investment opportunity study

Project Description Report (In conjunction with Main Report)

Department of Industry

Ministry of Economic Affairs

Investment Opportunity Study

2020

Consulting Assignment Background This study titled “Investment Opportunity in Bhutan” was carried out by APECS Consultancy. The assignment was

awarded vide work order No. MoEA/DoI/IDD-13(a)/2019-2020/669 dated 27th January 2020. The assignment was for a

period of 5 months.

Consulting Team

Rohit Adhikari, Team Leader

Novin Darlami, Policy Expert

HN Adhikari, Quality Infrastructure Expert

BN Bhattarai, Supply/Value Chain Expert

Bishnulal Gurung, Financial Expert

Sangay Gyeltshen, GIS and Data Management Expert

Tandin Dorji, Business Analyst

Tashi Dorji, Editor

Official Counterpart and Technical Reviewer/Adviser:

Copyright

Industrial Development Division, Department of Industry, MoEA.

Suggested Citation

Department of Industry (2020). Investment Opportunity Study Bhutan 2020. Thimphu, Bhutan.

Disclaimer

Various statements contained in this document, including those that express a belief, expectation or intention, as well

as those that are not statements of historical fact, are forward-looking statements. The forward-looking statements

have been based on the current expectations and assumptions about future events. These assumptions include,

among others, analysis of operating industries, resources inventory, market trends and demand, investment

opportunities, financial projections.

While it is considered that these expectations and assumptions to be reasonably true, they are inherently subject to

significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which

are difficult to predict and the actual results with regard to investment opportunities could differ.

This information is not offered as legal or any other advice on any particular matter. The Department and contributing

authors expressly disclaim all liability to any person in respect of anything, and in respect of the consequences of

anything, done or omitted to be done wholly or partly in reliance upon the whole or any part of the contents. No

reader should act or refrain from acting on the basis of any matter contained in this report without first seeking the

appropriate legal or other professional advice on the particular facts and circumstances.

Tashi Dorji (Mr.)

Chief Industries Officer

Dakpa Gyeltsen (Mr.)

Senior Industries Officer

Industrial Development Division

Department of Industry, MoEA

Page | i

Preface

Industrial development is key for

expansion of the economy, creation of

employment opportunities, value addition

to resources and revenue generation

among others. Towards promoting

industrial development, relevant policies

have been realigned and specific programs

such as CSI Flagship Development Program

and development of business infrastructure

are being taken up. To complement the

various programmes that are being

undertaken to foster economic

diversification, the current study was

proposed.

Considering the current

availability of resources and the business

development environment in the country,

this study had become imperative. Further,

the investment opportunities have

considerably changed over the period of

time due to advancement in technology,

methods of production and availability of

resources. This study takes stock of the

resources, assesses business potential and

identifies project ideas to stimulate

investment in the country.

The study is expected to provide

comprehensive information on business

opportunities in the country with the aim to

guide and encourage prospective investors

to take up business activities. The study

contains list of potential activities that

investors could further explore and take up.

The findings of the study will also serve as

a basis for policy recommendations to

promote industrial development.

Jiten Bansal

Retrieved from:

https://www.tripoto.com/trip/my-solo-trek-to-tiger-s-nest-or-paro-taktsang-5965efd268442

https://www.tripoto.com/trip/my-solo-trek-to-tiger-s-nest-or-paro-taktsang-5965efd268442

Investment Opportunity Study 2020

Page | ii

Acknowledgements

APECS Consultancy would like to

thank the Department of Industry for selecting

the firm to carry out this study. The firm thanks

the Director General, Officiating Director

General, the Specialist of DoI, industry officers

from Industrial Planning and Coordination

Division, Company Registration Division,

Foreign Direct Investment Division, Industrial

Infrastructure Development Division and

Environment Unit for their valuable comments

and suggestions. Further, the Chief Industries

Officer and Project Focal from the executing

agency, the Industrial Development Division,

continuously rendered their support in

procuring relevant data, facilitating meetings

and reviewing the reports; the firm is very

thankful for their support.

The consulting team is also grateful

for all the inputs received from various

business establishments as well as other

government and non-government agencies

who provided us their valuable time, shared

expert opinion and knowledge on investment

climate and opportunities in the country.

Page | iii

Abbreviations

Abbreviation Definition

ADB Asian Development Bank

ADO Asian Development Outlook

BCAA Bhutan Civil Aviation Authority

BDBL Bhutan Development Bank Limited

BHU Basic Health Unit

BICMA Bhutan InfoComm and Media Authority

BLDCL Bhutan Livestock Development Corporation Limited

BTBP Bhutan Telecommunications and Broadband Policy

CBR Crude Birth Rate

CF Community Forest

CFT Cubic Feet

COTI Countries Other Than India

CSI Cottage and Small Industries

CSO Civil Society Organization

DCCL Dungsam Cement Corporation Limited

DGPC Druk Green Power Corporation

DOAT Department of Air Transport

DoFPS Department of Forest and Park Services

EA Economic Activity

ECCD Early Childhood Care and Development

EDP Economic Development Policy

FAO Food and Agriculture Organization

FDI Foreign Direct Investment

FMU Forest Management Unit

FTA Free Trade Agreement

FYP Five Year Plan

G2C Government to Citizen

GDP Gross Domestic Product

GNHCS Gross National Happiness Commission Secretariat

GST Goods and Service Tax

HEP Hydro Electric Plant

HSS Higher Secondary School

ICT Information and Communication Technology

IOS Investment Opportunity Study

ISIC International Standard for Industrial Classification

ISP Internet Service Provider

ITC International Trade Centre

JDWNRH Jigme Dorji Wangchuck National Referral Hospital

KG Kilogram

LDC Least Developed Country

LSS Lower Secondary School

LULC Land Use and Land Cover

M&L Medium and Large

MoAF Ministry of Agriculture and Forest

MoEA Ministry of Economic Affairs

MoH Ministry of Health

MSE Micro and Small Enterprise

MSO Multi-Service Operator


Page | iv

Abbreviation Definition

MSS Middle Secondary School

M2 Metre Square

MT Metric Tones

NEC National Environment Commission

n.e.c. Not Elsewhere Classified

NFI National Forest Inventory

NFIS National Financial Inclusion Strategy

NICS National Industrial Classification System of India

NPL Non-Performing Loans

NPV Net Present Value

NRDCL Natural Resources Development Corporation Limited

NWFP Non-wood Forest Product

P&M Production and Manufacturing

PA Protected Area

PHCB Population Housing and Census of Bhutan

PHPA Punatsangchhu Hydroelectric Project Authority

PNH Primary National Highway

PPP Purchasing Power Parity

PPP Public Private Partnerships

PS Primary School

RGoB Royal Government of Bhutan

RICBL Royal Insurance Corporation of Bhutan Ltd.

RMA Royal Monetary Authority

S&C Small and Cottage

SAARC South Asian Association for Regional Corporation

SDG Sustainable Development Goals

SNH Secondary National Highway

SoE State Owned Enterprise

SWOT Strength, Weakness, Threats and Opportunities

TFR Total Fertility Rate

ToR Terms of Reference

UNCTAD United Nation Conference on Trade and Development

UNESCAP United Nation Economic and Social Commission for Asia and the Pacific

WGI Worldwide Governance Indicators

Page | v

Conversions and Units

Currency

1 USD= 76.1 Ngultrum (June 2020)

1 Pound sterling= 94.17 Ngultrum (June 2020)

1 INR= 1 Ngultrum

Measurements

m= metre

ft. = feet

Sq. m= Square meter

Cu. m= Cubic meter

C. ft= Cubic feet

Sq. ft= Square feet

Kg= kilogram

lbs= Pounds

kw= kilowatt

1 m= 3.28 foot

1 Sq. m= 10.76 Sq. ft

1 Decimal= 435.6 Sq. ft

1 kg= 2.20 lbs


Page | vi

Contents

Preface……………………………………………………………………………………………………………………….i

Acknowledgement…………………………………………………………………………………………………….ii

Abbreviation……………………………………………………………………………………………………………..iii

Conversion and Units………………………………………………………………………………………………..v

Executive Summary…………………………………………………………………………………………………..vii

Methodology…………………………………………………………………………………………………………….ix

1. Manufacturing of Beauty Care Products ............................................................................... 3

2. Manufacturing of Mouth freshener ....................................................................................... 27

3. Manufacturing of Essential Oil ................................................................................................ 54

4. Manufacturing of Gypsum Board/Panel .............................................................................. 81

5. Manufacturing of Chewing Gum ......................................................................................... 104

6. Manufacturing of Corrugated Paper Board Containers ............................................. 112

7. Manufacturing of Bamboo Toothpick and Ear Buds .................................................... 120

8. Manufacturing of Bio-Liquid and Talc Based Fertilizers ............................................. 128

9. Manufacturing of Prefabricated Wooden Building Components............................ 139

10. Manufacturing of Packaging Aluminium Foil .............................................................. 149

11. Hydroponic Farming ……………………………………………………………………………………….156

12. High Tech Geophysical and Mining Exploration Services ……………………………….179

13. Multi-product Kiosks Services………………………………………………………………………. .209

14. Car Detailing and Resell…………………………………………………………………………………...227

15. Financial Consulting for Investments and Market Research ……………………………236

16. Domestic Tourism Company…………………………………………………………………………….243

17. Outdoor Sporting Organizer…………………………………………………………………………….253

18. Childcare Agency for Children under 3 years……………………………………………………258

19. Branding and Marketing Intermediary Services………………………………………………..268

Page | vii

Executive Summary This report is on Investment Opportunity Study for Bhutan. The study comprises of

analysing the existing economic activities and business establishments, reviewing

available resources in the country under various domains, assessing the 12th Five Year

Plan to incorporate major new developments, identifying the surplus resources for

utilization, analysing accessibility for resources, identification of possible opportunities

under various sub-sectors and in different parts of the country and providing a list of

potential industries under manufacturing and service sectors.

Rationale for the Assignment

The current assignment is an offspring of the statements from the Economic

Development Policy 2016. Few relevant clauses of the Policy are outlined below:

7.3.1 The MoEA shall continue to create an enabling environment by

adopting policies and regulations for promotion of investments in the

country.

7.3.18 National Resource Inventories shall be updated periodically beginning

from 2018 and made available to prospective entrepreneurs to enable

identification of areas of opportunities for investment.

7.3.19 The MoEA shall identify scope of subcontracting/outsourcing

opportunities by large and medium industries to small and cottage

industries and initiate such business linkages and partnerships by 2018.

Objective

The objective of the study is to review national resources and prepare a report on

investment opportunities in the country.

Due to technical issues with regard to report binding, the consultants had to print the

report as two documents. This second document, titled ‘Project Descriptions’ and

contains descriptions of potential investment ideas under Production &

Manufacturing, and Service sector. The background and rationale, market outlook,

equipment and resources requirements, and financial analysis are presented for the

projects.

The first document, titled ‘Main Report’ is to be read in conjunction with this report. It

contains the following Chapters:

Chapter 1: The first chapter describes Bhutan with regard to geography, population,

economy and trade. It is a brief introduction to set the context for this report.

Chapter 2: This chapter describes the operating business establishments in Bhutan as

of March 2020. Based on the data obtained from Department of Industry and

Department of Cottage and Small Industry, a detailed analysis based on the investment

size and classification as per International Standard for Industrial Classification (ISIC)


Page | viii

version 3.1 has been prepared. Apart from the description on these two categories, a

separate compendium of all the 280 economic activities Bhutanese establishments are

currently engaged in has also been prepared as a stand-alone document.

Chapter 3: This chapter describes the resources available in Bhutan under the various

topic of Agriculture, Horticulture, Livestock, Forest based products, Minerals,

Education, Health and other infrastructure. Wherever applicable, forecasts have been

made on the growth considering the projections made in the 12th Five Year Plan

document. For resources that were not covered in the document, projection is based

on historical data.

Chapter 4: This chapter is in continuation to the resource inventory and analyses the

availability, consumption and surplus with review of 12th Five Year Plan and salient

features that could result in enhanced connectivity, accessibility and production.

Chapter 5: This chapter presents a detailed Strength, Weakness, Threats and

Opportunities (SWOT) analysis of Bhutan in relation to investment climate and

resources. Comparisons have been made with SAARC countries, lower-middle income

countries and land locked lower middle-income countries where applicable.

Chapter 6: This chapter encompasses the review of relevant policies that impacts

trade and investment in the country to identify possible conflicts and gaps that could

affect investors’ confidence. Recommendations are provided along with the review.

Chapter 7: This chapter assesses investment opportunities under ten sectors of Agro,

Forest, Mineral, ICT and other professional services, Hospitality, Education and Health,

Transport and Logistics, Construction, Finance and Insurance and Energy. The

investment ideas are also accompanied by recommended Dzongkhags for its

establishment.

An action plan for preparation of detailed project reports for these ideas is also

attached.

Page | ix

Methodology In economics literature, there is no universally accepted methodology or tool to be

used for a study of this nature and scope. At the heart of it, it is a scoping study: a

method used to comprehensively map evidence across a range of study designs in an

area, with the aim of informing future research practice, programs and policy.

Several authors such as Myers (1977), Smith and Watts refer investment opportunity

set (or IOS) as the component of firm value resulting from options to make future

investments. Typically, the study on a particular investment opportunity is carried out

by firms for product or the firm diversification while this study has been carried out at

a larger scale i.e. at a national level and information has been considered accordingly.

This study employed reference from various sources of similar nature in order to select

the most appropriate methodology some of which are mentioned in table below:

Sl.

No

Title Country Author Retrieved from

1. Investment

Opportunity Study

Bhutan 2006

Bhutan Ministry of Economic

Affairs, RGoB

https://www.moea.gov.bt/wp-

content/uploads/2017/07/Ch

apters-C-F_Vol_I.pdf

2. Understanding the

Investment Potential

of the Bangladesh

Diaspora

Bangladesh Commonwealth

Secretariat, UK

https://thecommonwealth.org

/sites/default/files/inline/Und

erstanding%20the%20Invest

ment%20Potential%20of%20t

he%20Bangladesh%20Diaspo

ra.pdf

3. Climate Investment

Opportunities in

Cities - 2018

East Asia and the Pacific,

South Asia, Europe and

Central Asia, Middle East

and North Africa, Sub-

Saharan Africa, and Latin

America and the

Caribbean

International Finance

Corporation

http://www.njtod.org/climate-

investment-opportunities-in-

cities/

4. Investment Climate

Assessment

Bhutan World Bank http://siteresources.worldban

k.org/BHUTANEXTN/Resourc

es/306148-

1288813971336/BhutanICAVo

lume1.pdf

5. Investment Guide

Study

Bhutan UNCTAD https://theiguides.org/guides

/bhutan.pdf

6. Investment

opportunity study for

Ethiopia, Kenya,

Mozambique and

Zambia

Ethiopia, Kenya,

Mozambique and Zambia

International Trade

Centre (ITC)

http://www.intracen.org/uplo

adedFiles/intracenorg/Conten

t/Redesign/Projects/PIGA/PIG

A_Investment%20opportunity

%20study_final.pdf

7. Nepal: Market Study

Identifying Foreign

Direct Investment

Opportunities in

Nepal

Nepal Ministry of Foreign

Affairs, The

Netherlands

https://www.rvo.nl/sites/defa

ult/files/2018/10/Nepal-

Market-Study.pdf

https://www.moea.gov.bt/wp-content/uploads/2017/07/Chapters-C-F_Vol_I.pdf



https://thecommonwealth.org/sites/default/files/inline/Understanding%20the%20Investment%20Potential%20of%20the%20Bangladesh%20Diaspora.pdf






http://www.njtod.org/climate-investment-opportunities-in-cities/



http://siteresources.worldbank.org/BHUTANEXTN/Resources/306148-1288813971336/BhutanICAVolume1.pdf





https://theiguides.org/guides/bhutan.pdf

https://theiguides.org/guides/bhutan.pdf

http://www.intracen.org/uploadedFiles/intracenorg/Content/Redesign/Projects/PIGA/PIGA_Investment%20opportunity%20study_final.pdf





https://www.rvo.nl/sites/default/files/2018/10/Nepal-Market-Study.pdf




Page | x

Framework

This study employs a methodology of desk research and field surveys. The desk

research was carried out through review and analysis of the data from published

sources and government database. After thorough research and preliminary

assessment of key areas for investment exploration, further data collection employing

a mix of the quantitative and qualitative questions was used to interview relevant

government, corporate, autonomous, CSOs and private organisations.

Understanding Bhutan’s

Economy

Baseline Study of

Operating Industries

Based on Economic

Activity Based on Scale

Resources Inventory

Agriculture

Livestock

Horticulture

Non-Wood Forest

Products

Education

ICT, Transportation

Health

Human Resources

Minerals

Review of 12th

FYP

Acc

ou

nti

ng

fo

r C

han

ges

Identification of Investment

Opportunities

For Cottage and Small-

Scale Investment

For Medium and Large-

Scale Investment

Overall Longlist based

on Economic Sector

Synopsis Detailed Project Profiles

Policy Recommendations

to foster Investments

Page | xi

The report makes inferences through SWOT matrix for Bhutan. Along with this, a

compendium of the available resources inventory was documented. The third aspect

was listing specific business avenues which was also considered based on the global

and regional demand and forecasts, existing business climate and resources. Using the

multi criteria decision analysis (MCDA) technique, economic activities were selected

for detailed study.

Guiding Principle

Drawing upon the work of Dustin Cathcart, Meredith Gloger, & Aaron Roesch (2012)

for determination of Pakistan’s Private Investment Initiative, our guiding principle for

this investment study has three domains.

The approach is to first address the needs. The needs in the present context is defined

as meeting local demand but reducing imports. In the review of the needs, various

forms of opportunities are reviewed but the selection would depend on ensuring a

feasible investment that would be relevant to Bhutanese context (population,

resources, legal provisions etc…).

Among others, the methodologies used for the compilation of various sections in this

study sections to be highlighted in this study include:

Sl.No. Approach Use

1 Inventory Approach of Asian

Development Bank

For Resource Inventory

2 ABC Inventory Analysis Organizing Resource Inventory

3 SWOT Analysis Country Analysis

4 Multi Criteria Decision Analysis Selection of Investment Ideas

Investment

Opportunity in

Bhutan 2020

ENSURE

FEASIBILITY

ADDRESS

NEED

CAPITALIZE ON

OPPORTUNITY


Page | xii

Methodology for investment selection

This approach is developed to systematically select the investment opportunities in a

rationalized manner and employs MCDA at two levels;

• Long-Listing

• Short-Listing

Identification of Economic Activities

Overall, the list of industries is selected from the following sources:

i. List of economic activities mentioned in the National Industrial Classification

System 2008 of India.

ii. Current operational economic activities with less than 5 establishments.

iii. Potential economic activities based on consultant’s knowledge.

iv. Government reports describing economic activities that could substitute

imports.

v. List of top 50 products imported in the country.

Long listing of Economic Activities

The identified economic activities are longlisted based on five criteria as mentioned

below:

i. Relevance to Bhutan: economic activities such as tobacco or drug related

items or complex ideas such as manufacture of aircraft are discarded based

on its irrelevance to Bhutan.

ii. Environmental Friendliness: economic activities that could endanger the

ecology have been discarded in line with Bhutan’s stand for environmental

conservation.

iii. Market Potential: overall ease of marketability of the product at regional and

international market is considered instead of limiting it only to Bhutan.

Page | xiii

iv. Resource Availability: overall ease of purchase of raw material from India

and Bangladesh is also considered along with resource availability within

Bhutan

v. Employment Generation: ideas offering limited or single employment are

discarded.

Rejection Criteria: any economic activity that does not score a full five point is rejected.

Grouping into Sectors

The longlisted ideas are grouped under ten sectors (shown in Table 1) which can be

explored by individuals who may find specific and relevant opportunities for

consideration in the future.

Table 1: Grouping of longlisted economic activities

Production and

Manufacturing

Services Trade

Agro Agro Agro

Forest Forest Forest

Mineral Mineral Mineral

Information Communication

and Technology and

Information

Technology

Information Technology

Hospitality Sector Hospitality Sector Hospitality Sector

Construction Construction Construction

Education and Health Education and Health Education and Health

Finance and Insurance Finance and Insurance Finance and Insurance

Energy Energy Energy

Transport and Logistics Transport and Logistics Transport and Logistics

The above list is also characterized based on the Dzongkhag where it is most

applicable.

Shortlisting of Economic Activities

Shortlisting of economic activities for recommendation was carried out based on the

following criteria: return on investment, market size, main market, new

product/services (value), economic diversification, energy intensive, domestically

available resources, cost of imported raw material, time taken to operationalise, import

substitution, sensitivity of policies and regulations.

Each criterion was scored using a Likert scale of 1-5 with 5 indicating the most

favourable terms with regard to that criteria. The top twenty activities scoring the

highest was chosen for recommendation.

Manufacturing Sectors

Page | 2

Project Title: Manufacturing of

Beauty Care Products

(Soaps, Shampoo and Allied Products)

Investment Opportunity Study 2020 Project Profile-Manufacture of Mouth fresheners

Page | 3

1. Manufacturing of Beauty Care Products

1.1. Background of the Idea The demand for organic cosmetic products is strong. The global natural cosmetics

market size is expected to reach a value of USD 48.04 billion by 2025, increasing by

5.01% from 2019 to 2025, according to a recent report published by Grand View

Research.

A product is considered "natural" when it contains ingredients that are sourced from

nature rather than created synthetically. Given that Brand Bhutan is associated with

organic culture, manufacturing and exporting of organic soaps is quite promising.

1.2. Rationale of the Idea

1.2.1. Local Demand

The beauty care products currently in the market is largely synthetic based. The

imports have been consistent over the past five years accounting to almost Nu 350

million.

Table_ 1: Beauty Care Products Average Import Trends in Bhutan

Items Average Import

in 4 years (Nu. Millions)

Soaps 140

Other agents for washing skin 33

Organic surface-active agents (other than soap) 144

Shampoos 31

Personal Hair and Skin Care 10

Figure_ 1: Import of Beauty Care Products (in Millions)

-

50

100

150

200

2015 2016 2017 2018 2019Soaps

Other agents for washing skin

Organic surface-active agents (other than soap


Page | 4

An article in Kuensel covered the story on the successful start-ups manufacturing soaps

in Bhutan1. Firms interviewed expressed the satisfaction with market response to the

products.

However, it must be noted that the cost of production of synthetic products outside

Bhutan is much cheaper owing to economies of scale. Therefore, this business idea

considers only offsetting products worth Nu. 20 million annually.

1.2.2. Export Demand

Bhutan has been making a good progress in the export market with regard to soap.

Exports in the past few years have been increasing at 50% each year. Almost all of the

export is to Germany.

Figure_ 2: Export of Soaps from Bhutan

A research by Centre for the Promotion of Imports mentions of the following key

points:

• European imports of soap increased from €1.4 billion in 2012 to €1.6 billion in

2016. This resulted in an average annual growth rate of 3.8%.

• In the coming years, European imports are expected to keep growing

moderately.

• Developing countries supply around 14% of European soap imports amounting

to €231 million. This share is predicted to be fairly stable in the coming years.

• Germany is Europe’s leading importer of soap by far with €248 million in 2016.

France (€222 million) and the United Kingdom (€203 million) follow.

• When it comes to imports from developing countries, the United Kingdom leads

with €68 million. This is one third of its total soap imports.

• The strong performance of developing country soap suppliers in the United

Kingdom is evidenced further by a €14 million increase between 2012 and 2016.

1 https://kuenselonline.com/handmade-soaps-find-market-in-the-country/

1.46

41.47

60.28

86.30

-

20

40

60

80

100

2015 2016 2017 2018

India COTI


Page | 5

Figure_ 3: European Imports of Soaps in £ million

Source 1: Centre for the Promotion of Imports, Netherlands Enterprise Agency

For this business idea, the net import from Bhutan is considered as 1% of the total

import which makes around Nu. 230 million. Assuming a market share of 10% by one

firm, it accounts to Nu. 23 million.

1.2.3. Market Outlook International2

Skincare maintains the top billing in the global organic beauty market and is expected

to emerge as the most attractive segment, closely followed by haircare. This means

that natural and organic skincare, combined with organic haircare, will form half of the

total global organic beauty market3.

The Global Organic Soap market is projected to register a CAGR of 7.2% over the

forecast period (2020-2025).

• The growing concerns regarding the impact of synthetic ingredients such

as parabens and sulphates in synthetic soaps are driving the market for organic

soap.

• Furthermore, awareness towards a sustainable environment, by reducing the

impact of chemicals coupled with the government initiatives to support organic

products are also fuelling the market growth.

1.3. The Concept The strategy to penetrate the beauty products market suggested to offer multiple

products to customers under one brand name to leverage Brand Bhutan. To follow this

2 Information from: https://www.mordorintelligence.com/industry-reports/organic-soap-market and

https://www.statista.com/statistics/673641/global-market-value-for-natural-cosmetics/ 3 https://formulabotanica.com/global-organic-beauty-market-22bn-2024/

https://formulabotanica.com/global-organic-beauty-market-22bn-2024/


Page | 6

concept, multiple products manufacturing is suggested which can be started from

making soap and shampoo.

The product group is as follows:

• Herbal and Organic Bathing Soap: 10g, 20gm, 50gm, 75gm, 100gm, 125gm

• Herbal Hair Shampoo: Pouch 5-10 ml, 30ml, 50ml, 100ml, 150ml, 200ml, 400ml

• Body Wash Lotion: 50ml, 100ml, 200ml, 400ml, 1lt

• Skin Moisturizer Cream: 50ml, 100ml, 200ml, 400ml, 1lt

• Hair Conditioners: 20ml, 50ml, 100ml, 150ml, 200ml

• Hair Cream: 50ml and 100ml

1.3.1. Perceptual Mapping

In comparison to the price of a natural organic ingredient-based soap, the price is 5

times higher in the UK. For example, a 100g bar of Bio Soap costs Nu. 1104, a similar

product (based on packaging and ingredients) costs Nu. 512 in the UK5. This provides

an excellent opportunity for Bhutanese products to find a place in the European export

market.

Figure_ 4: Price Changes over the Period (Nu./Kg)

When comparing within the local market, there is stiff competition from imported

products which has been about Nu. 100 per kg, making the price as low as Nu. 10 for

100g. Therefore, this business idea must seek to find a niche market in Bhutan and

concentrate largely on the export market. A Representation of Concept Planning and

Basis is given in figure no. 5 below:

4 https://druksell.bt/search?type=article%2Cpage%2Cproduct&q=soap* 5 https://www.amazon.co.uk/s?k=ginger+soap&ref=nb_sb_noss

0

100

200

300

400

500

600

700

2015 2016 2017 2018 2019

Soap Shampoo Deodrants


Page | 7

Figure_ 5: Representation of Concept Planning and Basis

With regard to the export market, CBI research mentions, ‘Shipping, import and

handling add 25% to the price of your soap. Wholesalers account for a further 100%

mark up. Finally, retailers may add another 100–150% to the price.’ This means that

the price of the product with manufacturing cost of Nu. 50 would be sold in export

market at Nu. 187.5. The difference in price between the existing products and

proposed product leaves a good margin to enter the market and make profit.

1.3.2. Existing Competitors

Popular brands currently in the market include Mountain Mist Soaps, Bio-Bhutan and

PelBar Natural Soaps. The new entrants need not compete with existing brands to

establish presence in Bhutan as there is enough room for export market.

The business would, however, not have advantage when competing with imported

brands particularly from India in the range of Nu. 10-20 such as Lifebuoy, Dettol, Lux,

Ayur, Santoor, Medimex, Patanjali etc…

1.4. Plant Capacity Plant will operate in single shift, 8-hour production in 300-day years. Capacity of the

plant is assessed with final output of annual 90 MT production of soap and 60 KL

shampoo manufacturing with consideration of investment, technology, skill sets &

expansions plan, Bhutan Industrial development demand and supply projections etc.

Along with these two products, others as such body wash lotion, skin moisturizer

Hig

h P

rice

Low Quality


Page | 8

cream, hair conditioners and hair cream will also be produced in the proposed plant.

The detail plant capacity planning is as follows given below:

# Product Plant Capacity Annual Capacity

(MT)

1. Premium Quality Herbal Soap 100Kg per Hr. 90 MT

2. Shampoo 100 Lt per Hr. 60 KL

3. Body Wash Lotion 100 Lt per Hr. 30 KL

4. Skin Moisturizer Cream 50Lt. per Hr. 20 KL

5. Hair Conditioners 50Lt. per Hr. 20 KL

6. Hair Cream 50Lt. per Hr. 20 KL

Table 2: Plant Capacity and Planning

1.5. Manufacturing Process

1.5.1. Soap Manufacturing6

Glycerine is a humectant meaning that it helps retain, or reduce the loss of moisture.

The manufacturing of soap consists preparation of herbs, mixing with glycerine, and

coconut oil with pure potassium hydroxide. After that heating and shaping is done in

moulds. Cooling is done after moulding and soaps are ready for finally sizing and

packaging. The raw ingredients are herbal fats, herbal oils and their fatty acids, soluble

olive oil and cocoa oils, palm, coconut oil, kernel oils etc. Manufacturing process for

soap production is detailed in figure no.5 given below:

The soap manufacturing process follows the following steps:

6 https://www.diynatural.com/how-to-make-glycerin-soap-base-recipe/


Page | 9

Step 1: Melt the glycerine

Step 2: Add the herbs (add the minced herbs, citrus zest and two drops of

essential oils (if used) and mixing).

Step 3: Pour the mixture into the mould

Step 4: Cooling, cutting, sizing and packaging

1.5.2. Shampoo Manufacturing7

The ingredients are prepared according the above process. Water is metered into the

process vessel and it is often heated to around 130-140℉ (55-60℃) to aid

dilution/hydration of other ingredients. Conditioners and other ingredients are added.

This solution cooled and packed in PET Bottles.

Figure_ 6: Shampoo Manufacturing Process Flow Chart

Water, surfactants (surface active agents – or cleansing agents), thickeners or viscosity

builders, conditioning agents, foam boosters, preservatives, active ingredients,

fragrance and colour are the main ingredients for shampoo manufacturing.

Body Wash Lotion, Skin Moisturizer Cream, Hair Conditioners and Hair Cream are the

emulsion-based products and mainly mixing, boiling and cooling are the main process

activities. The equipment used for manufacturing these products are mixers, SS vessels

and kettles, filling machines etc. These allied products are also packed in HDPE bottle

shape containers.

7 https://www.slideshare.net/waliseu/shampoo-44457202


Page | 10

1.5.3. Equipment Requirement

Equipment used for manufacturing of soap, shampoo and other products mainly

consist of mixtures equipment, SS vessels, and kettles. The required machines and

equipment for this plant can be sourced from Kolkata (West Bengal), Guwahati (Assam)

and Rajkot (Gujarat). The list of equipment suppliers is attached as Annex A.

Some of the required equipment include pre-cleaning machines and mixing

equipment, glycerin soap plant - (MOC SS 316), soap cutting machine – manual,

stamping machine, shampoo making machine (reactor vessel), lotion & cream making

machine, SS vessels and kettles, trays and tanks, soap bar packaging machines,

shampoo/liquid bottle filling machine - bottle manual, body lotion filling and

packaging machine, shampoo pouch filling machine and bottle cap sealing machine,

weighing machine, conveyors and packaging machine etc.

1.5.4. Required Systems and Licenses

• Land requirement: about 1,000 m2 and built up area of about 465 m2 for

production hall, storage, packaging, office and utilities.

• Manpower of 25 people including:

▪ Manager

▪ Accounts and Administration,

▪ Advertising and Marketing

▪ Quality assurance and Lab In-charge

▪ 12 factory front line workers

▪ Support staff (on contract basis)

1.6. Required Licenses and Certification

Table_ 2: Required Licenses and Certification

Quality Management ISO 9001:2015

Environment Management ISO 14001

GMP Certification for Export Good Manufacturing Practice

Products Cover in Indian Act Drugs and Cosmetics Act by the Act 68 of

1982 - 1983

BIS Number – India IS 7669, BIS IS 2888: 2004(R2016)

Bhutan Approval Environment Clearance and Other

Regulatory Act Registration and Certificates

Export Requirement to US & Europe WHO- GMP (Good manufacturing practices)

Export – Import Duty to India Trade between India and Bhutan is not

subject to customs duties

The proposed business idea is based on providing a range of beauty care products.

More details on the process can be found from the following sources and videos for

better understanding.


Page | 11

Reading Materials Videos

https://www.diynatural.com/how-to-make-

glycerin-soap-base-recipe/

https://www.youtube.com/watc

h?v=rPckDJP9GLY

http://www.madehow.com/Volume-2/Soap.html https://www.youtube.com/watc

h?v=qSXbZ52r7IY

https://my.msme.gov.in/MyMsmeMob/MsmePro

jectProfile/Pages/2_6.html

https://www.youtube.com/watc

h?v=lQ6fCZgYc8g

1.7. Estimated Project Cost and Financials The total cost of the project has been considered at Nu. 13.5 million. The payback

period is 21 months. D.S.C.R value is 4.51 which show that the project will generate

sufficient income to pay back loans. Other financial trends are as follows:

Table_ 3: Project Trends and Financial Ratio

# Description Amount (Nu. In Lacs)

1. Plant Capacity ▪ 90 MT for Soap

▪ 150KL Shampoo and Other Items

2. Land Area (On Lease) 1000 m2

3. Proposed Location in Bhutan Thimphu, Samtse, Phuentsholing, and

Gelephu

4. Establishment Cost 134.59

5. Cost of Operation at 100%

capacity utilization

2.1 Fixed Cost 78.22

a. Salary & Wages 57.00

b. Overhead Cost 21.22

6. Variable Costs at 100% capacity

utilization

42.63

a. Raw Material 534.60

b. Other Variable

Cost

34.28

7. Break Even Point 52.83%

8. Payback Period 21 Months

9. D.S.C.R. 4.51

10. NPR 14.24%

11. Return on Investment 44.53%

https://www.youtube.com/watch?v=lQ6fCZgYc8g

https://www.youtube.com/watch?v=lQ6fCZgYc8g


Page | 12

1.8. Means of Finance

Table_ 4: Means of Finance

# Particulars Value (Nu. in Lacs)

1. Promoters Equity 37.21

2. Term Loan from Bank 97.40

Total 134.61

3. Margin Money for Working Capital 28.84

4. Working Capital Loan from Bank 49.82

Total 78.66

1.9. Project Cost The cost of project is estimated as a total value of land, building and civil construction,

plant and machinery, MFA, preliminary expenses, pre-operative expenses and

contingency. The required land is around 1000 m2 on lease for 30 years.

The Plant & Machinery shared maximum project cost of around 41.85% with Nu. 5.6

million followed by Building & Civil Construction cost of Nu. 3.8 million constituting

28.19% of the project cost. Margin Money for working capital is not considered as part

of the project cost.

The summary of the project cost is as follows: Table_ 5: Head Wise Project Cost and Sharing Percentage

# Particulars Value (Nu. in Lacs) Cost

Sharing

1. Building & Civil Construction 37.95 28.19%

2. Plant & Machinery 56.34 41.85%

3. Misc. Fixed Assets 14.75 10.96%

4. Preliminary Expenses 1.00 0.74%

5. Pre-operative Expenses 21.30 15.82%

6. Contingencies 3% 3.27 2.43%

Total 134.61 100%

1.9.1. Estimation of Building and Civil Work and Cost

Based on the requirement of processing area, raw material and finished goods store

and office space, the following building area is planned. The building civil construction

cost is considered as per the Bhutan Schedule of Rates (Civil Works)8 - 2018 - issued

by Ministry of Works and Human Settlement, Bhutan. Pre-fabricated building structure

will be used for construction of building amenities.

8 Source: https://www.mowhs.gov.bt/wp-content/uploads/2018/04/BSR-2018-civil.pdf


Page | 13

Total estimated building construction cost is Nu.3.8 million which is around 28% of the

total project cost. The detail Building and Civil Work cost estimation is as follows:

Table_ 6: Estimation of Building and Civil Work and Cost

# Particular Dimensions (Mt.)

Area (Sq. Mt.)

Rate (Nu./ Sq. Mt.)

Amount (Nu. in Lacs)

1. Production area -

main shed height

16 feet (5Mt.)

60 50 3000 750 22.50

2. Raw material

storage

25 18 450 600 2.70

3. Packaging section 20 16 320 600 1.92

4. Finished goods

storage

25 18 450 600 2.70

5. Laboratory 20 15 300 600 1.80

6. Office space 20 15 300 600 1.80

7. Facilities + utility +

canteen

20 18 360 600 2.16

8. Security & time

office

10 10 100 600 0.60

9. Boundary wall (130

RM with height of 3m

(10Ft) and 1ft thickness)

412 1 412 150 0.62

10. Parking area 60 30 1800

0.50

11. Green belt

development and

open space

70 50 3500

0.30

12. Entrance gate - 15

feet wide and sign

board

1 35000 0.35

Total 37.95


Page | 14

1.9.2. Plant and Machinery Cost9

The cost estimates for plant & machinery have been worked out based on the cost

figures received from the Indian plant machinery suppliers.

