

Skilled- 5

Human Resource Semi Skilled- 2

Miss. Sharmila Rai

Mr. Suren Rai

Mr. Fahim Shah

Shareholders- 5 People Ms. Urmila Rai

Mr. Abishek Tamrakar

Curd

Upcoming Product Line Cheese

Ice cream

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 EXECUTIVE SUMMARY

Milk and dairy products are the highly nutrient food. It involves high level of protein and
calcium. These are the necessity food supplement to one’s daily diet. It is consumed
everyday by an individual but in Lukla people are not been able to have this healthy drink
on their regular diet. They depend on powder milk which has low nutrient factors than fresh
fluid milk. Lukla being the gateway of Everest for people all over the world visit but those
foreigners are bound to drink coffee or any milk mixed food cuisine with powder milk.

With the inflow of 900,000 tourists last year, Lukla alone had 100,000 tourists inflow.
There is a huge market opportunity size. Everest dairy is trying to provide fresh milk to
all the foreign tourist and domestic tourist. Since we are the only opening a factory floor
production house in Lukla to cater this opportunity size, there are lots of unseen
difficulties and challenges to make the factory work. We have planned to accept to
challenge with the high risk factor. Our team partners from various field will certainly co-
ordinate and be a competitive advantage to our company.

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 LIST OF ABBREVIATION

GoN: Government of Nepal

FNCCI: Federation of Nepalese Chamber of Commerce and Industry

Kw: Kilo Watt

MW: Mega Watt

PPA: Power Purchase Agreement

NEA: Nepal Electricity Authority

IPPAN: Independent Power Producers’ Association- Nepal

Gwh: Giga Watt Hour

PV: Photovoltaic

IRR: Internal Rate of Return

GDP: Gross Domestic Product

Mwh: Mega Watt Hour

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 CHAPTER-I
INTRODUCTION

1.1. Background

In the year 1990s my parents moved to Lukla, Solukhumbu. Since at that time tourism
has just hit that sector they saw an opportunity so they started their own business. First
they started with a small grocery store and after many years of hard work they were able
to become the largest wholesaler in Khumbu area. They sold almost everything including
grocery items and other hardware products. Since there is no road transportation facility
till date, every people there in Khumbu area needs to depend upon air cargo. With the
tremendously difficult terrain and unpredictable weather condition, the deadliest Lukla
Airport is the only way to get human and every commodity there. Dealing with all these
obstacles since 1990 our family business has been able to retain a proper market out reach
but the one question struck my mind, “how can I increase my family business portfolio.”
Looking at all the stuffs that we sell, I found we didn’t have milk and other dairy
products. The reason why we were not able to sell these dairy products is because of its
perishable character which we could not store it in our inventory for longer period of
time. Meanwhile, there were powdered milk available in the market but powdered milk is
not as fresh as fresh milk.

Drinking coffee, tea and other continental food demands huge quantity of dairy product.
The demand for the dairy product is so high that people there pay thrice as higher than
that in Kathmandu. This hit my mind.

Still the tradition of packet milk was on use because locals had no option. Every family in
Khumbu areas are involved in some kind of business related to tourism or hotels so
farming and animal husbandry is almost zero. Khumbu being one of the hottest tourism
spot there is a huge market for milk and dairy products. During peak season there are high
demand for milk, cheese, butter and yogurt.

Milk and dairy products are highly nutrient food as these are packed with high source of
protein, calcium and other nutrients. The morning in ever houses and locality starts with

1
the sip of milk or tea. Dairy products have become a necessity of an individual. But since
locals in Khumbu are deprived of fresh drinking milk, children, adolescent and elderly
people are missing essential nutrients in their diet. Especially when the cargo flights are
unable to deliver the packed powder milk due to weather problem people are forced to
drink tea without milk or even if milk is available, they are forced to purchase the milk at
thrice the price.

There are issues related to supplying milk and dairy products in Khumbu and me being
the local of Khumbu, I have faced the problem myself so I thought of coming up with a
solution. I discussed about it with my friends and one of my elder brother as they have
wide knowledge on starting a business. And through our discussion we came up with a
business idea of starting our own dairy company in Lukla where we will be producing
milk from powder milk by pasteurizing it through dairy equipped technologies.

1.2. Nature of Business

Everest dairy is a small-scale milk plant established under Everest Dairy Pvt. Ltd. that is
based on a Business to Consumer Model. The team at Everest Dairy is working on a
strategy that turns powder milk in to fresh liquid milk by using scientific method. We
use plants to process the raw milk from powder milk to extend the marketable life of
milk. Heat treatment is used to ensure the safety of milk for human consumption and to
lengthen its shelf- life.

Since it is the highly specialized field, it involves production, procurement, storage and
distribution of dairy products. The powder milk will be processed in to plants and
pasteurized by injecting additional fats in to milk. Dairy scientists will be employed to
cover the production aspect. In the initial stage the team have decided to start the
production with very small scale of about 1000 liter per day with the use of 500 liters
capacity machine. The machine will be run for 2 hours daily.

The company will produce milk and other dairy product items such as yogurt, butter, ice
cream. We will sell the products to whole seller and on the other side we will also
establish our own outlet where we will be focusing more on the sales of ice cream. Our
company would be the first dairy business in Solukhumbu and the company team has
decided to work hard to make this venture a success by producing a quality product and

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cater the needs of customers. For this specified team will be assigned with particular tasks
to manage the logistics, manpower and finances.

1.3. Opportunities / Scope of Business

In earlier days the demand for milk used to be fulfilled by raising the cows/buffalos by
people themselves. The milk producers used to sell milk and curd by moving door to
door. But today Solukhumbu being the home of Mount Everest, 85% of the population is
involved in tourism business. People are busy in two occupations either tourism or
business which has decreased the agro business and animal husbandry. The supply and
consumption of yak and cow milk have vanished in these many years.

There is a high demand for milk and other dairy products in Solukhumbu. Due to cold
weather in Solukhumbu the people have a habitant of drinking hot beverages multiple
times a day. There is a local Sherpa drink called (Su-chiya) which requires a good
proportion of milk. There are more than 50 coffee shops and bakeries in Lukla and on the
way to Namche. Mainly during peak season there is a huge market demand for milk,
yogurt, cheese and butter. Trekkers demand for ice cream as well. In order to cater their
needs coffee owners and retailers directly order from Kathmandu through air cargo as this
is the only option available till date.

A coffee lover would obviously prefer a cup of coffee with fluid milk rather than
powdered milk. A mother would love to provide her children and family natural liquid
milk rather than powdered milk. Likewise an elderly would enjoy a cup of liquid milk
that has a rich taste to it. But locals have no option. So we are here to cater their needs for
fluid milk. We will sell the dairy products to whole sellers and also establish our own
outlets where we can sell milk products directly to our consumers.

1.4. Vision

Everest Dairy envisions being the first agro dairy business in Solukhumbu. Our vision is
to be a company that produces and sell milk and milk products in the Solukhumbu area
while offering our employees a safe and meaningful place to work.

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1.5. Mission

Our mission is to produce quality milk products and cater the needs of our target
customers. We want to introduce fresh liquid milk to the people of Solukhumbu at
reasonable price. We aim at taking care of our consumers by providing them fresh liquid
milk and milk products at reasonable price. We aim for financial success through
marketing quality milk and milk products.

1.6. Goals & Objectives of Company

Everest Dairy has been established to achieve the following goals and objectives:

 To produce fresh hygienic milk and milk products at a small quantity in the initial stage.

 To sell milk and milk products to whole seller as well as in our own outlets.

 To create a value addition in the lives of targeted consumers through supply of variety of
milk and other dairy products in coming year.

 To work for a constant improvement and change in operation and marketing.

 To grow the business and increase the production scale.

1.7. Values

At the core, the team of Everest Dairy Pvt. Ltd. constitutes of team member who are
enthusiast and energetic, which helps us to generate new ideas and turn those ideas in a
feasible business venture.

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INTERGRITY LEADERSHIP INNOVATION &
CHANGE
Take pride in everything that Create Vision, Inspire others
is fair, honest and and advance the priorities and Encourage Innovation,
knowledgeable and build mission of the organization. adapt to change and willing
trust. to take risk.