The prices are considered without Indian GST which is exempted under supply of trade

agreement between India and Bhutan (Category Export). Installation and

commissioning of equipment are considered separately in the total plant and

machinery cost estimation. Freight and insurance have been considered with the

assumption that all goods are transported by road. Goods of imported origin would

be handled at the Kolkata port.

Total estimated cost of the plant and machinery is Nu. 5.6 million including the cost of

packaging and forwarding @7.5% and erection and commissioning @10% of

equipment billing cost of Nu. 4.8 million. The equipment list with cost is given in table

below:

Table_ 7: Plant & Machinery with Cost

# Plant & Machinery Qty. Rate Amount (Nu. in Lacs)

1. Pre cleaning Machines and Processing equipment's

(100 Kg. per Hr.)

1 250000 2.50

2. Glycerine Soap Plant - (SS 316) (100Kg per Hr.) 1 950000 9.50

3. Soap Cutting Machine - Manual (500 cuts per Hr.) 2 40000 0.80

4. Stamping Machine 2 80000 1.60

5. Shampoo Making Machine-Reactor vessel (100Lt.) 1 635000 6.35

6. Lotion & Cream Making Machine (100Lt. Capacity) 1 1125000 11.25

7. SS vessels and kettles, Trays and Tanks

(100Lt, 200Lt. 500 Lt and 1000 Lt.)

1 250000 2.50

8. Soap Bar Packaging Machines 1 100000 1.00

9. Shampoo Filling Machine - Bottle Manual

(Upto 5Lt)

1 35000 0.35

10. Body Lotion Filling and Packaging Machine

(Upto 5Lt)

1 190000 1.90

11. Shampoo Pouch Filling Machine (10ml to 50ml) 1 100000 1.00

12. Bottle Cap sealing machine (upto 4” Dia) 1 75000 0.75

13. Corrugated box wrapping machine

(Box weight Capacity 100Kg)

1 135000 1.35

14. Weighing Machine (500Kg) 1 20000 0.20

15. Small Hand Tools and Laboratory Equipment 0.5

16. Laboratory Equipment's and Measuring Devices 6.00

17. Miscellaneous Items i.e. Jigs and Fixtures 0.40

9 Equipment Supplier List is given under annexure A.


Page | 15

Total 47.95

18. Packaging and Forwarding @7.50% 3.60

19. Erection and Commissioning @10% 4.80

Grand Total 56.34

1.9.3. Misc. Fixed Assets

A miscellaneous fixed asset includes office equipment & furniture, computer and

peripherals, firefighting equipment, vehicle etc. Nu.1.5 million has been estimated

under this head “MFA” and is presented in the below table:

Table_ 8: Misc. Fixed Assets Cost Estimation

# Particulars Qty. Amount (Nu.in lacs)

1. Office Equipment, Laptop, Printer & Software's 1 2.50

2. Furniture & Fixture with Interior Items 1 3.50

3. Fire Fighting Equipment's (1set of 10 pcs each) 1 0.60

4. Ventilation - Exhaust fans 5 0.15

5. Tata Mini Truck 1 8.00

Total 14.75

1.9.4. Preliminary Expenses

Preliminary expenses are those expenses which are incurred before the incorporation

and commencement of the business. This expense is treated as deferred

revenue expenditure. These expenses are marked write off in next ten years in

estimation of profitability.

The Preliminary Expenses details are as follows:

Table_ 9: Preliminary Expenses

# Particular Amount (Nu.in Lacs)

1. Company formation, Approvals and Setup

expenses

1.00

Total 1.05

1.9.5. Pre-operative Expenses

These expenses are incurred prior to commencement of commercial production. A

total of amount Nu. 2.13 million is estimated under this project cost head. It is written

off in the next 10 years and exempted in the first year.

The details are given in the table below:


Page | 16

Table_ 10: Pre-operative Expenses


1. Interest up to production 1.99

2. Insurance during construction period 0.56

3. Electricity charges construction period 1.50

4. Salary during construction period 3.40

5. Marketing launch expenses 2.00

6. Quality, GMP and Environment Management System 5.00

7. Project consultancy fees @5% of project cost 5.45

8. Travelling Expenses for Project Implementation 1.00

9. Registration of Trade Mark and patent 0.40

Total 21.30

1.9.6. Cost of Raw Material

The cost of raw material consists of the cost of the main ingredients, raw material and

cost of packaging. The annual raw material cost is based on the present average

market prices in Bhutan. A total of Nu. 53.46 million has been estimated as raw material

cost. The details are given in the table below:

Table_ 11: Cost of Raw Material

# Raw Material Annual

Requirem

ent

Rate (Nu/Unit )

Total Amount (Nu.in Lacs)

1. Refined Glycerine 73 KL 110 Lt 80.3

2. Coconut oil, fats, olive oil, wax

esters and ester oils, essential

oils etc.

112 KL 140 Lt 156.8

3. Surfactants, Thickeners or

Viscosity Builders,

Conditioning Agents, Foam

Boosters, preservatives, active

ingredients, fragrance and

colour.

25 MT 350 Kg 87.5

4. Herbs Ingredients as such

amla, sweet almond oil, methi,

almonds oil, flowers, Shea,

cocoa, kokum butter etc.

30 MT 600 Lt 180

5. Packaging Material - PP

Sheets, Pouches, HDPE

Bottles, Carton Box,

Packaging's Taps etc.

Set

30

Total Raw Material requirement at 100% capacity Utilisation 534.60


Page | 17

1.9.7. Salary & Wages

Salaries and Wages (including benefits) for different categories of employees have

been considered based on present day expenses. The salaries are considered as per

the present trends in the relevant segment and followed rules as per Pay Revision Act

2019 (9 July 2019) Bhutan. The fringe benefits are considered at 15% per year.

It is also considered that salary will increase by 5% annually. The breakdown of

manpower with estimated salaries is given in the following table:

Table_ 12: Salary & Wages

# Description Intake Salary

Per

Month (Nu.)

Salary Per

Annum

1. Manager 1 50000 6.00

2. Accounts and Administration 1 30000 3.60

3. Advertising and Marketing 1 30000 3.60

4. Reception and office Support 1 15000 1.80

5. Quality Assurance and Lab In-charge 1 25000 3.00

6. Front Line Operators 12 20000 28.80

7. Support Staff 6 10000 7.20

8. Transport - Drivers 1 15000 1.80

9. Security 3 10000 1.20

Total (Nu. In Lacs) 27 57.00

1.9.8. Electrical and Water Consumption Charges

Electricity charges are considered as per the tariff rate issued by Bhutan Power

Corporation. The unit cost10 of electricity has been considered @ Nu. 3/KwH for

operating of machines and plant equipment.

It is assumed that the entire power requirement is met from the grid. The expense on

water supply, treatment and distribution has been suitably considered based on the

Thimphu City Corporation water tariff at lumpsum basis. It is assumed that power and

water charges will increase @ 5% every year. Table_ 13: Electrical and Water Consumption Charges

# Description Amount Per Annum

1 Power Consumption Charges 14.40

2 Water Consumption Charges 2.40

Total(Nu.in Lacs) 16.80

10 Source: Available on the link of https://www.bpc.bt/electricity-tariff/.


Page | 18

1.9.9. Term Loan Estimation

The Term loan requirement is estimated on the funding pattern in Bhutan. It is

estimated as per the norms by Bhutan National Bank Limited. The term loan is

considered as up to 60% to 75% of the project cost and it does not include working

capital margin money (as per financing pattern by Bhutan National Bank Limited). The

estimated term loan is Nu.5.65 million with 55% shared by the financial institution. The

estimated term loan is Nu.9.74 million with 72% shared by the financial institution. The

rest of the capital investment (Nu. 3.72 million comprising 36%) will be managed by

entrepreneurs on their own arrangement. The details are as follows:

Table_ 14: Term Loan Requirement from Financial Institution

# Particulars Margin

%

Amount (Nu.in Lacs)

Own

Contribution

Bank

Loan (Nu.in Lacs)

1. Building & Civil Construction 37.95 3.79 34.15 37.95

2. Plant & Machinery 56.34 5.63 50.71 56.34

3. Misc. Fixed Assets 14.75 2.21 12.54 14.75

4. Preliminary Expenses 1.00 1.00 0.00 1.00

5. Pre-operative Expenses 21.28 21.28 0.00 21.28

6. Contingencies 3.27 3.27 0.00 3.27

Total ((Nu. in Lacs)) 134.60 37.20 97.40

Sharing % 28% 72%

1.9.10. Working Capital Loan Amount

Working capital loan up to 75% of the total working capital gap is considered in

Bhutan. The total estimated working capital requirement is Nu.7.7 million and margin

money is estimated as Nu. 2.78 million. The estimated working capital loan amount is

Nu. 4.97 million. It can be arranged from the banks in Bhutan with the interest rate of

13% (fixed rate as well as floating)11.

The estimation of required working capital, loan amount and margin money

requirement are detailed in the below table:

Table_ 15: Estimation of Required Working Capital and Loan

Estimation of Required Working Capital and Loan

# Particulars Period Margin

%

Amount (Nu.in

Lacs)

Own

Contributio

n (Nu. in Lacs)

Bank

Loan (Nu.in Lacs)

11 The Interest Rate for term loan and working capital loan is referenced from the rate of BNB, Bhutan,

available on https://www.bnb.bt/wp-content/uploads/dld/DOCUMENTS/interest-rates.pdf (Industrial Loan

capital/Term loan Interest rate 12% (fixed rate), working capital loan 13% (fixed rate).


Page | 19

1. Raw Material 15

days

50% 15.40 7.70 7.70

2. Receivable 30

days

25% 55.07 13.77 41.30

3. Cash for Expenses &

Consumables

15days 90% 7.02 6.32 0.70

Net Working Capital Requirement 77.49 27.79 49.70

Margin Money for working Capital Nu. 27.79Lacs

1.9.11. Sales Realisation/Estimated Turnover

Sales Realisation or estimated turnover is based on the sale price at FOB Factory Gate.

The sale price of products is determined as cost competitive with present available

similar product by domestic as well as international supply. The sale price of Premium

Quality Herbal Soap is considered as average 160kg for 10gm to 125gm packing.

The total amount of Nu. 94.4 million is estimated as sales realization (turnover) at 100%

production capacity. The sale price of each item is detailed in the table below with

production capacity:

Table_ 16: Sales Realization/Estimated Turnover

# Product Sale

Quantity

Annual

Rate (Nu. per Unit)

Total Amount

per Annum (Nu. in Lacs )

1. Premium Quality Herbal Soap 90 MT 160 Kg. 144

2. Shampoo 60 KL 350 Lt. 210

3. Body Wash Location 30 KL 700 Lt. 210

4. Skin Moisturizer Cream 20 KL 700 Lt. 140

5. Hair Cream 20 KL 600 Lt. 120

Total 944


Page | 20

1.9.12. Estimated Cost of Production and Profitability

As per the above estimated economic parameters, finance can be arranged by sharing

28% by investor and 72% by loan through financial institutions. Working capital mainly

consists of the amount required to purchase raw material. Required margin money for

this project is Nu. 2.72 million. For profitability estimation, analysis of loan repayment

capacity and analysis of financial ratios for this project, the following assumptions and

relevant basis applicable to Bhutan have been considered:

• Industrial land12 in Bhutan is available on lease for up to maximum of 30 years and

could be renewed further. The plots for industrial use are available in the

government developed industrial parks and estates at prominent locations such as

Thimphu, Samtse, Phuentsholing, Gelephu etc. Charges are considered as Nu. 4 per

square feet per annum for the first three years. In the fourth year, the rate is Nu. 6

(i.e. 50% increase). Subsequently, it increases @3% every year.

• The profitability projection has been worked out for 10 years at 70% capacity

utilization to be achieved during the first to the third year and 80% from the fourth

year and 90% from the seventh year and onwards.

• Repair & maintenance have been taken at @1% p.a. on plant & machinery & misc.

fixed assets.

• Bank interest rate13 has been calculated @12% p.a. on term loan & @13% working

capital loan.

• Insurance charges is @ 0.25% on all assets in the first year. Then it is @ 5% decrease

every year.

• Power & water charges are increased @ 5% every year.

• Administrative expenses have been increased @ 5% every year.

• Margin money has been considered @ 40% on building, @ 25% on plant &

machinery and @ 25% on misc. fixed assets.

• Bank loan has been considered for repayment in 7 years with one-year moratorium.

• Preliminary expenditure will be written off every year in the next 10 years.

• Pre-operative expenditure will be written off from the second year.

• Depreciation has been charged on Straight-Line Method.

• Insurance, lease rent & interest has been taken as fixed cost for calculating B.E.P.

• Income tax14 has been charged @ 30% every year as per Bhutan's tax rates.

• DSCR - debt service coverage ratio - is defined as net operating income divided by

total debt service.

12https://www.bhutanenterprise.com/2018/06/03/investment-climate-in-bhutan/#:~:text=Lease%20rate%20for %20Industrial

%20Estate&text=4%20per%20square%20feet%20peri.e%2050%25%20increase%20on%20Nu. 13 The Interest Rate for term loan and working capital loan is referenced from the rate of BNB, Bhutan, available on

https://www.bnb.bt/wp-content/uploads/dld/DOCUMENTS/interest-rates.pdf (Industrial Loan capital/Term loan Interest rate 12%

(fixed rate), working capital loan 13% (fixed rate). 14 Ministry of Finance - https://www.mof.gov.bt/faq/)


Page | 21

1.10. Estimation of Project Profitability: (Nu.in Lacs) # Particulars 1st Yr. 2nd Yr. 3rd Yr. 4th Yr. 5th Yr. 6th Yr. 7th Yr. 8th Yr. 9th Yr. 10th Yr.

1 Installed Capacity@100% 944.00 944.00 944.00 944.00 944.00 944.00 944.00 944.00 944.00 944.00

2 Capacity Utilisation 70% 70% 70% 80% 80% 80% 90% 90% 90% 100%

3 Actual Sales (Nu. in Lacs) 660.80 660.80 660.80 755.20 755.20 755.20 849.60 849.60 849.60 944.00

4 Cost of Operation

4.1 Land Lease Charges 5.17 5.17 5.43 7.75 7.98 8.22 8.47 8.72 8.98 9.25

4.2 Raw Material 374.22 374.22 374.22 427.68 427.68 427.68 481.14 481.14 481.14 534.60

4.3 Consumables @ 3% 11.23 11.23 11.23 12.83 12.83 12.83 14.43 14.43 14.43 16.04

4.4 Power and Utility 16.80 17.64 18.52 19.45 20.42 21.44 22.51 23.64 24.82 26.06

4.5 Repair & Maintenance @3% 1.44 1.44 1.44 1.44 1.44 1.44 1.44 1.44 1.44 1.44

4.6 Salary & Wages 57.00 59.85 62.84 65.98 69.28 72.75 76.39 80.20 84.21 88.43

4.7 Fringe Benefits @10% 8.55 8.98 9.43 9.90 10.39 10.91 11.46 12.03 12.63 13.26

4.8 Insurance 0.50 0.45 0.41 0.36 0.33 0.30 0.27 0.24 0.22 0.19

4.9 Administration Expenses 7.00 7.35 7.72 8.10 8.51 8.93 9.38 9.85 10.34 10.86

Total 476.74 481.15 485.80 545.75 550.88 556.28 617.02 622.98 629.24 690.88

5 Marketing Expenses @10%

(Sales)

66.08 66.08 66.08 75.52 75.52 75.52 84.96 84.96 84.96 94.40

6 Cost of Production 542.82 547.23 551.88 621.27 626.40 631.80 701.98 707.94 714.20 785.28

7 Sale (Estimated Turn Over) 660.80 660.80 660.80 755.20 755.20 755.20 849.60 849.60 849.60 944.00

8 Profit Before Interest

and Depp.

117.98 113.57 108.92 133.93 128.80 123.40 147.62 141.66 135.40 158.72

9 Interest on Term Loan @12% 11.69 10.70 8.74 6.77 4.80 2.83 0.88 0.00 0.00 0.00

10 On Working Capital @13 % 6.46 6.46 6.46 6.46 6.46 6.46 6.46 6.46 6.46 6.46

11 Total Interest 18.15 17.16 15.20 13.23 11.26 9.29 7.34 6.46 6.46 6.46

12 Profit Before Depreciation. 99.84 96.40 93.73 120.70 117.54 114.11 140.29 135.20 128.94 152.26

13 Depreciation 11.48 9.91 8.58 7.44 6.47 5.64 4.93 4.32 3.80 3.35

14 Profit After Depreciation 88.36 86.49 85.15 113.27 111.07 108.47 135.36 130.88 125.15 148.91

15 Pre-operative Exp. W. Off 0.00 2.36 2.36 2.36 2.36 2.36 2.36 2.36 2.36 2.36

16 Preliminary Exp. W .Off 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10

17 Profit before Taxation 88.26 84.03 82.68 110.80 108.61 106.01 132.89 128.42 122.68 146.45

18 Taxation @30% of Net Profit 26.48 25.21 24.81 33.24 32.58 31.80 39.87 38.53 36.80 43.93

19 Accumulated Profit 61.78 120.60 178.48 256.04 332.07 406.27 499.29 589.19 675.06 777.58

20 Profit after Taxation 61.78 58.82 57.88 77.56 76.02 74.20 93.03 89.89 85.88 102.51

21 Add: Depreciation 11.48 9.91 8.58 7.44 6.47 5.64 4.93 4.32 3.80 3.35

22 Add: Interest on Term Loan 11.69 10.70 8.74 6.77 4.80 2.83 0.00 0.00 0.00 0.00

Total (A) 84.95 79.43 75.19 91.77 87.29 82.67 97.95 94.21 89.67 105.86

23 Interest on Term Loan 11.69 10.70 8.74 6.77 4.80 2.83 0.88 0.00 0.00 0.00

24 Repayment on Term Loan 0 16.40 16.40 16.40 16.40 16.40 15.40 0.00 0.00

Total (B) 11.69 27.10 25.14 23.17 21.20 19.23 16.28 0.00 0.00 0.00

Surplus (A) - (B) 73.26 52.33 50.06 68.60 66.09 63.44 81.68 94.21 89.67 105.86

DSCR (A/B) 7.27 2.93 2.99 3.96 4.12 4.30 6.02 0.00 0.00 0.00

Average DSCR 4.51


Page | 22

1.11. Calculation of Interest on Term Loan and Repayment (Nu. in

Lacs) # Year Opening Balance Repayment Closing

Balance

Interest

1 1st year 97.40 0 97.40 11.69 11.69

2 2nd year

1st Qtr. 97.40 4.10 93.30 2.86

2nd Qtr. 93.30 4.10 89.20 2.74

3rd Qtr. 89.20 4.10 85.10 2.61

4th Qtr. 85.10 4.10 81.00 2.49 10.70

3 3rd year

1st Qtr. 81.00 4.10 76.90 2.37

2nd Qtr. 76.90 4.10 72.80 2.25

3rd Qtr. 72.80 4.10 68.70 2.12

4th Qtr. 68.70 4.10 64.60 2.00 8.74

4 4th year

1st Qtr. 64.60 4.10 60.50 1.88

2nd Qtr. 60.50 4.10 56.40 1.75

3rd Qtr. 56.40 4.10 52.30 1.63

4th Qtr. 52.30 4.10 48.20 1.51 6.77

5 5th year

1st Qtr. 48.20 4.10 44.10 1.38

2nd Qtr. 44.10 4.10 40.00 1.26

3rd Qtr. 40.00 4.10 35.90 1.14

4th Qtr. 35.90 4.10 31.80 1.02 4.80

6 6th year

1st Qtr. 31.80 4.10 27.70 0.89

2nd Qtr. 27.70 4.10 23.60 0.77

3rd Qtr. 23.60 4.10 19.50 0.65

4th Qtr. 19.50 4.10 15.40 0.52 2.83

7 7th year

1st Qtr. 15.40 4.10 11.30 0.40

2nd Qtr. 11.30 4.10 7.20 0.28

3rd Qtr. 7.20 4.10 3.10 0.15

4th Qtr. 3.10 3.10 0.00 0.05 0.88


Page | 23

1.12. Break Even Point

# Particulars

1st

Yr.

2nd

Yr.

3rd

Yr.

4th

Yr.

5th

Yr.

6th

Yr.

7th

Yr.

8th

Yr.

9th

Yr.

10th

Yr.

1 Calculation of B.E.P.

Variable Cost

469.7

7

470.6

1

471.4

9

536.9

2

537.8

9

538.9

1

604.4

9

605.6

1

606.7

9 672.54

Fixed Cost

107.8

4

108.8

7

109.5

9

112.7

7

114.2

2

116.0

4

118.2

2

121.8

3

126.6

5 131.80

2

Break Even Point

(B.E.P.)

56.45

%

57.24

%

57.89

%

51.66

%

52.56

%

53.65

%

48.23

%

49.93

%

52.16

%

48.55

%

Average B.E.P. 52.83%

1.13. Projected Balance Sheet for the Project (10 Year) # Description Construc

tion

Period

Operation Period in Years

0 1st

Yr.

2nd

Yr

3rd

Yr

4th

Yr

5th

Yr

6th

Yr

7th

Yr

8th

Yr

9th

Yr

10th

Yr

1 Liabilities

1.

1 Equity 37.20

37.2

0

37.2

0

37.2

0

37.2

0

37.2

0

37.2

0

37.2

0

37.2

0

37.2

0

37.2

0

1.

2 General reserves 0

61.7

8

120.

60

178.

48

256.

04

332.

07

406.

27

499.

29

589.

19

675.

06

777.

58

1.

3 Debt 97.40

97.4

0

81.0

0

64.6

0

48.2

0

31.8

0

15.4

0 0.00 0.00 0.00 0.00

1.

4 Current Liabilities 0.00 0.46 0.51 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50

1.

5

Working Capital

Loan 0.00

49.6

9

49.6

9

49.6

9

49.6

9

49.6

9

49.6

9

49.6

9

49.6

9

49.6

9

49.6

9

Total Liabilities 134.59

246.

53

289.

00

330.

47

391.

63

451.

26

509.

06

586.

69

676.

58

762.

46

864.

97

2 Assets

2.

1 Gross Fixed Assets 112.31

112.

31

112.

31

112.

31

112.

31

112.

31

112.

31

112.

31

112.

31

112.

31

112.

31

2.

2

Accumulated

Depreciation 0

11.4

8

21.3

9

29.9

6

37.4

0

43.8

7

49.5

1

54.4

4

58.7

5

62.5

5

65.9

0

2.

3

Net fixed assets

(2.01-2.02) 112.31

100.

83

90.9

2

82.3

5

74.9

1

68.4

4

62.8

0

57.8

8

53.5

6

49.7

6

46.4

1

2.

4

Preliminary

Expenses 1.00 0.90 0.80 0.70 0.60 0.50 0.40 0.30 0.20 0.10 0.00

2.

5

Pre-Operative

Expenses 21.28

21.2

8

18.9

2

16.5

5

14.1

9

11.8

2 9.46 7.09 4.73 2.36 0.00

2.

6 Current Assets 0.00

14.4

9

16.5

6

16.5

6

16.5

6

16.5

6

16.5

6

16.5

6

16.5

6

16.5

6

16.5

6

2.

7

Profit & Loss

Account 0.00 0.00 0 0 0 0 0 0 0 0 0

2.

8

Cash & Bank

Balance 0.00

109.

03

161.

80

214.

32

285.

38

353.

94

419.

84

504.

86

601.

54

693.

68

802.

00

Total Assets 134.59

246.

53

289.

00

330.

47

391.

63

451.

26

509.

06

586.

69

676.

58

762.

46

864.

97


Page | 24

1.14. Environment Consideration Maintaining and sustaining the environment is of paramount importance for this

project. The manufacturing process contains no harmful ingredient. It will not create

any effluent and chemical waste. However, the plant is designed to be environment

friendly and prioritises to maintain neat and clean atmosphere through its industrial

process activities.

It’s an eco-plant and environment management system ISO 14001 will be

implemented and followed strictly to ensure that there is no compromise in

environment management.

1.15. Conclusion Beauty products like soap, shampoo and body care cater to the daily needs of people.

Some entrepreneurs have started manufacturing herbal glycerine-based soap to know

the liking of users “keeping away the chemicals normally used in these products”. The

demand is ample and it has wide scope in the domestic as well as the international

market and the main focus country is Germany. It is covered under small industry

segment and can be managed through technical collaboration with companies from

India and Thailand.

The project is financially viable with Net Profit Ratio of 14.24%. It needs around 25

employees including managerial staff, and skilled and unskilled staff to operate the

plant. The financial ratios are positive during the first 7 years of operation. The average

DSCR is 4.51which implies that the project generates sufficient funds to cover its cost,

including loan repayments and interest payments during the period. This also indicates

that the project can continue making profits even after 7 years.

The required machinery and equipment for the production of soap and allied products

can be imported from India, Thailand and Italy.

Based on the estimation of project cost and financial analysis, the production of Beauty

Care product manufacturing unit is financially viable, profitable with a good rate of

return. It is recommended to entrepreneurs to scale up to industrial level.


Page | 25

1.16. Annex A: List of Equipment Suppliers The manufacturing process is covered under engineering sector. The state-of-the-art modern

equipment can be sourced from India. Some of the leading manufacturers of equipment

include (individuals are advised to conduct their own research to look for suppliers, the

following list does not indicate the consultant’s opinion on the choice of supplier and is

provided only for basic information based on first hand search):

▪ RSB Equipment’s Private Limited

Mr. Atanu Sarkar

435, Jessore Rd, Shyam Nagar, Amarpalli,

Dum Dum, Kolkata, West Bengal 700055

Mobile: 098302 78600,

Email: [email protected],

Website: www.rsbpumps.com

▪ Kishori Kripa Enterprises

Mr. Naveen Bhalla

27, Pandit Park, Shivaji Gali

Krishna Nagar, Delhi - 110051, India

Mobile: +91 9811114589

Email: [email protected]

Website: www.kishorikirpa.com

▪ Golden Engineering Co.

Mr. Tarun Preet Singh

63/27, Opposite Lakhbir Complex,

Chd road, Khanna - 141407 (Punjab) India.

Mobile: +91-88721-77000, 08909241371


Website: www.goldenengineeringcompany.com

▪ Adhisakthi Projects Private Limited

Senthil Kannan (CEO)

No. 20/10, Ganesh Nagar Main Road, G. K. Industrial Estate, Alappakkam,

Porur, Chennai - 600116, Tamil Nadu, India

Mobile: +91 9443203221, 9442255639


Website: www.adhisakthi.com

▪ Sakun Engineers

Mr. Hiten (Proprietor)

33/A, New Arbuda Estate, New Ranip

Ahmedabad - 382470, Gujarat, India

Mobile: +91 9443203221, 9442255639


Website: www.sakunengineers.in

References

▪ BhutanTradeStatistics2019260320201.pdf

▪ www.businesswire.com

▪ www.mof.gov.bt

▪ https://www.equitymaster.com/research-it/sector-info/consprds/consprds-

products.html#:~:text=The%20popular%20and%20economy%20segments,at%201%2C100%20gms%20p

er%20annum.

▪ https://my.msme.gov.in/MyMsmeMob/MsmeProjectProfile/Pages/2_6.html

▪ https://www.diynatural.com/how-to-make-glycerin-soap-base-recipe/

▪ http://www.madehow.com/Volume-2/Soap.html

https://www.mof.gov.bt/wp-content/uploads/2020/03/BhutanTradeStatistics2019260320201.pdf

http://www.mof.gov.bt/


Page | 26

Project Title:

Manufacturing of Mouth freshener

(Flavoured Areca nut and Cardamom)

Tobacco Free Product


Page | 27

2. Manufacturing of Mouth freshener

2.1. Background of the Idea People consume mouth fresheners for various reasons but mostly for good breath.

Known as ‘Pan Masala’, it is a very popular product in India and could be described as

a Bhutanese equivalent to Doma-pani.

Popular brands in the Bhutanese market include Rajnigandha, Rajnigandha Pearls,

Shakila, Shikar. None of these contain tobacco. The basic composition can vary based

on the brand and product but could consist of a balanced mixture of areca nuts (also

known as supari), catechu, cardamom, lime, flavoring agents and some natural

perfuming materials.

In reference to the Bhutan Trade Statistics, following highlights are presented;

i. Some types of pan masala are produced in Bhutan.

ii. Exports have plummeted possibly on the account of India’s GST.

iii. Import has still increased by 72% in 2019 as compared to 2018 indicating that

either the demand has substantially increased15.

On the supply side, Bhutan is having a rich production of Cardamom and Areca nut.

The southern Dzongkhags of Sarpang and Samtse lead the production. While the

production of Areca nut has been on the rise, cardamom production has been

▪ 15 BhutanTradeStatistics2019260320201.pdf

2014 2015 2016 2017 2018 2019

Imp_Pan masala 21 26 21 23 16 28

Exp_Pan masala 43 20 21 17 3 0

21

26

21 23

16

28

43

20

21

17

3

0 -

5

10

15

20

25

30

35

40

45

50

Imp_Pan masala Exp_Pan masala

Figure_ 7: Trade Statistics of Pan Masala (Nu. in Millions)



Page | 28

declining on the account of poor market price (or rather poorer price as compared to

few years ago).

Figure_ 8: Cardamom and Arecanut Production in Bhutan (MT)

2014 2015 2016 2017 2018

Arecanut 7468 9406 9467 9342 11681

Cardamom 1781 2091 2736 2245 1542

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

Cardamom Arecanut


Page | 29

2.2. Market Outlook International16

India is the major producer and consumer of areca nut in the world17. Production is

concentrated in six states, namely Karnataka, Kerala, Assam, Meghalaya, Tamil Nadu

and West Bengal. There is an ever-increasing demand for mouth freshener products.

Among the various types of pan masala available in the Indian market, pan masala

containing tobacco represents the dominating type accounting for more than 50% of

the entire market. Pan masala containing tobacco is followed by plain pan masala and

flavoured pan masala. Exports also represent a major driver of the Indian pan masala

market.

The biggest export market for Indian pan masala is the UAE accounting to one-third

of the total export. UAE is followed by USA, Singapore, Afghanistan, South Africa, Saudi

Arabia and Malaysia.

The majority of the Indian pan masala market is highly disorganised and is surrounded

by few players, namely, DS GROUP, Manikchand Group, Godfrey Phillips India Ltd,

Kothari Product Limited, Trimurti Fragrances Pvt. Ltd, Sugandha Exports, Dharampal

Premchand Limited, and Red Rose Group, among others. Among these players,

Rajnigandha represented the largest manufacturer of pan masala accounting for the

majority of the market share. It was followed by RMD, Pan Vilas, Pan Parag and others.

Factors like its immense popularity, constantly increasing disposable incomes,

convenient packaging, aggressive advertising campaigns by manufacturers and the

large-scale switching of consumers from tobacco products to pan masala are currently

encouraging the growth of pan masala market. The brief market outlook is surmised

below:

▪ Indian pan masala market has reached values worth INR 421,800 million in

2019 growing at a CAGR 8.09% and expected to grow with 9.3% in the next five

years18.

▪ Cardamom is popularly known as the queen of spices and it is the third-most

expensive spice in the world. The Cardamom market is expected to grow by

USD 49.65 million during 2020-2024, progressing at a CAGR of 3% annual19.

16https://www.businesswire.com/news/home/20170221006370/en/Pan-Masala-Market-Global-Industry-Trends-

Share 17 http://www.kerenvis.nic.in/Database/ImportantPlantationCrops_1732.aspx?format=Print#:~:

text=India%20is%20the%20largest%20producer,place%20in%20the%20Indian%20economy. 18 https://www.marketwatch.com/press-release/indian-pan-masala-market-2020-industry-overview-growth-rate-

trends-covid-19-impact-analysis-opportunities-and-forecast-till-2025-2020-05-16 19 https://www.reportlinker.com/p05028436/Global-Cardamom-Market.html


Page | 30

▪ The ever-growing demand for areca nut products such as pan, scented supari,

and pan masala in countries such as the U.S., Sri Lanka, Nepal, UAE, Mexico,

Thailand, Singapore, and other countries drives the growth of the areca nut

market.

2.3. The Project Concept Bhutan is a growing market for flavored Areca nut and Cardamom as Mouth freshener

items. Bhutanese are consuming Areca nut and Cardamom flavoured mouth freshers.

Pan masala brands ‘merry supari’ and ‘Raju Supari’ are popular among young

Bhutanese. Rajnighandha Pearls (silver coated seeds) are also popular.

With the growing demand for pan masala in the country and increasing consumption

pattern among the Bhutanese, production processing plant is recommended. The raw

materials are easily available in the country and can be imported from the neighboring

states of Assam and Bengal in India.

2.4. Technical Details

2.4.1. Product Group

Mouth Freshener is a balanced mixture of areca nut, clove, cardamom, mint, essence

and other ingredients packed in small pouches. Supari is a scented soft areca nut

known for its refreshing taste and flavor.

a. Mouth Freshener and Pan Masala

(Packaging - 10gm, 20gm, 50gm, 100gm)

b. Clean Graded Cardamom Pods

(Packaging - 5gm, 10gm, 20gm, 50gm,100gm, 250gm, 500gm)

c. Peppermint Coated Beetle Nut

(Packaging - 10gm, 20gm, 50gm,100gm, 250gm, 500gm)

2.4.2. Plant Capacity and Equipment

The plant will operate in single shift, 8-hour production in 300-day years. Plant capacity

is assessed with final annual output of 105MT with consideration to investment,

technology, skill sets & expansions plan, Bhutan Industrial development demand and

supply projections etc.

2.4.3. Assessment Production Capacity

The plant production estimate are as follows:


Page | 31

Figure_ 9: Assessment Production Capacity:

Products

Particulars

Pan Masala Cardamom

Pods

Coated Cuts

Beetle Nut

Production Capacity 50 Kg/Hr. 50 Kg/Hr. 50 Kg/Hr.

Production in a Day 3 Hr. 2 Hr. 2 Hr.

Days in a Year 300 Days 300 Days 300 Days

Total Production in Year 45000 Kg 30000Kg 30000Kg

MT per Year 45MT 30 MT 30 MT

State of the art technology in rust free (mostly MOC SS 316 & 304) equipment is

planned for processing followed by WHO- GMP, ISO 22000 and FSSAI norms for

quality delivery of Mouth freshener flavored Areca nut and Cardamom products.

2.5. Manufacturing Process The manufacturing process of the proposed product is simple and technology can be

sourced from Indian companies under joint collaboration. However, as per available

skill sets, production is feasible in Bhutan. The manufacturing process mainly consists

of cleaning, boiling, drying and mixing of ingredients.

The production process brief is as follows:

2.5.1. Mouth Freshener and Pan Masala Manufacturing Process20

The process includes preparation of raw material, pre-processing, cleaning and

grading of areca nut and cardamom. Preparation of Areca nut consists with softening

process i.e. boiling, sun drying and cutting in small pieces (2-3mm size). It follows

layering of sweetener and menthol on cut pieces of Areca nut for its refreshing taste.

Finally, cardamom, Areca nut and other ingredients are blended with essence as per

the formulation.

The prepared product is packed in bio gradable moisture proof pouches of different

weights and sizes. The bigger packs are in Tin and Paper Boxes. All necessary

information for customers is mentioned on the packaging. Then the product is ready

for supply.

20 https://www.slideshare.net/franchiseconnect/alpha-agro-loooking-for-cf-distributors-for-pan-india


Page | 32

Figure_ 10: Manufacturing Process Flow Chart of Pan Masala

2.5.2. Green Cardamom Processing21

Clean & Graded Cardamom Pods processing is covered under Post

Harvested processing. It includes cleaning of pods for removing

dust and dirt. After the first cleaning, it is washed thoroughly to

remove additional dirts from cardamom capsules. Actual processing

starts from curing of wet pods in sodium carbonate (2% w/W) and

dipping in hot water at 40°C for 10 minutes.

This activity provides retention of green colour of cured capsules.

Subsequently sun drying is performed to maintain moisture for 7-

8hr. and after that mechanical dryer is used to make required quality

standard.

These prepared pods are further graded and evenly sorted

according to sizes and weight. The graded product is ready for packaging and supply.

It should be protected from absorption of moisture, or any other kind of unwanted

contamination. Thus, it is stored in gunny bags lined with 300-gauge polyethylene and

sometimes packed in wooden chests lined with moisture proof Kraft paper or

polyethylene.

21 Sweet Scented Supari Manufacturing Businesswww.entrepreneurindia.co

Figure_ 11: Clean & Graded

finest Cardamom Pods


Page | 33

Figure_ 12: Post Harvested Cardamom Processing Flow Chart

2.5.3. Peppermint Coated Cuts Areca Nut Processing22

It is a scented soft Areca nut, known for its refreshing taste and flavor.

Manufacturing Process23 comprises the following steps:

(a) Pealing and cleaning, washing areca nuts in water and seasoning

(b) Boiling in water and drying

(c) Cutting in pieces

(d) Sugar immersion and rinsing

(e) Drying: taking out sugared areca seeds, washing off excessive syrup on the

surface,

removing seasonings, and baking in oven

(f) Once the drying process is over, it can be packed in pouches and bio-degradable

poly bags for storage and supply

For every 100 kg of raw areca nut, the expected final product will weigh 13-15 kgs.

Pealed areca nuts can be sourced from farmers or wholesale suppliers.

The proposed business idea is to provide a range of manufacturing plants for Mouth

freshener products.

22 https://muvsi.in/scented-supari-making-business/


Page | 34

More details on the process can be found from the following sources and videos for

better understanding:

Figure_ 13: Readable Material


https://www.entrepreneurindia.co/pro

ject-and-profile-

details/Pan%20Masala

https://www.youtube.com/watch?v=L7ZgX

o_QqyM

https://www.slideshare.net/MDSALM

ANANJUM/processing-of-cardamom

https://www.youtube.com/watch?v=Zrjj0IL

Nee4

https://muvsi.in/scented-supari-

making-business/

https://www.youtube.com/watch?v=wWZl

wOPQn1w

2.6. Raw Material Requirement and Source Areca Nut and Cardamom are the main raw materials for

manufacturing mouth fresheners along with other ingredients like

clove, catechu, cardamom, lime, mint, essence and other flavouring

agents. Cuts of supari are blends with alkaloids and

peppermint/menthol.

Raw material for plant processing will be sourced from India

(Kolkata and Guwahati) and from within Bhutan. As per the

agriculture produce statistics, areca nut production touchedt 9.40

KT in 2018 in Bhutan. This is 5.24% increase from the year before.

Historically, areca nut production in Bhutan reached an all-time

high of 10.5 KT in 2012.

Cardamom plantations in Bhutan covered an area of about

13,880 acres with an annual production of 6,202 MT in 2019. Samtse, Chukha, Dagana,

Tsirang, Sarpang and Trongsa are the major large cardamom growing Dzongkhags in

Bhutan. Thus, areca nut and cardamom are both available in Bhutan for commercial

processing. A list of raw material supplier is attached as “annexure B”.

Details of required raw material is as follows along with the source: Table_ 17: Raw Material Requirement and Source

# Raw Material Source

1. Areca nut Bhutan

2. Cardamom Bhutan

3. Peppermint/menthol India

4. Herbs, addictive, flavors, saffron, sweetener, spices and

pomegranate, cumin, black pepper, dry ginger,

India and Bhutan

Figure_ 14: Glimpse of Raw

Materials for Pan Masala


Page | 35

fenugreek, fennel, pumpkin seeds, sesame, mint leaves,

cardamom, dry pan leaves, powdered lime etc.

5. Packaging material - packaging paper, gunny bag, PP

bag and met-pet pouches, carton box, packaging's tapes

etc.

India

2.7. Equipment Requirement24 Some of the equipment used for manufacturing

mouth freshener and supari products are pre-

cleaning machine, nut cutting machine,

decorticators, sifter sieves, boiling pans, mechanical

dryer, solar dryer, mixing tank, ribbon blenders,

automatic pouch filling and packaging machine,

corrugated box wrapping machine, weighing

machine, SS tanks & HDPE Drums, small hand tools

and laboratory equipment etc.

The required machines and equipment for this

plant can be sourced form Kolkata (West Bengal),

Guwahati (Assam) and Rajkot (Gujarat). A list of

suppliers is presented as annexure A of this report.

2.8. Required Licenses and Certification25 The proposed business idea falls under food processing based on state-of-the-art

technology and equipment. The business trends and required licenses and certification

are given below

Table_ 18: Required Licensees and Certification System

1. Type of Industry Small Sector – Food Processing

(Investment >Nu.10 million)

2. Employment To 22

3. Proposed Location: Jigmeling, Motanga, Bondeyma and

Dhamdum Industrial Parks in Bhutan

4. Land Requirement 1000 Sq. Mt. on lease

5. GST Tax Rate in India 12%

6. Market Bhutan - Individual, Hotels and Restaurants,

Retail Shops, Department Store etc.

24 Topic 8.1 of this report title as Reference for Equipment 25 https://www.who.int/biologicals/vaccines/good_manufacturing_practice/en/ and

https://halalindia.co.in

Figure_ 15: Betel Nut Cutting machine


Page | 36

7. Export Opportunity Bhutan Border States of India and Saudi

Arabia and Gulf Countries.

8. Required Systems and Licenses

Quality Management System ISO 9001:2015


Food management System ISO 22000 –HACCP

Approvals in Bhutan Environment Clearance and Other

Regulatory Act Registration and Certificates.

Export to US & Europe WHO- GMP (Good Manufacturing Practices)

Export to Gulf Countries Needs HALAL certification

Export to India FSSAI - APEDA

2.9. Financial Calculations

2.9.1. Estimated Project Cost and Financials

The total cost of the project is Nu. 13.8 million. The rate of return is 37.52% with

payback period of 32 months. The average DSCR is 3.23 indicating that the project

generates sufficient funds to cover its cost, including loan repayments and interest.

The financial ratios are positive during the first 7 years of operation. Some of the

financial trend are as follows: Table_ 19: Estimation of Building and Civil Work and Cost



13. Cost of Operation at 100% capacity utilization




14. Variable Costs at 100% capacity utilization 812.19


b. Other Variable Cost 51.93



17. D.S.C.R. 3.23

18. NPR 8%


2.9.2. Means of Finance

The capital investment is shared by the investor investing 29% and remaining 71% by

loan through financial institutions. Required margin money for the project is Nu. 3.5

million. The finance details are given in the table below:





Page | 37


Total 138.36



Total 97.00

2.9.3. Project Cost

The project cost is estimated to include the cost of building and civil construction,


contingency. Margin money for working capital is not considered as part of project

cost. The required land for plant set-up is on an area of around 1,000 m2 and it will be

arranged on lease. Estimated cost for building & civil construction is Nu. 3.9 million

which share about 28.15% of the project cost. Plant & Machinery cost is about Nu. 5.9

million consisting 42.59% of the project cost. The project cost is given below:

Table_ 21: Head Wise Project Cost and Sharing Percentage


Cost Sharing







Total 138.36 100%

2.10. Estimation of Building and Civil Work and Cost Based on the requirement of processing area, store for raw materials and finished

goods and office space, the following building area is planned. The civil construction

cost of the building is considered as per the Bhutan Schedule of Rates (Civil Works)26

2018 issued by Ministry of Works and Human Settlement, Bhutan. Pre-fabricated

building structure will be used for construction of building amenities. Total estimated

cost for building and civil work is Nu. 3.8 million. 7 The cost components of building

& construction are given below:



Page | 38

Table_ 22: Estimation of Building and Civil Work and Cost


Area (Sq. Mt.)

Rate (Nu. / Sq. Mt.)

Amoun

t (Nu. in

Lacs)

13. Production Area (Main

Shed) height 16 feet (5Mt.)

50 40 2000 750 15.00

14. Raw Material Storage 40 30 1200 600 7.20

15. Packaging Section 20 15 300 600 1.80

16. Finished Goods Storage 25 18 450 600 2.70

17. Laboratory 15 10 150 600 0.90

18. Office Space 18 15 270 600 1.62

19. Facilities + Utility + Pantry 20 15 300 600 1.80

20. Security & Time office 10 10 100 600 0.60

21. Boundary wall (130 RM

with height of 3m (10 Ft.)

and 1Ft. Thick)

412 10 4120 150 6.18

22. Parking Area 40 30 1200 Lump Sump 0.50

23. Space for Sun Drying and

Green Belt Development

70 50 3500 Lump Sump 0.30

24. Entrance Gate - 15 feet

wide and Name Sign

Board

35000 0.35

Total 37.95

2.11. Plant and Machinery Cost27 The cost estimation for plant & machinery has been worked out based on the cost

figures received from the Indian plant machinery suppliers. The prices are considered

without Indian GST tax as it is exempted under supply of trade agreement between

India and Bhutan (Category Export). Installation and commissioning of equipment are

considered separately in the total plant and machinery cost estimation.

Freight and insurance have been considered with the assumption that all goods are

transported by road. Goods of import origin would be handled at the Kolkata port.

Total estimated cost for building and civil works is Nu. 5.9 million and share the highest

percentage (42.59%) of the project cost. The equipment list28 with cost is given in the

table below:

27 Equipment Supplier List is given under annexure A. 28 Details given on Topic 8 of this report title as Additional Reference for Equipment


Page | 39

Table_ 23: Plant & Machinery with Cost

# Plant & Machinery Qty. Rate

(in Nu.)

Amount

(Nu. in Lacs)

20. Poly Carbonate Sun Dryer (1MT - 8 Hr) 1 850000 8.50

21. Pre-cleaning Machine Vibrator Type (100 Kg / Hr)

and Accessories

1 450000 4.50

22. Cardamom Washing Machine (100Kg/Hr) 1 85000 0.85

23. Mechanical Dryer for Drying (100 Kg/Hr) 1 900000 9.00

24. Cardamom grading machine (50Kg/Hr) 1 350000 3.50

25. Arecanut Dehusking Machine (100 Kg/hr) 1 180000 1.80

26. Arecanut Decorticators (100 Kg/Hr) 1 250000 2.50

27. Arecanut Nut Cutting Machine (100 Kg /Hr) 1 180000 1.80

28. Vibro Sieves Machine ( 50-70kg/Hr) 2 110000 1.10

29. Boiling Pans -Tilting Type(50Lt.) 1 135000 1.35

30. Motorized Mixture (30 Kg/Hr) 1 100000 1.00

31. Ribbon Blenders for Mixing

(MOC SS, Single Shaft 50-70kg / Hr)

2 570000 5.70

32. Automatic Pouch Filling and Packaging Machine 1 390000 3.90

33. Corrugated box wrapping machine 1 100000 1.00

34. Weighing Machine (Scale 500 Kg) 4 40000 0.40

35. SS Tanks & HDPE Drums 1 135000 1.35

36. Small Hand Tools and Accessories 1 40000 0.40

37. Testing and Monitoring Equipment Set 1.50

Total 50.15



Grand Total 58.93


Page | 40

2.12. Misc. Fixed Assets Miscellaneous fixed asset includes office equipment & furniture, computer and

peripherals, firefighting equipment, vehicle etc. Nu. 1.5 million has been estimated

under this head “MFA” and is presented in the table below: Table_ 24: Misc. Fixed Assets Cost Estimation


6. Office Equipment, Laptop, Printer & Software’s 1 3.50


8. Fire Fighting Equipment's (1set of 10 pcs each) 1 0.60



Total 14.72

2.13. Preliminary Expenses Preliminary expenses are those that are incurred before the incorporation and

commencement of business. These are treated as deferred revenue expenditure. These

expenses are marked to be written off in the next ten years in profitability estimation.

The Preliminary expense details are given below: Table_ 25: Preliminary Expenses


2. Company formation, Approvals and Setup expenses 1.00

Total 1.00

2.14. Pre-operative Expenses


total of Nu. 2.2 million 1is estimated under this cost to be written off in the next 10

years. It is considered as exempted in the first year. The details are given in the table

below:








15. Quality and Environment Management Certification Export

Market - GMP

7.00


Page | 41




Total 21.39

2.15. Cost of Raw Material The cost of raw materials consists of the cost of main ingredients, raw materials and


market prices in Bhutan. A total of Nu. 76 million has been estimated. A list of raw

material supplier is detailed under “Annexure B29”. The details are given in the table

below:



Requirement

Rate (Nu. Per

Unit)

Total

Amount (Nu.in

Lacs)

1. Areca nut 54Mt 240Kg 129.60

2. Cardamom 37.50 Mt 1000Kg 375.00

3. Peppermint/menthol 0.80 Mt 2000Kg 16.00

4. Herbs, additives, flavors, saffron,

Sweetener, spices and pomegranate,

cumin, black pepper, dry ginger,

fenugreek, fennel (Coated and without

Coated), Pumpkin Seeds, sesame, Mint

leaves, cardamom, dry pan leaves,

powdered lime etc.

29.25 Mt 750Kg 219.38

5. Packaging Material - Packaging Paper,

Gunny Bag, PP Bag and MET-PET

Pouches, Carton Box, Packaging's Taps

etc.

Set

21

Total Raw Material requirement at 100% capacity Utilization 760.98

2.16. Salary & Wages Salaries and wages (including benefits) for different categories of employees have


the present trends in the relevant segment and rules as per Pay Revision Act 2019 (9

July 2019) Bhutan. The fringe benefits are considered at 15% per year. It is also

considered that salary will increase 5% annually.

29 Raw Material Supplier in Bhutan - List is given under “annexure B”.


Page | 42

It needs about 24 employees include Manager, Accounts and Administration,

Advertising and Marketing, Reception and Office Support, Skilled Worker, Unskilled

Worker, Driver and security to operate the plant. The breakdown of manpower with

estimated salaries is given in the following table:


# Description Intake Salary Per

Month (Nu.)

Salary Per

Annum (Nu. In Lacs)

10. Manager 1 50000 6.00


12. Advertising and Marketing 1 30000 3.60

13. Reception and Office Support 1 15000 1.80



16. Transport - Driver 1 15000 1.80

17. Security 3 10000 1.20

18. Manager 1 50000 6.00

Total 24 46.80

2.17. Electrical and Water Consumption Charges30 Electricity charges are considered as per the tariff rate issued by Bhutan Power

Corporation. The unit cost of electricity has been considered @ Nu. 3/Kwh for

operating of machines and plant operation. It is assumed that the entire power

requirement is met from the grid. The expense on water supply, treatment and

distribution has been suitably considered based on the Thimphu City Corporation

water tariff on a lumpsum basis. It is assumed that power and water charges will

increase @ 5% every year. The expenses under this head are as follows: Table_ 29: Electrical and Water Consumption Charges

# Description Amount Per Annum



Total (Nu.in Lacs) 27.60

2.18. Term Loan Estimation The term loan requirement is estimated on the funding pattern in Bhutan. It is




estimated term loan is Nu.9.8 million of which 71% will come as loan from financial



Page | 43

institution. The rest of the capital investment (Nu. 4 million consisting 29%) will be

managed by entrepreneurs on their own.

The term loan details are as follows: Table_ 30: Term Loan Requirement from Financial Institution


%

Amount

(Nu.in

Lacs)

Own

Contribution

(Nu. in Lacs)

Bank Loan

(Nu.in

Lacs)

7. Building & Civil Construction 37.95 38.95 3.90 35.06

8. Plant & Machinery 56.34 58.93 8.84 50.09

9. Misc. Fixed Assets 14.75 14.72 2.21 12.51

10. Preliminary Expenses 1.00 1.00 1.00 0.00

11. Pre-operative Expenses 21.28 21.39 21.39 0.00

12. Contingencies 3.27 3.38 3.38 0.00

Total 138.36 40.71 97.65

Sharing % 29% 71%

2.19. Working Capital Loan Amount Working capital loan up to 75% of the total working capital gap is considered in

Bhutan. The total estimated working capital requirement is Nu. 9.7 million and margin

money is estimated as Nu. 3.5 million. Rest of the amount to form the working capital

loan amount is Nu. 6. 3 million. It can be arranged from the banks in Bhutan at the

interest rate31 of 13% (fixed rate as well as floating). Working capital requirements

have been worked out in the following table: Table_ 31: Working Capital Loan Amount


%

Amount

(Nu.in Lacs)

Own

Contribution

(Nu. in Lacs)

Bank Loan

(Nu.in

Lacs)

4. Raw Material 15 days 50% 21.92 10.96 10.96

5. Receivable 30 days 25% 67.38 16.84 50.53

6. Cash for Expenses

& Consumables

15days 90% 7.73 6.95 0.77


Margin Money for working Capital Nu. 34.76 Lacs

2.20. Sales Realization/Estimated Turnover Sales realization or estimated turnover is based on the sale price at FOB Factory Gate.

The sale price of products is determined as cost competitive with presently available

similar product whether supply is from domestic market or international.

The sale price of Pan Masala is considered as Nu. 800 a kg, Peppermint Coated Cuts

Areca Nut sale price is at Nu. 900 kg and the sale price of clean & graded finest

cardamom pods kept at Nu. 1,750 a kg. Based on these prices, a total of Nu. 94.5


available on https://www.bnb.bt/wp-content/uploads/dld/DOCUMENTS/interest-rates.pdf (Industrial

Loan capital/Term loan Interest rate 12% (fixed rate), working capital loan 13% (fixed rate).


Page | 44

million is estimated as sales realization (at 100% production capacity). The details are

as follows:


# Product for Sale Sale

Quantity

Annual

Rate (Nu. per Unit)

Total Amount

per Annum (Nu. in Lacs)

6. Mouth Freshener – Pan Masala 45 MT 800Kg. 360

7. Peppermint Coated Cuts Beetle

Nut

30 MT 900Kg. 270

8. Clean & Graded finest

Cardamom Pods

30 MT 1750Kg. 525

Total Sale/Turnover 105MT Rs.1155/-

2.21. Estimated Cost of Production and Profitability As per the above estimated economic parameters, the capital investment can be

shared between the investor (29%) and the remaining 71% as loan from a financial

institution. Working capital mainly consists of amount required to purchase raw

materials. Required margin money for this project is Nu. 3.5 million. For profitability

estimation, analysis of loan repayment capacity, and analysis of financial ratios for this

project, the following assumptions and relevant basis applicable to Bhutan have been

considered:

• Industrial Land32 in Bhutan is available on lease for up to maximum 30 years and

could be further renewed. The plots for industrial use are available in the

government developed industrial parks and estates at prominent locations as

such Thimphu, Samtse, Phuentsholing, Gelephu etc. Charges are considered at

Nu. 4 per square feet per annum for the first three years. In the fourth year the

rate is Nu. 6.00 (i.e. 50% increase). Subsequently, it increases @ 3% every year.


utilization to be achieved during the first year till the third year and 80% from

the fourth year and 90% from the seventh years onwards up to 100% in the 10th

year.

• Repairs & maintenance have been taken at @ 3% per annum on plant &

machinery & misc. fixed assets.

• Bank interest rate33 has been calculated @ 12% per annum on term loan @ 13%

working capital loan.

32

https://www.bhutanenterprise.com/2018/06/03/investment-climate-in-bhutan/#:~:text=Lease%20rate%20for

%20Industrial %20Estate&text=4%20per%20square%20feet%20peri.e%2050%25%20increase%20on%20Nu. 33 The Interest Rate for term loan and working capital loan is referenced from the rate of BNB, Bhutan, available on

https://www.bnb.bt/wp-content/uploads/dld/DOCUMENTS/interest-rates.pdf (Industrial Loan capital/Term loan

Interest rate 12% (fixed rate), working capital loan 13% (fixed rate).


Page | 45

• Insurance charges is @ 0.25% on all assets in first year and then decreases @ 5%

every year.



• Term loan has been considered @ 10% on building, @ 15% on plant &

machinery and @15% on misc. fixed assets.

• Bank loan has been considered for repayment in 7 years with one-year

moratorium.

• Preliminary expenses will be written off every year in the next 10 years.

• Pre-operative expenses will be written off beginning the second year.

• Depreciation has been charged using the Straight-Line Method.



• DSCR - debt service coverage ratio - is defined as net operating income divided

by total debt service.

34 Ministry of Finance - https://www.mof.gov.bt/faq/)


Page | 46

2.22. Estimation of Project Profitability: (Nu.in Lacs)

Table_ 33: Estimation of Project Profitability

# Particulars 1st Yr. 2nd Yr. 3rd Yr. 4th Yr. 5th Yr. 6th Yr. 7th Yr. 8th Yr. 9th Yr. 10th Yr.

1 Installed Capacity@100% 1155.00 1155.00 1155.00 1155.00 1155.00 1155.00 1155.00 1155.00 1155.00 1155.00

2 Capacity Utilization 70% 70% 70% 80% 80% 80% 90% 90% 90% 100%

3 Actual Sales in lacs Nu. 808.50 808.50 808.50 924.00 924.00 924.00 1039.50 1039.50 1039.50 1155.00

4 Cost of Operation


4.2 Raw Material 532.68 532.68 532.68 608.78 608.78 608.78 684.88 684.88 684.88 760.98

4.3 Consumables @ 3% 15.98 15.98 15.98 18.26 18.26 18.26 20.55 20.55 20.55 22.83



4.6 Salary & Wages 46.80 49.14 51.60 54.18 56.89 59.73 62.72 65.85 69.14 72.60

4.7 Fringe Benefits @15% 7.02 7.37 7.74 8.13 8.53 8.96 9.41 9.88 10.37 10.89

4.8 Insurance 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00


Total 639.59 644.01 648.65 731.91 737.02 742.40 826.42 832.34 838.56 923.48

5 Marketing Expenses @10% (Sales) 80.85 80.85 80.85 92.40 92.40 92.40 103.95 103.95 103.95 115.50


7 Sale ( Estimated Turn Over) 808.50 808.50 808.50 924.00 924.00 924.00 1039.50 1039.50 1039.50 1155.00

8 Profit Before Interest and Depp. 88.06 83.64 79.00 99.69 94.58 89.20 109.13 103.21 96.99 116.02



11 Total Interest 19.81 18.83 16.86 14.89 12.92 10.96 9.00 8.09 8.09 8.09


13 Depreciation 11.80 10.20 8.84 7.67 6.67 5.82 5.09 4.46 3.93 3.46



16 Preliminary Exp. W .Off 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10





21 Add : Depreciation 11.80 10.20 8.84 7.67 6.67 5.82 5.09 4.46 3.93 3.46


Total (A) 62.96 57.43 53.18 66.73 62.26 57.65 69.88 66.18 61.67 74.85


Page | 47



Total (B) 11.72 27.13 25.17 23.20 21.23 19.26 16.56 0.00 0.00 0.00

Surplus (A) - (B) 51.25 30.30 28.01 43.53 41.03 38.39 53.32 66.18 61.67 74.85

DSCR (A/B) 5.37 2.12 2.11 2.88 2.93 2.99 4.22 0.00 0.00 0.00

Average DSCR 3.23

2.23. Calculation of Interest on Term Loan and Repayment (Nu. in Lacs): Table_ 34: Calculation of Interest on Term Loan and Repayment (Nu. in Lacs)

# Year Opening

Balance

Repayment Closing

Balance

Interest

1 1st year 97.65 0 97.65 11.72 11.72

2 2nd year

1st Qtr. 97.65 4.10 93.55 2.87

2nd Qtr. 93.55 4.10 89.45 2.75

3rd Qtr. 89.45 4.10 85.35 2.62

4th Qtr. 85.35 4.10 81.25 2.50 10.73

3 3rd year

1st Qtr. 81.25 4.10 77.15 2.38

2nd Qtr. 77.15 4.10 73.05 2.25

3rd Qtr. 73.05 4.10 68.95 2.13

4th Qtr. 68.95 4.10 64.85 2.01 8.77

4 4th year

1st Qtr. 64.85 4.10 60.75 1.88

2nd Qtr. 60.75 4.10 56.65 1.76

3rd Qtr. 56.65 4.10 52.55 1.64

4th Qtr. 52.55 4.10 48.45 1.52 6.80

5 5th year

1st Qtr. 48.45 4.10 44.35 1.39

2nd Qtr. 44.35 4.10 40.25 1.27

3rd Qtr. 40.25 4.10 36.15 1.15

4th Qtr. 36.15 4.10 32.05 1.02 4.83

6 6th year


Page | 48

1st Qtr. 32.05 4.10 27.95 0.90

2nd Qtr. 27.95 4.10 23.85 0.78

3rd Qtr. 23.85 4.10 19.75 0.65

4th Qtr. 19.75 4.10 15.65 0.53 2.86

7 7th year

1st Qtr. 15.65 4.10 11.55 0.41

2nd Qtr. 11.55 4.10 7.45 0.29

3rd Qtr. 7.45 4.10 3.35 0.16

4th Qtr. 3.35 3.35 0.00 0.05 0.91

2.24. Break Even Point: Table_ 35: Break Even Point



Variable Cost 658.62 660.00 661.45 752.90 754.50 756.17 847.86 849.71 851.66 943.63

Fixed Cost 98.60 99.06 98.92 101.72 102.51 103.62 105.06 107.86 111.86 116.16

2 Break Even Point (B.E.P.) 65.79% 66.71% 67.27% 59.45% 60.48% 61.74% 54.83% 56.83% 59.55% 54.96% Average B.E.P. 60.76%

2.25. Projected Balance Sheet for the Project (10 Year): Table_ 36: Projected Balance Sheet

# Description Construction

Period


0 1st Yr. 2nd Yr 3rd Yr 4th Yr 5th Yr 6th Yr 7th Yr 8th Yr 9th Yr 10th Yr

1 Liabilities

1.1 Equity 40.71 40.71 40.71 40.71 40.71 40.71 40.71 40.71 40.71 40.71 40.71

1.2 General reserves 0 39.44 75.94 111.51 163.77 214.52 263.49 328.28 390.00 447.74 519.13

1.3 Debt 97.65 97.65 81.25 64.85 48.45 32.05 15.65 0.00 0.00 0.00 0.00

1.4 Current Liabilities 0.00 0.46 0.51 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50

1.5 Working Capital Loan 0.00 62.26 62.26 62.26 62.26 62.26 62.26 62.26 62.26 62.26 62.26


Page | 49

Total Liabilities 138.36 240.53 260.67 279.85 315.71 350.06 382.62 431.76 493.48 551.22 622.61

2 Assets

2.1 Gross Fixed Assets 115.97 115.97 115.97 115.97 115.97 115.97 115.97 115.97 115.97 115.97 115.97

2.2 Accumulated Depreciation 0 11.80 22.01 30.84 38.51 45.19 51.01 56.10 60.57 64.49 67.95

2.3 Net fixed assets 115.97 104.17 93.97 85.13 77.46 70.79 64.96 59.87 55.41 51.48 48.02

2.4 Preliminary Expenses 1.00 0.90 0.80 0.70 0.60 0.50 0.40 0.30 0.20 0.10 0.00

2.5 Pre-Operative Expenses 21.39 21.39 19.01 16.64 14.26 11.88 9.51 7.13 4.75 2.38 0.00

2.6 Current Assets 0.00 14.49 16.56 16.56 16.56 16.56 16.56 16.56 16.56 16.56 16.56

2.7 Profit & Loss Account 0.00 0.00 0 0 0 0 0 0 0 0 0

2.8 Cash & Bank Balance 0.00 99.58 130.33 160.82 206.83 250.33 291.19 347.90 416.56 480.70 558.03

Total Assets 138.36 240.53 260.67 279.85 315.71 350.06 382.62 431.76 493.48 551.22 622.61


Page | 50

2.26. Environment Consideration Maintaining and sustaining the environment is of paramount importance for this project.

The manufacturing process contains no harmful ingredient. It will not create any effluent

and chemical waste. However, the plant is designed to be environment friendly and

prioritises to maintain neat and clean atmosphere through its industrial process activities.

It’s an eco-plant and environment management system ISO 14001 will be implemented

and followed strictly to ensure that there is no compromise in environment management.

Mostly husk of the areca nut will be generated which can be used as fuel. Other small

disposal of any effluent will be recycled to ensure that these does not cause hazard at the

vicinity of the site.

2.27. Conclusion Bhutan can serve as a domestic market and while the foreign markets include India,

Bangladesh, Sri Lanka and Nepal. Mouth fresheners are traditionally popular in these

countries. A large regional population along with rising disposable incomes makes the

region an ideal market for Mouth Freshener products.

Moreover, high quality product, affordable price, convenient packaging, easy availability,

competitive marketing as well as the shift from tobacco to tobacco-free products offers

the potential to create a good market for Mouth Freshener products.

The suggestive products will be available in hygienic and attractive foil packets (sachets)

and tins which are easy to store and carry.

Working capital mainly consists of amount required to purchase raw materials. The capital

investment can be arranged by the investor investing 29% with the remaining coming as

loan from banks. The required margin money for this project is Nu. 3.5million with a rate

of return at 37.52% with a payback period of 32 months.

It needs about 24 employees include managerial staff, skill and unskilled staff to operate

the plant. The Financial ratios are positive during the first 7 years of operation. The average

DSCR is 3.23 indicating the project to generate sufficient funds to cover its cost, including

loan repayments and its interest.

Based on the estimation of project cost and financial analysis, production of mouth

freshener (flavored Areca nut and Cardamom) unit is financially viable, and profitable with

a good rate of return.


Page | 51

It is recommended for entrepreneurs to scale up the business to the Industrial level.

2.28. Annexure A – Plant and Machine Supplier The manufacturing process is covered under food processing. The state-of-the-art

modern equipment can be sourced from India. The sourced equipment will be hygienic

and most of them made by SS 304 and SS316. Some of the leading manufacturers for the

equipment include (individuals are advised to conduct their own research to seek for

suppliers and the following list does not indicate the consultant’s opinion on the choice

of supplier and is only for basic information based on first hand search):

Nobel Engineering

Mr. Vishal Riyani

Khodiyar Industries Area,

Near Rajkamal Railway Crossing,

Dhebar Road, Rajkot - 360002,

Gujarat, India

Mobile: 090334 91201

Email:

[email protected]

Website: www.nobelengineering.in

Unique Manufacture

Kalpesh Patel (Proprietor)

Opp. Rajeshree Bajaj Show Room

Railway Crossing , Dhebar

Road(South

Rajkot, Gujarat – 360002.

Mobile: +91 98984 63671

Email:

[email protected]

Website:

www.Uniquemanufacture.Co.In

Rajlaxmi Engineering Corporation

No. 32, Immambada Chowk, Great

Nag Road,

Nagpur - 440003, Maharashtra,

Mobile: +91-8048764042,

8079455700

Email: info@ Rajlaxmiengg.Com

Website: www.Rajlaxmiengg.Com

Packaging Machine:

P.K. Engineering Works

B.D Sharma (Proprietor)

A 90, Sector 10

Noida - 201301, Gautam Budh

Nagar,

Uttar Pradesh, India

Mobile: 098182 66942, 097111

51388


Website:

www.pkengineeringworks.in

Sara Udyog

Fakharuddin Ali(Proprietor)

C-167, Sector 10, Noida - 201301,

Uttar Pradesh,

Mobile: +91-9810137891, +91-

9818264602


Website: www.saraudyog.com

https://www.google.com/search?q=NOBEL+ENGINEERING&rlz=1C1CHBD_enIN837IN837&oq=NOBEL+ENGINEERING&aqs=chrome..69i57j0l4j69i60l3.1004j0j9&sourceid=chrome&ie=UTF-8

tel:9898463671

mailto:[email protected]

https://www.google.com/search?q=p.k.+engineering+works+email&rlz=1C1CHBD_enIN837IN837&oq=p.k.+engineering+works+email&aqs=chrome..69i57.808j0j9&sourceid=chrome&ie=UTF-8


Investment Opportunity Study 2020 Project Profile-Manufacture of Mouth Fresheners

Page | 52

2.29. Annexure “B” Raw Material Supplier in Bhutan • Food Corporation of Bhutan

Post Box No.80

Phuentsholing, Bhutan

Tel : 00-975-5-252241 / 252429

[email protected]

www.fcbl.bt

• Tashi Commercial Corporation

Post Box No. 78


Tel : +975 17 60 61 99

• C. Dorji Enterprise

Post Box No. 803

Thimphu, Bhutan

Contact : Mr. Chencho Dorji

Tel : +975-2-323371

• Sonam Rinchen Tshongkhang

Post Box No. 337

Thimphu, Bhutan

Contact : Mr. Jochu Dukpa

Tel : 00-975-2-322942

• Gyaltshen Trading Corporation

Post Box No. 310

Thimphu, Bhutan

Contact : Mr. Tshewang Dorji

Telefax : +975-2-324226

• Bhutan Fruit Products Ltd.

Samtse, Bhutan

Tel : +975-5-365294

• Phoju Tshongkhang

Post Box No. 320

Thimphu, Bhutan

Contact Mr. Phoju

Tel : +975-2-322887

• Ugyen C. Tshongkhang

Thimphu, Bhutan

Contact : Mr. Gayiey Nima

Tel : +975-2-325161

• Rinzin Tshongkhang

Thimphu, Bhutan

Contact : Mr. Tempa

Tel : +975-2-322968

• Phub Dorji Tshongkhang

Thimphu, Bhutan

Contact : Mr. Phub Dorji

Tel : +975-2-323650 / 321771

• Ugyen Tshongkhang

Thimphu, Bhutan

Contact : Mr. Ugyen

Tel : +975 17 83 29 55

• Chapchap Dorgan Enterprise

Upper Market


Contact : Mr. Thinley Dorji

Tel : +975-5-252167

• Lhaki Group Organization

Post Box No. 179

Thimphu, Bhutan

Contact : General Manager

Tel : 00-975-2-322570

Bhutan Agro Industries Ltd.

P.O. Box No. 329

Thimphu, Bhutan

Tel : +975-2-351078 /357081

E-mail : [email protected]

Additional Reference: www.mof.gov.bt

a. Reference for Equipment

https://www.indiamart.com/siddhapuraengineeringrepairing/sizer.html

https://www.indiamart.com/aayushengineeringworks/cardamom-washing-machine.html

https://www.indiamart.com/proddetail/automatic-betel-nut-cutting-machine-10863301612.html

b. Salary References

http://www.salaryexplorer.com/salary-survey.php?loc=25&loctype=1&job=226&jobtype=3

https://www.nationalcouncil.bt/assets/uploads/docs/download/2015/Wage_Rates_Eng.pdf

https://www.payscale.com/research/BT/Location=Thimphu/Salary

c. Raw Material Source:

https://www.flipkart.com/veg-e-wagon-pan-masala-200-gm-mouth-freshener/p/itmf3uhas2vpb66y

https://www.bigbasket.com/pb/chandan/mukhwas/

https://www.commodityonline.com/market-place/cardamom-sell-

leads/130#:~:text=We%20are%20selling%20cardamom%20in,1800%2D2500%2Fkg.

http://www.fcbl.bt/

https://www.google.com/search?q=Ugyen+Tshongkhang&rlz=1C1CHBD_enIN837IN837&oq=Ugyen+Tshongkhang&aqs=chrome..69i57j0.3736j0j4&sourceid=chrome&ie=UTF-8



Investment Opportunity Study 2020 Project Profile-Manufacture of Essential Oils

Page | 53

Project Title: Manufacturing Plant of Essential

Oils

(Ginger & Cardamom)

Investment Opportunity Study 2020 Project Profile-Manufacture of Essential Oil

Page | 54

3. Manufacturing of Essential Oil

3.1. Background of the idea Essential oils are used in a wide variety of consumer goods such as detergents, soaps,

toilet products, cosmetics, pharmaceuticals, perfumes, confectionery food products, soft

drinks, distilled alcoholic beverages (hard drinks) and insecticides. The global essential oils

market demand was estimated at 247.08 kilotons in 2020.1

The essential oil production was started in 1981 by the Bhutan Aromatic and Phyto-

Chemicals Section (BAPC) of Tashi Commercial Corporation. The main essential oil

production in Bhutan is lemon grass oil. But studies show that ginger and cardamom are

produced in huge quantities in Bhutan. Ginger oil and cardamom oil also have a high

demand in both the local and global markets. The global essential oils market is expected

to grow at a compound annual growth rate of 7.5% from 2020 to 2027 to reach USD 33.3

billion by 2027.1

3.2. Rationale of the idea Ginger production in Bhutan grew by 7.2% since 2014. In 2019, ginger production in

Bhutan was 6,202 MT and it put Bhutan in the 20th position of global ginger production.

Among all spices, ginger is the main cash crop supporting the livelihood of many farmers

of Bhutan. Ginger is a seasonal product but it is used extensively in many food

preparations. Therefore, it is essential to convert a part of the produce into low-volume

high-value ginger products to make the crop cultivation more lucrative. As it is abundantly

available in the region, different products like dehydrated ginger, ginger oil, ginger

oleoresin may be developed. Ginger oil is primarily used as a flavoring agent in

confectionary as well as in soft drinks. Ginger is also used for multiple medicinal purposes. Figure_ 16:Ginger production data in Bhutan


Page | 55

Large cardamom (Amomum Subulatum) is a traditional spice with global production

largely limited to eastern Himalayan region spread over Northeast India, Eastern Nepal

and South-West Bhutan. Large cardamom is a subtropical crop grown in sloppy and moist

areas of these region sharing similar climatic conditions making production suitable.