ENVIROMENT SOCIAL RESPONSIBILITY TEAM WORK

FRIENDLY
We aim at making balance Co-operate and work
A commitment to profit making activities with together for the common
sustainability and to acting in activities that benefit society. good of the consumers and
an environmentally friendly organization’s mission.
manner.

1.8. Business Model Canvas

1.8.1. Customer Segmentation

– The customer of Lukla, Chaurikharka, Phakding, Namche will be targeted.

– Customers of all ages are targeted for sell of milk and milk products.

– Target coffee shops, restaurants and hotels.

– The company aims to gain loyalty from its customers by providing quality
products.

1.8.2. Value Proposition

 Providing quality milk that would build customer loyalty.

 Providing milk and at reasonable rates.

 The products will have more storing date than usual milk products.

 It enables the customer to focus on their health and nutritional diet.

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1.8.3. Channels

 Everest Dairy will supply the milk grocery stores, coffee shops.

 Everest Dairy will have its own retail outlet in the main market.

 Facility for home delivery shall also be made available for bulk customers
with added delivery charges.

1.8.4. Customer Relationship

 Building a Point of Difference by providing quality products to create brand

equity and brand loyalty with customers.

 Using company’s store to note down customer feedback and complains to help
us improve our product line.

1.8.5. Revenue Stream

 By selling milk to retailer and directly to the consumers.

 By building customer loyalty towards our products making them buy our
product again and again.

1.8.6. Key Activities

 Bulk quantity of reconstituted milk, necessary fats, preservatives and other

raw materials will be transported through air cargo.

 Diesel will be brought via animal carriers.

 The required inventories will be stocked before hand with the use of inventory
tracking system.

 Building healthy relationship with in the industry.

 Marketing of our product.

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1.8.7. Key Resources

 Machinery, Tools and Equipment, Land and Building etc.

 Human Resources – labors 2 people, marketing 1 person and operations and

management 1 person

1.8.8. Key Partners

 The reconstituted milk will be bought from local market or if necessary it can
be imported from India.

 Grocery whole-sellers in Kathmandu for raw material.

 Departmental stores and grocery stores in Solukhumbu.

 Coffee shops and restaurants in Solukhumbu area.

1.8.9. Cost Structure

 Administrative Cost: Marketing personnel salary and rent expenses.

 Operational Cost: These are cost required to operate the daily activities of the
factory and will mainly include- raw material costs, electricity, salaries, labor
wages, and delivery Cost etc.

1.9. VALUE PROPOSITION CANVAS

1.9.1. Customer Side

 Customers Job

 Availability of the product

 Quality product

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 Customers Gains

 Milk at reasonable price

 Long Lasting storage

 Promotes healthy lifestyle and nutritional diet

 Better taste and availability of milk products.

 Customers Pains

 High Price

 Lack of Customer Support

 Value Proposition

 Product & Services

 Fluid milk production.

 Gain Creators

 Use of fresh liquid milk instead of powder milk.

 More storage date.

 Regular availability of milk at more stable price.

 Use of high quality raw materials.

 Pain Relievers

 Monitoring the operation cost that will help us reduce our manufacturing cost.

 Our product shall be made available through grocery stores, departmental stores and our
own retail outlet.

 Customer feedback will be continuously monitored for continuous improvement and

development.

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 CHAPTER 2

PRODUCT PORTFOLIO

2.1. Product Description

At the beginning we will be focusing only on producing milk. The reconstituted milk will
be converted in to fluid milk with the use of systematic procedures by adding extra fats
for better taste and protein. The processed fluid milk will be fresh to drink and will have a
delicious taste. Pasteurization process will prepare the milk with nutrients factors.

2.2. Benefits to Consumers

Everest Dairy will be the first dairy industry to be established in Solukhumbu. The core
benefit of our milk is as comparable as to other but the core benefit that the people of
Lukla get apart from our quality is the availability. The availability is not only about milk
but it is about the fresh fluid milk for the first time.

Prior to our idea business people used to buy powder milk but due to flight problems a
single buyer had to invest a huge amount of money for the inventory of the product.
Stocking those inventories would burn the capital of the business as well as increase the
inventory cost of the shop. Therefore our products availability would make higher
earnings to those retailers who used to purchase high quantity of powdered milk because
of seasonal air flight problems.

Due to the harsh weather those inventories maintained by the shopkeepers would gets
spoiled which would further increase the loss of the shop. Lots of coffees shop at Lukla
and Namche Bazaar left the place due to fluid milk. Some coffee shops even tried to get
fluid milk from Kathmandu to Lukla via airplane but they failed.

In conclusion, our company is trying to solve all these problems faced by shopkeepers,
restaurants, hotels and other consumers. Thus regular availability at reasonable price is
the main benefit to our customers. Comparably our product price is cheaper than that of
the one which people used to buy in Kathmandu and send via flight which benefits the
consumers high return.

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2.3. Product Life Cycle

1.3.1. Introduction Stage

In the initial stage, we will be focusing on the production and sales of milk only. The
team is planning to set out its own dairy outlet and also sell it to the whole sellers and
other grocery stores in various location of targeted market segment of only Lukla area.

1.3.2. Growth Stage

Since the company is planning to launch its product every year in the targeted segment, it
will take 1 year for the company to reach the total targeted segment of its consumers.
Hence, the company expects the growth stage of Lukla to start in the second year of its
operation when it would be launching milk products like curd, cheese and ice cream
gradually. The milk will be bottled and supplied to other areas of Khumbu region.

1.3.3. Maturity Stage

We will be attaining maturity stage when we have two things. One is when the market has
intense competition, which we don’t see in near future and the second one is when we
produce our products where we can out bit the demand.

1.3.4. Decline Stage

Since we are the only the one in the market, we don’t have a clear picture of decline
stage.

1.3.5. Costing and Pricing Basis

The cost of our company is mainly on reconstituted milk powder, diesel, water and
electricity with its individual transportation cost that is pretty high. This makes our
product cost higher than that of any other urban areas. Therefore our costing and pricing
has a slightly different character than others. If we will be the only dairy industry in
Lukla, we can have a monopoly pricing but that does not mean we charge extra higher
premium price. Our main strategy is to provide our consumers our product at a price
lower than they purchase and send to Lukla.

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1.3.6. Quality and Assurance

The “Code of Practice for Dairy Industry” approved by the GoN in 2061 (2005) will be
followed. The main objective of the codes are to improve the quality of processed milk
and milk products by considering consumers’ health, and secure sustaining long future of
the dairy industry. Phosphatase test is used on pasteurized milk and acidity development
is done on ultra high temperature milk to improve quality attribute of milk. Since milk
contains 87% of water it is prone to adulteration hence it requires quality control. Our
factory floor will be neat and clean with the standard to meet quality assurance. The
employees will be trained with hygiene.

We will go as per the formula that will maintain high quality and in order to make profit
we will not be practicing wrongful methods. For this our product will be tested from the
Government of Nepal and also get certified from the related agencies.

2.4. Sourcing of raw materials and supplies

The main raw materials that we need are reconstituted milk. For this, our company will
have a contractual agreement with DDC Nepal and Sujal Dairy. For other raw materials
and supplies we buy it from local market. Whenever there is scarcity of milk powder, we
will get it from the importer of Indian milk powder like Nova milk, Goodday milk etc.
For plastic bottle, bottle labels, we buy it from the direct manufacturer.

2.5. Research and Development Effort

Today, innovation is the synonymous of excellence. Innovation drives the world an inch
ahead. At Everest Dairy, we understand how much difference innovation could make to
the world. The finest people in the team lead our Research and Development Wing at
Everest Dairy and we strive to achieve innovation and development by applying new
techniques to expand our existing market.

Everest Dairy will be continuously looking for new product development and re-
engineering the present product. Similarly the technicians will be thriving for obtaining
cost benefit production methods without deteriorating the quality.