Large cardamom is one of the major export commodities of Bhutan. The Bhutanese

produce is known for its high natural qualities containing 2-3% essential oil which is its

most desired flavoring property. It also has other properties like carminative, stomachic,

diuretic, cardiac stimulant and antiemetic.

Cardamom plantation in Bhutan covers an area of about 13,880 acres with an annual

production of 6,202 MT in 2019. Samtse, Chukha, Dagana, Tsirang, Sarpang and Trongsa

are the major large cardamom growing Dzongkhags. Large cardamom is grown only in

India, Nepal and Bhutan which lie in the sub-Himalayan region in south-east Asia. Bhutan

is third after Nepal and India in production of large cardamom in the world3.

Cardamom oil is an essential spice oil. It has very good flavor and has a major use in the

pharmaceutical industry, cosmetic industry, food industries etc.

For the production of oil, a steam distillation apparatus is required. It is used in biscuits,

bakery, canning, chewing gum, confectionery, perfumery, cosmetics, soaps and soft drink

industries. There is a very good domestic and export market for cardamom oil. Any

entrepreneur can enter in the field of manufacture of cardamom oil to be successful as

the rate of return is 137% as per the project costing.

Table_ 37: Quantity of cardamom procured through buyback and marketed1

# Dzongkhag Volume (Kg.) Amount (Nu) Av. Production

Per Kg.

No. of

producers

benefited

1. Trongsa 3,009.14 305,043.25 433.69 33

2. Zhemgang 7,494.08 3,164,348.45 422.25 74

3. Chhukha 1,928.60 819,871.50 425.22 7

4. Samtse 1,637.20 699,179.50 427.06 16

5. Sarpang 3,127.30 1,327,284.50 424.42 45

6. Samdrupjongkhar 5,648.92 2,282,339.90 404.03 68

7. Tsirang 6,514.00 2,771,203.30 425.42 114

8. Dagana 20,666.80 8,371,673.50 405.08 192

Total 50,026.04 20,740,943.90 414.60 459


Page | 56

According to the Bhutan Trade Statistics 2019 Report, Bhutan has imported essential oils

and resinoids; perfumery, cosmetic or toilet preparation, worth of Nu. 475 million. In 2017,

imports were worth of Nu. 365 million. It shows an increase in the imports of essential oil

by Nu 110 million between 2017 and 2019. It would also trigger in getting a higher value

in the export market. Ginger and cardamom essential oils have a great potential and offers

a new segment for investment opportunity in Bhutan.

3.3. Market Analysis The global essential oils market demand was estimated at 247.08 kilotons in 2020 and is

expected to grow at a compound annual growth rate (CAGR) of 7.5% from 2020 to 202735.

The market is expected to be driven by increasing demand from major end-use industries,

such as food and beverage, personal care and cosmetics, and aromatherapy. Several

health benefits related to essential oils are projected to drive their demand in

pharmaceutical and medical applications.

Unlike most of the conventional medicines and drugs, essential oils have no major side

effects. Such traits of essential oils are projected to be the major factor for market growth.

In addition, rising prevalence of health problems, such as cardiovascular problems,

Alzheimer’s, and bronchitis, is creating more demand for beneficial essential oils in

aromatherapy applications.

Table_ 38: Essential Oils Business Trade, Bhutan

Description India Other Countries

Export 7,297,244 6,596,306

Import 349,563,462 125,799,232

Year 2019 - Value in Nu.

Using above data from the Bhutan Trade Statistics 2019, there is a huge import of

essential oils and resinoids as compared to exports. There is a phenomenal possibility for

import substitution. Bhutan imports huge amount of essential oil and resinoids from

India and other countries.

3.3.1. Bhutan Essential Oil – Market Scenario4

“Kingdom Essences” a.k.a K. Essences promotes natural/indigenous healing through the

use of pure, essential oils extracted from medicinal and aromatic plants. The Kabab

Organic Farm in Trongsa was started with the vision to produce natural food products,

create employment and improve rural livelihoods.

35 https://www.grandviewresearch.com/industry-analysis/essential-oils-market

https://www.grandviewresearch.com/industry-analysis/essential-oils-market


Page | 57

3.3.2. Demand and Supply

Bhutan's production and trade of lemon grass oil was introduced and initially carried out

by the Aromatic and Phytochemicals Section of Tashi Commercial Corporation in 1983

and 1984. The oil was processed by steam distillation using a low-cost, cottage-type

distillery made from second-hand petrol drums.

Tashi Commercial Corporation now has a large distilling unit at Kurizampa and has sold

large number of smaller units to the farmers from whom the company now buys the oils.

The company also buys lemon grass collected from the wild and delivered to road sides.

According to the Bhutan Trade Statistics 2019, Annual Report, Bhutan imported Essential

oils and resinoids; perfumery, cosmetic or toilet preparation worth of Nu. 475 million.

In 2017, Bhutan imported essential oils worth of Nu. 365 million indicating an increase in

imports. Bhutan’s export is very less compared to imports.

Therefore, it is clear from the above information that the demand for essential oils are

very high nationally and internationally.

3.4. The Concept The penetration strategy for ginger and cardamom essential oils is to target customers

under one brand name like Brand Bhutan. Essential oils are used in a wide variety of

consumer goods such as detergents, soaps, toilet products, cosmetics, pharmaceuticals,

perfumes, confectionery food products, soft drinks, distilled alcoholic beverages and

insecticides.

Phase First:

• Ginger and Cardamom Oils: 15ml, 30ml, 50ml


Page | 58

3.5. Process Technology of Essential Oils (Ginger & Cardamom):

Figure_ 17:Process Technology of Essential Oils

SELECTION OF FRESH GINGER RHIZOMES

WASHING TO REMOVE THE ADHERING IMPURITIES

PEELING/TREATING IN LIME WATER SOLUTION

SLICING

DRYING

PULVERISING OF DRIED GINGER

STEAM DISTILLATION FOR EXTRACTION OF OIL

FILTERING AND PACKING


Page | 59

3.5.1. Ginger Oil36

Dry ginger is pulverized using grinder to get the

required mesh size. Steam distillation is the

preferred method for all essential oils produced in

large quantities. The steam, produced in a boiler is

introduced into an evaporation vessel which

contains the ginger powder and water. The ginger

powder is located on a grid placed at a certain

distance above the water level which fills the

bottom of the vessel. The water is vaporized

indirectly, by steam flowing in a pipe coil

submerged under water. The water vapor plus the

distilled oil coming from the evaporator vessel is

recovered in a separate water-cooled condenser.

This mixture flowing out of the condenser is separated by decantation in a Florentine

Flask. The essential oil is collected at the top and distilled water is left at the bottom of

the flask. As the water still contains some soluble parts of the oil, it is sent back to the

evaporator vessel to recover the soluble components by means of second distillation

process.

3.5.2. Cardamom oil extraction process37

The essential oil of cardamom is extracted by steam distillation from the seeds of the fruit

gathered just before they are ripe. The yield is 1-5 %. Extraction of essential oils from

cardamom is carried out by solvent extraction and steam distillation methods.

3.5.3. Steam Distillation Extraction

The grounded powder (150 g) and 500ml

distilled water are mixed in round bottomed

flask and heated for 5.0 hours to yield essential

oil. The collected extract is separated using a

separating funnel by holding it for 10 minutes in

order to separate the essential oil.

3.5.4. Solvent Extraction

The coarse powdered sample is extracted with

petroleum ether and kept in Soxhlet apparatus

bottom flask in 1:2 w/v, ratio for 24 hours. The

36 https://www.nedfi.com/sites/default/files/Project_Profile/Ginger%20Processing.pdf 37 http://www.chemijournal.com/archives/2018/vol6issue2/PartAM/6-2-296-678.pdf

Figure_ 18:Ginger Essential Oil

Figure_ 19: Cardamom Essential Oil


Page | 60

collected extract is concentrated in hot air oven at 40°C. The essential oil obtained is

weighed and kept at 4°C until further analysis.

3.6. Plant Capacity and Parameters Plant capacity is assessed with final output manufacturing of annual 4.01 million litres

production of essential oil considering investment, technology, skill sets and expansion

plan, Bhutan industrial development demand and supply projections etc.

Plant will operate in single shift 8-hour production cycle in 300-day years. The detailed

plant capacity planning is as follows: Table_ 39: Estimated Plant Capacity

Product Plant Capacity Per Month Annual Capacity

Start Up Plan

Ginger essential oil 350 Liters / Month 4200 Liters

Cardamom essential oil 150 Liters / Month 1800 Liters

3.7. Plant Equipment’s Equipment used for manufacturing of essential oil include Solar Cabinet Dryer- 200 Skin

Peeling Machine, Steam Distillation Unit, Baby Boiler, Steam Jacketed Kettle, Aluminum

Top Working Tables, Sealing Machine, Gas Burners, Washing Tanks, SS Utensils, Weighing

Scales, Aluminum Trays, Plastic Tubs and Laboratory Equipment Weighing Machine etc.

The required machines and equipment for this plant can be sourced from Maharashtra,

Dhanbad, New Delhi, Surat etc.

3.8. Equipment Cost and Financial Trends: Essential Oil Manufacturing The proposed business idea is based to provide a range of essential oils. After the suitable

establishment of market network, additional products can be planned in second phase

for manufacturing.

The project is suggested to be under small industries. The required land for this

manufacturing plant is 1,000 m2 with two halls for production process, quality control,

store room, office etc. It can be arranged on a lease basis. The equipment cost and

financial trends are presented below:

Table_ 40: Plant Standards

# Type of Industry Large Scale (>Nu. 10 million)

1. Employment Size 22

2. Land (1,000 m2) and Building On lease

3. Building & Construction Nu. 38.95 Lacs


Page | 61

4. Equipment and Machinery Cost: Nu. 58.75 Lacs

5. Raw Material Cost Nu. 575.89 Lacs

6. Break Even Point (BEP) 29 Months

7. Average Return on Investment 40.80%

8. GST Tax Rate in India 18%

9. Market Biscuits, Bakery, Canning, Chewing Gum,

Confectionery, Perfumery, Cosmetics,

Soaps, Soft Drink industries and

Pharmaceutical Companies etc.

10. Export Opportunity Bhutan Border States of India and Saudi

Arabia and Gulf Countries.

11. Required Systems and Licenses

12. Quality Management ISO 9001:2015

13. Environment Management ISO 14001

14. GMP Certification for Export Good Manufacturing Practice

15. Products Cover in Indian Act Drugs and Cosmetics act by the Act 68

of 1982 - 1983

16. BIS Number – India IS 7669, BIS IS 2888: 2004(R2016)

17. Bhutan Environment Clearance and Other

Regulatory Act Registration and

Certificates.

18. Export Requirement to US & Europe WHO- GMP (Good manufacturing

practices)

19. Export to Gulf Countries Needs HALAL certification

20. Export to India FSSAI – APEDA

21. Export – Import Duty to India Trade between India and Bhutan is not

subjected to customs duties.

The total investment requirement is estimated at about Nu. 14.1 million out of which Nu.

5.9 million is required for plant and machinery including laboratory and R& D equipment

for manufacturing of essential oil.

This plant can be operated in 1,000 m2 land area with a storage area (for raw materials as

well as to store finished goods), processing and packaging. It can be arranged on a lease

basis. Working capital is mainly consists of the amount required to purchase raw material.

The financial burden can be shared with the investor bearing 36% and the remaining

around 64% as loan from financial institutes. Required margin money for this project is

Nu. 3.4 million. Rate of return is 40.80% with BEP of 29 months.


Page | 62

It needs around 22 employees including Manager, Accounts and Administration,

Advertising and Marketing, Reception and Office Support, Skilled Worker, Unskilled

Worker, Drivers, and Security to operate the plant.

3.9. Estimated Project Cost and Financials The total cost of the project has been considered at Nu. 14.13 million. The break-even

months are 29, and the D.S.C.R value is 3.48 showing that the project will generate enough

to pay loans. Other details are as follows:

Table_ 41: Financial Trends



2. Cost of Operation




2.2 Variable Costs 615.91





5. D.S.C.R. 3.48

6. NPR 18.59%


3.10. Project Cost The cost of project is estimated as a total value of land, building and civil construction,


contingency. The required land is around 1,000 m2. Estimated cost for building and civil

construction is Nu. 3.9 million which is about 27.55% of the project cost. Plant and

Machinery cost is around Nu. 5.9 million which is about 41.5% of the project cost. Margin

money for working capital is not considered as part of project cost. The summary of the

project cost is given below:



Cost Sharing



Page | 63






Total 141.37 100%


Particulars Value (Nu. in Lacs)



Total Term Loan Amount 141.37


4. Working Capital Loan Amount 68.03

Total Working Capital Loan Amount 102.03

Figure_ 20: Graphical representation of Project Cost Components and its Share and its Share (*Nu. in Lacs)

3.10.1. Estimation of Building and Civil Work and Cost38

The company building area has been planned based on the requirement for a processing

area, goods for raw material and finished goods and office space. The civil construction

cost of the building is considered as per the Bhutan Schedule of Rates (Civil Works)39

2018, issued by Ministry of Works and Human Settlement, Bhutan. Pre-fabricated building

38 Source: https://www.mowhs.gov.bt/wp-content/uploads/2018/04/BSR-2018-civil.pdf 39 Source: https://www.mowhs.gov.bt/wp-content/uploads/2018/04/BSR-2018-civil.pdf

Building & Civil Construction 38.95, 27%

Plant & Machinery

56.34

Misc. Fixed Assets 15.72, 11%

Preliminary Expenses1.00, 1%

Pre-operative Expenses

23.57, 17%

Contingencies 3.40, 2%


Page | 64

structure will be used for construction building amenities. The details of Building and

Construction is given below:

Figure_ 21: Table 8: Building and Civil Work


Area (Sq. Mt.)

Rate Per (Nu. /Sq.

Mt.)

Amount (Nu.in Lacs)

1. Production Area

(Main Shed) height 16 feet (5Mt.)

50 40 2000.00 750 15.00

2. Raw Material Storage 40 30 1200.00 600 7.20

3. Packaging Section 20 15 300.00 600 1.80

4. Finished Goods Storage 25 18 450.00 600 2.70

5. Laboratory 15 10 150.00 600 0.90

6. Office Space 18 15 270.00 600 1.62

7. Facilities + Utility + Pantry 20 15 300.00 600 1.80

8. Security & Time office 10 10 100.00 600 0.60

9. Boundary wall (130 Rm with

height of 3m (10 ft) and 1 ft

Thick).

412 10 4120.00 150.00 6.18

10. Parking Area 40 30 1200.00

0.50

11. Space for Sun Drying 70 50 3500.00

0.30

12. Green Belt Development 35 25 882.00

13. Entrance Gate - 15 feet wide and

Name Sign Board

Entrance Gate - 15 feet wide and Name Sign

Board

1 35000 0.35

Grand Total 3400 38.95

3.10.2. Plant and Machinery Cost

The cost estimates for plant and machinery have been worked out based on the cost


without Indian GST tax as it is exempted under supply of trade agreement between India

and Bhutan (Category Export). Installation and commissioning of equipment are

considered separately in the total plant and machinery cost estimation. Freight and

insurance have been considered with the assumption that all goods are transported by

road. Goods of import origin would be handled at the port in Kolkata. The equipment list

with cost is given in the table below:

Table_ 44: Table 9: Plant & Machinery with Cost

# Plant & Machinery Qty. Rate Amount


Page | 65

(Nu. in Lacs)

1. Polycarbonate solar dryer (Size 9m*15m) 1 650000 6.50

2. Garlic Peeler (30 to 100 kg/Hr.) 1 350000 3.50

3. Cardamom Peeling Plant (100 kg - 200 kg/Hr.) 1 300000 3.00

4. Essential Oil Distillation Unit, Automation

Grade: Semi-Automatic (Capacity: 100- 1000

Liters /Day)

2 535000 10.70

5. Boiler (Capacity: Up to 500 Kg/hr. with safety

equipment's and Accessories)

1 500000 5.00

6. Stainless Steel Jacketed Kettle (50 Lt.) 4 250000 10.00

7. Industrial Working Table (MOC Aluminum) 5 20000 1.00

8. Glass Bottle Filling Sealing Machine 1 370000 3.70

9. Industrial Gas Burners 4 15000 0.60

10. Washing Tanks, SS Utensils, Weighing Scales,

Aluminum Trays, Plastic Tubs and Laboratory

Equipment

1 300000 3.00

11. Laboratory and testing Equipment 1 300000 3.00

Total 50.00



Grand Total 58.75


A miscellaneous fixed asset includes office equipment and furniture, computer and

peripherals, firefighting equipment, vehicle etc. Nu. 1.6 million has been estimated under

this head “MFA” and presented in the table below:

Table_ 45: Misc. Fixed Assets

# Particulars Qty. Rate (Nu.in Lacs)

Amount (Nu.in lacs)

1. Office Equipment, Laptop, Printer &

Software's, CCTV Camera and Systems

1 4.00 4.00

2. Furniture & Fixture with Interior Items 1 3.00 3.00

3. Fire Fighting Equipment's 1 0.60 0.60

4. Ventilation - Exhaust fans 4 0.03 0.12

5. Tata Mini Truck 1 8.00 8.00

Total 15.72


Page | 66


Preliminary expenses are those expenses which are incurred before the incorporation and

commencement of the business. These are treated as deferred revenue expenditure.

These expenses are marked written off in the next ten years in estimation of profitability.

The preliminary Expenses details are as follows:



1. Company formation expenses (ROC) and formalities 1.00

Total 1.00


These are expenses incurred prior to the commencement of commercial production. A

total of Nu. 2.4 million is estimated under this project. The details are given in the table

below:



1. Interest up to production for 1 Year on term loan 4.32

2. Insurance during construction period (0.25% of factory assets) 0.56




6. Quality and Environment Management Certification Export Market -

GMP

7.00



9. Registration of Trade Mark and Patent 0.40

Total 23.55


The cost of raw material consists of the cost of the main ingredients, raw material and

cost of packaging. The annual raw material cost is based on the present average market

prices in Bhutan. A total of Nu. 57.6 million has been estimated as raw material cost. The

details are given in the table below:


Page | 67

Table_ 48: Cost of Raw Material

# Raw Material Requirement

Per Month

Requirement

Per Annum

Rate

Nu. Per

Kg.

Total

Amount

Per Annum

(Nu.in Lacs)

1. Ginger Dry 10000 Kg 120000 160.00 192.00

2. Cardamom - badi

elayschi

6000Kg 72000 500.00 360.00

3. Additives and

Ingredients

150Kg 1799 300.00 5.40

4. Packaging Bottles

(20ml Packaging) with

cap

12495 Pieces 149936 10 14.99

5. Card Paper, Carton

Box, and Packaging

Material

Lump Sump 5.50

6. Misc. Items Lump Sump 3.00

Total Raw Material requirement at 100% capacity 575.89

3.10.7. Salary & Wages:

Salaries and Wages (including benefits) for different categories of employees have been

considered based on present day expenses. The salaries are considered as per the present

trends in the relevant segment and followed rules as per Pay Revision Act 2019 (9 July

2019) Bhutan. The fringe benefits are considered at 15% per year. It is also considered

that salary will increase by 5% annually. The breakdown of manpower with estimated

salaries is given in the following table: Table_ 49: Salary & wages

# Description Intake Salary (Nu. / Month)

Salary

Per

Month

Salary

Per Annum

1. Manager 1 50000 0.50 6.00

2. Accounts and Administration 1 30000 0.30 3.60

3. Advertising and Marketing 1 30000 0.30 3.60

4. Reception and Office Support 1 15000 0.15 1.80

5. Skilled Worker 8 20000 1.60 19.20

6. Unskilled Worker 8 10000 0.80 9.60

7. Transport - Drivers 1 15000 0.15 1.80

8. Security 1 10000 0.10 1.20

Total (Nu. In Lacs.) 22

46.80


Page | 68

3.10.8. Electrical and Water Consumption Charges40


Corporation. The unit cost of electricity has been considered @ Nu. 3/KwH for

operating of machines and plant equipment. It is assumed that the entire power


distribution has been suitably considered based on the Thimphu City Corporation water

tariff at lumpsum basis. It is assumed that power and water charges will increase @ 5%

every year.

Table_ 50: Electrical and Water Consumption Charges

# Description Amount

Per Annum (Nu.in Lacs)

1. Power Consumption Charges 26.40

2. Water Consumption Charges 0.60

Total 27.00

3.10.9. Term Loan Estimation:

The term loan requirement is estimated on the funding pattern in Bhutan. It is estimated

as per the norms by Bhutan National Bank Limited. The term loan is considered as up to

60% to 75% of the project cost and it does not include working capital margin money (as

per financing pattern by Bhutan National Bank Limited). The estimated term loan is Nu.

9.8 million with 70% shared by the financial institution. The estimated term loan is Nu.9.74

million with 72% shared by the financial institution. The rest of the capital investment (Nu.

4.3 million comprising 30%) will be managed by entrepreneurs on their own arrangement.

The details are as follows:

Table_ 51: Term Loan Requirement from Financial Institution


%

Amount

(Nu.in

Lacs)

Own

Contribution

(Nu. in Lacs)

Bank Loan

(Nu.in

Lacs)

1. Land (On Lease) 50% 0.00 0.00 0.00

2. Building & Civil

Construction

10% 38.95 3.90 35.06

3. Plant & Machinery 15% 58.75 8.81 49.94

4. Misc. Fixed Assets 15% 15.72 2.36 13.36

5. Preliminary Expenses 100% 1.00 1.00 0.00



Page | 69

6. Pre-operative Expenses 100% 23.55 23.55 0.00

7. Contingencies 100% 3.40 3.40 0.00

Total 141.37 43.01 98.35

8 Fund Sharing in %

30% 70%

8. 8 Margin Money for Working Capital 100% 34.00 0.00

3.10.10. Working Capital Loan Amount:

Working capital loan up to 75% of the total working capital gap is considered in Bhutan.

The total estimated working capital requirement is Nu. 10.2 million and margin money is

estimated as Nu. 3.4 million. The estimated working capital loan amount is Nu. 6.8 million.

It can be arranged from the banks in Bhutan with the interest rate41 of 13% (fixed rate as

well as floating). Working capital requirements have been worked out in the following

table: Table_ 52: Table 17: Working Capital Loan Amount

# Particulars Period Margin %

Amount (Nu.in Lacs)

Own

Contribution (Nu. in Lacs)

Bank Loan (Nu.in Lacs)


8. Receivable 30 days 25% 78.75 19.69 59.06

9. Cash for Expenses

& Consumables

15days 90% 6.69 6.02 0.67

Net Working Capital Requirement 102.03 34.00 68.03 33% 67%

Margin Money for Working Capital @ 100% Capacity Nu. 34.00 Lacs

3.10.11. Sales Realization / Estimated turnover

Sales Realization or estimated turnover is based on the sale price at FOB Factory Gate.

The sale price of products is determined cost competitive with presently available similar

products even if supply is domestic as well as international. The sale price of ginger

essential oil is considered at Nu.7,500 a liter and cardamom essential oil is considered at



capital/Term loan Interest rate 12% (fixed rate), working capital loan 13% (fixed rate).


Page | 70

Nu. 35,000 a liter. A total of Nu. 94.5 million is estimated as sales realization at 100%

production capacity. The details are as follows:

Table_ 53: Sales Realization/Estimated turnover

# Product Production

Per month (in Ltr.)

Annual Production (in Ltr.)

Rate (Nu. per Ltr.)

Total Amount

Per Annum (Nu in Laces)

1 Ginger oil 350 Ltrs. 4200 7500 315.00

2 Cardamom

oil

150 Ltrs. 1800 35000 630.00

Total 500 Ltrs. 6000 945.00

Table_ 54: Estimated Production Capacity Details

k.1 Assumption: Production Details

Production Capacity 8 Hr

Item Ginger & Cardamom Essential Oil

Total Production in

year

4200 Ltr. Ginger Oil & 1800 Ltr. Cardamom Oil

Current Price Nu. 7500/Ltr Ginger essential oil and Nu. 35000/Ltr.

Cardamom essential oil

After three years 10% hike after every three years

3.10.12. Estimated Cost of Production and Profitability As per above estimated economic parameters, finance can be arranged by sharing 30%

by investor and 70% by loan through financial institutions. Working capital mainly consists

of the amount required to purchase raw Materials. Required margin money for this project

is Nu. 3.4 million. For profitability estimation, analysis of loan repayment capacity and

analysis of financial ratios for this project, the following assumptions and relevant basis

applicable to Bhutan have been considered:

• Industrial Land42 in Bhutan is available on Lease for up to maximum 30 years and

could be renewed further. The plots for industrial use are available in the government

developed industrial parks and estates at prominent locations as such Thimphu,

Gelephu, Samtse, Samdrup Jongkhar etc. Charges are considered as Nu. 7,500 per

litre for ginger essential oil and Nu. 3,500 per litre for cardamom essential oil for the

first three years. Subsequently it increases @ 3% every year.

42https://www.bhutanenterprise.com/2018/06/03/investment-climate-in-

bhutan/#:~:text=Lease%20rate%20for%20Industrial%20Estate&text=4%20per%20square%20feet%20peri.

e%2050%25%20increase%20on%20Nu.


Page | 71


utilization to be achieved during first three years and 80% in fourth to sixth year.

• Repairs & maintenance have been taken as @ 3% per annum on plant & machinery

& misc. fixed assets.

• Bank interest rate43 has been calculated @12% per annum on term loan & @ 13%


• Insurance charges is @ 0.25% on all assets in the first year and then @ 5% decrease

every year.

• Power & water charges are increased @ 5% every year

• Administrative expenses have been increased @ 5% every year

• Margin money has been considered @ 40% on building @ 25% on plant & machinery

and @ 25% on misc. fixed assets.


• Preliminary expenditure will be written off @ 10% every year in the next 10 years.

• Pre-operative expenditure will be written off from the second year @ 10% every year

in the next 10 years.

• Depreciation has been charged using Straight-Line Method.


• 44Income tax has been charged @ 30% every year as per Bhutan's tax rates.


total debt service.



capital/Term loan Interest rate 12% (fixed rate), working capital loan 13% (fixed rate). 44 Source: Ministry of Finance - https://www.mof.gov.bt/faq/)


Page | 72

3.11. Estimation of Project Profitability (Nu.in Lacs)


S. No. Particulars 1st Yr. 2nd Yr. 3rd Yr. 4th Yr. 5th Yr. 6th Yr. 7th Yr. 8th Yr. 9th Yr. 10th Yr.

1 Installed Capacity @100% 945.00 945.00 945.00 945.00 945.00 945.00 945.00 945.00 945.00 945.00



4 Cost of Operation


4.2 Raw Material 403.12 403.12 403.12 460.71 460.71 460.71 518.30 518.30 518.30 575.89

4.3 Consumables @2% 8.06 8.06 8.06 9.21 9.21 9.21 10.37 10.37 10.37 11.52

4.4 Power 27.00 28.35 29.77 31.26 32.82 34.46 36.18 37.99 39.89 41.89


4.6 Salary & Wages 46.80 49.14 51.60 54.18 56.89 59.73 62.72 65.85 69.14 72.60

4.7 Fringe Benefits @15% 7.02 7.37 7.74 8.13 8.53 8.96 9.41 9.88 10.37 10.89

4.8 Insurance 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00


Total 499.51 503.80 508.30 571.77 576.74 581.96 646.18 651.93 657.96 723.04

5 Marketing Expenses @10% (Sale) 66.15 66.15 66.15 75.60 75.60 75.60 85.05 85.05 85.05 94.50






11 Total Interest 20.65 19.66 17.69 15.73 13.76 11.79 9.82 8.84 8.84 8.84


13 Depreciation 11.96 10.33 8.94 7.75 6.74 5.88 5.14 4.50 3.96 3.49


15 Pre-Operative Exp. W. Off 0.00 2.62 2.62 2.62 2.62 2.62 2.62 2.62 2.62 2.62

16 Preliminary Exp. W. Off 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10




Page | 73





Total (A) 67.96 62.34 58.18 72.34 67.97 63.47 76.26 72.73 68.34 82.17



Total (B) 11.80 27.22 25.25 23.28 21.31 19.35 17.33 0.00 0.00 0.00

Surplus (A) - (B) 56.16 35.12 32.93 49.05 46.65 44.12 58.92 72.73 68.34 82.17

DSCR (A/B) 5.76 2.29 2.30 3.11 3.19 3.28 4.40 0.00 0.00 0.00

Average DSCR 3.40

3.12. Calculation of Interest on Term Loan (Nu. in Lacs)

Table_ 56: Calculation of Interest on Term Loan

# Year Opening Balance Repayment Closing Balance Interest

1 1st year 98.35 0 98.35 11.80 11.80

2 2nd year

1st Qtr. 98.35 4.10 94.25 2.89

2nd Qtr. 94.25 4.10 90.15 2.77

3rd Qtr. 90.15 4.10 86.05 2.64

4th Qtr. 86.05 4.10 81.95 2.52 10.82

3 3rd year

1st Qtr. 81.95 4.10 77.85 2.40

2nd Qtr. 77.85 4.10 73.75 2.27

3rd Qtr. 73.75 4.10 69.65 2.15

4th Qtr. 69.65 4.10 65.55 2.03 8.85

4 4th year

1st Qtr. 65.55 4.10 61.45 1.91

2nd Qtr. 61.45 4.10 57.35 1.78

3rd Qtr. 57.35 4.10 53.25 1.66

4th Qtr. 53.25 4.10 49.15 1.54 6.88


Page | 74

5 5th year

1st Qtr. 49.15 4.10 45.05 1.41

2nd Qtr. 45.05 4.10 40.95 1.29

3rd Qtr. 40.95 4.10 36.85 1.17

4th Qtr. 36.85 4.10 32.75 1.04 4.91

6 6th year

1st Qtr. 32.75 4.10 28.65 0.92

2nd Qtr. 28.65 4.10 24.55 0.80

3rd Qtr. 24.55 4.10 20.45 0.68

4th Qtr. 20.45 4.10 16.35 0.55 2.95

7 7th year

1st Qtr. 16.35 4.10 12.25 0.43

2nd Qtr. 12.25 4.10 8.15 0.31

3rd Qtr. 8.15 4.10 4.05 0.18

4th Qtr. 4.05 4.05 0.00 0.06 0.98

3.13. Break Even Point

Table_ 57: Break Even Point



Variable Cost 505.84 507.19 508.60 578.28 579.85 581.49 651.40 653.21 655.11 725.29

Fixed Cost 97.59 97.92 97.65 93.29 93.74 94.50 95.57 97.92 101.54 105.44

2 Break Even Point (B.E.P.) 62.69% 63.45% 63.87% 52.49% 53.21% 54.15% 48.00% 49.63% 51.97% 47.99%

Average B.E.P. 54.75%


Page | 75

3.14. Projected Balance Sheet for the Project (10 Year) (Nu.in Lacs)

Table_ 58: Projected Balance Sheet for the Project


Period

Operation Period

0 1st Yr. 2nd Yr. 3rd Yr. 4th Yr. 5th Yr. 6th Yr. 7th Yr. 8th Yr. 9th Yr. 10th Yr.

1 Liabilities

1.1 Equity 43.01 43.01 43.01 43.01 43.01 43.01 43.01 43.01 43.01 43.01 43.01


1.3 Debt 98.35 98.35 81.95 65.55 49.15 32.75 16.35 0.00 0.00 0.00 0.00




2 Assets



2.3 Net fixed assets (2.01-2.02) 116.82 104.87 94.54 85.60 77.85 71.10 65.23 60.09 55.59 51.63 48.14



2.6 Current Assets 0.00 14.49 16.56 16.56 16.56 16.56 16.56 16.56 16.56 16.56 16.56



Total Assets 141.37 254.05 278.90 302.88 344.18 384.09 422.33 477.10 545.32 609.70 688.39


Page | 76

3.15. Quality Control and Standards

3.15.1. BSI: The Bureau of Indian Standards has formulated the following specifications

for dehydrated ginger. Ginger whole & ground - IS: 1908-1980 (First Revision). The quality

should conform to standards laid down in the PFA Act. However, for better marketing of

this product, standards may be maintained as per "AGMARK" and BIS specifications.

3.15.2. FSSAI License: FSSAI License is issued by the Food Safety and Standards Authority

of India (FSSAI), Ministry of Family Health & Welfare, Government of India. Application to

commence a food business must be made to the FSSAI in the prescribed format. Based on

the application and supporting documents, FSSAI will accord approval. The Food Safety

and Standards (Licensing and Registration of Food Businesses) Regulations 2011

introduced to improve the hygiene and quality of food has brought about tremendous

changes in the food industry. As per the Act, no person shall commence or carry on any

food business except under a FSSAI license or FSSAI registration. Therefore, any food

manufacturing or processing or packaging or distributing entity is now required to obtain

a FSSAI License or Registration.

3.15.3. Pollution Control: There is no major pollution problem associated with this

industry except for disposal of waste which should be managed appropriately. However,

waste water resulting from washing of ginger and lime, treated ginger water may be safely

dispersed over a large area of land for irrigation purpose. The promoter is advised to take

"No Objection Certificate" from the State Pollution Control Board.

3.15.4. Effluent Disposal: Disposal of any effluent out of the project unit should be

treated with recycling facility or dumped in such a way that these does not cause hazard

in the vicinity of the site.

3.15.5. Energy Conversation: Proper care should be taken in running the machineries and

equipment to avoid overrun and high electricity consumption. The machineries selected

for the plant should be energy efficient for economical production.

3.16. Conclusion: Essential oils are the natural volatile compounds having loveable odor. The essential oils

are isolated mostly from the hydro distillation method which is more suitable for this

process and easy to carry. Whole parts of the plants are used for the extraction of plants.

Steam distillation method is expensive than the hydro distillation, so it is less preferred.


Page | 77

Essential oils have good medicinal applications and are used in the treatment of different

diseases including infectious diseases, depression, anxiety, act as the antifungal,

antimicrobial, anticancer, and help in wound healing. They are also used in cosmetics and

perfume industries.

In the field of heath, essential oils mostly applied to the external body parts to relieve

pain. In the field of fragrance, essential oils are used in the perfume industry and due to

attractive odor, the essential oils are mostly used in this industry. It is used worldwide and

due to its wide usage, the world essential oil market is growing rapidly and getting more

importance day by day.


Page | 78

Overall, it can be concluded that extraction of essential oil from spices can be done by

using solvent extraction and steam distillation method. The solvent extraction method

showed better efficiency of extraction compared to steam distillation method for

essential oil extraction.

3.17. Other Bhutan Essential Oils Suppliers and Manufacturers 1. Bhutan Cordyceps And Herbs, Bhutan

Supplier: Wintergreen oil

2. Yeshi, Bhutan

Supplier: essential lemon grass oil

3. Bhutan Natural Products, Thimphu, Bhutan

Supplier: Lemongrass oil

4. Organic Lemon Grass Oil Industry, Mongar, Bhutan

Supplier: Organic lemon grass oil

5. Bhutan Agarwood, Zhemgang, Bhutan

Supplier: Agarwood wood chips & agarwood oil

6. Delek Builder Export, Thimphu, Bhutan

Supplier: Agarwood log and oil

7. Indra Import and Export Business Line, Phuentsholing 1100, Chhukha, Bhutan

Supplier: Mineral water, soya chunks, Bhutan beer, lemon, grass oil, cordyceps,

silica fumes, white quartzite, quartz, silicate, kyanite, river stone, coal, iron ore.

3.18. Source of Technology: The manufacturing process is covered under food processing. The state-of-the-art

modern equipment will be sourced from India like Hyderabad (Telangana), Mohali

(Punjab) and Ahmedabad (Gujarat) etc. Some equipment and machines suppliers

include:

▪ Dhopeshwar Engineering Private Limited

Mr. Shirish Dhopeshwar (Chief Executive Officer)

Plot A 16, Co - Operative Industrial Estate,

Balanagar Hyderabad - 500037, Telangana, India

Mobile: +(91)-9391058963; +(91)-9652158908


Website: https://www.dhopeshwar.in/

▪ Best Engineering Technology

Mr. M. Sesha Sai (Partner), Mr. Gautam

Plot No. 4, Survey No. 174 &176, IDA Bollaram Village Gram Panchayat

Hyderabad – 502325, Telengana, India

Mobile: +91-8043046080


Page | 79

Website: https://www.bestengineeringtechnologies.com/essential-oil-plants.html

▪ GAK Equipments & Technologies

Mr. Karam Singh (Proprietor)

Plot No 54, Sector 82, JLPL, JLPL Industrial Area,

Mohali - 160062, Punjab, India

Mobile: 08042966611

Website: https://www.gakequipment.com

▪ Abster Equipments

24/A, Laxmi Industrial Estate, Nr. Mathurmaster Estate,

Amraiwadi, Ahmedabad-380026. Gujarat, INDIA.

Mobile: +91-79-22748046; +91 – 9879091953; +91 - 9427554374

Email: [email protected]; [email protected]

Website: http://www.abfindia.co.in/index.html

References:

Raw material resources https://www.indiamart.com/proddetail/solar-crop-dryers-7038385762.html

https://www.indiamart.com/proddetail/garlic-peeler-19163785233.html

https://www.exportersindia.com/sunny-solly-machines-pvt/elaichi-peeler-cum-sifter-3818202.htm

https://www.indiamart.com/proddetail/essential-oil-distillation-unit-22351700088.html

https://www.indiamart.com/proddetail/baby-boiler-9337649355.html

https://www.indiamart.com/proddetail/jacketed-kettle-22256980373.html

https://www.indiamart.com/proddetail/industrial-aluminium-table-11812978430.html

https://www.indiamart.com/proddetail/glass-bottle-filling-sealing-machine-22017174655.html

Others: • BhutanTradeStatistics2019260320201.pdf

• Department of Agriculture Annual Report 2018-19

• www.mof.gov.bt



Investment Opportunity Study 2020 Project Profile-Manufacture of Gypsum Board

Page | 80

Project Title: Manufacturing of Gypsum

Board/Panel


Page | 81

4. Manufacturing of Gypsum Board/Panel

4.1. Background of the Idea Minerals are an important resource for Bhutan. Gypsum, dolomite and limestone

deposits are widely available in the country. For captive processing units, all these

minerals are available on lease for use in any suitable industry proposed by the private

sector.

Dolomite is a common rock-forming mineral. It is a calcium magnesium carbonate with

a chemical composition of (CaMg(CO3)2). It is used as a source of magnesia (MgO), a

feed additive for livestock, a sintering agent and flux in metal processing, and as an

ingredient in the production of glass, bricks, and ceramics.

Limestone is a sedimentary rock composed primarily of calcium carbonate (CaCO3) in

the form of the mineral calcite. It is used as a crushed stone for road base and railroad

ballast. It is used as an aggregate in concrete.

It is fired in a kiln with crushed shale to make cement. Powdered limestone is used as

filler in paper, paint, rubber, and plastics. Crushed limestone is used as a filter stone in

on-site sewage disposal systems. Powdered limestone is also used as a sorbent (a

substance that absorbs pollutants) at many coal-burning facilities.

Gypsum is a soft sulfate mineral composed of calcium sulfate dihydrate, with the

chemical formula CaSO4·2H2O. It is widely mined and is used in manufacturing of

wallboard, plaster of Paris, soil conditioning and hardening retarder in Portland

cement. Gypsum mines are located in Pemagatshel area proper, Khothakpa and Uri

Chu, Pemagatshel Dzongkhag with 56.45 MT proved to exist as deposits at Khothakpa

and 13.60 MT estimated in Uri Chu and Khar as per the data by department of Geology

and Mining, Bhutan. As per the report and data (year 2009 to year 2013) presented by

Asia Trade Hub Research Company and the information by Department of Geology

and Mines, Bhutan produces an average annual quantity of 350,000 MT of gypsum.

Dolomite and Limestone are widely used in cement, glass and paper manufacturing as

ingredient or catalyst. The raw rocks and lumps are crushed and used. Bhutan Ferro

Alloys Ltd., Penden Cement, Lhaki Cement, and Dungsam Cement are the main users

of dolomite and Limestone for manufacturing purpose. Bhutan is also exporting

dolomite and limestone to India and Bangladesh.

About eight companies in Bhutan are involved in Mining of Dolomite / Manufacturing

of Calcanei Dolomite / Crushing / dolomite powdering and three companies are

mining Gypsum as per the trade statistics of Bhutan. Druk Satair Corporation Ltd, State

Mining Corporation Limited, RSA Private Limited, Jigme Mining Corporation Limited

and SD Eastern Bhutan Pvt. Ltd are the prominent organizations working in this area.


Page | 82

Druk Gyp products & Chemicals Ltd. is a prominent company, based in Nganglam,

Pemagatshel, which is manufacturing Plaster of Paris (by Gypsum). Gypsum is exported

to North Eastern parts of India, West Bengal, eastern Bihar in India, the south east of

Nepal and the western parts of Bangladesh. It has declined substantially in the last year

due to increasing of 5% import duty by Bangladesh and import from Oman. Thus,

Gypsum is predominantly available in Khotakpa area of Pemagatshel.

As per above scenario, gypsum-based product

manufacturing units can be further explored. A

setting of gypsum board ceiling tiles is

predicted feasible in Bhutan looking at the

domestic and also for supply to the Indian

Market. The feasible locations for this plant are

suggested to be in Mongar, Gelephu and

Samdrup Jongkhar. Gypsum is in high demand

in the neighboring markets due to higher rate

of building construction and commercial mall

development. The proposed project does not

have any significant adverse impact on the

environment.

4.2. Market Scenario As per the Gypsum Board Market Size & Share, Industry Report, 2020-2027 by a U.S.

based market research company known as Grand View Research45: “the global

gypsum board market size was estimated at USD 40.87 billion in 2019 and is expected

to expand at a CAGR of 11.9% in terms of revenue, from 2020 to 2027”. In addition,

growing innovative construction applications of gypsum board are likely to provide

growth opportunities.

Prominent players in gypsum board manufacturing include Saint-Gobain Gyproc,

Knauf, Gulf Gypsum Co., USG Corporation, National Gypsum, Lafarge Holcim, and

Georgia pacific. The companies are focused on technological collaboration with

smaller companies to extend the production capacity, enhance the product portfolio,

and extend the geographical reach.

4.2.1. India Market

As per the study conducted by Hexa Research, New Delhi, Gypsum Board is expected

to reach about 333.64 million m2 by 2021 from 221.75 million m2 in 2016, registering

a Compounded Annual Growth Rate (CAGR) of 8.51% during the analysis period, 2020-

2025. A number of small and medium units have been manufacturing gypsum panels

with different designs and textures.

45 https://www.grandviewresearch.com/industry-analysis/gypsum-board-market

Figure_ 22: Gypsum Mining Area


Page | 83

4.2.2. Bhutan Market

Bhutan is now experiencing a big construction boom in the past few years with a

notable peak construction year in 2019. The construction industry plays an important

role in the national economy. Its contribution to the GDP is significant. In 2017, it

contributed 15.87% to the GDP making up 0.99 percentage points to the GDP growth.

A big part of this construction boom is in Thimphu fueled by a strong demand for

rental apartments, apartments to buy, office space, shops and hotels which has led to

a record number of ongoing construction projects. This could offer ample demand for

Gypsum celling board with advantages noted as follows:

• Wood has been extensively used in the construction of buildings in Bhutan for

flooring, paneling, insulation and various other purposes. Presently, wood is

increasingly becoming scarce and costly.

• Some of the applications of wood viz for insulation, ceiling, partition, paneling,

etc. need to be replaced by Gypsum boards. The use of Gypsum boards also

provides a modern look to interior designing and it can be reused. The cost of

gypsum board is relatively much lower compared to wood and their installation

is also quite easy.

• Gypsum ceiling board market is also growing in Bhutan owing to persuading

characteristics including enhancing aesthetics value, low maintenance cost and

lightweight.

• Gypsum board is a much more residential and offers a cleaner, more consistent

look and can be painted. Compared to PVC board, it is safer from fire hazard

and quite hard to install which also provides better thermal insulation. The

Gypsum board is around 40% to 50% cheaper comparison to PVC board.

Comparison to wood board, it is cheaper and safer to fire hazards.

Construction of schools & colleges, hotels, hospitals, government offices, private

offices, service sector offices, shopping complexes are the target markets for use of

gypsum boards. The product marketing can be routed through Building construction

companies, building contractors, private house owners, infrastructure development

companies, home designers, architects and interior contractors.

4.3. The Concept Gypsum board (also known as plasterboard, wallboard, gypsum panel, sheet rock, or

drywall) is a panel made of calcium sulfate dihydrate (gypsum) with or without

additives and normally pressed between a facer and a backer (typically thick sheets of

paper). It is used to make interior walls and ceilings. The plaster is mixed with fiber

(typically paper and/or fiberglass), plasticizer, foaming agent, and various additives

that can decrease mildew, increase fire resistance, and lower water absorption.


Page | 84

Gypsum building materials are used in all construction types (residential, non-

residential, new or refurbished), ranging from complex high-tech systems to easy-to-

install products adapted for use by the general public.

Gypsum board is widely used for internal walls and ceilings by the construction

industry, and is a material of growing importance in the do it yourself sector. Gypsum

board is also a common fire barrier used in house and general building construction.

Commonly gypsum boards used in walls and ceilings, in moist areas, in exterior

applications, for fire resistance and area separation and special systems.

4.4. Product Description Gypsum boards are the ultimate solution for today's buildings. Along with aesthetic

appeal, they are lightweight and also offer high levels of performance in terms of fire

rating, acoustic insulation and thermal insulation as compared to POP sheets. The

physical properties of Gypsum are as follows: Table_ 59: Physical Properties of Gypsum

Due to its inherent fire resistance, gypsum board, commonly known as drywall, is the

premier building material for wall, ceiling, and partition systems in residential,

institutional and commercial structures.

Designed to provide a monolithic surface when joints and fastener heads are covered

with a joint treatment system, gypsum products also provide sound control, economy,

versatility, quality, and convenience.

These gypsum boards and panel are widely used in offices, schools, hospitals and

factories for wall and ceiling. It is a kind of environmentally friendly and corrosion-

resistant decorative ceiling board. Gypsum based putty; gypsum wall blocks and

gypsum tiles can be produced in the product series. Gypsum board/Panel

specifications are as follows:

# Property Details

1. Chemical Classification Sulfate

2. Color Clear, colorless, white, gray, yellow, red, brown

3. Streak White

4. Luster Vitreous, silky, sugary

5. Cleavage Perfect

6. Mohs Hardness 2

7. Specific Gravity 2.3

8. Diagnostic Properties Cleavage, specific gravity, low hardness

9. Chemical Composition Hydrous calcium sulfate, CaSO4.2H2O

10. Crystal System Monoclinic

11. Product Uses Used to manufacture dry wall, plaster, joint

compound. An agricultural soil treatment.


Page | 85

Table_ 60: Gypsum board/Panel Specifications

# Property Details

1. Material Natural Gypsum

2. Surface Fire Retardant PVC Film

3. Color White Pink, and Blue

4. Size 595mm X 595mm

5. Thickness 08 mm

6. Edge Construction Square Edge

7. Light Reflectance 0.75 - 0.85 (Certified)

8. Moisture Content <2.0%

9. Fire Resistance BS-476-4:1970

10. Humidity Resistance (RH) 95%

11. NRC ≥0.50

Gypsum boards having characteristics of thermal insulation and sound barrier could

replace wood in many applications. Similarly, the cost of bricks especially red bricks is

very high in Bhutan and gypsum board could be an alternative as it is economically

used for inner partitions.

Gypsum boards are hundred percent green products and the entire manufacturing

process itself is environmentally friendly.

4.5. Manufacturing Process 46 Plaster of Paris is raw gypsum that is chemically altered by heat to remove much of the

water contained in the gypsum molecule and then hydrated to make it useable as a

plastering material.

Gypsum that has been crushed and heated to remove 75% of its water content is

known as plaster of Paris. When water is added to this fine white powder, the resulting

material is easily molded into any desired shape. Upon drying, the reconstituted

gypsum regains its rock-like qualities while retaining the desired shape.

Fabrication of drywall consists of placing the gypsum core material between two layers

of paper, drying the product, and finishing it into panels of standard size. Depending

on the variety of wallboard being produced, certain additives are blended with the

plaster of Paris that will form the core of the drywall. The boards are dried in the dryers

(35-40 minutes) and cooled. Humidity and temperature are carefully controlled in the

dryer.

46 http://www.innogyps.com/gypsum_board_training.php

http://www.innogyps.com/gypsum_board_training.php


Page | 86

After cooling the board each board is labeled with a bar code that is used for

warehouse inventory, billing, and price scanning at the retail level. Usually, the size is

610 X 610 mm with 12.5 mm thickness. The weight of the sheet is around 3.5 kg to

3.75 kg. The production machines are semi-automatic. Each additional ingredient

amounts to less than one half of one percent of the amount of gypsum powder.

Automatic Plant of Gypsum board/Panel covered in two layers of special gypsum

board paper. These automatic machines need huge capital investment with a higher

production output i.e. 5laces to 10lacs MT / Annual. The installation of such plant needs

around Nu. 350 million and based on the requirement. At inception, this automatic

plant is not recommended.

To utilize the resource a semi-automatic and manual plant is suggested for initial setup

which would cover around Nu.15 to 16 million of the total project costs. It consists of

mould and work station process for shaping the board. The main machine is dryer.

The manufacturing process is same as detailed above.

Figure_ 23: Gypsum Board manufacturing Process Diagram

4.6. Equipment and Machine POP Mixture, Rollers with conveyors, working stations with fixtures, mounts for

gypsum panels, panel hanger strands, edge cutting machine, hot air oven drier, drums,

buckets & stirrer motor, miscellaneous equipment & tools, strip packing machine etc.

comprise the equipment and machines for the plant.

4.7. Plant Capacity and Parameters The plant capacity is assessed with a final annual output 480,000 units (size 610mm X

610mm) of gypsum board/panel. Plant will operate in single shift 8-hour production

cycle in 300-day years. The detailed plant capacity is as follows:


Page | 87

Table_ 61: Plant Capacity and Parameters

American Society for Testing and

Materials

ASTM C1396

Plant Capacity - Gypsum panels, reinforced

with glass fiber

4,80,000 Units annual

Dimensions of Gypsum Baseboards Thickness: 9mm

Size: 610mm X 610mm,

Density: 520 Kg/m3

Land and Building Requirement 1000-1500Sq. Mt. with Shed.

Gypsum plaster boards – Specification BIS IS 2095-1: 2011

Test IS 2542 (Part 2/Sec 1 to 8)

Employment Size 19

Land (1500Sq. Mt.) On lease

GST Tax Rate in India 18%

Market Construction Sites

Export Opportunity India Border States

Required Systems and Licenses



Environment Clearance in Bhutan Environment Clearance and Other

Regulatory Act Registration and

Certificates.

Export – Import Duty to India Trade between India and Bhutan is

not subjected to customs duties.

4.8. Estimated Project Cost and Financials The project is suggested under the M&L manufacturing category (Investment above

Nu. 10 million). The required land for this manufacturing plant is around 1,500 m2. It

will be arranged on lease basis for 30 years to be renewed further. Process building,

raw material yard, finished goods storage and office will be constructed through pre-

fabricated structure.

The total cost of the project has been estimated as Nu. 15.6 million. The Break-Even

months is 40 and D.S.C.R value is 3.07 showing that the project will generate sufficient

to pay loans. Gypsum as raw material is easily available in Bhutan. A list of plant and

machinery supplier is given under the topic “1.11 suppliers” for first ready reference.

Financial trends related to manufacturing plant of gypsum board are as follows:

Table_ 62: Plant Capacity and Parameters





Page | 88




22. Variable Costs 42.63





25. D.S.C.R. 3.07

26. Rate of Return 30%

27. NPR 25.32%

4.8.1. Project Cost

The cost of project is estimated as a total value of land, building and civil construction,


contingency. The required land is around 1500 m2 to be taken on lease followed by

Building & Civil Construction comprising 43.69% of project cost and Plant & Machinery

to comprise 33.03% of the project cost. Margin Money for working capital is not

considered as part of project cost. The summary of the project cost is as follows:


# Particulars Value (Nu. In

Lacs)

Cost Sharing

13. Land 1500 sq. meters (Size 50Mtr. *30Mtr.) On Lease







Total 155.66 100%

4.8.2. Means of Finance Table_ 64: Means of Finance


9. Promoters Equity 56.24 36%

10. Term Loan from Bank 99.42 64%

Total 155.66 100%

3. Margin Money for Working Capital 8.52 38%

4. Working Capital Loan from Bank 14.15 62%


Page | 89

Total 22.67 100%

4.9. Estimation of Building and Civil Work and Cost Based on the requirement of processing area, store for raw materials and finished

goods and office space, the project would require an area of around 1,500 m2. Around

9,000 Sq. Ft area will be constructed by pre-fabricated building structure. The building

civil construction cost is considered as per the 47Bhutan Schedule of Rates (Civil Works)

- 2018 issued by Ministry of Works and Human Settlement, Bhutan.

Total estimated building construction cost is Nu.6.8 million which is around 43.69% of

the total project cost. The details of building and civil work cost estimation are as

follows:

Table_ 65: Estimation of Building and Civil Work Cost

# Particular Dimensions

(Mt.)

Area

(Sq. Mt.)

Rate

(Nu. /Sq.

Mt.)

Amount

(Nu. in

Lacs)

1. Production Area

(Main Shed)

height 16 feet (5Mt.)

80 60 4800 750 36.00

2. Raw Material Storage 40 30 1200 600 7.20


Building & Civil Construction

44%

Plant & Machinery 56.34, 33%

Misc. Fixed Assets 13.14, 8%

Preliminary Expenses, 1.00, 1%

Pre-operative Expenses, 18.12,

12%

Contingencies , 3.98, 2%

Figure_ 24: Fig. 3 Graphical representation of Project Cost Components and its Share *Nu. in Lacs


Page | 90

3. Finished Goods Storage 60 30 1800 600 10.80

4. Laboratory & Quality

Assurance Section

15 10 150 600 0.90

5. Office Space 18 15 270 600 1.62

6. Facilities + Utility + Pantry 20 15 300 600 1.80

7. Security & Time office 10 11 110 600 0.66

8. Boundary wall (165) Rm

with height of 3m (10 ft)

and 1 ft Thick)

510 1 510 1350 6.88

9. Parking Area 40 25 1000

0.50

10. Green Belt Development

and Open Space

100 30 3000

0.30

11. Entrance Gate - 15 feet

wide and name sign

board

1 35000 0.35

12. Misc. Civil Construction as

Water Tank

1.00

68.01

4.10. Plant and Machinery Cost 48 The cost estimates for plant & machinery have been worked out based on the cost





insurance have been considered with the assumption that all goods are transported

by road. Goods of import origin would be handled through the Kolkata port. The

equipment list with cost is given in table below:

Table_ 66: List of Plant & Machinery with Cost


(Nu. in Lacs)

1. Ribbon Blenders (Single Shaft 100kg / Hr.) 2 185000 3.70

2. Drum Buckets & Stirrer Motor 1 350000 3.50

3. Working Stations with Fixtures 25 3500 0.88

4. Silicon Mould (Size 610mm*610mm) 400 2887.5 11.55

5. Panel Hanger Strands 50 4000 2.00

6. Edge Cutting Machine 2 120000 2.40

48 Plant and Machine Supplier List is given on the topic of 1.12 of this profile under title “Plant Machine Supplier”.


Page | 91

7. Hot Air Oven - Vertical Down Airflow

(500kg/hr., 100KWH)

1 1800000 18.00

8. Material Handling Equipment - rollers table,

conveyor, hand carts

1 250000 2.50

9. Small Hand Tools and Packaging Machines 1 50000 0.50

10. Testing Equipment and Accessories 1.50

Total Amount 46.53

11. Packaging & Forwarding 7.5% 3.49

12. Erection and Commissioning - Oven 3% 1.40

Grand Total 51.41

4.11. Misc. Fixed Assets A miscellaneous fixed asset includes Office Equipment & Furniture, computer and


under this head “MFA” and presented in the below table:

Table_ 67: Misc. Fixed Assets Cost Estimation

# Particulars Qty. Amount

(Nu.in

lacs)

11. Office Equipment, Laptop, Printer, CCTV Camera and Systems 1 3.50


13. Fire Fighting Equipment's 1 0.02



Total 13.40

4.12. Preliminary Expenses Preliminary expenses are those expenses which are incurred before the incorporation

and commencement of the business. These are treated as deferred

revenue expenditure. These expenses are marked to be written off in the next ten years

in estimation of profitability. The Preliminary Expenses details are as follows:



3. Company formation expenses (roc) and setup approvals 1.00

Total 1.00


Page | 92

4.13. Pre-operative Expenses These expenses are incurred prior to commencement of commercial production. A

total of Nu. 1. Million is estimated under this cost to be written off in the next 10 years

and exempted in the first year. The details are given in the table below:


# Particular Amount

(Nu.in Lacs)






24. Quality and Environment Management Certification 5.00



27. Registration of Trade Mark and Patent 0.40

Total 18.12

4.14. Cost of Raw Material The cost of the raw material consists of the cost of the main ingredients, raw material

and cost of packaging. The annual raw material cost is based on the present average

market prices in Bhutan. The supplier49 for Gypsum Powder (POP) is available in

Bhutan. A total of Nu. 8.3 million has been estimated as raw material cost at 100%

capacity. The details are as follow given in the table below: Table_ 70: Cost of Raw Material


Requirement

Unit Rate

(Nu.

per)

Unit Total

Amount

1. Fine Grade POP 1584 MT 4.50 Kg 71.28

2. Reinforcing fiber / glass fiber 1 MT

2.00

3. Mould release agent, and other

chemicals

5 MT 100 Kg 5.00

4. Misc. Items

2.00

5. Packaging Material -Clippers, Plastic

Strips

3.00

Total Raw Material requirement at capacity 100% 83.28

4.15. Salary & Wages Salaries and Wages (including benefits) for different categories of employees have


49 Raw Material Supplier: https://www.indiamart.com/proddetail/home-ceiling-plaster-of-paris-

19271110248.html

Druk Gypproducts & Chemicals Ltd,

https://www.exportersindia.com/druk-gypproducts-chemicals-ltd/products.htm


Page | 93

the present trends in the relevant segment and followed rules as per Pay Revision Act

2019 (9 July 2019) Bhutan. The fringe benefits are considered at 15% per year. It is also

considered that salary will increase by 5% annually. The breakdown of manpower with

estimated salaries is given in the following table: Table_ 71: Salary & Wages

# Description Intake Salary Per Month

(Nu.)

Salary Per Annum

(Nu. In Lacs)

1. Manager 1 50000 6.00


3. Marketing and Advertising 1 30000 3.60

4. Production Supervisor 1 25000 3.00



7. Transport - Drivers 1 15000 1.80

8. Security 3 10000 1.20

Total 21 43.20

A dedicated Post Graduate Marketing Executive is required to manage marketing,

supply chain management and revenue collection.

4.16. Electrical and Water Consumption Charges Electricity charges are considered as per the tariff rate issued by Bhutan Power

Corporation. The unit cost of electricity50 has been considered @ Nu. 3/KwH for


requirement is met from the grid.

The expense on water supply, treatment and distribution has been suitably considered,

based on the Thimphu City Corporation water tariff on a Lumpsum basis. It is assumed

that power and water charges will increase @5% every year. The expenses under this

head are as follows: Table_ 72: Electrical and Water Consumption Charges





Total 6.00

The details of electrical installations for power distribution have been considered

commensurate with power load and process control requirements.



Page | 94

4.17. Term Loan Estimation The term loan requirement is estimated on the funding pattern in Bhutan. It is


considered as up to 60% to 75% of the cost of the project and it does not include

working capital margin money (As per financing pattern by Bhutan National Bank

Limited).

The estimated term loan is Nu.9.9 million and with 64% to come as loan from financial

institution. The rest of the capital investment (Nu. 5.6 million comprising 36% of project

cost) to be invested by entrepreneurs. The details are as follows:

Table_ 73: Term Loan Requirement from Financial Institution and Investor Contribution


%

Amount

(Nu.in

Lacs)

Own

Contribution

(Nu. in Lacs)

Bank Loan

(Nu.in Lacs)

13. Land On Lease

14. Building & Civil

Construction

25% 68.01 17.00 51.01

15. Plant & Machinery 25% 51.41 12.85 38.56




19. Contingencies 100% 3.98 3.98 0.00

Total 155.66 56.24 99.42

Sharing % 36% 64%

4.18. Working Capital Loan Amount Working capital loan up to 75% of the total working capital gap is considered in

Bhutan. The total estimated working capital requirement is Nu. 2.3 million and Margin

money is estimated as Nu. 876,000. The estimated working capital loan amount is Nu.

1.4 million. It can be arranged from the banks in Bhutan with the interest rate51 of 13%

(fixed rate as well as floating).

Working capital requirement has been worked out in the table given below:





Page | 95

Table_ 74: Estimation of Working Capital Loan Amount


%

Amoun

t

(Nu.in

Lacs)

Own

Contribution

(Nu. in Lacs)

Bank

Loan

(Nu.in

Lacs)


11. Receivable 30 days 25% 16.80 4.20 12.60


Consumables

15days 90% 3.73 3.36 0.37


Margin Money for Working Capital @ 100% Capacity Nu. 4.58 Lacs

4.19. Sales Realization / Estimated turnover Sales Realization or estimated turnover is based on the sale price at FOB Factory Gate.

The sale price of products is determined to be cost competitive with presently available

similar product whether supply is domestic or international. The sale price of Gypsum

Board/Panel is considered as Nu. 60/- per board (2x2 sq. ft.) The total of Nu. 28.8

million is estimated with sales realization at 100% production capacity. The details are

as follows:


# Product Annual

Producti

on

(Nos.)

Rate Total

Amount

Per Annum

(Nu. in

Lacs)

1. Gypsum panels, reinforced with glass

fiber

(4sq Ft - 610mm*610mm, 9mm thick)

4,80,000 Nu. 60

per Nos.

288

Total 480000 Nu. 288 Lacs


Assumption: Production Details

Gypsum Board Size 4sq Ft - 610mm*610mm, 9mm thick

Production Capacity 200 Board per Hr.

Production in a Day 8 Hr.

Days in a Year 300 Days

Total Production in Year 4,80,000 Nos. Annual

Current Price Nu. 60 per Nos.


Page | 96

4.20. Estimated Cost of Production and Profitability: As per above estimated economic parameters, finance modality could be shared with the

investor putting 36% and remaining 64% as loan through financial institutions. Working

capital mainly consists of amount required to purchase raw materials. Required margin

money for this project is Nu. 852,000. For profitability estimation, analysis of loan

repayment capacity, and analysis of financial ratios for this project, the following

assumptions and relevant basis applicable to Bhutan have been considered:

• Industrial Land52 in Bhutan is available on lease for up to maximum 30 years and could

be further renewed. The plots for industrial use are available in the government

developed industrial parks and estates at prominent locations as such Thimphu,

Samtse, Phuentsholing, Gelephu etc. Charges are considered at Nu. 4 per square feet

per annum for the first three years. In the fourth year the rate is Nu. 6.00 (i.e. 50%

increase). Subsequently, it increases @ 3% every year. Bhutan is available on lease for

up to maximum 30 years and could be further renewed.

• The profitability projection has been worked out for 10 years at 80% capacity utilization

to be achieved during the first year and onwards till the third year and 90% from the

fourth year.

• Repairs & maintenance have been taken at @ 1% per annum on plant & machinery &

misc. fixed assets.

• Bank interest53 rate has been calculated @ 12% per annum on term loan & @ 13%


• Insurance charges @ 0.25% on all assets in first year, then decreases @ 5% every year.


• Administrative expenses increases @ 5% every year.

• Margin money has been considered @ 40% on building, @ 25% on plant & machinery

and @ 25% on misc. fixed assets.


• Preliminary exp. will be written off every year in next 10 years.

• Pre-operative exp. will be written off from second year.

• Depreciation has been charged using the Straight-Line Method




total debt service.

52https://www.bhutanenterprise.com/2018/06/03/investment-climate-in-

bhutan/#:~:text=Lease%20rate%20for%20Industrial%20Estate&text=4%20per%20square%20feet%20per,i.e%205

0%25%20increase%20on%20Nu.




54 Source: Ministry of Finance - https://www.mof.gov.bt/faq/)


Page | 97

I.1 Estimation of Project Profitability (Nu.in Lacs) Table_ 77: Estimation of Project Profitability

Sl.

No.

Particulars 1st

Yr.

2nd

Yr.

3rd

Yr.

4th

Yr.

5th

Yr.

6th

Yr.

7th

Yr.

8th

Yr.

9th

Yr.

10th

Yr.

1 Installed Capacity 100% 288.0

0

288.0

0

288.0

0

288.0

0

288.0

0

288.0

0

288.0

0

288.0

0

288.0

0

288.00


3 Actual Sales in lacs Nu. 230.4

0

230.4

0

230.4

0

259.2

0

259.2

0

259.2

0

288.0

0

288.0

0

288.0

0

288.00

4 Cost of Operation


4.2 Raw Material 66.62 66.62 66.62 74.95 74.95 74.95 83.28 83.28 83.28 83.28

4.3 Consumables @ 3% 2.00 s 2.00 2.25 2.25 2.25 2.50 2.50 2.50 2.50



4.6 Salary & Wages 43.20 45.36 47.63 50.01 52.51 55.14 57.89 60.79 63.83 67.02

4.7 Fringe Benefits @15% 6.48 6.80 7.14 7.50 7.88 8.27 8.68 9.12 9.57 10.05

4.8 Insurance 0.20 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00


Total 127.9

7

129.7

0

134.7

8

146.6

0

149.9

9

153.5

6

165.8

8

169.8

1

173.9

4

178.28

5 Marketing Expenses @10% 23.04 23.04 23.04 25.92 25.92 25.92 28.80 28.80 28.80 28.80

6 Cost of Production 151.0

1

152.7

4

157.8

2

172.5

2

175.9

1

179.4

8

194.6

8

198.6

1

202.7

4

207.08

7 Sale (Estimated Turn Over) 230.4

0

230.4

0

230.4

0

259.2

0

259.2

0

259.2

0

288.0

0

288.0

0

288.0

0

288.00

8 Profit before Interest and

Depp.

79.39 77.66 72.58 86.68 83.29 79.72 93.32 89.39 85.26 80.92


Page | 98



11 Total Interest 13.77 12.76 10.75 8.73 6.71 4.70 2.70 1.84 1.84 1.84


13 Depreciation 12.43 10.89 9.56 8.43 7.45 6.60 5.87 5.23 4.68 4.20






19 Accumulated Profit 37.17 73.49 108.6

0

155.7

9

202.7

0

249.1

2

306.9

6

363.1

0

416.7

4

467.68




Total (A) 61.52 58.14 53.58 62.51 59.23 55.88 63.71 61.37 58.32 55.14


24 Repayment on Term Loan 0 16.80 16.80 16.80 16.80 16.80 15.42 0.00 0.00 0.00

Total (B) 11.93 27.72 25.71 23.69 21.67 19.66 16.29 0.00 0.00 0.00

Surplus (A) - (B) 49.59 30.41 27.87 38.82 37.56 36.22 47.43 61.37 58.32 55.14

DSCR (A/B) 5.16 2.10 2.08 2.64 2.73 2.84 3.91 0.00 0.00 0.00

Average DSCR 3.07


Page | 99

4.21. Calculation of Interest on Term Loan (Nu. in Lacs) Table_ 78: Repayment of Interest on Term Loan

# Year Opening

Balance

Repayment Closing

Balance

Interest

1 1st year 99.42 0 99.42 11.93 11.93

2 2nd year

1st Qtr. 99.42 4.20 95.22 2.92

2nd Qtr. 95.22 4.20 91.02 2.79

3rd Qtr. 91.02 4.20 86.82 2.67

4th Qtr. 86.82 4.20 82.62 2.54 10.92

3 3rd year

1st Qtr. 82.62 4.20 78.42 2.42

2nd Qtr. 78.42 4.20 74.22 2.29

3rd Qtr. 74.22 4.20 70.02 2.16

4th Qtr. 70.02 4.20 65.82 2.04 8.91

4 4th year

1st Qtr. 65.82 4.20 61.62 1.91

2nd Qtr. 61.62 4.20 57.42 1.79

3rd Qtr. 57.42 4.20 53.22 1.66

4th Qtr. 53.22 4.20 49.02 1.53 6.89

5 5th year

1st Qtr. 49.02 4.20 44.82 1.41

2nd Qtr. 44.82 4.20 40.62 1.28

3rd Qtr. 40.62 4.20 36.42 1.16

4th Qtr. 36.42 4.20 32.22 1.03 4.87

6 6th year

1st Qtr. 32.22 4.20 28.02 0.90

2nd Qtr. 28.02 4.20 23.82 0.78

3rd Qtr. 23.82 4.20 19.62 0.65

4th Qtr. 19.62 4.20 15.42 0.53 2.86

7 7th year

1st Qtr. 15.42 4.20 11.22 0.40

2nd Qtr. 11.22 4.20 7.02 0.27

3rd Qtr. 7.02 4.20 2.82 0.15

4th Qtr. 2.82 2.82 0.00 0.04 0.86


Page | 100

4.22. Break Even Point Table_ 79: Yearly Estimated Break Even Point



Variable Cost 98.13 96.43 98.74 110.53 110.88 111.24 123.08 123.49 123.91 124.35

Fixed Cost 86.82 87.71 87.14 90.76 91.16 91.86 92.87 95.28 98.83 102.64


4.23. Projected Balance Sheet for the Project (10 Year) Table_ 80: Yearly Estimated Break-Even Point


Period



1 Liabilities

1.1 Equity 56.24 56.24 56.24 56.24 56.24 56.24 56.24 56.24 56.24 56.24 56.24


1.3 Debt 99.42 99.42 82.62 65.82 49.02 32.22 15.42 0.00 0.00 0.00 0.00




2 Assets



2.3 Net fixed assets 136.54 124.11 113.23 103.66 95.24 87.79 81.19 75.32 70.08 65.40 61.20



2.6 Current Assets 0.00 14.49 16.56 16.56 16.56 16.56 16.56 16.56 16.56 16.56 16.56



Total Assets 155.66 207.44 227.01 245.32 275.71 305.82 335.43 377.85 433.99 487.63 538.57


Page | 101

4.24. Environment Consideration Maintaining and sustaining the environment is of paramount importance of this

project. The manufacturing process contains no harmful ingredient. It will not create

any effluent and chemical waste. However, the plant is designed to be environment

friendly and prioritises to maintain neat and clean atmosphere through its industrial

process activities.

A large part of used gypsum board is recycled for production of fresh gypsum boards.

It’s an eco-plant and environment management system ISO 14001 will be

implemented and followed strictly to ensure that there is no compromise in

environment management.

4.25. Conclusion Gypsum board is a relatively new product for construction industry in Bhutan.

However, keeping in view the international trend for promotion of green materials of

traction and the strong emphasis of Bhutan government on protection of environment

and sustainable development, opportunity for production of gypsum board in Bhutan

is feasible. India is going to be big market for gypsum board in future and if a unit can

be set up for production of gypsum board in Bhutan, it could cater to a large part of

Indian market also.

The proposed gypsum board plant is a viable project in terms of availability of gypsum

which is locally available in Bhutan. The project needs to use electricity to operate dryer

and equipment which is abundantly available. The cost of electricity in Bhutan is lower

comparison to neighboring Indian states. Manufacturing process of gypsum board is

environment friendly and generates no impact on the environment. These advantages

provide opportunity to make the gypsum board in Bhutan and export to Indian market.

Gypsum board is able to reduce the use of wood in constriction for ceiling wall

paneling, insulation and various other purposes with low prices and modern look with

similar effect of insulation. Gypsum board is a recyclable and therefore, termed as

green material of construction.

The project is financially viable with Net Profit Ratio of 25.32%. It needs around 19

employees include managerial staff, skill and unskilled staff to operate the plant. The

financial ratios are positive during the first 5 years of operation. The average DSCR is

3.07 which implies that the project would generate sufficient funds to cover its cost,

including loan repayments and interest payments during the period. This also indicates

that the project can continue making profits even after 5 years.

Based on the estimation of project cost and financial analysis, production of Gypsum

board manufacturing unit is financially viable, profitable with high rate of return.


Page | 102

It is recommended to entrepreneurs to scale the business up to Industrial level.