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 CHAPTER 3

INDUSTRY AND MARKET ANALYSIS

3.1. Industry Structure and Market Characteristics

Everest Dairy is a small-sized business firm in the laps of Mount Everest adopting a
business to consumer model. It is currently working on a strategy to convert reconstituted
milk into fresh fluid milk, so that the people of Lukla and the tourist can enjoy the fresh
milk and milk products. Running a business in such high altitude is a tough task due to its
harsh climatic conditions, lack of road transportation. Since the only means of
transportation in through air, it is a challenging task. Lukla is one of the most sought after
destination for tourism and the demand of milk and milk products certainly is high, so our
team will focus on providing tourist with fresh fluid milk and other products. Since this
would be the first company in this area we certainly will have the advantage of sole
player in the market.

As Solukhumbu witnesses’ cold temperature the demand for hot beverages is high for the
locals as well as the tourist, but the shops here are relying on milk powder rather than
liquid one. We will be producing fresh fluid milk in the first year and by the second year
we will be focusing on producing other dairy products namely, yoghurt, cheese and ice
cream. Establishing a plant here in Lukla not only would be beneficial for the consumers,
but it will also be a boon for the society as it will generate employment opportunity and
improve the living standard of the people.

3.2. Environmental Analysis

PESTLE Analysis is one of the most widely used strategic tools used to assess the
external environmental factors affecting the business. These analyses will help to align
strategies with company’s environment. It helps an organization determine the risk and
other opportunity associated with the market that helps in the smooth running of a
business.

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3.3. PESTLE Factors

A. Political Factors

Running a business in Nepal is a challenging affair and comes with lots of hassle, as the
country has unstable government that affects the smooth running of the business.
Basically the government of a country has a vital role in the sustainability of an
organization, such as its policy, foreign trade policy, tax policy and other legal issues

Strikes, blockade, shortages of raw materials are some of the major issues that hinder the
successful operation of the business in Nepal.

B. Economical Factor

Looking at a top holiday spot for trekkers, hikers and mountaineers, Lukla has been a
heaven. Economically Lukla is very viable for business but viability comes with lots and
lots of challenges.

C. Socio-Culture Factor

As the number of people leaving for foreign employment, there certainly have been some
changes in the buying and consuming trend of the people. These factors include the
demographic of the community, buying habits and behavior of the consumer. During
season the population of Solukhumbu increases thrice the number due to the entry of
tourist and people from other region for employment so the various people have different
need requirement.

D. Technological Factor

The dairy industry largely relies on use of technology and machineries, and the main
objective of this organization is to transform milk powder into fresh liquid milk. With the
use of new technological advancement the company aims provide milk at relatively low
cost and ensure good hygiene to the consumer.

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E. Environmental Factor

Environment has always been key to all companies all over the world. The
environmentalists are trying to make the environment healthy. Lukla being the highly
tourist area, the pollution is also increasing at the same level. Keeping these things in
mind, Everest Dairy is planning to go for environmental friendly production unit.

F. Legal Factor

Legal factor always plays an important role in any industry like our which is related to
food and beverages, it is more monitored and supervised sector. Differences in legal
terms and standards have direct impact to the company. Therefore we should be more
concerned about the compliances regarding quality and standards.

3.4. PORTERS Five Forces Model

A. Rivalry among Competitors

Everest diary would be the first of its kind to be operated in Khumbu region therefore; we
certainly will have the competitive advantage in the market. Being the first such
company, for few years it can act as a sole provider. Hence, the company aims to become
very considerate in the pricing strategy while insuring to maintain good quality of milk
and other related products.

B. Bargaining Power of Suppliers

Here at Everest dairy, constant supply of milk powder is crucial for the running of the
company. It relies heavily on air cargo to procure the packaged milk powder, so
maintaining good relation with the suppliers will ensure in the smooth running of the
daily business operation. Due to unpredictable weather large quantity of milk powder has
to be ordered and be safely stored as backup in case of any contingencies.

C. Threat of New Entrants

Business industry is a very challenging and tough to sustain, there is always some risk of
potential competitors in the market. At present, there is no threat of new entrants because
Everest dairy is the first kind of business

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D. Threat of Substitutes

Powder milk is easily available in the market and which is quite accessible in this region
posse’s great threat for the company, as they have already marked their presence in the
market. Now the company has to focus mainly on providing the milk product at
comparatively lower cost and eliminate the threat of the substitute products.

E. Bargaining Power of Buyers

The demand for milk and its products is very high in this area due to cold weather.
Consuming hot beverage is one way to keep warm. Since Everest dairy is planning to
enter the market with the hopes of providing fresh liquid milk to the people, it certainly
has to make some plans regarding the pricing strategy. So the company has to keep the
price of liquid milk lower than that of packaged powder in order to attract customers and
cater their demand.

F. Market and Competitor Analysis

Everest Dairy carries the tag of first mover in this market segment using this kind of
formulation in Nepal. As far as market is concerned, it is like selling a bunch of people
who has willingness and ability to buy things they need but unavailability has forbidden
them to spend. On the other side, Everest Dairy will be the only fluid milk supplier all
over Khumbu region. There are certain business, shopkeepers, hotels who buys fluid milk
from Kathmandu but they are not our competitors because when we will have our own
production house in Lukla, the entire region will be our clients.

G. Consumer and Demand Analysis

Visit Nepal 2020 is targeting to accommodate 25 lakhs tourists that year. When we look
at the past history around 10% of total tourist inflow in a year visit Everest and Lukla is
the gateway to Everest. If we take the past data as reference, in 2020, Everest will
welcome around 2.5 lakhs tourist. This directly capitalizes each and every sector of
Everest region and Everest Dairy is not an exception.

The current population of Lukla is around 1000 similarly, there are more than 5000
individuals residing on Everest region apart from Lukla. With a simple analysis out of all
these people if 10% of the population consume our products, the daily demand would be

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around 500 liters. The tourist inflow and outflow per day is around 800 and Lukla is also
the place where a single visitor steps two times. This indicates that the demand is around
1000 liters a day.

For visit Nepal 2020, our company goes to the second year and we forecast the demand to
be 320,000 liters. We have predicted the demand to be 450,000 liters and 500,000 liters in
the fourth year and fifth year respectively.

3.5. SWOT Analysis of Everest Dairy

1. Strength

a. Quality Product

b. Skilled and Committed Team

c. Simple production technique

d. Healthy and nutritional

e. Help conserving environment

2. Weakness

a. High Price

b. Highly Labor Oriented

c. Lack of transportation

3. Opportunities

a. First Mover Advantage

b. Huge unmet local market demand.

c. Scope of Innovation and Research and Development.

4. Threat

a. Powdered milk

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 b. Easy entry of competitors due to low

c. Capital investment.

3.6. Business Strategy Diamond

1. ARENAS

a. Providing quality milk.

b. Projects that helps to promote health of locals.

c. Targeting local consumers as well as tourist consumers.

2. VEHICLES

a. A committed and energetic team that envisions to help the world by its innovation.

b. Strategic Partnership with INGOs and NGOs relating to dairy.

3. DIFFERENTIATORS

a. Provide quality products that will make our consumer experience new dimension of the
products.

b. Innovative new and current product line on the basis of consumer surveys conducted on a
frequent basis.

4. STAGING

a. Building a core team that is dedicated towards providing quality milk and milk products.

b. Generating awareness in our targeted consumer segment, using extensive marketing tools.

5. ECONOMIC VALUE

a. Providing quality product comes by charging premium price.

b. On the long run economies of scale shall reduce the cost increasing the profit margin
ratio.

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 CHAPTER 4

MARKETING PLAN

4.1. Marketing Objectives and Goals

A marketing plan is a road map that a company uses to accomplish a focused marketing
goal. In Solukhumbu the local consumers are concerned about certain milk powder
brands that they have been consuming for so long like “Everyday milk powder and New
Zealand milk powder”. As per a survey conducted by the company it reveals that around
40,000 kilos of milk powder is sold. Therefore the company aims to cater this demand for
which our main marketing objective and goal is to make the restaurants, hotels and retail
shops to use our products. The major marketing objectives of our company are:

 Being the first company to launch this kind of product we plan to identify our potential
consumers and make them aware about our product.

 Build premium customer base in Lukla.