4.26. Source of Technology The manufacturing process is covered under engineering sector. The state-of-the-art

modern equipment can be sourced from India. Some of the leading manufacturers for

the equipment include the following (individuals are advised to conduct their own

research to seek suppliers and the following list does not indicate the consultant’s

opinion on the choice of supplier and is only for basic information based on first hand

search): Some of equipment and machines suppliers are as follows:

Vogue Marketing Technologies

Chandra Sekhar (Managing Director)

Address: No. 3, 2nd Floor, 5th Cross, P & T Layout, Horamavu, Kalyan Nagar Post,

Bengaluru, Karnataka - 560 043, India

Phone: +91-8042126294

Mobile+91-9663367255, 9845380695

Website: www.indiamart.com/vogue-marketing

Libran Engineering and Services

Address: C-33, First Floor, Malviya Nagar near HDFC Bank,

New Delhi, Delhi - 110 017, India

Phone: + 91-11-26681175

Mobile: + (91)-9811055650

Website: https://www.indiamart.com/libran-engineerinew-delhi/- and

libranengineering.com

Reference:

• Plant Machine Supplier

http://geodrytech.com/ribbon-blender.html

https://gzglory.en.alibaba.com/product/60403242797-

802684861/Silicone_mold_for_gypsum_ceiling_tiles.html

https://www.indiamart.com/proddetail/small-edge-cutting-machine-14346794097.html

https://www.indiamart.com/proddetail/industrial-ovens-16813685497.html

https://www.despatch.com/drying.html

• https://s3-us-west-2.amazonaws.com/prd-wret/assets/palladium/production/mineral-

pubs/country/2006/myb3-2006-bt-np.pdf

• Note: Land Area Measurement - 1 Decimal = 40.46 Sq. Mt.

https://www.indiamart.com/proddetail/small-edge-cutting-machine-14346794097.html

https://www.indiamart.com/proddetail/industrial-ovens-16813685497.html

https://www.despatch.com/drying.html

Investment Opportunity Study 2020 Project Profile-Manufacturing of Chewing Gum

Page | 103

Project Title:

Manufacturing of Chewing Gum


Page | 104

5. Manufacturing of Chewing Gum

5.1. Background of the Idea Chewing gum is a sweetened, flavoured confection composed primarily of latex, both

natural and artificial55. Organic latex, a milky white fluid produced by a variety of seed

plants, is best known as the principle component of rubber. Used as a snack, gum has

no nutritive value, and, when people have finished chewing, they generally throw it

away rather than swallow it. Chewing gum base consists either of natural latex or a

synthetic substitute.

Natural latex such as chicle is harvested by making large X-marks on rubber trees and

then collecting the substance as it runs down the tree. After grinding the base to form

a coarse meal, the mixture is dried for a day or two.

The chewing gum segment is the fastest growing segment of confectionery industry

is growing at a CAGR of approximately 7% for past few years due to mouthful of

benefits as per market research article published on buisnesswire.com (A leading

market research company)56. It is said to relieve stress, helps in weight management,

increases alertness and focus.

All these factors result in the increasing demand of chewing gum in people of every

age group. Innovation in chewing gum is another important driver of this industry.

Different flavours, flexibility and variety in gum attract consumers and the current

trends suggest consumers prefer gum with natural colours and avoid usage of

synthetic and azo colours.

5.2. Rationale of the Idea As per the ground survey reports, monthly import of chewing gums is about Nu. 12

million of which about Nu. 8 million worth is imported by Tashi Commercial

Corporation (TCC) alone. As per the Bhutan Trade Statistics57 (2015-2019) the import

of chewing gum and the price chart is as per the figure below.

Increased economic activities particularly under Production and Manufacturing Sector

has led to such an accelerated demand for chewing gum that it is expected to grow

with the given trend.

55https://www.encyclopedia.com/sports-and-everyday-life/food-and-drink/food-and-

cooking/chewing-gum#:~:text=Chewing%20sticks. 56https://www.businesswire.com/news/home/20100113006086/en/Research-Markets-Chewing-Gum-

Market---Growing 57 https://www.mof.gov.bt/publications/reports/bhutan-trade-statistics/


Page | 105

Figure 1: Import of Chewing Gum in Bhutan

5.3. Market Outlook International Global Chewing Gum Market was valued at US$ 16.75 billion in 2017, and is expected

to reach US$ 19.642 billion by 2026 at a CAGR of 2.01% during the forecast period58.

This can be attributed to the growing importance of oral health and fitness concerns

among the millennials. However, the consistent product modifications coupled with

the rising preference for functional ingredients results in increasing demand for sugar-

free products over the forecast period.

Figure 2: Fig 2. Global Chewing Gum Market by Region (2019-2027)

This industry is also driven by the modern age sugar-free chewing products which aid

oral hygiene and weight management. Rising consumer awareness about the health

benefits of sugar-free products such as caffeinated products is used to boost the

energy levels and metabolism rate. The market is growing due to increasing consumer

interest in healthy and sugar-free products.

58 https://www.maximizemarketresearch.com/market-report/global-chewing-gum-market/27775/

83,793,754

13,656,622

87,192,591

61,307,397

16,643,329

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

80,000,000

90,000,000

100,000,000

Amount in Nu. (Millions)

2015 Chewing Gum 2019 Chewing Gum 2016 Chewing Gum 2017 Chewing Gum 2018 Chewing Gum


Page | 106

Moreover, increasing fitness concerns among people renders a shift towards low-

calorie chewing products. This is a major driving factor for the growth of sugar- free

chewing product.

5.4. The Concept The concept of this investment idea is not to invest in large scale manufacturing plant

but in a small-scale plant with large raw material of sourcing of latex, gum base and

sweeteners. Price in the local market based on interviews with the retailers and

shopkeepers is around Nu. 330 per kg when sold in Bhutan.

Although Chewing gum sourcing from India can be the most desired option, statistics

from BTS59 shows the price at around Nu. 199 per kg which would render the overall

cost of production high.

Figure 3: Import Price of Chewing Gum

The financial estimates and size of the plan is determined with the following

assumptions:

• Raw material sourcing

• The cost of raw materials

• The selling prices

5.5. Existing Competitors Apart from importers, today there is no manufacturer of chewing gum in Bhutan.

Although a good market scope has been highlighted as it is very popular with the

common people.

59 https://www.mof.gov.bt/publications/reports/bhutan-trade-statistics/

0

50

100

150

200

250

Chewing Gum Chewing Gum Chewing Gum Chewing Gum Chewing Gum

2015 2016 2017 2018 2019

Price in Nu. Per KGM Price in Nu. Per KGM


Page | 107

5.6. Raw Material Requirements and Sourcing

The following major raw material details are provided considering a production

volume of 1,000 kg per day. The raw material details with costing are as follows:

Table 1: Cost of Raw Material

# Particular Requirement

Per day (Kg.)

Requirement

Per Annum ( Kg.)

Rate Nu. Per Kg.

Total

Amount


1. Gum Base60 300 90000.00 200.00 180.00

2. Sweeteners61 400 120000.00 435.00 522.00

3. Glycerin62 80 24000.00 100.00 24.00

4. Softener/Plasticizer63 20 6000.00 60.00 20.00

5. Flavors 15 4500.00 350.00 15.75

6. Colors 5 1500.00 1000.00 15.00

7. Polyol Coating 10 3000.00 140.00 4.20

Total 234000.00 780.95

5.7. Equipment Requirements64

Following plant, machinery and equipment are required for the proposed project.

Table 2: Cost of Equipment

# Particular Qty

.

Rat

e

Valu

e (Nu. In Lacs)

1. Fully Automatic Chewing Gum Production Line 150-

300kg/hr.

1 25.5 25.50

2. This production line is professional for producing dragee

chewing gum with high capacity. It is composed of the

sugar mill, gum base oven, mixer, extruder, cooling tunnel,

roller and forming machine, cooling breaking drum, dragee,

machine, packaging machine. The processing line is an

advanced equipment for making square shape sugar shell

coated chewing –gums.

60 https://dir.indiamart.com/impcat/sweetener.html 61 https://dir.indiamart.com/impcat/gum-ester.html 62 https://dir.indiamart.com/impcat/plasticizers.html 63http://www.sinofude.net/fully-automatic-chewing-gum-production-line-

2534057.html#:~:text=This%20production%20line%20is%20professional,dragee%2C%20machine%2C

%20packaging%20machine. 64http://www.sinofude.net/fully-automatic-chewing-gum-production-line-

2534057.html#:~:text=This%20production%20line%20is%20professional,dragee%2C%20machine%2C

%20packaging%20machine.


Page | 108

3. Miscellaneous Equipment 1 0.50 0.50

Sub-total

26.0

4. Add: Taxes, transportation and installation etc. @ 10%

2.60

Total 28.6

5.8. Process65 First, gum base is prepared through a melting and straining or filtering process. The

formulation for gum base is proprietary information known to few individuals within

each gum-producing company. Next, other ingredients such as nutritive and non-

nutritive sweeteners and flavours are added to the gum base until the warm mixture

thickens like dough.

Figure 4: Chewing Gum Production Line

The gum base mixture is heated during this mixing process in order to increase the

entropy of the polymers to achieve a more uniform dispersion of ingredients. Then,

extrusion technology is implemented to smooth, form, and shapes the gum. Next, the

gum goes through a shaping process that is determined by gum type and consumer

demand. For example, cut and wrap (chunk or cube) pieces are severed straight out of

the extruder using a vertical cutter.

Sheeting is a technique often used for stick, slab and tab gums. Next, gum is either

conditioned by being sprinkled with a powdered polyol or coated via the application

of subsequent layers of coating using temperature-controlled coating basins before it

is sent to packaging.

The gum base mixture is heated during this mixing process in order to increase the

entropy of the polymers to achieve a more uniform dispersion of ingredients. Then,

extrusion technology is implemented to smooth, form, and shapes the gum. Next, the

65 https://www.youtube.com/watch?v=20VwWaUymSY


Page | 109

gum goes through a shaping process that is determined by gum type and consumer

demand. For example, cut and wrap (chunk or cube) pieces are severed straight out of

the extruder using a vertical cutter.

Sheeting is a technique often used for stick, slab and tab gums. Next, gum is either

conditioned by being sprinkled with a powdered polyol or coated via the application

of subsequent layers of coating using temperature-controlled coating basins before it

is sent to packaging.

5.9. Other Requirements • Land: About 500-800 m2

• Manpower of 10 people which includes Supervisor, Accounts and

Administration, two support staffs (technician and driver) and 6 factory front

line workers.

5.10. Basic Financial Calculations The calculation is based on fairly conservative values of production of 30,000 kgs

(300MT) of chewing gum per annum, employing 10 people, purchasing of raw material

as mentioned in the cost of raw material in table 1. The selling price is proposed at Nu.

330 per kg which may vary on the quality and flavours. The production will be done

on single shift basis (8 hr.) and 300 days in a year. Some financial trends are as follows:

Table 3: Basic Financial Trends

Particulars Description Amount

(Nu. in Lacs)

Establishment Cost 42.50

Operation Cost 836

Fixed Cost 36

Salaries (10 people) 30

Overhead Cots (20%) including

utility bills

6

Variable Costs 800

Raw Material Cost 780

Misc. 20

Profit Margin( Revenue

Generation)

Production 300MT annual and

sale Price Nu.330 per Kg.

990

Break Even Units

(Production)

261MT

Break Even Months 23 Months

Annual PAT after BEP 111.50

Annual PBT after BEP 78.05

• The BEP in months is 23 months


Page | 110

5.11. Conclusion The demand for chewing gum is only growing both in the local and the international

market. The Establishment Cost is around Nu. 2.6 million which can be managed by

entrepreneur’s investment and by capital loan through financial institutions.

It will generate direct employment as well as indirect employment on multiplier basis

for provision of support services for the plant. Maintaining and sustaining the

environment is of paramount importance of this project. It will not create any effluent

byproduct. The project is recommended to be a viable project under domestic

investment along with marketing and technology collaboration with International

Companies. Before commencement, a detailed feasibility is recommended for the

proposed business Idea.

5.12. Chewing Gum Production Line Supplier Leading manufacturers 66 for the chewing gum production line equipment include

(individuals are advised to conduct their own research to seek suppliers. The following

list does not indicate the consultant’s opinion on the choice of supplier and is only for

basic information based on first hand search):

Shanghai Fude Machinery Manufacturing Co.,

Ltd.

Mr Victor Yin (Manager)

No 329, Huayuan Cun,

Huqiao Town, Fengxian, Shanghai

Prc, Shanghai - 201417, China

Phone :86-21-57416165

Mobile: +8613917870833

Website: www.sinofude.net

Shri Verai Engineering

Mr. Rajubhai I. Prajapati

41-42, Bhagirath Estate, Part-2, B/H. Swastik

Textile Industries,Gulabnagar, Amraiwadi,

Ahmedabad - 382426, Gujarat, India

919426545369, + 919898036414

[email protected]

www.shriveraiengineering.com

5.13. Other References: ▪ BhutanTradeStatistics2019260320201.pdf

▪ www.businesswire.com

▪ www.mof.gov

▪ https://www.youtube.com/watch?v=qt03qI0fS_I

▪ https://dir.indiamart.com/impcat/chewing-gum-making-plant.html

66 Image from

https://www.trekearth.com/gallery/Asia/Bhutan/West/Paro/Paro_Festival/photo1261163.htm

https://www.indiamart.com/shriveraiengineering/

https://www.indiamart.com/shriveraiengineering/

https://www.youtube.com/watch?v=qt03qI0fS_I

https://dir.indiamart.com/impcat/chewing-gum-making-plant.html

Investment Opportunity Study 2020 Project Profile-Manufacturing of Corrugated Paper Board Containers

Page | 111

Project Title:

Manufacturing Plant of Corrugated

Paper Board Containers

Investment Opportunity Study 2020 Project Profile- Manufacturing of Corrugated Paper Board Containers

Page | 112

6. Manufacturing of Corrugated Paper Board Containers

6.1. Background of the Idea Packaging plays a very important role in a country's economy. Till recently, only the

developed countries cared about proper packaging. However, now, even developing

countries like India have changed their outlook towards packaging and in the last few

years increasing focus has been laid to improve and provide proper packaging. In fact,

today, packaging is as important as the product itself.

Corrugated Kraft Paper Board Box, technically called Corrugated Fibre Board Box, is

the most popular shipping container used today. The box is manufactured from

corrugated board which consists of 3 or more layers of kraft paper. The middle-fluted

layer is pasted with two flat parallel sheets of paper. The boxes find their number of

applications in the packaging of chemicals & drugs, tobacco, engineering goods,

canned & bottled goods, food products, lamps, electrical appliances, glass wares etc.

6.2. Rationale of the Idea67 The import of corrugated cartoon boxes has increased in Bhutan by 178% in the past

five years. Data from Bhutan Trade Statistics (2015-2019) shows that the import in 2019

reached at all time high of Nu 92.66 million.


has led to such an accelerated demand for cartoon boxes and is expected to grow

given the current trend.

Figure 5: Import of Cartoon Boxes in Bhutan


48

50

52

54

56

58

60

62

64 -

10

20

30

40

50

60

70

80

90

100

2015 2016 2017 2018 2019

Am

ou

nt

in N

u.

Am

ou

nt

in N

u. (M

illi

on

s)

Corrugated Non-corrugated Price Per Kg Corrugated


Page | 113

6.3. Market Outlook International The corrugated and paperboard boxes market has experienced an enormous growth

over the past years, and as per the prediction, the global corrugated and paperboard

boxes market is likely to grow at a rapid pace over the forecast period. The rising

population and growing per capita income are the major growth driver for the

corrugated and paperboard boxes market.

• The packaging industry is growing at 14-15% annually. This growth rate is

expected to double in the next two years.

• According to the Indian Packaging Institute, Indian Packaging industry is USD

14 billion and growing at more than 15% per annum. These figures indicate

towards a change in the industrial and consumer set up.

• The flexible packaging segment is estimated to be growing at over 35%

annually.

• The industry is comprised of a large number of manufacturers of basic materials,

converted packages, machinery and ancillary materials.

• Currently, India is ranked 15th in the world for its paper and paperboard

consumption and is expected to improve its rank in the future.

• Indian packaging machinery imports are worth USD 125 million.

6.4. The Concept68 The concept of this investment idea is not to invest in large scale manufacturing plant

but in a small-scale plant with large raw material of sourcing of used cartoon boxes.

Price in the local market based on interviews with the waste collectors is around Nu.

10 per kg when sold in the bordering town of Jaigaon.

Although the Kraft Paper which can be sourced from India is the most desired option,

statistics from BTS shows the price at around Nu. 27 per kg, it would render the overall

cost of production high.

The financial estimates and size of the plan is determined with the following

assumptions:

• Raw Material sourcing from waste cardboards souring up to 10% of the

imported materials i.e. 150,000 kgs annually

• The cost of raw materials at Nu. 10 per kg (based on current prices)

• The selling price assuming Nu. 50 per kg (i.e. Nu. 12 lesser than the prevailing

rates of imported cartoon boxes)



Page | 114

Figure 6; Price Fluctuations for Import of Corrugated Cardboard (Nu./ kg)

6.5. Existing Competitors Apart from importers, there are three registered establishments of corrugated cartoon

boxes. Although they highlighted good market scope, the contradictory directives of

the government on the use of single use plastics for bottled water packaging is now

fast replacing cartoon boxes and it has been highlighted as an issue.

6.6. Raw Material Requirements and Sourcing

Sl. no. Raw Material

1 Kraft Paper (various grammage)69

2 Printing Ink70

3 Stitching Wire71

4 Binding Cloth72

5 Adhesives73

7 Misc. Consumable Stores

8 Packing Materials

69 https://www.indiamart.com/proddetail/kraft-paper-corrugated-box-16827561312.html 70 https://www.indiamart.com/proddetail/corrugated-box-printing-inks-12487821762.html 71 https://www.indiamart.com/royalwireindustries/corrugated-box-stitching-wire.html 72 https://www.indiamart.com/shaktiudyog-delhi/binding-cloth.html 73 https://www.starchdextrinadhesives.com/corrugated-box-adhesives.htm

58

53

63

57

62

50

55

60

65

2015 2016 2017 2018 2019

Price Fluctuations for Import of Corrguated Cardboard (Nu./ kg)


Page | 115

The following major raw material details are provided considering a production

volume of 2,000 cartoon boxes per day of 150 gsm quality and 30cmx30cmx40cm

dimension.

Table 4: Cost of Raw Material


Per day

(Kg.)

Requirement

Per Annum

( Kg.)

Rate

Nu.

Per

Kg.

Total

Amount

Per

Annum

(Nu.in

Lacs)

1 Kraft Paper (various

grammage)

1500 450000.00 40.00 180.00

2 Glue (Starch) 145 43500.00 30.00 13.05

3 Stitching Wire 28 8400.00 45.00 3.78

Total 501,900.00 196.83

Note: Cost of Raw material for first three months is Nu. 4.9 million.

6.7. Equipment Requirements Following plant, machinery and equipment are required for the proposed project:

Table 5: List of Required Equipment

Description Qty. Rate (Nu.) Amount (Nu.)

A. Corrugating Unit

Single Face Corrugating M/c 1 300,000 300,000

Slitting Attachment with cutter 1 18,000 18,000

Board Cutter (62” x 62”) 1 26,000 26,000

Sheet Pasting Machine 1 44,000 44,000

B. Box Making Unit

Bar Rotary Cutting &Creasing M/c (95”) 1 195,000 195,000

Eccentric Slotter (42”) 1 195,000 195,000

Partition Slotter (42”) 1 45,000 45,000

Stitching Machine (30”) 1 25,000 25,000

Stitching Machine (36”) 1 30,000 30,000

Vertical Bending Machine,(72”) 1 140,000 140,000

Single Slotting Machine (12”) 1 15,000 15,000

C. Printing Unit

Multi-colour Offset Printing M/c1 1 1,000,000 1,000,000

Screen Printing Equipment 1 50,000 50,000

D. Testing Equipment

Bursting Strength Factor Tester 1 30,000 30,000

Grammage Tester 1 5,000 5,000

Compression Strength Tester 1 150,000 150,000

Puncture Resistance Strength M/c 1 30,000 30,000

Cost of Equipment 2,298,000

Cost of installation, erection, commissioning 20% 459,600

Taxes, Freight Insurance etc. 10% 229,800

Total 2,987,400


Page | 116

6.8. Process The manufacturing process is described below with the flow chart.

6.8.1. Based on use of Recycled Paper74

1.7.2 Based on Kraft Paper75

74https://www.alibaba.com/product-detail/Carton-box-paper-testliner-cardboard-

paper_60300847050.html 75 http://www.corrugated-box-machine-china.top/the-process-from-pulp-to-corrugated-box.html


Page | 117

6.9. More Details More details on the process can be found from the following sources and videos for


Table 6: Link for more Details


http://www.madehow.com/Volume-

1/Corrugated-Cardboard.html

https://www.youtube.com/watch?v=

C5nNUPNvWAw

http://202.241.100.15/data/000007638.pdf https://www.youtube.com/watch?v=

ybGr0IWL0BE

https://www.dcmsme.gov.in/reports/Corrug

ated%20boxes.htm


yRT0gXyc3n0

6.10. Other Requirements • Land: About 1.000 m2

• Manpower of 12 people which includes Manager, Accounts and Administration,

two support staffs (technician and driver) and 8 factory front line workers.

6.11. Basic Financial Calculations The calculation is based on fairly conservative values of production of 150,000 kgs

using waste materials, employing 10 people, purchasing of raw material at Nu. 20 per

kg and additional Nu.5 per kg for other items such as glue. The selling price is

proposed at Nu. 50 per kg which is lower than the imported products.

Some financial trends are as follows: Table 7: Basic Financial Trends

# Particulars Details Amount in Nu.

1. Equipment Cost

2,987,400

2. Fixed Cost

3,210,000

Salaries (10 people) 2,400,000

Overhead Cots (15%) 810,000

3. Variable Costs

3,750,000

Raw Material Cost (Nu. 20/kg) 3,000,000

Other materials Cost (Nu. 5/kg) 750,000

4. Selling Price Nu. 50 per kg 7,500,000

5. Break Even Units

247,896

6. Break Even Months

20

7. Annual PAT after BEP

540,000

8. Annual PBT after BEP

378,000

• The BEP in months is 20 months


Page | 118

• Although the annual income is less, it does not account for increase in

production and selling price. For example, if the capacity is increased from

150,000 kgs to 165,000 kgs the PBT increases to Nu. 850,000.

6.12. Annex A: List of Equipment Suppliers Some of the leading manufacturers for the equipment include (Individuals are advised

to conduct their own research to seek suppliers. The following list does not indicate

the consultant’s opinion on the choice of supplier and is only for basic information

based on first hand search):

Bandma Packaging76

Natraj Corrugating Machinery

Company77

Sun-Up78

Bandma House

E – 36 A, New Multan Nagar,

Near Paschim Vihar Metro Station,

Rohtak Road, New Delhi – 110056

+91 11-45518758

Rishi Nagpal (CEO)

Plot No. 22-23, Village: Mithrol

Tehsil: Hodal,

Palwal – 121006,

Haryana, India

Mobile: +91-9810275497

Fax: +91-129-4109400

Sun-upindia

1, Suyog Industrial Estate,

Opp. Vitrum Glass Factory,

L.B.S. Marg, Vikhroli (W),

MUMBAI – 400083

+91 9821093645

[email protected]

76 https://bandmainfo.com/contact-us/ 77 https://natrajmachinery.co.in/contact/ 78 http://www.sun-upindia.com/contact.asp

Investment Opportunity Study 2020 Project Profile- Manufacturing of Toothpicks and Ear Buds

Page | 119

Project Title:

Manufacturing Bamboo Toothpick and Ear Buds


Page | 120

7. Manufacturing of Bamboo Toothpick and Ear Buds

7.1. Background of the Idea Bamboo is a versatile non-wood forest product. It is often considered to be a

replacement of wood and used in both modern industrial and traditional cottage

sectors such as furniture, hut constructions, support in civil construction activities,

household’s items, handicraft and decorative items, etc.

The bamboo handicraft is one of the oldest crafts known in Bhutan. It’s called “Tsharzo”

in Bhutanese. It is one of the highly renewable resources in the Bhutanese socio-

economic-cultural-ecological-climatic-functional context. It has broad range of rural

and semi urban cottage industries that provide livelihood for the villagers in Bhutan.

Looking at the importance of bamboo and skill sets that are available, a project to

manufacture toothpick and ear buds from Bamboo has been recommended. Bhutan

has good bamboo repository and it makes the unit viable as there is also a good

market in Bhutan and in India and other countries.

7.2. Rationale of the Idea Toothpick and cotton ear buds are one of the daily consumable items which are used

in almost all the household and hotels. Being consumable items, the demand is

continuous. Factors such as rising population, increasing hygiene awareness, and

increasing per capita expenditure of consumers are identified as major demand drivers

in the market.

The side effects of traditional plastic cotton buds are also triggering a rise in the

demand of bamboo and wood-based cotton buds market. Johnson & Johnson and

tulip are the leading manufacturer of cotton buds as well as toothpicks.

Several Indian manufacturers have already introduced environment friendly cotton

buds manufactured from chemical free organic cotton and rolled on bamboo and

paper rolled stick. Consumers are shifting towards natural products or plastic free

items.

In Bhutan, hotels and restaurants are in regular demand of these items which make up

a readily available market for these “Made in Bhutan” ear buds and toothpicks. Two

licenses have been issued for manufacturing of bamboo toothpicks in Bhutan.

7.3. Product Group

7.3.1. Toothpick

Toothpick is a small thin stick of wood, plastic, bamboo, metal, bone or other material

with at least one and sometimes two pointed ends to insert between teeth to remove

detritus, usually after a meal. Toothpicks are also used for festive occasions to hold or


Page | 121

spear small appetizers (like cheese cubes, fruits or olives) or as a cocktail stick79.

▪ Specification: Diameter 2.2mm and length 65mm.

7.3.2. Ear buds

Ear bud is a small wad of cotton wool rolled on a short, thin stick made by wood or

bamboo or plastic used for cleaning the ears and for cosmetic purposes. They are

most commonly used for ear cleaning, although this use is not recommended by

physicians.

Specification:

• No. of cotton swabs per stem - 2

• Diameter of cotton swabs tips - 5mm to 10mm

• Overall swab length of cotton bud – 70 to 78mm

• Diameter of stick: 2.7mm

The market of cotton buds is, however, dominated by some national brands. But local

manufacturers still have a huge market to explore due to the low cost of technology

and high growing market demand for quality products.

7.4. 1.3 Market Outlook International80 If produced with elegant quality and convenient packaging, the market of bamboo ear

buds and toothpick is readily available in Bhutan as well as the international arena

including India, Europe and MENA Countries.

There are about 10,157 licensed81 hotel, bar, restaurant, beauty parlors operational in

Bhutan. These are the ready markets.

A report by a market research company called Euromonitor International stated: “India

ear buds market is estimated to grow by a 6% retail volume CAGR and 2% value CAGR

at constant 2014 prices over the forecast period till 202082. Tulips and Johnson &

Johnson (India) are dominating this market and other small-scale brands i.e. Bela, Bliss,

Flice, Femiss, Felcon, Qtips etc. are also performing well.”

As per businesswire.com, a global market research web portal, “The global cotton ear

buds market accounted for a volume of 543.75 billion units in 2017, expected to

expand at a CAGR of 3.4% from 2018 to 2026”.

79 https://en.wikipedia.org/wiki/Toothpick 80 Cotton Buds Market | Extruded Plastics. http://www.plastemart.com/news-plastics-

information/cotton-buds-market-is-expected-to-grow-at-the-cagr-of-3-4-during-2018-2026/48684 81 As per report “nic_2004_struc_detail.pdf”(Bhutan). 82 https://www.euromonitor.com/cotton-wool-buds-pads-in-india/report


Page | 122

Factors such as rising population, increasing hygiene awareness, and increasing per

capita expenditure of consumers are identified as major drivers triggering a growth in

demand in the market. However, two entrepreneurs have been licensed. Nonetheless,

there is still good scope for new and established entrepreneurs to start a toothpick

and ear buds manufacturing unit under cottage industry segment.

7.5. The Concept As per the RNR statistics, in 201783, 119,288 numbers of bamboos were harvested in

Bhutan making the manufacture of ear buds and toothpick possible. The government

of Bhutan may provide necessary support and intervention to enhance production of

these ecofriendly bamboo products.

7.5.1. Plant Capacity

1. Bamboo ear buds = 20,000 per day = 6 million per year

2. Bamboo toothpicks = 20,000 per day = 6 million per year.

7.5.2. Packaging Scale

a. Bamboo Ear Buds – 1, 12, 24, 48,100, 200 nos. per packaging.

b. Bamboo Toothpicks – 4, 10, 24, 50,100, 200, 500 nos. per packaging.

7.5.3. Availability of Raw Material

There are three basic raw materials required for the manufacture of toothpick and ear

buds i.e.

i. Bamboo (spindle or stick)

ii. Cotton - rayon (absorbent material) and

iii. Recyclable packaging material (paper, PET transparent wide mouth containers

and card board boxes).

Zhemgang, Mongar, Trongsa, Dagana, Trashigang and Sarpang are the major bamboo

production Dzongkhags in Bhutan84. The other raw material such as cotton, plastic

containers can be easily sourced from adjoining Indian cities.

7.5.4. Proposed Location for Plant

Jigmeling in Sarpang and Motanga Industrial Parks Samdrup Jongkhar.

83 https://drive.google.com/file/d/1WIIyqR7csLPQSH5-Kirg7sSUy4r6OMMr/view 84 http://www.dofps.gov.bt/wp-content/uploads/2016/03/FFF-2018.pdf

http://www.dofps.gov.bt/wp-content/uploads/2016/03/FFF-2018.pdf


Page | 123

7.6. Manufacturing Process The proposed plant will produce Toothpick and Bamboo Cotton Swabs (Ear buds)

made by biodegradable bamboo and soft cotton and bamboo Toothpicks. After

usage, these can be disposed off in organic waste or compost.

7.6.1. Ear Buds Manufacturing process

Making ear buds entails a series of processing activities like spindle making, applying

of adhesive materials, wrapping of cotton around the glue coated spindle end

(approximately 0.05 to 1 gram of cotton), compressions, chemical coating (cellulose

polymer) etc. After completion of this process cotton buds are ready for packaging

and supply. These are packed in the polyethene pouch and carton box.

Spindle are made from bamboo through the state-of-the-art bamboo processing

machines such as bamboo sawer, splitter machine, dissection machine, flaker machine

and further processed by sawing machine, bamboo filament shaping machine as per

required length and diameter.

Figure 7: Ear Buds Making Machine

7.6.2. Toothpicks Manufacturing

It is basically a conversion of bamboo into fine quality small toothpicks sticks. The

process entails collection of original bamboo - cutting bamboo stick – section open

piece of fixed width into silk, bleaching, drying, cutting, pointing and packaging.

The raw bamboo processing equipment’s for both products are same and simple in

operation. Equipment can easily be sourced from India (Assam and Kolkata). Automatic

and semi-automatic machines are used to produce cotton buds. Packaging machines

are used to pack the beds in pouches.


Page | 124

Figure 8: Toothpick Making Process and Equipment’s

7.7. Equipment and Machinery The initial bamboo processing is same for both products and equipment used include

raw bamboo sawer, dissection machine, flaker, filament shaping machine, polishing

machine stick set-size machine, and finishing machine. The end product is produced

through specific machines like toothpick sharpened machine and ear buds making

machine. Simple pouch sealing machine and corrugated wrapping machine is used for

packaging. Equipment suppliers are listed in “annexure A”.


better understanding: Table 8: Addition Sources and Videos for Further Reference


https://en.wikipedia.org/wiki/Toothpick https://www.youtube.com/watch?

v=oxNMXdsO48Y

https://www.businesswire.com/news/home/20180615005229/e

n/Global-Cotton-Buds-Market-2018-Size-ShareThe%20

https://www.youtube.com/watch?

v=o_nPzMt0KW4

Cotton Buds Market | Extruded Plastics.

http://www.plastemart.com/news-plastics-information/cotton-

buds-market-is-expected-to-grow-at-the-cagr-of-3-4-during-

2018-2026/48684


v=lxcXQx54tFo

7.9. Basic Financial Calculations The financial calculation is based on fairly conservative values of production of 20,000

toothpick per day @ Nu 0.35, and 20,000 ear buds per day @ Nu.0.55 with the plant

operational for 300-day work year.


Page | 125

The production targets are considered at production of 6 million toothpick and ear

bud each annually. The sale price is considered as Nu. 0.35 per toothpick and 0.55 per

ear bud.

Basic financial calculations are detailed in the table below:

Table 9: Basic Financial Calculations

Particulars Description Value

Establishment Cost Nu. 2,350,000

Operation Cost Nu. 1,998,100

Fixed Cost Nu. 1,656,000

Salaries (9 people) Nu. 1,440,000


utility bills

Nu. 216,000

Variable Costs Nu. 342,100

Raw Material Nu. 311,000

Misc. Nu. 31,100

Profit Margin (Revenue

Generation)

Tooth Pick 20000 per day @

Nu0.35, Ear Bud 20000 per day

@ Nu.0.55 (300 Days Year)

Nu. 5,400,000

Break Even Units

(Production)

95 Lacs (Nos.)


Annual Profit Before Tax Nu. 1,051,900

Annual Profit After Tax Nu. 736,330

A total of 400 m2 land are is enough to set up the plant and the land could be procured

on lease from the government. The build-up requirement is for a production hall and

packaging area. Raw bamboo storage, cutting, as well as stick manufacturing section

can be done in shaded area as well. Around 9 people each will be employed for each

of the two projects.

7.10. Conclusion Commercial production of bamboos is not a common trend in Bhutan but it is cut

down for making furniture, basket agriculture equipment, houses construction etc. the

good news is the easy availability of bamboos in the country. Through sustainable

bamboo farming, a regular supply and ecological balance could be maintained

A manufacturing plant each for toothpick and ear buds from bamboo is highly

recommended and it does not require high technical skill set. Bamboo processing

equipment are easily available from Kolkata and Guwahati. These are easy to use and

needs investment of around Nu. 2.4 million. It can be managed by individual

investment or by capital loan through financial institutions.


Page | 126

The demand is ample and it has a good scope both in the local as well as the

international market. A detailed feasibility is recommended before final

commencement.

7.11. Machine Suppliers

Some of the leading manufacturers for related equipment include: (Individuals are

advised to conduct their own research to seek suppliers. The following list does not

indicate the consultant’s opinion on the choice of supplier and is only for basic

information based on first hand search)

Table 10: List of Equipment Suppliers

Equipment Suppliers:

Guru Nanak Mechanical

Works (Assam) Pvt. Ltd.

Mr. Kulwinder Singh

Makum Road, Tinsukia,

Guwahati, Assam, 781001, India

Phone (O) +91--0374-2338545

Mobile: +91--9435002172

E-mail: [email protected]

Ved Prakash Soni (CEO)

Prashant Bamboo Machines

12, Jamuna-2, Dr. Ambedkar

Square, C.A. Road

Lakadganj, Nagpur - 440008,

Maharashtra, India

Phone: +91-712 276 3378

Mobile: +91-8046031246

E-mail:

[email protected]

Anil Enterprises

Rohit Agrawal

4.1/5 Industrial Area, Behind Old

Haldi Factory,

Ujjain Road, Dewas-455001,

Madhya Pradesh, India

Mobile: +91 - 08048757004

Ear Buds Making Machine

Amarnaathh Engineering

Soundarajan Balakumar(CEO)

No. 96, Sri Ram Nagar,

Peelamedu, Coimbatore -

641004, Tamil Nadu, India

+91 0422 2511759

Mobile 8046051889

[email protected]

www.amarnathengineering.in

Uttam Patel, Director

Tirth Corporation

'Tirth Corporation', Parth Farm,

B/H Infinium Toyota Showroom,

Rajkot_ Gondal Highway,

Kangashiyali Road, Rajkot, Gujarat

360004


Mobile: +91-9825077764

China:

Romiter Machinery Compnay

Ltd.

No.1503, High Tech Zone,

Zhonghua Road, Wenfeng

District Anyang –China

Tel: 0086-372-5023661

Fax:0086-372-5023667

Mobile: 0086-18637275223


Investment Opportunity Study 2020 Project Profile- Manufacturing of Bio Liquid and Talc Based Fertilizer

Page | 127

Project Title:

Manufacturing Plant for ‘Bio-Liquid and

Talc Based Fertilizers’


Page | 128

8. Manufacturing of Bio-Liquid and Talc Based Fertilizers

8.1. Background of the Idea Bhutan is popular for its organic products. Farming is fundamental to the Bhutanese

economy. As in any other farming system, soil fertility is fundamental to the

productivity and sustainability of farming in Bhutan. The country is characterized by

considerable diversity in agricultural soil quality. To improve productivity, Urea is the

main fertilizer used in Bhutan since early 1990s.

Presently, due to increased awareness and notable adverse impact on farm soil fertility

and seed germination, the use of Urea is declining. Farmers are using organic compost.

However, farming has also been constrained by the mountainous topography and

rapid changes in environmental variability.

An innovative development of Bio-Fertilizers85 can play a vital role in the Bhutanese

agriculture industry. It will enhance productivity and provide a major boost to farmers.

Some of the benefits include longer shell life (up to 24 Months), no contamination,

better survival rate of seed and soil, easier usability for farmer, harmless, eco-friendly

low cost agro-input, will add nutrients to the soil facilitating market and import

substitution.

8.2. Rationale of the Idea Farmers have been producing food crops using simple forest litter and farm yard

manure86. There is potential to increase productivity of these traditional farming

systems by adopting ‘bio-fertilizers’, which include development of farming systems

applicable to the local soil and agro-climatic conditions.

From the total farm holding in the country, 94.84% use farmyard manure or compost,

followed by chemical fertilizer with 25.32% as major source of soil nutrients for crop

production.

85 Bio Fertilizers are the fertilizers which promote and enhance agro-ecosystem health, including biodiversity,

biological cycles and soil biological activity. 86 http://www.moaf.gov.bt/rnr-census-report-2019


Page | 129

Figure 9: Proportion of Fertilizer Inputs being used by the Framers

Urea is the main chemical fertilizer which is imported from India to the quantity tune

of 1,517 MT87 with a value of Nu. 2.5 million in 2019. Superphosphate was the next

highest imported fertilizer with 1,333 MT valued at Nu. 38.8 million. The below graph

depicts the import of Urea and Superphosphate in the past five years. These trends

offer newer opportunity for development of bio-fertilizers Market in Bhutan.

Figure 10: Fig.2: Import of Urea and Superphosphate Chemical Fertilizers in Bhutan

8.2.1. 1.2.1 Bio-Fertilizers Versus Organic Fertilizers88

Bio-fertilizers are microbial inoculants consisting of living cells of micro-organism like

bacteria, algae and fungi alone or in combination which help in increasing crop

productivity. Biological activities are markedly enhanced by microbial interactions in

the rhizosphere of plants.

87 https://www.mof.gov.bt/wp-content/uploads/2020/03/BhutanTradeStatistics2019260320201.pdf 88 https://www.researchgate.net/figure/Mechanisms-of-plant-growth-promoting-bacteria-

PGPB_fig1_271237100

1518

2110

1196

2935

2142

1,3341,061

2,046

1,772

2,889

0

500

1000

1500

2000

2500

3000

3500

2019 2018 2017 2016 2015

Nu

, in

Lacs

Years

Urea

Superphosphate


Page | 130

Figure 11: Bio Fertilizers Growth Approach

Organic fertilizers are obtained from animal sources such as animal manure or plant

sources like green manure. For example, vermicomposting is a simple biotechnological

process of composting, in which certain species of earthworms are used to enhance

the process of waste conversion to produce a better end product.

Bio-Liquid and Talc Based Fertilizer formulations are growing rapidly. These products

provide great promise to agriculture productivity improvement because of benefits

over the conventional chemical-based fertilizers in terms of longer shelf life, better

survival on seed and better nodulation.

It has cost saving on materials such as pulverization, neutralization, and sterilization,

easy transport, contamination free superior in quality & performance and convenience

of use, storage and transportation. This plant growth promoting bacteria refers to

bacteria that colonize the roots of plants to enhance plant growth.

These fertilizers are ecologically safe, provides enhanced nutrient mobilisation and

nutrient use efficiency, increased growth, yield and protection against diseases. These

products are stored for a maximum of 3 months. The farmers have to mix the

formulation with the seeds before sowing.

8.3. Market Outlook International The Bio-fertilizer Market is segmented by Microorganism into Rhizobium, Azotobacter,

Azospirillum, Blue-green Algae, Phosphate Solubilizing Bacteria, Mycorrhiza, and

Other Microorganisms. By Technology Type, it is segmented into Carrier Enriched

Biofertilizers, Liquid Biofertilizers, and Other Technology Types. Increased practice of


Page | 131

organic farming, need for improving soil organic matter, and favorable regulatory

structure are the major factors driving the market.

Following are the main trends:

▪ A market research report by a B2B Market research company

“MarketsandMarket89” states: “The global biofertilizers market is estimated to

be valued at USD 2.3 billion in 2020 and is projected to reach USD 3.9 billion by

2025, recording a CAGR of 11.6% during the forecast period”. North America

cornered the largest share of around 27.7% in the global market.

▪ As per buisnesswire.com, the Indian fertilizer market was worth INR 5,437 billion

in 2018. Looking forward, the market is projected to reach INR 11,116 billion by

2024, growing at a CAGR of 12.3% during 2019-2024.

▪ The global players in the industry are Monsanto BioAg, Kiwa Bio-Tech Products

Group Corporation, Lallemand Inc., Camson Biotechnologies Limited, and

Agrinos AS, Italpollina S.p.A., Tata Chemicals Ltd. etc.

▪ The increasing usage of bio-fertilizers signifies potential for sustainable farming

method and food safety. The increasing concern with regard to food safety is

expected to drive the industry growth over the forecast period. The Government

of India has introduced several schemes to promote the usage of the product

in the country.

8.4. 1.4 The Concept

Looking at the growth in of organic manure business, entrepreneurs are showing

interest to setup units in this segment. For example, Farmer PB Ghalley, 6,3 at Ramitey

in Phuentsholing produces bio-slurry compost – an organic fertilizer that is made from

bye-product waste of bio gas which is composted and sold as fertilizer. Most of his

product goes to Thimphu and some to the local market in Phuentsholing. The farmer

sells about 5 MT of compost annually in the capital. He is also supported by a team of

Bhutan Biogas Project and National Organic Program (NOP). And with the business

becoming successful, he says he now wants to increase his market size and take it all

over the country.

89 https://www.marketsandmarkets.com/Market-Reports/compound-biofertilizers-customized-

fertilizers-market-856.html

http://www.lallemand.com/

http://int.agrinos.com/


Page | 132

This is a good example towards declining use of chemical fertilizers. A news article was

published about his business entitled “Organic Business in Bhutan”90 in Business

Bhutan newspaper.

The concept of this investment idea is not to invest in large scale manufacturing plant

but in a small-scale plant with the capacity to produce more than one product using

simple technology so that demand-based products could be developed. The most

important aspect of this unit is that it should not adversely impact the environment.

All the raw material used in production has to be approved as safe and reliable.

The liquid bio-fertilizer formulation is produced through eco-friendly technology and

based on state-of-the-art technology in rust free (mostly MOC SS 316 & 304)

equipment. This project is suitable as per the working condition, benefits, demand and

strengths of Bhutan.

Some are highlighted below:

Table 11: Parameter in Respect to Bhutan

1. Product Bio-Liquid and Talc Based bio Fertilizers

2. Brand Support Bhutan – An organic country.

3. Market Potential Domestic as well as export – India, African

Countries etc.

4. Raw materials

4.1 Beneficial microorganisms One Time Sourcing – from Technology Indian

Research Institute – CSIR, NRDC etc.

4.2 Water Available

4.3 Talc Available

4.4 Packaging Material HDPP Bottles and Bio gradable PP Bags. Can

be sourced.

4.5 Electrical Power Available in Bhutan

4.6 Manpower Available in Bhutan

Product Mix and Packaging:

Table 12: Product mix and Packaging

Product Packaging Range

Bio-Liquid Fertilizer 500ml, 1Lt. 5Lt, & 20 Lt.

Talc Carrier Based Fertilizer 1 kg, 5 kg, 10 kg,25 kg, 50kg

90 https://www.businessbhutan.bt/2018/03/21/a-farmer-finds-success-in-organic-fertilizer-business/


Page | 133

8.5. Plant Capacity The optimum production capacity is designed after assessment of key investment,

available facilities, and market demand and is assessed at annual production of 4,800

MT in one 8-hour shift. It is just 5% of the total import of Urea from India. The

suggested plant capacity is as follows:

Table 13: PGPR – Proposed Production Capacity

Product Formulation Monthly

Production

Products Production

Annual Production

Liquid Bio Fertilizers 1,500 Lt per Month 18,000Lt.(18KL)

Talc Based Bio Fertilizers 20,00Kg per Month 24,000 Kg. (24MT)

*(Liquid 1Lt= 1Kg) Total 32,000Kg (32MT)

8.6. 1.6 Manufacturing Process91 Manufacturing process involves fermentation of variety of media, using commercially

available microbial cultures. It develops bulk culture and talc is used as carrier material

mixed with inert compound and binding agents. DM water is used for culture

preparation. After air drying, the products are packed and ready for supply.

A short product scenario is outlined below:

Table 14: Product Specification and Properties

Product - Product Specification

Bio-Liquid Fertilizers

Spread: 107 to 109CFU/ml

pH : 5 To 7.5

Colour : light brown

Physical Shape – Liquid

Talc Carrier Based Bio-Fertilizer

Spread: 107 to 109CFU/g

pH : 6.8 to 7.4

Colour – White

Physical Shape – Solid Powder form

91 https://www.slideshare.net/roshnimohan4/biofertilizers-production-and-their-applications


Page | 134

Figure 12: Production Cycle of Bio Fertilizer

8.7. Plant Equipment The manufacturing section consists of machineries i.e. industrial fermenters, talc

mixing equipment, packaging machines, SS storage tanks, & material handling

equipment etc. In addition, supportive and accessories equipment such as boilers,

demineralizing plant, air compressor, cooling towers, pumps & vacuum pumps are also

deployed. Fermenter is the main equipment for the production of culture formulation.

Figure 13: Fermenter –Main Equipment


Page | 135

It is a large vessel in which the organism is kept at the required temperature, pH,

pressure, dissolved oxygen concentration, and substrate concentration.

Manufacturing bio-fertilizers does not require any interlocking processes between

machines. Every machine is equipped with its own control and instrumentation

consists of PLC based control and display mechanism etc.

All the machineries are manufactured in India. Some of the suppliers are from Gujarat,

Maharashtra and Chennai providing equipment installation on turnkey basis. A list of

equipment suppliers is mentioned in “Annexure A”.

8.7.1. Required Raw Material

It includes Talc, Sticking Agents and Ingredient, Inert Compound, Biding Agent, Other

Additives and Laboratory Chemicals

8.7.2. Standards

Processing followed by norms under THE FERTILISER (CONTROL) ORDER 1985

No.11-3/83-STU, Government of India.



Reading Materials Videos https://www.slideshare.net/roshnimohan4/biofertil

izers-production-and-their-applications

https://www.youtube.com/watch?v=O1FfEbpaiHw

https://www.alliedmarketresearch.com/liquid-

fertilizers-market

https://www.youtube.com/watch?v=fBHMigFahZ4

https://www.ias.ac.in/article/fulltext/reso/018/03/0

275-0281

https://www.holganix.com/blog/5-facts-about-the-

organic-marketing-for-fertilizer-users-infographic

Table 5: Addition sources and videos for further reference

8.9. Basic Financial Calculations A total of 500 m2 of land area is enough to develop manufacturing facility for this plant.

It will be arranged on lease basis. The production area is under closed type building

and consists mainly three sections - culture preparation, manufacturing as well as

packaging, and storage section.

The financial calculation is based on fairly conservative values of annual production of

32 MT of bio-fertilizer which is estimated at only 2% of total Urea import in Bhutan

(Average Urea import was 1,517 MT 2019). The annual production targets are

considered at 18,000 lt for liquid bio-fertilizer formulation and 24,000 kg for talc-based

bio-fertilizer.


Page | 136

About 7 people will be employed at the plant. The sale price is considered as Nu. 100

per kg for talc-based formulation and Nu. 250 per lt for liquid formulation. Raw

Material suppliers are listed in “annexure A”.

Basic Financial Calculations are detailed in the table below:


Particular Description Amount and Value

Establishment Cost Nu. 2,550,000

Operation Cost Nu. 3,125,000

Fixed Cost Nu. 2,520,000

Salaries (7people) Nu. 2,100,000

Overhead Cost (20%)

including utility bills

Nu. 420,000

Variable Costs Nu. 605,000

Raw Material Cost Nu. 550,000

Misc. Nu. 55,000

Profit Margin Nu. 6,900,000

Annual Profit before

Tax

Nu. 1,225,000

Annual Profit after Tax Nu. 857,500


8.10. Conclusion The rise in demand for bio-fertilizers products has been immense and it is not only

due to the increase in conscientious consumers but also due to rising income along

with improved farming practices that make organic yields more robust. As a result, the

increasing global demand for organic food has increased the area under organic

farming.

The proposed plant will be beneficial to entrepreneurs as well as farmers of Bhutan.

Bio-fertilizers increase yield by up to 30% because of the nitrogen

and phosphorus they add to the soil92. These products are easy to transport and easy

to use.

It will generate direct employment as well as indirect employment on a multiplier basis

for provision of support services for the plant.

Maintaining and sustaining the environment is of paramount importance of this

project. It will not create any effluent bye-product. It’s an eco-friendly plant and

environment management system ISO 14001 and ISO 9001:2015 will be implemented.

92 https://www.hunker.com/13404698/advantages-and-disadvantages-of-biofertilizers


Page | 137

With easy availability of raw materials and the growing market demand, the

manufacturing plant of liquid bio-fertilizer and talc-based bio-fertilizer is highly

recommended as a viable business Idea in Bhutan. A Detailed Feasibility Study is

recommended before commencement of the project.

8.11. Annex A - List of Equipment Suppliers

Some of the leading manufacturers for the equipment include (individuals are advised



based on first hand search.):


Napro Scientific

6,Vaidehi Residency, MIT

College Road, Rambaug

Colony, Kothrud, Pune -

411038, INDIA

Tel./Fax: +91 20 25460214

Email : [email protected]

[email protected]/naproindia@g

mail.com

Shree Biocare Solution Pvt. Ltd.

Mr. BhadreshPankhaniya (CEO)

No. 28, Hariom Nagar - 1, Motera

Road,

Sabarmati, Ahmedabad, Gujarat -

380 005, India

Email :[email protected]

Mobile :+(91)-9033025502/

9898999146

Fax:+(91)-(91)-88660004776

Bionics Scientific Technologies

(P) Ltd.

AN ISO 9001:2008 Certified

Laboratory Equipment

Manufacturing Company

314 3rd Floor, Vardhman Capital

Mall. LSC-10, Sindhora Kalan,

Delhi 110 052, India

Mobile: +91-9971934500, +91-

9910788555

Tele:+91-11- 23652000 / 7000

Stericox Sterilizer Systems

India

A 100/1, Street No. 15, Gamri

Extn.

Delhi 110053. India

Gamri Extn, Delhi 110053

Tel: 8130134164


www.stericox.com

Raw Material Supplier

Gujarat State Fertilizers &

Chemicals Ltd. for Culture

P.O. Fertilizernagar -391 750,

Dist. Vadodara, Gujarat, India

Phone +91-265-2242051, 2242451,

2242651, 2242751

Fax +91-265-2240966, 2240119

E-mail [email protected]

www. gsfcltd.com

PGPR Strains:

Peak Chemicals Industries

Mr. DaipayanSen

Sevoke Road, 2nd Mile

Siliguri, West Bengal - 734 001,

Telephone: +(91)-(353)-2543875/

+(91)-(33)-24192117

Mobile: +(91)-9831067280/

[email protected],

[email protected]

Preci-techindia.com

207, Bhanu Enclave, Opp ICICI

Bank, Dr.A.S.Rao Nagar,

Secunderabad, Telangana

Call Us: 040 40119970

Sales: +91

9966611444,9966611888


[email protected]

Shree Biocare Solution Pvt. Ltd.

Mr. BhadreshPankhaniya (CEO)

No. 28, Hariom Nagar - 1, Motera

Road,

Sabarmati, Ahmedabad, Gujarat -

380 005, India

Email :[email protected]

Mobile :+(91)-9033025502/

9898999146

Fax:+(91)-(91)-88660004776

Hi Therm Boilers

A-102, Oshiwara Industrial Estate,

New Link Road,

Goregaon (W), Mumbai –

400104,

Maharashtra, INDIA

Mobile: +91- 9819515555

Phone:+91- 22- 40024444

Email

ID:[email protected]

mailto:[email protected]?subject=Shree%20Biocare%20India%2C%20Shree%20Biocare%20Solution%20Pvt%20Ltd%20Mail%20Through%20fermentorsolution.com



mailto:[email protected]?subject=Peak%20Chemicals%20Industries%20Limited%20Mail%20Through%20IndiaMART.com

mailto:%[email protected]?subject=Peak%20Chemicals%20Industries%20Limited%20Mail%20Through%20IndiaMART.com

mailto:[email protected]?subject=Shree%20Biocare%20India%2C%20Shree%20Biocare%20Solution%20Pvt%20Ltd%20Mail%20Through%20fermentorsolution.com

Investment Opportunity Study 2020 Project Profile- Manufacturing of Prefabricated Wooden Building Components

Page | 138

Project Title:

Manufacturing Plant of Prefabricated Wooden Building

Components


Page | 139

9. Manufacturing of Prefabricated Wooden Building

Components

9.1. Background of the Idea Owing to limitations in the transport infrastructure, cost of timber transportation

between Dzongkhags is high and therefore timber is mostly processed in its area of

origin, i.e. hardwood in hardwood areas, softwood in softwood areas.

The growth in the wood structure products industry is highly correlated with the

progression in the construction sector. It contributes about 15.87% to the country’s

GDP (Year 2017) making up 0.99 percentage points to the GDP growth93. Wood makes

to to around 25-28% of a construction cost of a house as per Bhutan Architectural

Design. Upcoming construction and infrastructure projects in Bhutan are likely to act

as an opportunity in the coming years given the required proportionate wood work.

Rapid urbanization has created shortage of housing in towns and cities. Pre-fabricated

buildings can be a cost and time efficient alternative to housing as these can be reused

or shifted if required. Thus, Bhutan has the market potential and availability of raw

material within the country and this offers an ideal opportunity for a manufacturing

unit of prefabricated building components to aid import substitution.

There is no unit specialized in manufacturing pre-fabricated building component with

modern machineries as required to urban as well rural construction sector. Looking at

potential opportunities in the wood processing segment, a manufacturing plant of

prefabricated wooden building components is highly recommended.

9.2. Rationale of the Idea As per Bhutan Trade Statistics94, the wood industrial segment covers cottage industries

and mainly comprises 168 sawmills, 500 small furniture houses, few licenses in

plywood, cardboard and flush doors manufacturers in Bhutan. Around 12 companies

are working in making structural wooden items such as doors/windows components

frames and joinery.

The wood processing technologies in the country are still rudimentary relying on

traditional equipment and often on hand tools for sizing and shaping the timber

structures. This is not only resulting in huge wastages but also poor quality of

workmanship. For instance, the use of power chain saws, band saws and mobile

sawmills result in losses as high as 30% to 40% of the total volume. This loss is further

exacerbated by the lack of technology to utilize undersized timbers and off-cuts.

93 https://kuenselonline.com/an-insight-into-the-construction-industry-of-bhutan-part-

i/#:~:text=Despite%20the%20relative%20slow%20progress,points%20to%20the%20GDP%20growth. 94 nic_2004_struc_detail, Bhutan


Page | 140

Despite the vast forests covering Bhutan’s territory, only 5% of the total forest area is

currently under commercial management. Around 2 to 3 million CFT of wood is

converted from logs to saw timber in Bhutan. Considering an average recovery rate of

70% of log around 0.6 to 0.9 million CFT of wood goes to waste as saw dust. Only

some part of this wood waste is used as fire fuel.

Some timber trends in Bhutan are as follows:

• Timber wastage is high during the processing in the form of sawdust and off-cuts.

A study to assess recovery percentage of timbers for different wood processing

technologies in Bhutan show that 99% of sawmills do not have the required

modern technology to reduce and make use of the wastes. Furthermore, continued

use of conventional sawing technologies like band saw, mobile sawmills and power

chainsaws have recorded losses as high as 30 to 40%.

• Traditional structures constructed mainly from natural timber without any form of

treatment and processing are easily susceptible to damage, thus entailing frequent

replacement.

• Lack of know-how and technology to process timber from young trees and utilize

undersized timber results in harvesting of old matured trees and huge wastages.

• Timber for the constructions of massive structure like Dzongs and bridges require

longer beams and larger pillars which are now getting difficult to manage due to

scarcity and involves substantial amount of manpower and cost. Solid wood

columns with rotted centre (heart) has become common much to the ire of people

working on the wood. This damage will result in severe radial cracks. Differential

seasoning will also result in crack on the surface, which are often quite deep and

would require remedy incurring further cost and time.

• With the growth in the number of constructions every year, the supply of timber is

not able to meet the demands, thus leading to a huge rise in the cost of timber.

When timber becomes expensive and there are no other readily available

construction materials, the shortage also fuels black-market of wood making

timber extraction unsustainable.

9.3. The Concept With rapid developmental activities taking place, the demand for forest products,

particularly timber, is growing every year giving enormous pressure to limited stock of

timber in the forests with commercial value. However, on the other hand, there is a

huge amount of waste generated due to out dated timber processing methods and

conventional technology.

On the other hand, the wood-based industries have limited market opportunity and

most wood industries don’t invest in new equipment. Lack of technological

advancement in wood processing means the choice of wood and timber products is


Page | 141

also limited. The general statement that consumers will not pay higher prices for semi-

processed timber as far as cheap raw-timbers are available may not be valid since there

is already a trend of importing semi-finished timber as raw materials in few of the

successful wood-based industries in the country.

In prefabricated construction, the manufacturer can order the building component

requirement in customised designs and anabling bulk production of materials as it is

fabricated in factories. This results in lower prices from suppliers and reduces the

number of labourers and transportation costs.

This concept is based on the use of modern wood processing machineries along with

the available saw dust and lumber, which is also manufacturing of prefabricated

wooden building components. It will provide viable market opportunities with price

advantages and time saving benefits to users.

Such wood-based building component manufacturing plants is recommended in

Bhutan with state-of-the-art manufacturing technology sourced from India or

Malaysia. The unit can be established independently or under the technological

support from established brand companies in India.

9.3.1. Product Group

Bhutan has the potential for making quality prefabricated wood items. Types of

prefabricated wood product group components are as follows:

i. Wood Frame for Window and Doors,

ii. Doors and Window, Walls and Roofing,

iii. Flooring and Stairs,

iv. Porch and Column’s etc.

9.3.2. Types of Timber Processing95

The different types of timber processing include:

i. Cross-Laminated,

ii. Nail-Laminated,

iii. Glue-Laminated and

iv. Dowel-Laminated Timber

9.4. 1.3 Market Outlook International Pre-fabricated Buildings Parts: It consists of factory-made components or units that

are transported and assembled on-site to form the complete building. Bhutanese

manufacturers use hard wood, steel, plywood, softwood and cane as raw materials to

make fabricate building parts.

95 https://continuingeducation.bnpmedia.com/courses/think-wood/designing-sustainable-

prefabricated-wood-buildings/3/


Page | 142

As per the study entitled ‘Report on Import Substitution Opportunities by Ministry of

Economic Affairs, Bhutan – Year 201996’ illustrated in the graph below, the total value

of import was recorded at Nu. 168.64 million from 2014 to 2018 with an average

increase of 41.26 %. Currently, there are 168 domestic fabrication industries. However,

few industries are into fabrication of building parts.

Figure 14: Building parts Import Trend (2014-2018)

Bhutan is experiencing a big construction boom in the past few years. Structural

framing, windows, doors, floors are made by wood. As traditional Bhutanese architect

is mostly timber based, timber will continue to be used in the construction and

maintenance of all existing and forthcoming structures. Increasing demand of timber

for these structures will apparently come to face constraints in supply of timber in

future due to factors such as scarcity of special and quality timber.

Presently, at construction sites, be it private or government, individual carpenters and

contractors are making structural door, windows and other Items with freshly sawn

timbers which consumes time and accounts a higher cost. Similar to the case of saw

dust, the leftover wooden parts are not utilized except when it is used as firewood.

Import value of wood particle board from India was Nu 133.5 million in 2018 as per

the data published by Bhutan Trade Statistics 2019. An analysis of the data show

particle board and other wood items has increased by 76% in 2018 compared to the

year before. It shows the increasing scope of the wood-based product in Bhutan .

There is no unit specialized in manufacturing pre-fabricated building components with

modern machineries as is required in the urban construction sector and this makes the

scope all the more lucrative.

96 Report On Import Substitution Opportunities by Ministry of Economic Affairs, Bhutan – Year 2019


Page | 143



Table 16: Addition Sources and Videos for Further Reference


http://www.fao.org/3/ag335e/AG335E09.ht

m


MFWxGqGPxzI

https://www.thinkwood.com/wp-

content/uploads/2018/07/Designing-

Sustainable-Prefabricated-Wood-

Buildings_Think-Wood-CEU.pdf


mNFO3fWh55k

https://www.slideshare.net/FarahSham/pref

abricated-timber-framing-system

https://www.treehugger.com/lightwe

ight-prefab-wood-framing-system-

goes-together-without-nails-

4856601

9.6. Manufacturing Process Prefabrication is the practice of assembling wood and components of a structure in

a factory or other manufacturing site, and transporting complete assemblies or sub-

assemblies to the construction site where the structure is to be built.

Prefabrication may also reduce the exposure of building components to wet weather.

That being said, efficient construction can only be achieved when sequencing and

project scheduling are determined up front and managed appropriately.

Manufacturing of prefabricated wood includes cutting of lumber in parts as per design,

surface flattening and straitening, cutting, joint making, gluing and sand finishing.

After these steps, the products are ready for final use.

A brief manufacturing process of prefabricated Wooden Building Components is

detailed on topic 1.7.1, which needs careful machining of wood in sophisticated

manner.

https://en.wikipedia.org/wiki/Structure

https://en.wikipedia.org/wiki/Factory

https://en.wikipedia.org/wiki/Manufacturing

https://en.wikipedia.org/wiki/Transport

https://en.wikipedia.org/wiki/Construction


Page | 144

Figure 15: Manufacturing Process and List of Machineires

1.7.1 Manufacturing Process and List of Machineires

a. Process b. Equipment1 Equip. Image

Band Saw Machine A band saw is a power saw with a long, sharp blade consisting of a continuous band of toothed metal stretched between two or more wheels to cut wood.

Jig saw Machine Jigsaw is one of the most important and extremely useful power tools that are required for performing curved lines and shapes.

Wood turning Lathe Wood turning is used to cut a shape that is symmetrical around the axis of rotation. Surface Planer & Cutting This is universal wood processing machine with high precision & quality. Its multi functionality machine and performs number of wood cutting activities.

Thickness planer It is a machine to trim boards to a consistent thickness from end-to-end.

[ Auto Mould Machine This machine is used for process of profiling concave and other curved surface along the length of a piece of wood.

Other Equipment: High Speed Router, Small Hand Tool pedestal Grinder, Hand Cutter, hand carts etc.

Saw Tooth

Grinder

Sand Cleaning

1 https://www.jaiindustries.com/solid-wood.

Preliminary Cutting

4–side Surface Flattening and Thickening

Pre-mill - Length formatting and Contour Shaping

Corner Joints and Gluing Pasting

Pressing, Drilling Hole and Boring for enclosures

Wood Surface Sanding

Finishing and Clean up.

Ready for use at Site

Manufacturing Prefabricated Wooden Building Components


Page | 145

9.7. Basic Financial Calculations Around 1,000 m2 of land is required for setting up prefabricated building component

manufacturing unit. Including built up area, it can be arranged on a lease basis. The

required manpower is around 10 people which includes Supervisor (1), Accounts and

Administration (1), Site Engineer and Draft man (1), Marketing and Resale Section,

Carpenter and Skilled Machine Operator (4), Helping Hands (2).

The calculation is based on fairly conservative values of 50 completed construction

projects in a year with a minimum profit margin of Nu. 100,000 per project. This is a

realistic amount as per the Bhutan Schedule of Rates – 202097 the Teak/Sal wood work

construction rate is Nu. 22,712 per CuM. Looking at benefits of time saving and high

yield, saving in transportation cost and labor fitment the sale price of prefabricated

components has been considered at Nu. 17,500 per CuM for Teak/Sal wood work. The

salaries are considered as @ Nu. 25,000 per position for ten people. The overhead cost

is 15% of the salaries. No variable cost is taken as it would depend largely on the

project estimates and work volume. No cost on purchase is taken as the production

will be order driven and customers will order in advance.




Establishment Cost Nu.4,500,000

Fixed Cost Nu.3,450,000

Salaries (10 people) Nu.3,000,000

Overhead Cots (15%) Nu.450,000

Variable Costs NA

Cannot be determined as it

will depend on project to project basis

Profit Margin Assuming 50 cars with

Nu. 1,00,000 profit margin

Nu.5,000,000

Break Even Units 80 Projects


Annual PAT after BEP Nu.1,550,000

Annual PBT after BEP Nu.1,085,000

97 Department of Engineering Services, www.mowhs.gov.bt


Page | 146

9.8. Conclusion Building Construction activities are increasing by the day in Bhutan and wood use is

also growing in the form of the use of furniture, structural framing, modular kitchen,

patrician, doors and windows. Thus, domestic market is available along with export

market opportunities to India (Kolkata, Assam, Jalpaigudi, and Northern States of

India), including Bangladesh, Sri Lanka and Nepal.

Reducing cost and time are major anxieties for both consumers and manufacturers

while processing pre-fabricated artifacts. In a prefabricated construction system, the

phases of site preparation and construction of the modules can be run simultaneously,

while in conventional construction, the construction phase happens after the site

preparation phase.

When compared to conventional construction methods, the prefabricated

construction system provides significant reductions in both cost and time.

After implementation of this unit, sawdust from saw mills can be put to effective use.

It will generate direct employment as well as indirect employment on a multiplier basis

for provision of support services for the plant.

It will not create any effluent byproducts. It is run mechanically powered by electricity.

The power rates in Bhutan are much lower compared to neighboring India. The

suggested business is covered under cottage industry and it is highly recommended

for entrepreneurs.


Page | 147

9.9. Annex A - List of Equipment Suppliers Some of the leading manufacturers for the equipment include: (individuals are advised



based on first hand search)


Jai Industries Woodtech Shree Umiya Machine

Nr. Ajit Mill Cross Rd., Rakhial -

Odhav Main Road, B/s Flyover,

Rakhial, Ahmedabad-380 023.

Gujarat, INDIA.

Mobile: +91 9227578426

[email protected]

www.jaiindustries.com

#31/2, Nadakerappa Industrial

Estate, Andhrahalli Main Road,

Near Peenya II stage,

Vishwaneedam Post, Bangalore

- 560091

+91 080 28364584 / 85


www.woodtech.in

3/C, Shiv Estate, Opp. Radhika

Society, NH - 8, near Baroda

Express Way, Ahmedabad, Gujarat

382445

+91 99255 19009


www.shreeumiya.com/

Table 4: List of Equipment Suppliers

9.10. Other References: • http://www.dofps.gov.bt/wp-content/uploads/2016/03/Sawmill_inside.pdf

• http://documents.worldbank.org/curated/en/118821562700584327/pdf/Bhuta

n-Forest-Note-Pathways-for-Sustainable-Forest-Management-and-Socio-

equitable-Economic-Development.pdf

• https://top-machinery.en.made-in-china.com/product/rSXxHfbuaaRy/Chin



tel:+919925519009


Investment Opportunity Study 2020 Project Profile- Manufacturing of Packaging Aluminium Foil

Page | 148

Project Title: Manufacturing of Packaging

Aluminium Foil


Page | 149

10. Manufacturing of Packaging Aluminium Foil

10.1. Background of the Idea Packaging plays a very important role in a country’s economy. Owing to strong

economic growth and increasing middle class with growing disposable income,

consumption of Aluminium foil is growing fast in Bhutan. The change in lifestyle

triggers changes in food habits and it has led to increased demand for foil packaging.

The growing demand for ready-to-eat confectionaries and pharmaceutical products is

another major growth drivers for Aluminium foils industry.

Aluminium foil is a sheet of super-thin metal. As such it can be an absolute barrier to

moisture, gases, odors, bacteria and moulds. The high reflectivity of Aluminium

ensures good protection against radiant heat, whilst its opacity is important in

preventing deterioration of a very large range of foods and drinks which are affected

by light. It is used primarily for packaging.

This industry has seen a major growth in the recent past owing to the growing

application of foil in a variety of products. India is one of the key producers of

Aluminium foil in the region. Over 70% of Aluminium foil used in India is for packaging

applications.

Presently, almost all required Aluminium foil packaging is imported from India. Thus,

Bhutan has the market potential for Aluminium Foil manufacturing unit and it will also

help in import substitution.

10.2. Rationale of the Idea The import of Aluminium Foil (whether or not printed or backed with paper,

paperboard, plastics or similar backing materials) of a thickness (excluding any

backing) not exceeding 0.2mm in the last five years has been consistent.

Data from Bhutan Trade Statistics (2015-2019) shows that the import in 2018 reached

at all time high with a worth of Nu. 214 million.


has led to such an accelerated demand for Aluminium Foil and is expected to grow

given the observed trend.


Page | 150

Figure 16: Packaging Aluminium Foil - Import Quantity from India

Figure 17: Packaging Aluminum Foil - Import Value From India

10.3. Market Outlook International The demand in the global aluminum foil packaging market is anticipated to increment

at a CAGR of 4.8% during the forecast period of 2017 to 202598. This prosperity of the

market for aluminum foil packaging is a reflection of a number of factors, such as high

preference for convenience packaging, growing demand for extended shelf-life of

packaged food, popularity of ready-to-eat meals and processed food, and growing

usage in pharmaceutical products and confectionaries.

98 https://packagingnewsblog.wordpress.com/2017/09/06/aluminum-foil-packaging-market-global-

industry-analysis-size-share-growth-trends-and-forecast-2017-2025/

1734021433

26716

49473

26595

0

10000

20000

30000

40000

50000

60000

2015 2016 2017 2018 2019

Qty

. in

KG

M

Years

98

154167

214

184

0

50

100

150

200

250

2015 2016 2017 2018 2019

Nu

. in

Lacs

Years


Page | 151

Robust economic growth along with rising middle population with inclining personal

disposable income is anticipated to intensify the growth of global Aluminium foil

packaging market during the forecast period. The change in life style which includes

changed food habits has led to increasing demand for packaging. Besides this, robust

demand for Aluminium foil packaging in snacks and chocolate industry are also

strengthening the growth of Aluminium foil packaging market all across the globe.

Some of the major opportunities in global Aluminium foil packaging market includes

technological development to enhance the product quality, reduction in plant losses,

inclination in the obtainability of foils in different forms for crucial mass consumption

usages and progress in the exportability of Aluminium foils.

Global Aluminium Foil Demand by Type

• Rapid industrialisation coupled with heavy air conditioner usage in India, Egypt,

Iran, and UAE boost the need for industrial aluminum foils

• Blister foil is the major application in the pharmaceutical industry and the

medical industry boom in emerging economies foster demand for aluminum

foils

• Rolled Aluminium Foil: it is primarily consumed by packaging, transportation,

and construction sectors.

• The packaging industry took the largest share, approximately 41% during 2016,

followed by transportation.

• It is projected that global rolled foil consumption might increase by 4.8% CAGR

from 2017 to 2025 with the transportation industry being the largest market

• Backed Aluminum Foil: this include laminated, embossed, backed with paper,

plastics and adhesives.

• Developed regions are expected to show moderate growth for backed

aluminum foil used in industrial purposes, especially from the electricity sector

that uses such foils for insulation purposes

The market can be segmented into packaging applications and non-packaging

applications. Packaging applications involve protecting the food from climatic,

chemical and physical hazards. Non-packaging applications which utilize the property

of conductivity of this foil include cable and capacitors wraps, the heat exchanging

tube fins for air conditioners.


Page | 152

Figure 18: Market for Aluminium Packaging in Percentage99

Due to high availability of substitutes in the food & beverages industry, packaging and

quality of product have always been the key competitive factors. Also, this is one of

the major reasons that why food and beverages manufacturers invest more than 11%

of the revenue on packaging.

Dry foods, like aromatic herbs and spices, are best preserved when packed in

Aluminium packaging medium. Lined cartons are the most favorable packaging

method for many dry food products. Latest innovations in packing, like cylindrical

design for an easy-to-open packaging mechanism, protective membranes under a

plastic re-closable lid for repeated usage, and perforated top seam for easy opening,

are revolutionizing Aluminium foil packaging in the food industry.

10.4. The Concept Packaging in today’s world has emerged as an integral part of brand promotion. Owing

to modern-day lifestyle coupled with today’s fast-paced life, customers’ inclination

towards convenience packaging has increased.

Aluminium plays a major role in the modern world through its innumerable forms of

applications - from kitchenware to electric conductors and from railway wagon to

Appollo spacecraft. Because of its intrinsic and versatile properties of lightness,

strength to weight ratio, corrosion resistance, electrical and thermal conductivity, non-

toxicity etc., a wide range of uses has opened up for this metal. Aluminium as a

packaging material is unmatched owing to its light weight, hygienic and non-

contamination which eventually results in longer shelf-life of end products.

99https://www.entrepreneurindia.co/Document/Download/How%20to%20Start%20Food%20Packagin

g%20Foil%20Manufacturing%20Business-776402-.pdf


Page | 153

Growing emphasis on ecofriendly packaging and foray by the investors/start-ups in

the emerging economies is expected to open new opportunities in the aluminum foil

packaging market in Bhutan.