 To research, develop and introduce new product line to the existing consumers.

 To develop a team to analyze and assess the consumer experience so that the products can
be more personalized.

 Building a Point of Difference by providing quality products to create brand equity and
brand loyalty with customers.

4.2. Consumer Analysis

Consumer analysis is an important and necessary part of market research as it provides an

organization an opportunity to take proper steps to maximize consumer satisfaction and
come up with solution to solve their problems. The market survey of the consumers of the
target area gave us visibility about their demand patterns. Various patterns of daily usage,
seasonal usage, purchase point. The company has focused on the market study on dairy
consumption of Lukla.

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The survey found out that the locals consume hot beverages multiple times a day to keep
themselves warm. They preferred drinking their traditional tea that requires milk. Hence,
there is a demand for milk in Solukhumbu.

During peak season, there is additional demand for dairy products. The market for dairy
products like milk is very high at that time. There has always been an exceeding demand
during seasonal month of April, May and October, November.

The company is also targeting the local hotels, restaurants and cafes to supply the milk
directly. They are the main consumer for milk products.

The market for dairy product is very good in Khumbu. Traders have been sending bulky
amount of milk powder in sacks, which fails to reach to their customers on time.
Moreover it’s a risky and expensive job since flights often get cancelled and delayed due
to weather and air traffic problems. There is a good customer base for dairy product but
the medium of supply is very poor so there is a huge opportunity for us to cater our
targeted customer.

4.3. Positioning Strategy

We shall use Differentiation strategy for “Everest Dairy” due to the following unique
attributes in the product:

 It will be fluid milk with a longer storage capacity.

 The milk will be packaged in a one liter plastic bottle so that it can easier to supply in
upper region.

 We will provide a home delivery service to bulk buyers including delivery charge.

 Our company will be the first one to have these unique attributes in Solukhumbu, which
makes our product valuable to our customers. We being the first mover in this business in
Solukhumbu, we aim to create new and different product than others.

4.4. Positioning Statement

To each individual who wants to enhance their life, we are Everest Dairy – Direct from
Himalaya” to make your life healthier and happier.

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4.5. Branding Strategy

A. Brand Name

The name “Everest” means the highest mountain in the world.

We want our customers to experience the taste of our product produced at the top of the
world. We want them to feel proud of

B. Brand Logo

The Brand Logo has a color combination of blue and white. The colour blue represents
the image of mountains and the color white represents milk. It contains the image of
Mount Everest that signifies the brand and provides the message it is purely the product
of Himalayas.

C. Brand Mantra

Emotional Modifier Descriptive Modifier Brand Function

Healthy and Delicious Quality Drink

Healthy Quality Drink

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4.6. Competitive Advantage

The competitive advantage of Everest Dairy is that it is the first mover towards producing
fluid milk in Lukla. Our product stands out because the local customers have been using
powder milk for many years, as there are no options available. The company will be
producing fluid milk in a unique way with the use of powder milk and additional fats so
that the customers can take the natural taste of milk and get satisfied.

4.7. Marketing Strategy

The marketing strategy of Everest Dairy is based on communicating the consumer that we
have a great product quality that will increase the consumer base. The company will use
various channels of media to communicate with its consumers. We will put the
advertisement on F.M station as locals in Lukla, Solukhumbu highly tune on to radio.

A. Free Distribution

In the initial phase of production, the company shall provide few samples to its target
customers like locals, hotels and restaurants to try out the products and experience the
taste. It shall enable our consumers to use the product at least once, and since we focus on
quality, the consumers are determined to return, making a long-term sustainable
relationship.

B. Physical Stores

First in order to attract the local customers the company aims to open its own retail stores
in major areas of Lukla in the targeted segments. This store will also be responsible to
analyze the buying behaviors of our consumers, at how much quantity the targeted
customers purchases the product and this shall also help us to conduct surveys that will
help us to analyze whether our consumer want to make the product more personal.

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C. Point Of Parity and Point Of Difference

Points of Parity Points of Difference

Healthy Availability of Product

Tasty Authentic taste

Quality Bottled milk

Packaging

4.8. Marketing Mix

A. Product

The product range of Everest Dairy includes the following products:

1. Fluid milk

B. Price

Everest Dairy will opt for a better Pricing Strategy. This pricing model is set keeping in
mind the value the consumer shall presume busing our product. Since there is lack of
transportation facility in Lukla, only air cargo is possible which makes the price of the
product costlier. Although having all these costly process, our products price range will
be lower than that of what the people there are currently paying. Thus our price will be:

Product Price

Milk Rs. 180 per liters in year one

C. Promotion

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At Everest Dairy, we feel that product promotion is one of the most important marketing
tools for getting our brand introduced in front of our consumer and to attract new
potential market. The promotion strategy of our product shall include Direct Selling.

D. Direct Selling

The company plans to directly connect to its consumers and hence it will follow direct
selling as a promotion tool for it marketing. The opening up of physical stores is a way
for the company to directly sell and connect with its consumers.

E. Place

The main office of the company will be located in Lukla. Similarly the production house
of the company will also be located at Lukla Bazaar. We have targeted Lukla as our
distribution location because airport is located here which will make us easier to manage
the raw materials and further Lukla being the first stop for tourist, it is a best place for
advertisement and distribution to other areas as well.

4.9. Sales Strategies, Management and Techniques

Quality and Price are the two major factors that our consumers values the most.
Moreover, we want to make a sustainable relationship with our consumers by creating a
balance of both the factors. Our sales strategy will start from Lukla. After Lukla, our sales
manager will be visiting each and every hotel and stores above from Lukla and tell them
our product availability.

We will also be using local FM stations for advertisement. The best part is by door to
door marketing. The interesting part of business at Lukla and above is that when the hotel
and shop find one single product which is easily available, they do not want any other
product in their use.

To attain sales, the company will be focusing improving efficiency and effectiveness of
the product processing and try to reduce the cost of production. Quality and price plays an
integral part in the daily life of consumers. Our customers we want to develop a

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sustainable relationship with our customers by creating a balance of price and quality of
our products.

CHAPTER-V

PRODUCT OPERATION PLAN

5.1. Description of product

Our only product is milk. Powdered milk will be converted in to fluid milk by using
scientific methods. The powdered milk will be heated to certain degree in the milk
processing machine and additional 3% fat will be added into milk for 1 kilo of powder
milk. We will be using bottles so that it will be easier for us to supply to other upper
areas.

5.2. Process Strategy and Process Design

Since we will be using powder milk, the first step in processing milk includes
homogenization. Under this process 3% fat is mixed in to the powder milk and water. It is
conducted to prevent gravity separation of the fat in the product and to improve the
synergy stability of mainly culture products. This process consists of a high pressure
pump and homogenizing valve driven by a powerful electric motor.

After homogenizing, the next step is pasteurization where each particle of milk and milk
product is heated to a specific temperature for a specific period of time (63C for 30
minutes). This process helps in destroying the bacteria and other micro- organisms that
may affect customer’s health. It makes the milk safe and healthy, further improving the

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quality of milk and milk product. This process also lets the milk and milk products stored
for longer periods without being spoilt.

At the final step the processed milk is packaged in to plastic bottles (one liter). Milk will
be packaged in to bottles so that it’s easier to sell to upper areas than Lukla.

5.3. PROCESS DESIGN

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5.3.1. Raw Materials

The process begins with the purchase of raw materials. The core raw material is the
reconstituted milk powder. This milk powder has fat in it. As we will be having an
agreement with supplier i.e. DDC or Sujal Dairy, they will be supplying us with the
powder. Apart from this, there are other raw material that are purchase in this process.
Diesel and bottle chips are purchase prior to the production form different vendors.

5.3.2. Inventory and Supply Chain

After the raw material is purchase from different suppliers, those inventory should be
properly and safely transported to the factory site at Lukla. We use air cargo from Phaplu
as it is cheaper from there than from Kathmandu. Apart from this, we use animal cargo
for diesel transportation from Phaplu.

5.3.3. Production

After the safe logistic of the raw material and other components, those ingredients are
processed with proper safety, hygiene and best standards. Every set of processing is
planned as per the direction of the technician. In this stage, a slight mistake may ruin the
whole production lot. Thus, every step must be carefully undertaken.

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5.3.4. Packaging

After the cooling is done, the milk is packaged using the bottle. The bottle chip is inflated
by the inflation machine which is a part of packaging machine. Leveling and bottling is
done and then checked if or not it is accordingly or not.

5.3.5. Sales

After the packaging is done, it is first supplied to the local retailers in Lukla. The order
received from Namche, Phakding, Khumjung etc are also dispatched according.

5.3.6. Capacity need and Aggregate Planning

Everest Dairy is a manufacturing industry that is labor oriented we believe strategic

planning of the available capacity will help the company to meet changing demands for
its products. Our company aims at achieving maximum capacity utilization in all its
aspects of product production process. The company is planning to purchase medium
ranged machinery that has the capacity of 1000-3000 liters per day. This machine will be
enough only for beginning three years and after that, we will be adding homogenizer,
cooling equipment.

Our aggregate planning is:

Months Demand in liters Overtime in Rupees

January 10000 -
February 15000 -
March 13000 -
April 30000 2 staffs*24 days*4 hours
per day* Rs. 300 per day =
57,600
May 30000 2 staffs*24 days*4 hours
per day* Rs. 300 per day =

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 57,600
June 20000 1 staffs*24 days*4 hours
per day* Rs. 300 per day =
28,200
July 20000 1 staffs*24 days*4 hours
per day* Rs. 300 per day =
28,200
August 20000 1 staffs*24 days*4 hours
per day* Rs. 300 per day =
28,200
September 22000 1 staffs*24 days*4 hours
per day* Rs. 300 per day =
28,200
October 35000 2 staffs*24 days*4 hours
per day* Rs. 300 per day =
57,600
November 35000 2 staffs*24 days*4 hours
per day* Rs. 300 per day =
57,600
December 25000 1 staffs*24 days*4 hours
per day* Rs. 300 per day =
28,200
The demand for milk is not constant every month thus we need aggregate planning. Our
current ground level staff can work easily work up to the production of less than 20,000
liters in a month. Therefore, whenever the demand is higher than 20,000, we need
additional staff for which we adopt overtime facility system. For overtime we pay 1.5
times the salary and the overtime hour is four hours a day. The total overtime costs in first
year is 374,000 rupees.

5.4. Location

There will be two major units set up by the company, one will be the main office of the
company that shall be rented and shall be situated in Lukla, Solukhumbu and the second
set up will be the production house of the company that shall also be rented by the
company and be situated in Lukla, Solukhumbu. Since Lukla is the gateway to Everest, it
is the major location point where all the business people, stop by twice a week and the
journey of trekkers starts from Lukla. The main office of the company shall be
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responsible for all the administrative works of the company. The location is chosen by the
company due to two reasons, first the airport is located in Lukla so that it becomes easier
to manage the raw material for the company, the second reason being it is near the center
of the Khumbu and hence distribution to all targeted segment will be easier for the
company.

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5.5. Layout

Production Floor
Homogenizatio
n

5000 Sq. Feet

Warehouse

&
Toilet
Office

Residence

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PRODUCTION FLOOR

A Block B Block

1000 Sq. Feet

C
Block

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The manufacturing compound will of 5000 square feet in total whereas the production
unit will be of only 1000 square feet. The overall manufacturing compound will have
ware house, staff residence, toilet, inventory store, production house and homogenization
center.

Inside the production house, there are three blocks where the equipment will be set up.
Block A and B will have the main machine that is for pasteurizing and block C is for
packaging.

5.6. Quality

The site and design of milk processing facilities will be prevented from dust, rodents
other environmental pollutants. For this we will train the personnel in hygiene and install
adequate facilities for sanitation and hand washing.

We will only use the potable water for processing milk. Since milk being a liquid it is
prone to catch bacteria so processing step of milk will begin with pasteurization. It is a
heat treatment process that is designed to kill pathogens while preserving the nutritional
value of milk. The processing temperature of milk will be about 135-140 C. We know
that our customers will look for two major things quality and price while consuming our
product so we aim at enhancing the quality of our product.

5.7. Supply Chain

Supply chain plays an important role in Everest dairy as the location of our company is in
a non- transportation facility area, air cargo is the only option. Thus our supply chain
partners must be well known to the fact that we are geographically challenged. One of
our key supplier is DDC for powder milk and fats. We assume that DDC can provide the
required amount of ingredients to us. Apart from this we also have other powder milk
producing industries i.e Suzal Dairy Pvt. Ltd. when this two suppliers cannot fulfill our
demand we will be buying it from local importers of Indian powder milk and fats.

We choose DDC as a supply chain partner as it has a long history for providing dairy
products since 2021 B.S. It has a wide network and branches in 45 districts of Nepal. The
DDC factory at Biratnagar would be easier for us to buy product and supply it to Phaplu

48 | P a g e
and then cargo it via airplanes from Phaplu. This will help us to reduce our transportation
cost.

We will be purchasing mini plastic chips for bottles and plastic pouch from local
suppliers in Kathmandu.

5.8. Inventory Management

Inventory like reconstituted milk, diesel is very important. Since both these products are
not available in Lukla market, the scare of one of it directly halts the production. We
cannot follow just in time inventory management system therefore we need to stock these
raw materials and diesel for at least 15 days. The desiel will be brought using animal
carrier. Since the flight cost from Phaplu to half priced than that of Kathmandu to Lukla,
transporting the inventory is cheaper from Phaplu. In first year we have to purchase
42,500 kilos of reconstituted milk leaving 2000 kilos as closing stock in year 1. Similarly,
48,200 kilos, 57,300 kilos, 67,500 kilos, 75,500 kilos respectively from second year to
end of fifth year.

We will have a separate inventory system where we will use First in First Out inventory
management system.

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 CHAPTER-VI

HUMAN RESOURCE PLANNING

6.1. Stakeholder Analysis

There are 5 shareholders at Everest Dairy Pvt. Ltd. having people from different field.
Two of the shareholders are from Lukla itself and remaining three are from Kathmandu
out of which one has been in dairy business. Thus we can say that the entire shareholder
is connected for a purpose of thriving via business in Lukla. Not everyone is into the
management. I look after the overall company as a CEO, local partner from Lukla will
look after marketing and operation and the partner from Kathmandu will look after
production and quality control.

6.2. Organization Structure

The organization has a simple structure with simple hierarchy.

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 ORGANIZATION Structure

Managing
Director/
Engineer

Manager/Engineer Sales and Production, Administration/Fina

Procurement/Sales/ Marketing Technical and nce/Human
Marketing Quality Test Resources

Two Support Staffs

Accountant Trainee
Accounts/Finance Executive

Operation Executive
Charles Darwin
Administration/
Employee
Customer Support

Ada Lovelace Support Staff Marie Curie

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Employee Employee
6.3. Departmentalization and their core functions:

There will be four core departments in the company. So the departments have been
planned accordingly. With one Managing Director and remaining three with their own
department.

The four main departments are as follows:

A. Procurement and Logistics:

Buying all the necessary ingredient and transporting it to Lukla is taken care by the
procurement and logistics department. For this, I myself will be the in charge as I have
knowledge of procurement and logistics from my family business. The main function of
this department is to place order to the supplier, maintain good relationship with the
supplier, contact with the airline company and send the ingredient to Lukla via freight.

B. Sales and Marketing

Our shop at Lukla has been there for last 30 years. Out of many buyers who come to
Lukla to purchase, we supply around 60% of them. Thus, we have a competitive
advantage and my sister Urmila Rai will be looking after the marketing of the product.
Since the product is new to Lukla, this department has to contact remaining 40% of the
buyers and make them the new client of the product

C. Production, Technical and Quality Test

One of the partner from Kathmandu Mr. Fahim Shah who has knowledge and experience
in dairy will be looking after this department. This department is responsible for the
overall production, cost reduction techniques, technical algorithms and quality test and
control of the dairy. One partner with his technical assistant will lead this department and
when there is proper continuity of system, the technical assistant will be the head of this
department.

D. Administration/Finance/Human Resource

Another partner from Lukla Mr. Suren Rai will be the head of this department where he
will look at the administration, finance and human resource. Being local of Lukla, he can

52 | P a g e
help find ground staff for the day to day activity. He will have staffs under him to assist
him.

6.4. Job responsibilities of Key Positions and Employees

Job type Number Job Field

Managerial 1 Managing Director

Managerial 1 Sales/Marketing

Technical 1 Managerial Admin/Finance

Technical 1 Senior Technician

Technical 1 Production/Operation

Non-Technical 2 Support staffs

Total 7

A. Managing Director:

I will be the managing director of the company. I will look after procurement and
logistics and also the over all functioning of the company. Apart from this, I will be doing
following things:

 Develop strategies with assistance of all other partners and execute them in the company.

 Projection for the company.

 Coordination with all the stakeholders.

 Networking and finding strategic partners with domestic or foreigners.

 Managing meeting and distributing the reports to the partner on a monthly basis.

B. Sales and Marketing Manager:

 Develop formal and informal channels where we can sell our product in Khumbu region.

53 | P a g e
  Work out on bottling of liquid milk so that our product can reach to every place in that
region.

 Come up with promotional strategy if necessary.

 Do market research about our own product and other rivalry product.

C. Administration/Finance/Human Resource:

 Look after the administration, prepare and maintain each and every legal documents,
purchasing bills, price list, cost structure, contracts and orders, suppliers, approve bills for
payment etc.

 Accurately maintain the inventory records and accounting, its safeguard.

 Communicate with other departments.

 Book keeping of all the transaction, expenditure and income.

 Motivate and train employee for better performance.

Production, Technical and Quality Test

 Follow the standard procedure and maintain the quality.

 Resolve any hazards in the site.

 Minimize the cost of production.

 Optimum utilization of the resources.

 Proper care of the inventory and maintaining proper inventory.

6.5. Human Resource Management Aspects

Human resource is actually a huge problem in Nepal and when we talk about Lukla, it is
more difficult than in anywhere else. As it is a tourism centric economy, people in Lukla
would rather work as porter than in a factory floor. A porter can easily earn 2000-5000
rupees per day depending on the tourist season, finding appropriate human resource is
challenge. In order to cope up with this problem, one of our partner who will be looking
at the production has a plan where he can send worker from Kathmandu to Lukla. Since

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he already has a dairy factory here at Kathmandu, he is planning to send some of his staff
member there.

Human resource management aspects ensure that everyone in the company is treated
fairly. Reward and recognition is very important aspect of human resource. All the
employees should be fully aware of what the company expects of them and what they can
expect from the company.

A. HR Planning

Lukla has a season for tourism. April-May is one peak season, October-November is
another peak season. This four month, a proper planning is necessary. Apart from this, the
growth of the business is expected to rise by 20% each year. With the increase in
production, increase in human resource should go hand in hand. During next year, our
company is planning to add more staff in the factory floor. Currently 3 staffs handle the
ground floor where one will be doing packaging and other two will look after the
production. Two staffs are enough for a 1000 liters of milk production in a day. When the
company plans to go more than that, additional staffs will be added. For 2000 liters for
day 2 ground staffs and 1 packaging staff will be required. The recruitment and selection
will be based on the experience and is selected on a fair basis. The newly appointed staff
will be sent to Lukla. They will have their rooms at the factory it self.

B. HR Administration

Employee are the key resource of the company. The human resource administration is the
management of the entire employee, their working schedules, overtime recording etc.
This also administers the effectiveness of the workforce. Everest Dairy will always take
care of the employees, prevent them from harassment. We regard them as resourceful
humans rather than human resource. Although the working environment there in Lukla is
cold, we provide them with necessary clothes. We are also planning to provide them with
insurance benefits. For this, we do insurance of all the working staffs.

C. HR Development

Training and development is one of the most important thing for any business. In the
beginning years, the company will hire staff from our partner dairy industry. This will

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help us because we already have a competent employee. Nevertheless, timely training and
development will be provided to the employees for betterment. For motivation, we will
try to provide worker with proper salary package, bonuses, salary increment of ten
percent in a year, insurance coverage, etc. Retaining the existing employee is crucial to
the organization. The retention is important because these staffs are the actual assets of
the company. These people help company to attain its goals and growth. For this a
minimum contract period of 3 years is signed between employee and the employer. The
tenure can also be added when completed.

6.6. Reporting/Communication Structure:

The floor level staff directly reports to the head technician where the head technician does
all the report writing and deliver it to the managing director. Since there is no any
corporate structure, this small business model has easy communication structure.
Managing director compiles all the information received from each and every department
and thus makes strategy accordingly.

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 CHAPTER-VII

FINANCIAL PLAN

7.1. Financial Objectives

The main objective is to company is to have a transparent financial statement. Every

financial accounting should be transparent and prepared under Generally Accepted
Accounting Principle, which shall be update and maintained with high integrity.

Other objective is the proper determination of capital requirement of the company where
excess capital should not be entertained in the organization. Another objective is to have
tax subsidies and reduction. Proper and full utilization of resource is another objective,
which will be looked after by Mr. Suren Rai in Lukla office.

1. Assumptions

 We assume there is no any receivable and payable but due to the fiscal year end,
we assume we have salary and TDS payable.

 25 % tax is paid to the government.

 Company decides to distribute dividend form year one.

 Salary is increased by 10% in a year.

 Inventory is calculated.

 Accrual basis of accounting is followed.

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7.2. Projected Income Statement

Year I Year II Year III Year IV Year V

Amount in Amount in Amount in Amount in
Particulars Schedule NRS. NRS. NRS. NRS. Amount in NRS.

Income
Annual Sales 6 48,600,000.00 59,200,000.00 72,200,000.00 87,750,000.00 100,000,000.00
Total Income 48,600,000.00 59,200,000.00 72,200,000.00 87,750,000.00 100,000,000.00
Direct Expenses
Cost of Raw Material 7 32,400,000.00 42,240,000.00 51,300,000.00 62,775,000.00 71,250,000.00
Total Direct Expenses 32,400,000.00 42,240,000.00 51,300,000.00 62,775,000.00 71,250,000.00
Gross Profit 16,200,000.00 16,960,000.00 20,900,000.00 24,975,000.00 28,750,000.00

Indirect Expenses
Administrative Expenses 8 5,537,400.00 6,435,440.00 5,888,344.00 6,812,238.40 7,907,634.24
Employee Cost 9 5,528,900.00 6,692,400.00 8,992,841.00 11,686,446.20 15,176,154.24
Depreciation 3 1,848,000.00 1,478,875.00 1,204,831.25 1,117,788.44 1,027,998.33
12,914,300.00 14,606,715.00 16,086,016.25 19,616,473.04 24,111,786.81
Profit for the Year 3,285,700.00 2,353,285.00 4,813,983.75 5,358,526.96 4,638,213.19
Income Tax Provision 821,425.00 588,321.25 1,203,495.94 1,339,631.74 1,159,553.30
Profit for the Year after
Tax 2,464,275.00 1,764,963.75 3,610,487.81 4,018,895.22 3,478,659.89
Dividend Paid

* Interest Rate 8% on FD

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 Important Ratios
NP to Turnover Ratio (NP
5.07% 2.98% 5.00% 4.58% 3.48%
Margin)
Return on Assets 19.94% 13.78% 23.66% 24.10% 19.52%
Return on Equity 22.48% 15.31% 27.48% 28.38% 22.98%
Fixed Assets Turnover Ratio
6.69 10.14 15.06 17.37 24.86
(Times)
Total Assets Turnover Ratio
3.93 4.62 4.73 5.26 5.61
(Times)
Networth per Share (Rs) 438.57 461.17 525.59 566.34 605.49
Dividend Per Share (Rs) 60.00 48.00 80.00 120.00 100.00
Earning Per Share (Rs) 98.57 70.60 144.42 160.76 139.15

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7.3. Projected Balance sheet

Year I Year II Year III Year IV Year V

Source of Funds Schedule Amount (NR) Amount (NR) Amount (NR) Amount (NR) Amount (NR)
Shareholder's Fund

Share Capital 1 10,000,000.00 10,000,000.00 10,000,000.00 10,000,000.00 10,000,000.00

Reserve & Surplus 2 964,275.00 1,529,238.75 3,139,726.56 4,158,621.78 5,137,281.68

10,964,275.00 11,529,238.75 13,139,726.56 14,158,621.78 15,137,281.68

Loan Fund

Term Loan - - - - -

Total Source of Funds 10,964,275.00 11,529,238.75 13,139,726.56 14,158,621.78 15,137,281.68

Application of Funds

Assets & Properties

Fixed Assets 3 7,264,000.00 5,840,125.00 4,795,293.75 5,050,505.31 4,022,506.98

7,264,000.00 5,840,125.00 4,795,293.75 5,050,505.31 4,022,506.98

Current Assets, Loans &

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 Advances

Cash & Bank Balances 5,036,052.92 6,463,740.00 9,665,187.68 10,023,688.81 11,695,297.89

Advance Tax 60,000.00 500,000.00 800,000.00 1,600,000.00 2,100,000.00

5,096,052.92 6,963,740.00 10,465,187.68 11,623,688.81 13,795,297.89

Less: Current Liabilities &
Provisions

Income Tax Provision 821,425.00 588,321.25 1,203,495.94 1,339,631.74 1,159,553.30

TDS Payable 4 74,211.25 89,205.00 118,605.51 152,820.08 197,190.38

Other Payable 5 500,141.67 597,100.00 798,653.42 1,023,120.52 1,323,779.52

1,395,777.92 1,274,626.25 2,120,754.87 2,515,572.33 2,680,523.20

Net Current Assets 3,700,275.00 5,689,113.75 8,344,432.81 9,108,116.48 11,114,774.69

Total Application of
Funds 10,964,275.00 11,529,238.75 13,139,726.56 14,158,621.79 15,137,281.68

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7.4. Cash flow Statement

Particulars Year I Year II Year III Year IV Year V

Amount (NR) Amount (NR) Amount (NR) Amount (NR) Amount (NR)
Cash Flow from Operating Activities

Profit as per Profit & Loss A/C 3,285,700.00 2,353,285.00 4,813,983.75 5,358,526.96 4,638,213.19

Add: Depreciation 1,848,000.00 1,478,875.00 1,204,831.25 1,117,788.44 1,027,998.33

Cash Flow from Operating Activities
before changes in Working Capital 5,133,700.00 3,832,160.00 6,018,815.00 6,476,315.40 5,666,211.52

Changes in Working Capital

Decrease/(Increase) in Current Assets (60,000.00) (440,000.00) (300,000.00) (800,000.00) (500,000.00)

Increase/(Decrease) in Current Liabilities 574,352.92 111,952.08 230,953.93 258,681.67 345,029.30

Net Changes in Working Capital 514,352.92 (328,047.92) (69,046.07) (541,318.34) (154,970.70)

Tax paid - (821,425.00) (588,321.25) (1,203,495.94) (1,339,631.74)

Net Cash Flows from Operating

Activities A 5,648,052.92 2,682,687.08 5,361,447.68 4,731,501.13 4,171,609.08

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 Cash Flows from Investing Activities

Purchase of Fixed Assets (9,112,000.00) (55,000.00) (160,000.00) (1,373,000.00) -

Decrease/(Increase) in Investment - - - - -
Net Cash Flows From Investing
Activities B (9,112,000.00) (55,000.00) (160,000.00) (1,373,000.00) -

Cash Flows From Financing Activities

Share Capital Introduced 10,000,000.00 - - - -

Cash Dividend Distribution (1,500,000.00) (1,200,000.00) (2,000,000.00) (3,000,000.00) (2,500,000.00)

Net Cash Flows from Financing
Activities C 8,500,000.00 (1,200,000.00) (2,000,000.00) (3,000,000.00) (2,500,000.00)

Cash Generated during the Year

( A+B+C) 5,036,052.92 1,427,687.08 3,201,447.68 358,501.13 1,671,609.08

Opening Cash and Bank Balance - 5,036,052.92 6,463,740.00 9,665,187.68 10,023,688.81

Closing Cash and Bank Balance 5,036,052.92 6,463,740.00 9,665,187.68 10,023,688.81 11,695,297.89

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7.5. Schedules

Schedule-1 Year I Year II Year III Year IV Year V

Share Capital Amount (NR) Amount (NR) Amount (NR) Amount (NR) Amount (NR)
Authorised Share Capital 10,000,000.00 10,000,000.00 10,000,000.00 10,000,000.00 10,000,000.00
(100000 Shares @Rs.100 each)
Issued & Paid-up Share Capital 10,000,000.00 10,000,000.00 10,000,000.00 10,000,000.00 10,000,000.00
(100000 Shares @Rs.100 each)

Schedule-2 Year I Year II Year III Year IV Year V

Amount in Amount in Amount in
Reserve & Surplus NRS. NRS. Amount in NRS. Amount in NRS. NRS.

Opening Reserve - 964,275.00 1,529,238.75 3,139,726.56 4,158,621.78

Add: Current Year Profit carried
forward 2,464,275.00 1,764,963.75 3,610,487.81 4,018,895.22 3,478,659.89

Less: Cash Dividend Distributed (1,500,000.00) (1,200,000.00) (2,000,000.00) (3,000,000.00) (2,500,000.00)

964,275.00 1,529,238.75 3,139,726.56 4,158,621.78 5,137,281.68

Schedule-4 Year I Year II Year III Year IV Year V

Amount in Amount in Amount in
TDS Payable NRS. NRS. Amount in NRS. Amount in NRS. NRS.

TDS on Salary Payable 69,111.25 83,655.00 112,410.51 146,080.58 189,701.93

Audit fee TDS Payable 600.00 600.00 750.00 750.00 900.00

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 TDS on Consultancy 4,500.00 4,950.00 5,445.00 5,989.50 6,588.45
74,211.25 89,205.00 118,605.51 152,820.08 197,190.38

Schedule-5 Year I Year II Year III Year IV Year V

Amount in Amount in Amount in
Other Payable NRS. NRS. Amount in NRS. Amount in NRS. NRS.

Salary Payable 460,741.67 557,700.00 749,403.42 973,870.52 1,264,679.52

Audit fee Payable 39,400.00 39,400.00 49,250.00 49,250.00 59,100.00

500,141.67 597,100.00 798,653.42 1,023,120.52 1,323,779.52

Schedule- 3
Projected Fixed Assets Schedule

Years
Particulars Rate Year I Year II Year III Year IV Year V
Projected Projected Projected Projected Projected
Computer, Furniture, Fixtures 25% - 567,000
512,000 727,000 800,000
Addition during the year 160,000 -
512,000 55,000 73,000
Depreciation 104,031
128,000 102,875 107,148 89,486
Accumulated Depn - 230,875
128,000 334,906 442,055
WDV at the end of the year 392,094

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 384,000 336,125 357,945 268,459

Machinery and Equipment 20%

- 8,600,000 8,600,000 8,600,000 9,900,000
Addition during the year - - -
8,600,000 1,300,000
Depreciation
1,720,000 1,376,000 1,100,800 1,010,640 938,512
Accumulated Depn -
1,720,000 3,096,000 4,196,800 5,207,440
WDV at the end of the year
6,880,000 5,504,000 4,403,200 4,692,560 3,754,048

Total Gross Value

9,112,000 9,167,000 9,327,000 10,700,000 10,700,000

Total Addition 9,112,000.00 55,000.00 160,000.00 1,373,000.00 -

Total Depn for the Period
1,848,000 1,478,875 1,204,831 1,117,788 1,027,998
Accumulated Depreciation
& Amortization - 1,848,000 3,326,875 4,531,706 5,649,495
Net Fixed Assets
7,264,000 5,840,125 4,795,294 5,050,505 4,022,507

Vehicle added in middle of 3rd year

WDV Written Down Value

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 Machinery and Equipment Year I Year II Year III Year IV Year V
Expected Total Cost
Number Total Cost Total Cost Total Cost Total Cost
Type of Equipment Price (in (in
required (in Rupees) (in Rupees) (in Rupees) (in Rupees)
Rupees) Rupees)
1. Mixer 1 300,000.00 300,000.00 - - -
2. Mini Dairy Composite
1 5,500,000.00 5,500,000.00 - - -
Plant
3. Homoginizer 1 500,000.00 500,000.00 - - 600,000.00 -
4. Cooling Equipments 2 175,000.00 350,000.00 - - 400,000.00 -
5. Generators 1 950,000.00 950,000.00 - - -
6. Other Setups 1 1,000,000.00 1,000,000.00 - - 300,000.00 -
Total 8,600,000.00 - - 1,300,000.00 -

Computer & Printer Year I Year II Year III Year IV Year V

Expected Total Cost
Number Total Cost Total Cost Total Cost Total Cost
Particulars Price (in (in
required (in Rupees) (in Rupees) (in Rupees) (in Rupees)
Rupees) Rupees)
1. Laptop 2 80,000.00 160,000.00 - 80,000.00 - -
2. Desktop 1 55,000.00 55,000.00 - - 55,000.00 -
3. Printer 2 45,000.00 90,000.00 - 45,000.00 - -
Total 305,000.00 - 125,000.00 55,000.00 -

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 Furniture & Fixture Year I Year II Year III Year IV Year V
Expected Total Cost
Number Total Cost Total Cost Total Cost Total Cost
Particulars Price (in (in
required (in Rupees) (in Rupees) (in Rupees) (in Rupees)
Rupees) Rupees)
1. Computer Table 1 35,000.00 35,000.00 - 35,000.00 18,000.00 -
2. Office Sofa 1 80,000.00 80,000.00 - - - -
3. Chairs & Table 9 10,220.00 92,000.00 55,000.00 - - -
Total 207,000.00 55,000.00 35,000.00 18,000.00 -

Schedules to Projected Profit & Loss Account

Year I Year II Year III Year IV Year V
Schedule-6 Income from sales Amount (NR) Amount (NR) Amount (NR) Amount (NR) Amount (NR)
Production in Ltrs 270,000.00 320,000.00 380,000.00 450,000.00 500,000.00
Per liter price 180.00 185.00 190.00 195.00 200.00
Annual sales 48,600,000.00 59,200,000.00 72,200,000.00 87,750,000.00 100,000,000.00

Year I Year II Year III Year IV Year V

Schedule-7 Cost of Raw
Material Amount (NR) Amount (NR) Amount (NR) Amount (NR) Amount (NR)
Powder requirement in KG (Per
Ltr of milk) 0.15 0.15 0.15 0.15 0.15
Total Reconstituted Milk Powder
(in KGS) 40,500.00 48,000.00 57,000.00 67,500.00 75,000.00
Price (Per KG) 800.00 880.00 900.00 930.00 950.00

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 Total cost of raw material 32,400,000.00 42,240,000.00 51,300,000.00 62,775,000.00 71,250,000.00
Year I Year II Year III Year IV Year V
Schedule-7.1 Details of Raw
Material Inventory Amount (NR) Amount (NR) Amount (NR) Amount (NR) Amount (NR)
Opening inventory of raw
material (KG) - 2,000.00 2,200.00 2,500.00 2,500.00
Purchaed (KG) 42,500.00 48,200.00 57,300.00 67,500.00 75,500.00
closing stocks (KG) 2,000.00 2,200.00 2,500.00 2,500.00 3,000.00

Raw material used (KG) 40,500.00 48,000.00 57,000.00 67,500.00 75,000.00

Price of closing stock 1,600,000.00 1,936,000.00 2,250,000.00 2,325,000.00 2,850,000.00
Cost of closing stock and cost of goods sold are taken in average price from year 2.

Schedule- 8
Administrative Expenses

Years
Particulars Year I Year II Year III Year IV Year V
Projected Projected Projected Projected Projected
Audit Fee 40,000 40,000 50,000 50,000 60,000
Telephone & Communication Expenses 65,000 71,500 78,650 86,515 95,167
Kitchen and lunch Expenses 80,000 88,000 96,800 106,480 117,128
Disel expenses 1,250,000 1,500,000 1,800,000 2,160,000 2,592,000
Office Expenses 45,000 49,500 54,450 59,895 65,885
Water & Electricity Expenses 900,000 1,080,000 1,296,000 1,555,200 1,866,240
Printing & Stationery Expenses 54,000 59,400 65,340 71,874 79,061

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 House Rent 900,000 990,000 1,089,000 1,197,900 1,317,690
Legal & Professional Expenses 30,000 33,000 36,300 39,930 43,923
Repair & Maintenance A/c 100,000 110,000 121,000 133,100 146,410
Internet Exp 18,000 19,800 21,780 23,958 26,354
Registration & Renewal Expenses 55,000 60,500 66,550 73,205 80,526
Advertisement Expenses 150,000 165,000 181,500 199,650 219,615
Board Meeting Allowanace 34,000 37,400 41,140 45,254 49,779
Misc Expenses 100,000 110,000 121,000 133,100 146,410
Insurance Charge 150,000 165,000 181,500 199,650 219,615
Newspaper Expenses 7,000 7,700 8,470 9,317 10,249
AGM Expenses 36,000 39,600 43,560 47,916 52,708
Travelling Expenses 1,020,000 1,224,000 1,468,800 1,762,560 2,115,072
Subtotal 5,034,000 5,850,400 5,353,040 6,192,944 7,188,758
10% Contingency 503,400 585,040 535,304 619,294 718,876
Total 5,537,400 6,435,440 5,888,344 6,812,238 7,907,634
Operating expenses 10% increment each year

Schedule- 8
HR Planning-Core Staff

Base Salary Years

Particulars Per Person No of Year I Year II Year III Year IV Year V
Per Month Month Projected Projected Projected Projected Projected
Managing Director 60000 13 1 1 1 1 1
Sales and Marketing 45000 13 1 1 1 1 1
Admin/Finance 45000 13 1 1 1 1 2

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 Senior Technician 55000 13 1 1 1 1 2
Production Operator 50000 13 1 1 2 3 3
Ground Staff 35000 13 2 3 4 5 5
Total No of Core Staff 7 8 10 12 14

Core Employee Expenses

Years
Particulars Year I Year II Year III Year IV Year V
Projected Projected Projected Projected Projected
Managing Director 780,000 858,000 943,800 1,038,180 1,141,920
Sales and Marketing 585,000 643,500 707,850 778,635 856,440
Admin/Finance 585,000 643,500 707,850 778,635 1,712,880
Senior Technician 715,000 786,500 865,150 951,665 2,093,520
Production Operator 650,000 715,000 1,573,000 2,595,450 2,854,800
Ground Staff 910,000 1,501,500 2,202,200 3,028,025 3,330,600
Total 4,225,000 5,148,000 6,999,850 9,170,590 11,990,160
Training Cost (10% of
422,500 514,800 699,985 917,059 1,199,016
Salary)
Fringe Benefits (10% of
422,500 514,800 699,985 917,059 1,199,016
Salary)
Staff Welfare Exp (2% of
84,500 102,960 139,997 183,412 239,803
Salary)
Staff Overtime Cost 374,400 411,840 453,024 498,326 548,159
Total Employee Cost 5,528,900 6,692,400 8,992,841 11,686,446 15,176,154

salary 10% increment each year

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 CHAPTER-VIII

RISK AND CONTINGENCY PLAN

8.1. Risk Contingency Plan

Risk is the part of business and mitigation is also what a businessman should thrive for.

Expected Risk Mitigation Plan

Sales increases more than expected during If the sales during the season exceeds, the
season company plans to add a working shift of 4 hours
in order to meet the sales.

Supply of raw material not one time or not up To mitigate such risk the company have
contracted with more than one supplier.
to our standards

Price fluctuation of the powder For this, we do pre contract agreement and also
pay in advance.

8.2. Exit Plan

For exit, we have not thought of anything but for any shareholders willing to exit, the
value of company will be taken under consideration and the value will be paid to him/her.
We might exit from the business when we can get better value for our company around 20
times higher than the initial investment.

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 REFERENCES

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 TOOLS AND MACHINARY

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