10.4.1. Plant Capacity

Aluminium foil = 150 kg per day = 45MT per year

10.4.2. Availability of Raw Material

The raw materials for Aluminium foil packaging is produced utilizing Aluminium sheets

and it is a part of stretchable packaging material. The cost of the Aluminium rolls is

around Nu.300 a kg.

10.5. 1.5 Manufacturing Process100 As the foil sheets come through the rollers, they are trimmed and slit with circular or

razor-like knives installed on the roll mill. Trimming refers to the edges of the foil, while

slitting involves cutting the foil into several sheets. These steps are used to produce

narrow coiled widths, to trim the edges of coated or laminated stock, and to produce

rectangular pieces. The main required aluminum foil equipment are automatically

controlled rewinding machine, grinding machine, weighing machine etc.

Figure 19: Plant Machineries

10.6. Product Standards Aluminum packaging foil

• Width: Width:45cm (450mm 18 inch)

• Length: 8m

• Thickness: 10-20 micron (range 0.01mm to 0.02mm)

• Net of Aluminium foil: 60g-97g /Roll (without paper core and package)

• Card Paper packed and labelled

100 http://www.madehow.com/Volume-1/Aluminum-Foil.html#ixzz6T6CkU6vB


Page | 154

10.7. More Details: More details on the process can be found from the following sources and videos for


Table 18: Addition Sources and Videos for Further Reference


https://www.lahootipapernapkinmachine.com/aluminium-foil-

machine.html


v=w58MAyI1qxg

https://www.entrepreneurindia.co/Document/Download/pdfan

ddoc-29120-.pdf

https://www.entrepreneurindia.co/Document/Download/How

%20to%20Start%20Food%20Packaging%20Foil%20Manufactur

ing%20Business-776402-.pdf

1.8 Basic Financial Calculations

The financial calculation is based on fairly conservative values of production of 100 kg

per day, the raw material cost is @ Nu. 300 per kg of Aluminium rolls. The production

targets are considered at an annual production of 30 MT. The sale price is considered

as Nu. 500 per kg.




Establishment Cost Nu.1,500,000

Operation Cost Nu.13,005,00

0

Fixed Cost Nu.3,105,000

Salaries (9 people) Nu.2,700,000


utility bills

Nu.405,000

Variable Costs Nu.9,900,000

Raw Material Nu.9,000,000

Misc. Nu.900,000


Generation)

30000 Kg @ Nu.500/kg Nu.15,000,000

Break Even Units

(Production)

29 MT


Annual Profit Before Tax Nu.1,995,000

Annual Profit After Tax Nu.1,396,500


Page | 155

A total of 400 m2 land is sufficient to establish the manufacturing plant. Including the

constructed area, the land can be procured on lease. The built-up requirement is for

production hall and packaging area. Aluminium rolls storage, cutting, as well as stick

manufacturing section can be done in shaded area as well. The plant will employ 9

people.

Assumptions: Table 20: Basic Financial Calculations

Production per day 100 Kg

Annual Production 30,000 kg (30MT)

Cost of Aluminium Roll (Raw Material) Nu. 300 per Kg

Selling Price Nu. 500 per Kg

Yearly Revenue Nu. 19.95 (in Lacs)

10.8. Conclusion Manufacturing Plant of Aluminium foil does not require high technical skill set.

Aluminium Foil Rolls and manufacturing machine are available from India. These are

easy to use and needs investment of around Nu. 1.5 million. It can be managed by

individual investment or by capital loan through financial institutions.

The demand is aplenty and it offers a wide scope in both the local and the international

market. It will not create any hazardous bye-product. The project is highly viable. A

detailed feasibility is recommended before final commencement.

10.9. Machine Suppliers Leading manufacturer for the equipment includes (Individuals are advised to conduct

their own research to seek suppliers. The following list does not indicate the

consultant’s opinion on the choice of supplier and is only for basic information based

on first hand search):

Lahooti Printech Private Limited

Mohammad Sabir (Director)

Shed No. 34, Scheme 2, DSIDC Complex, Phase 2,

Okhla Industrial Area,

New Delhi - 110020, Delhi, India

Mobile No.: +918048555838

Web Site:

https://www.lahootipapernapkinmachine.com

Viva Engineering

Mr Vaman Thacker

(Proprietor)

27, Shrinathji Estate,

Opposite Kailash Estate

Phase 1,

GIDC vatva, Ahmedabad -

382445,

Dist. Ahmedabad, Gujarat

Mobile : +918045800575

Email : info@ vivaengg.in

Web Site: http://www.vivaengg.in

Friends Engineering

Overseas Exports Manjit Singh (Proprietor) J- 126-B, Vishnu Garden New Delhi - 110018, Delhi, India Phone: 011 2598 4953 Email: sales@ friendsengineering.in

https://www.lahootipapernapkinmachine.com/

https://www.google.com/search?rlz=1C1CHBD_enIN837IN837&sxsrf=ALeKk03ANX_6qJV0RMHjXidl0ZmGsDilJw:1595609261793&q=friends+engineering+corporation+phone&ludocid=6491317884486682828&sa=X&ved=2ahUKEwjghv_Zq-bqAhX8xTgGHaNDBe8Q6BMwHHoECBEQAg

https://www.google.com/search?q=friends+engineering+overseas+exports&rlz=1C1CHBD_enIN837IN837&oq=Friends+Engineering+Overseas+Exports&aqs=chrome.0.0j46j69i60.1751j0j4&sourceid=chrome&ie=UTF-8

Service Sectors

Investment Opportunity Study 2020 Project Profile- Hydroponic Farming, Bhutan

Page | 156

Project Title: Hydroponic Farming, Bhutan


Page | 157

1. Hydroponic Farming Service

Background of the Idea

Bhutan possesses a considerable array of opportunities and strengths in promoting

organic farming. It is exploring opportunities to develop local organic crop produces

for organic horticulture products. It has an opportunity to promote healthy lifestyle

and sustainable use of resources and “yes” economic development.

Bhutan has many opportunities primarily due to growing interest and awareness in

organic produce. Current market trends show that markets for organic produce are

available across the globe and demand is increasing for healthy food coupled with the

growing scare of environmental pollution and damage which is pushing the growth of

organic farming worldwide. The growing demand for organic food is manifested in the

total global area under organic farming.

The Himalayan country of Bhutan is typically an agrarian country with about 57% of

the people depending on agriculture. However, farming has been constrained by the

mountainous topography and rapid changes in environmental variability. With climate

change, agricultural production and food security is likely to face one of the biggest

challenges in the twenty-first century. The country has already been experiencing some

impacts of climate change, such as crop loss to unusual outbreaks of diseases and

pests, erratic rainfalls, windstorms, hail storms, droughts, flash floods and landslides

annually.

Because of the nature of subsistence farming with low productivity and small land

holding, the food production in Bhutan does not meet the entire food demand of the

country and the income of rural farming households remains at a low level. Under

those circumstances, promotion of “Hydroponic Farming” plays an important role in

agricultural development.

Rationale of the Idea

1.2.1. Local Demand

The country’s climatic and altitudinal variability allows cultivation of many crops,

including year-round production. The main cereal crops cultivated by the farmers

include rice, maize, wheat, barley, buckwheat and millet. Among the fruit crops, the

two most important ones are apples and mandarin, and farmers cultivate almost all

kinds of vegetable crops due to the large climatic variability across the agroecological

zones. However, the country continues to import close to 30% of its food from outside,

mostly from India.


Page | 158

The country’s total geographical size is 38,394 km2, of which cultivable land accounts

for just 2.93% of its entire area. It shows that the country has a limited cultivable land

due to the geographical and topographic features.

Hydroponics plants grow in water, without any use of soil. Though a continuous supply

of water is used, it conserves water hence reducing water shortage problems. It is 100%

organic as it uses compost and manure as its nutrient source.

This process takes place in a very versatile and intensive hydroponic growing unit

where only water and nutrients are used to produce a grass and root combinations

that is very lush and high in nutrients. These green products are extremely high in

protein and metabolizable energy, which is highly in demand. In short - it reduces

water usage, marginal land use, constant food supply, reduced growth time, reduced

labor requirement, cost effective, high nutritional value, and is completely natural.

Currently, the Agriculture Research and Development Centre in Mongar is carrying

field research on growing high-value Hydroponics Maize Fodder using the

Hydroponics technology and previously hydroponic fodder is successfully

implemented in Rekhey and Marthang Chewog under Dewathang Gewog, Samdrup

Jongkhar.

List of plants cultivated using Hydroponic Farming

The list of plants mentioned here are the ones that can be easily grown in hydroponic

system. The root plants are difficult to be cultivated in a hydroponic system. The list is

not limited to these vegetables.

• Greens: Spanish, chard, cabbage, lettuce, celery, mint etc.

• Vining plants: tomatoes, cucumbers, peas etc.

• Root plants: potatoes, carrots, radish etc.

• Fruits: raspberries, strawberries, small papaya, peppers, blue berries etc.

• Herbs: basil, parsley, rosemary, chives, sweet marjoram, watercress, dill etc.


Page | 159

Market Outlook International1

A report by Mr. Sarah Smith, Research Advisor at Reportbuyer.com estimates that

overall hydroponics system market is projected to grow from USD 8.1 billion in 2019

to USD 16.0 billion by 2025, at a CAGR of 12.1%.

Hydroponic systems provide higher yield compared to traditional agricultural

techniques, owing to the increase in harvest cycles. Furthermore, hydroponic systems

eliminate the use of artificial ripening agents and pesticides, which helps in creating

nutritionally superior vegetable produce.

The market for hydroponics is fragmented at the global level, with multiple innovative

start-ups and emerging companies entering the hydroponics market. Worldwide,

major companies have been trying to enter in this space, either by developing

hydroponic components or by investing in the technology for crop cultivation.

The Concept

The soilless farming technique which is gaining popularity these days is called

hydroponic farming. This technique makes use of water-soluble nutrient mixture for

growing fruit, vegetable or flowering plants. Generally, in conventional farming

technology the soil soaks store the nutrients that are supplied and the plants in turn

take the nutrients from the soil. But in hydroponic method of farming, plant roots get

in direct contact with the water-soluble nutrient content and this helps in faster

absorption and growth. The idea of hydroponic farming is believed to serve two

purposes – one, it can be practiced by people to grow fruits and vegetable where the

soil condition is not suitable for conventional farming, second, it is a solution for

satisfying sustainable food requirements in urban areas where the land for

conventional farming is not good and fertile.

Hydroponic farming is being considered as a revolution in the farming and agriculture

industry because of its capability to produce surplus food. This farming technique is

environment friendly as there is not much use of chemicals in the form of pesticides

and insecticides. Growing plants hydroponically needs an environment which can be

controlled as per the requirement. This kind of controlled set up for the cultivation of

crops eliminates the danger of critical warm climatic conditions on agriculture.

The greenhouse hydroponic farming is a perfect one-stop solution to all farming and

food relates problems. The commercial hydroponic farming systems will give good

1. https://www.prnewswire.com/news-releases/the-hydroponics-market-is-estimated-at-usd-8-1-billion-in-2019-and-

projected-to-grow-at-a-cagr-of-12-1-to-reach-usd-16-0-billion-by-2025--300855444.html

https://www.prnewswire.com/news-releases/the-hydroponics-market-is-estimated-at-usd-8-1-billion-in-2019-and-projected-to-grow-at-a-cagr-of-12-1-to-reach-usd-16-0-billion-by-2025--300855444.html

https://www.prnewswire.com/news-releases/the-hydroponics-market-is-estimated-at-usd-8-1-billion-in-2019-and-projected-to-grow-at-a-cagr-of-12-1-to-reach-usd-16-0-billion-by-2025--300855444.html


Page | 160

profits. In conventional farming, the farmer has to work on the ground, plant seeds,

and grow plants.

The farmer is heavily depended on natural resources and nature’s mercy. However, in

hydroponics, the farmer takes complete control on plant farming. The farmer takes

control on quantity of water, oxygenating the water, and adding right nutrients at

required amounts depending on growing plants.

In this way, a farmer can solve most of the problems faced in conventional farming

such as quality, gathering farm yard manure, water, and pests and insects that come

through ground. Hydroponic Farming follows two general methods of farming.

1. Plants roots are directly suspended in nutrient rich waters. The root system

avails oxygen and nutrients easily.

2. The roots are supported in growing medium such as clay rocks, rock wool

while plants are stabilized to grow in a proper direction.

Types of Hydroponic Farming

There are six basic types of hydroponic farming systems. The good thing in acquiring

best hydroponics is by combining different types into one hybrid hydroponic system

to get the rich nutrient solution to the plants. The following are the list of hydroponic

farming that one can choose accordingly to space, finance and production vermiculite,

yield:

a) Wick Systems

b) Drip Systems

c) Nutrient Film Technique

d) Deep Water Culture

e) Ebb and Flow or Flood and drain

f) Aeroponics

In Bhutan, mainly two types of technologies are used for Hydroponic Farming:

1.6.1. Hydroponic Farming – Nutrient Film Technique (NFT):

Nutrient Film Technique (NFT) is growing of plants bare-rooted supported by a netted pot in long

channels down which flows a shallow water full of minerals required to grow plants healthy. In

continuous-flow solution culture, the nutrient solution constantly flows past the roots. It is much easier

to automate than the static solution culture because sampling and adjustments to the temperature, pH,

and nutrient concentrations can be made in a large storage tank that has potential to serve thousands

of plants.

Figure_ 1: Nutrient Film Technique (NFT)


Page | 161

In NFT, a very shallow stream of water containing all the dissolved nutrients required for plant growth

is recirculated past the bare roots of plants in a watertight thick root mat, which develops in the bottom

of the channel and has an upper surface that, although moist, is in the air. Subsequent to this, an

abundant supply of oxygen is provided to the roots of the plants. A properly designed NFT system is

based on using the right channel slope, the right flow rate, and the right channel length.

The main advantage of the NFT system over other forms of hydroponics is that the plant roots are

exposed to adequate supplies of water, oxygen, and nutrients. In all other forms of production, there is

a conflict between the supply of these requirements, since excessive or deficient amounts of one result

in an imbalance of one or both of the others. NFT, because of its design, provides a system where all

three requirements for healthy plant growth can be met at the same time, provided that the simple

concept of NFT is always remembered and practiced. The result of these advantages is that higher yields

of high-quality produce are obtained over an extended period of cropping. A downside of NFT is that

it has very little buffering against interruptions in the flow (e.g., power outages). But, overall, it is

probably one of the more productive techniques.

1.6.2. Hydroponic Farming – Ebb and Flow or Flood and Drain

Flood and Drain (Ebb and Flow) systems are very popular among home hydroponic growers or

hydroponic farming. It is easy to build and can use almost any material laying around, so growers don’t

need to spend much money to start growing hydroponic plants. Also, it can be built to fit in any available

space in the backyard or in terrace gardening.

The working method of hydroponic flood and drain system is simple. The container that plants are

growing is the main part in this system. There is a tray above a reservoir of nutrient solution.


Page | 162

Figure_ 2: Ebb and Flow or Flood and drain

At regular intervals, a simple timer causes a pump to fill the upper tray with nutrient

solution, after which the solution drains back down into the reservoir. This keeps the

medium regularly flushed with nutrients and air. Once the upper tray fills past the drain

stop, it begins recirculating the water until the timer turns the pump off, and the water

in the upper tray drains back into the reservoirs.

Plants like tomatoes, cucumber, peppers, and strawberries, celery that have deep roots

and need support are preferable to grow in Ebb and Flow systems.

Advantages of Hydroponic Farming Systems

Hydroponics can be initiated in a small area and gets adapted to the conditions of

urban areas. This method favors the people in the following ways:

• Isolation from the soil and cultivation at a convenient level.

• Water along with low cost substrates such as sand, rice, husk and pumice etc.

are used.

• Balconies, kitchen gardens, rooftops are the places that can be used for

simplified hydroponics.

• Recycling of water is done so that the environment doesn’t get polluted.

• Any disease or pest is controlled by natural herbal treatments. No chemical used.

• Higher yield in less time and multiple harvest results in greater output.

• Easy to understand methods and less technological involvements.

• Use of recycled materials.

• Source of income to the family.

• Safe food for consumption with high biological and dietary value.


Page | 163

• Household food needs are achieved by fresh and nutritious food.

• Shade net (shade to sun ratio) and polythene sheet can be used to protect the

plants from sun and rain respectively.

Equipment required for Hydroponic Farming

There are various techniques or types of deploying a hydroponic farm: the wick system,

water culture, ebb and flow system, drip system, nutrient film technique and the

aeroponic technique. A basic system of hydroponic may require the following

equipment which may change depending on the size of the farm and technique being

used:

• Plastic trays for the medium, nutrient solution and the plants

• A table or elevated stand to hold the trays

• A container to hold the nutrient mixture

• A pumping cable or pipe which can pump 500 liters per hour

• Small pots with holes to hold the plants

• Growing medium if necessary

• Drainage tube, Sprayers

• Timer, thermometer and other sensors

• Seeds or plant cuts

• Nutrient solutions, Beneficial insects

• pH meter, Induction lights, LED grow lights

Cost Estimation in Hydroponic

Other Requirements

• Land: About 1,200 m2

• Manpower of 13 people which includes:

o Operation Head

o Purchase, Accounts and Store

o Sales & Supply Officer

o Supervisor

o Skilled Labour/ Unskilled Labour

o Driver

o Security

o Housekeeping


Page | 164

Estimated Project Cost and Financials

The total cost of the project has been considered as Nu. 10.3 million. The Break-Even

Months are 27. DSCR value is 2.07 which show that the project will generate sufficient

to pay loans. Other details are as follows:

Table_ 1:Estimated Project Cost and Financials




i. 2.1 Fixed Cost 53.19

ii.


iii. b. Overhead Cost 21.15


iv.



4. Break Even Point 69%


6. D.S.C.R. 2.07


8. NPR 18.59%

1.10.1. Project Cost

The cost of project is estimated to be a sum total of the value of land, building and

civil construction, plant and machinery, MFA, preliminary expenses, pre-operative

expenses and contingency. The required land is around 1,200 m2. Its purchase value

would stand at Nu. 3 million estimated on current market trends (around Nu. 100,000

per decimal) and sharing about 29% of project cost followed by Building & Civil

Construction with 25.32% and Plant & Machinery about 23.25%. Margin Money for

working capital is not considered as part of project cost. The summary of the project

cost is as follows:

Table_ 2:Head Wise Project Cost and Sharing Percentage

# Particulars Value (Nu. in Lacs) Cost Sharing

1. Land 1200 sq. meters 29.70 28.95%







Total 102.60 100%


Page | 165

1.10.2. Means of Finance

Table_ 3:Means of Finance





Total 107.18

Figure_ 3:: Project Cost Components and Its Share

1.10.3. Estimation of Building and Civil Work and Cost

Based on the requirement of processing area, store for raw material and finished goods

and the office space, the following building area plan has been laid down. The building

civil construction cost is considered as per the Bhutan Schedule of Rates (Civil Works)

2018, issued by Ministry of Works and Human Settlement, Bhutan. Pre-fabricated

building structure will be used for construction of building amenities. Total estimated

building construction cost is Nu.2.6 million which is about 25% of the total project cost.

The detailed Building and Civil Work cost estimation is given below:

Land 14%

Building & Civil Construction

6%

Plant & Machinery 39%

Misc Fixed Assets 12.65, 12%

Preliminary Expenses, 1.75, 2%

Pre operative Expenses, 6.79, 7%

Contingencies , 1.87, 2%


Page | 166

Table_ 4:Building and Civil Work


Area (Sq. Mt.)

Rate

Per Sq. Mt. (Nu.)

Nu.

(in Lacs)

1. Ground preparation Cost -

including material

1200 200.00 2.40

2. Boundary wall (140 Rm with

height of 1.82m(6 ft))

252

350.00 0.88

3. Ground Cover - Carpeting

1000 70.00 0.70

4. Site preparation, frames,

doors, poly and ends plus

construction and installation

cost approx. amount to @ 1

house

1000 1200.00 12.00

5. Office Space & Display Area 7.50 10.00 75 5000.00 3.75

6. Finished Goods Storage 12.50 10.00 125 5000.00 6.25

Grand Total 3400 25.98

Source: https://www.mowhs.gov.bt/wp-content/uploads/2018/04/BSR-2018-civil.pdf

1.10.4. Plant and Machinery Cost

The cost estimates for plant & machinery have been worked out based on the cost





insurance have been considered with the assumption that all goods are transported

by road. Goods of imported origin would be handled at the Kolkata port.

The equipment list with cost is given in the table below:

Table_ 5:Plant & Machinery with Cost


(Nu. in Lacs)

1. Equipment’s for Hydroponic as per attached list

b.1(Growing and delivery equipment cost)

4.85

2. Horizontal air fans 4 20,000 0.80

3. Cooling equipment for a single setup 4 25,000 1.00

4. Heaters, Poly inflation kit, low voltage wiring

package and protective equipment, Lights

2 175,000 3.50

5. Electrical panel setup 1 45,000 0.45

6. Environmental control equipment 2 375,000 7.50


Page | 167

7. Generator for single bay 1 75,000 0.75

8. Transportation cost @15%

2.83

Total 21.68

9. Packaging and Forwarding @10% 2.17

Grand Total 23.85

1.10.5. Equipment for Hydroponic

Growing and delivery equipment is outlined below:

Table_ 6:Growing and Delivery Equipment (List b.1)

# Equipment Qty. (Unit) Price

Per Unit

(in Nu.)

Total cost

For all Seasons (in

Nu.)

1. Sprayer 8 9500 76000

2. Carbon di-oxide

generator

2 40000 80000

3. Water Pump 8 4000 32000

4. Environment Control

Meter

2 15000 30000

5. pH meter 2 4200 8400

6. Thermometer 2 2500 5000

7. Humidity sensor 2 11000 22000

8. CO2 sensor 2 41000 82000

9. Measurement scales 2 75000 150000

Total 485400

Total Nu. In Lacs 4.85




under this head “MFA” and presented in the below table:

Table_ 7:Misc. Fixed Assets Cost Estimation

# Particulars Qty. Amount

(Nu.in lacs)

1. Office Equipment & Furniture 1 2.00

2. Computer & accessories 2 1.00

3. Printer & Software’s 1 0.50

4. CCTV Surveillance 8 0.68

5. Fire Fighting Equipment’s 6 0.12


Page | 168

6. Vehicle 1 8.00

7. Air Conditioner 1 0.35

Total 12.65


Preliminary expenses are those expenses which are incurred before the incorporation

and commencement of the business. These are treated as deferred

revenue expenditure. These expenses are marked to be written off in the next ten years

in estimation of profitability. The Preliminary Expenses details are as follows:

Table_ 8:Preliminary Expenses

# Particular Amount

(Nu.in Lacs)

1. Company formation expenses (ROC), legal & liasoning 1.00

2. Registration in Labor Department 0.75

3. Weight & Measurement

4. and Other required Licenses

Total 1.75


These are expenses incurred prior to commencement of commercial production. A

total of Nu. 679,000 is estimated under this cost to be written off in the next 10 years

and exempted in the first year. The details are given in the table below:

Table_ 9:Pre- operative Expenses

# Particular Amount

(Nu.in Lacs)

1. Interest up to production on term loan 1.92




5. Implementation of ISO 9001: 2015 Certification 0.40


7. Travelling Expenses 0.50

8. Registration of Trade Mark 0.40

Total 6.79


The cost of the raw material consists mainly of cost of the main ingredients, raw

material and cost of packaging. The annual raw material cost is based on the present


Page | 169

average market prices in Bhutan. A total of Nu. 4.3 million has been estimated as raw

material cost. The details are given in the table below:

Table_ 10:Cost of Raw Material

# Raw Material A list of

Supplies for

production is

mentioned

below in table

f.1 with

amount.

Total Amount

Per Annum

(Nu.in Lacs)

1. Beneficial insects include 2.67

2. Fertilizers 14.33

3. Accessories and Implementing Equipment’s:

Seeds (pack), Seedling support mats (mat), PET

Trays, Sticky traps (pack), Clips (case), Twine Box

PET and Hooks.

1.85

4. Packaging Material: Label Roles, Boxes and Cases

for Foam Trays

15.05

5. Natural Gas 8.6

6. Misc. Raw material Items 0.5

Total 43.00


Page | 170

1.10.10. Items for Supplies for Production (f1)

Table_ 11:Items for Supplies for Production

# Supplies for production Qty. (Nos.) Per Unit Price

(in Nu.)

Annual cost in Nu.

1. Beneficial insects include

Lacewing (pack) 30 2723.09 81692.70

Encarsia Formosa (pack) 20 1739.75 34795.00

Aphidus Colemani (pack) 10 3680.78 36807.80

Bees (hives) 20 5673.1 113462.00

Total 266757.50


2. Fertilizers

Blended mix (pounds) 3000 75.64 226920.00

Calcium nitrate (pounds) 3000 30.26 90780.00

Additional mix (pounds) 50 75.64 3782.00

Pesticides (gallons) 50 529.49 26474.50

Sanitizer (gallon) 10 2647.45 26474.50

Rockwool cubes (case) 10 12026.97 120269.70

Rockwool slabs (bags) 200 4689.76 937952.00

Total 1432652.70


3. Seeds (pack) 10 8093.62 8093.62

4. Seedling support mats (mat) 10 8623.11 8623.11

5. PET Trays 100 75.64 7564.00

6. Sticky traps (pack) 10 2269.24 22692.40

7. Clips (case) 10 6278.23 62782.30

8. Twine Box PET 10 1665.11 16651.10

9. Hooks 5200 11.35 59020.00

185426.53


# Packaging Qty.

(Unit)

Per Unit Price

(in Nu.)

Cost

(in Nu.)

1. Label rolls 180 2269.24 408463.20

2. Cases of foam trays 300 2344.88 703464.00

3. Boxes 8000 49.17 393360.00

1505287.20



Salaries and Wages (including benefits) for different categories of employees have




Page | 171

July 2019) Bhutan. The fringe benefits are considered as 15% per year. It is also

considered that salary will increase 5% annually. The breakdown of manpower with

estimated salaries is given in the following table:

Table_ 12:Salary & Wages


Month (Nu.)

Salary Per Annum

(Nu. In Lacs)

A Administrative

1 Operation Head 1 50000 6.00

2 Purchase, Accountant & Store 1 21000 2.52

3 Sales & Supply Officer 1 25000 3.00

Total (A) 3

B Production

1 Supervisor 1 30000 3.60

2 Skilled Labor 4 20000 9.60

3 Unskilled Labor 2 12000 2.88

Total (B) 7

C Supportive Staff

1 Drivers 1 15000 1.80

2 Security 1 12000 1.44

3 Housekeeping 1 10000 1.20

Total (C) 3

Total (A+B+C) 13 32.04


Electricity Charges are considered as per the tariff rate issued by Bhutan Power

Corporation. The unit cost of electricity has been considered @ Nu. 3/KwH for



distribution has been suitably considered, based on the Thimphu City Corporation


increase @ 5% every year.

Table_ 13:Electrical and Water Consumption Charges





Total 6.50

Source: Available on the link of https://www.bpc.bt/electricity-tariff/.


Page | 172

The details of electrical installation for power distribution have been considered



The term loan requirement is estimated on the funding pattern in Bhutan. It is


considered as up to 60% to 75% of the cost of the project and it does not include

working capital margin money (as per financing pattern by Bhutan National Bank

Limited). The estimated term loan is Nu.5.7 million and with 55% to come as loan from

by financial institution. The rest of the capital investment (Nu. 4.6 million comprising

45%) will be managed by the entrepreneurs. The details are as follows:

Table_ 14:Term Loan Estimation


%

Amount

(Nu.in

Lacs)

Own

Contribution

(Nu. in Lacs)

Bank Loan

(Nu.in Lacs)

1. Land 50% 29.70 14.85 14.85

2. Building & Civil Construction 40% 25.98 10.39 15.59

3. Plant & Machinery 25% 23.85 5.96 17.89




7. Contingencies 100% 1.87 1.87 0.00

Total 102.60 46.05 56.55

Sharing %

45% 55%

8 Margin Money for Working

Capital

100% 4.58 4.58 0.00



Bhutan. The total estimated working capital loan requirement is Nu.1.2 million and

Margin money is estimated as Nu. 458,000.

Working capital requirements have been worked out in the following table:

Table_ 15:Working Capital Loan Amount


%

Amount

(Nu.in

Lacs)

Own

Contribution

(Nu. in Lacs)

Bank Loan

(Nu.in

Lacs)


2. Receivable 30 days 25% 8.19 2.05 6.14


Page | 173


Consumables

15days 90% 2.12 1.91 0.21


The Interest Rate for term loan and working capital loan is referenced from the rate of

BNB, Bhutan, available on https://www.bnb.bt/wp-

content/uploads/dld/DOCUMENTS/interest-rates.pdf (Industrial Loan capital/Term

loan Interest rate 12% (fixed rate), working capital loan 13% (fixed rate).


Sales realization or estimated turnover is based on the sale price at FOB Factory Gate.

The sale price of products is determined cost competitively with presently available

similar product supply whether domestic or international. The sale price of organic

tomato produce by hydroponic technology is considered as Nu. 65 a Kg. The total of

Nu. 14 million is the estimated sales realization at 100% production capacity. The

details are as follows:

Table_ 16:Sales Realization/Estimated turnover

# Product Tomato

produce from

one plant

(in Kg.)

Annually

from 12000

plants

(in Kg.)

Rate

(Nu. per

Kg.)

Total

Amount

Per Annum

(Nu. in Lacs)

1 Organic Tomato

(VERTICAL

FARMING)

18 216000

(216 MT)

65 140.4

Total 65 140.40

Table_ 17:Estimated Production Capacity Details

k.1 Assumption: Prod k.1 Assumption: Production Details Details

Production Capacity 216000 Kg per annum (in two seasons)

Item 18Kg Organic Tomato from one plant

Plants 12000 plants of tomato (6000 plants in one season)

Total Production in year 216000 Kg per annum (in Two season)

Current Price Nu. 65/Kg, will remain same for three years

After three years 10% hike after every three years


The profitability projection has been worked out for 10 years at 70% capacity utilization

to be achieved during the first year, 80% in second and third year. Following

assumptions and relevant basis applicable to Bhutan have been considered while

preparing the profitability:

https://www.bnb.bt/wp-content/uploads/dld/DOCUMENTS/interest-rates.pdf

https://www.bnb.bt/wp-content/uploads/dld/DOCUMENTS/interest-rates.pdf


Page | 174

• Repairs & maintenance have been taken as @ 1% per annum on plant & machinery

& misc. fixed assets.

• Bank interest rate has been calculated @ 12% per annum on term loan & working

capital loan @ 13%.

• Insurance charges is @ 0.25% on all assets in first year, then decreases @5% every

year.


• Administrative expenses have been increased @ 5% every year




• Preliminary exp. will be written off @15% every year in next 10 years.

• Pre-operative exp. will be written off from second year @10% every year in next

years.

• Depreciation has been charged using Straight-Line Method


• Income tax has been charged @ 30% every year as per Bhutan's tax rates (Source:

Ministry of Finance - https://www.mof.gov.bt/faq/)


total debt service.


Page | 175

Table_ 18:Estimation of Project Profitability


1 Installed Capacity 100% (Nu.in Lacs) 140.40 140.40 140.40 140.40 140.40 140.40 140.40 140.40 140.40 140.40


3 Actual Sales in Nu. in lacs 98.28 112.32 112.32 139.00 139.00 146.72 161.39 177.53 195.28 140.40

4 Cost of Operation

4.1 Raw Material 30.10 34.40 34.40 38.70 38.70 40.85 43.00 43.00 43.00 43.00

4.2 Consumables @ 3% 0.90 1.03 1.03 1.16 1.16 1.23 1.29 1.29 1.29 1.29

4.3 Power 6.50 6.83 7.17 7.52 7.90 8.30 8.71 9.15 9.60 10.08

4.4 Salary & Wages 32.04 33.64 35.32 37.09 38.94 40.89 42.94 45.08 47.34 49.70

4.5 Fringe Benefits @15% 4.81 5.05 5.30 5.56 5.84 6.13 6.44 6.76 7.10 7.46

4.6 Insurance 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20


4.8 Administration Expenses 2.00 2.10 2.21 2.32 2.43 2.55 2.68 2.81 2.95 3.10 Total 76.77 83.46 85.84 92.77 95.40 100.37 105.48 108.51 111.70 115.05

5 Marketing Expenses @5% On Sales 4.91 5.62 5.62 6.95 6.95 7.34 8.07 8.88 9.76 7.02






11 Total Interest 7.69 7.13 6.00 4.87 3.74 2.62 1.49 0.91 0.91 0.91


13 Depreciation 6.45 5.61 4.89 4.28 3.75 3.29 2.90 2.56 2.27 2.01




17 Profit Before Taxation 2.28 9.57 9.04 29.20 28.23 32.18 42.53 55.74 69.71 14.48



20 Profit After Taxation 1.60 6.70 6.33 20.44 19.76 22.52 29.77 39.02 48.80 10.13



Total (A) 14.83 18.53 16.31 28.68 26.34 27.52 32.67 41.58 51.06 12.15



Total (B) 6.79 15.62 14.49 13.37 12.24 11.11 10.13 0.00 0.00 0.00


Page | 176

Surplus (A) - (B) 8.05 2.91 1.82 15.31 14.11 16.41 22.54 41.58 51.06 12.15

DSCR (A/B) 2.19 1.19 1.13 2.15 2.15 2.48 3.23 0.00 0.00 0.00

Average DSCR 2.07

Table_ 19:Repayment of Interest on Term Loan


1 1st year 56.55 0 56.55 6.79 6.79

2 2nd year

1st Qtr. 56.55 2.35 54.20 1.66

2nd Qtr. 54.20 2.35 51.85 1.59

3rd Qtr. 51.85 2.35 49.50 1.52

4th Qtr. 49.50 2.35 47.15 1.45 6.22

3 3rd year

1st Qtr. 47.15 2.35 44.80 1.38

2nd Qtr. 44.80 2.35 42.45 1.31

3rd Qtr. 42.45 2.35 40.10 1.24

4th Qtr. 40.10 2.35 37.75 1.17 5.09

4 4th year

1st Qtr. 37.75 2.35 35.40 1.10

2nd Qtr. 35.40 2.35 33.05 1.03

3rd Qtr. 33.05 2.35 30.70 0.96

4th Qtr. 30.70 2.35 28.35 0.89 3.97

5 5th year

1st Qtr. 28.35 2.35 26.00 0.82

2nd Qtr. 26.00 2.35 23.65 0.74

3rd Qtr. 23.65 2.35 21.30 0.67

4th Qtr. 21.30 2.35 18.95 0.60 2.84

6 6th year

1st Qtr. 18.95 2.35 16.60 0.53

2nd Qtr. 16.60 2.35 14.25 0.46

3rd Qtr. 14.25 2.35 11.90 0.39

4th Qtr. 11.90 2.35 9.55 0.32 1.71

7 7th year

1st Qtr. 9.55 2.35 7.20 0.25

2nd Qtr. 7.20 2.35 4.85 0.18

3rd Qtr. 4.85 2.35 2.50 0.11

4th Qtr. 2.50 2.50 0.00 0.04 0.58


Page | 177

Table_ 20:Break Even Point



Variable Cost 42.63 48.09 48.43 54.55 54.93 57.93 61.29 62.53 63.88 61.61

Fixed Cost 53.19 53.73 53.92 54.32 54.91 55.69 56.64 58.32 60.76 63.38

2 Break Even Point (B.E.P.) 0.96 0.84 0.84 0.64 0.65 0.63 0.57 0.51 0.46 0.80 Average B.E.P. 0.69

Table_ 21:Projected Balance Sheet

# Description Construction Period Operation Period in Years


1 Liabilities

1.1 Equity 46.05 46.05 46.05 46.05 46.05 46.05 46.05 46.05 46.05 46.05 46.05


1.3 Debt 56.55 56.55 47.15 37.75 28.35 18.95 9.55 0.00 0.00 0.00 0.00




2 Assets



2.3 Net fixed assets

(2.01-2.02)

64.36 57.91 52.30 47.40 43.13 39.38 36.09 33.19 30.63 28.37 26.36



2.6 Current Assets 0.00 14.49 16.56 16.56 16.56 16.56 16.56 16.56 16.56 16.56 16.56



Total Assets 102.60 111.63 108.98 105.90 116.94 127.30 140.42 160.64 199.66 248.46 258.60


Project Profile- Hydroponic Farming, Bhutan

Page | 178

Conclusion

Hydroponic farming can be a great way to grow sustainable organic food

economically. High demand for food production is growing. Meanwhile, the traditional

farming using soil system will not cover the world's growing demand for food.

Thus, horticulture crops production through Hydroponic is an opportunity to trap the

organic food market. The Financial Projections are positive during the first 10 years of

operation considered. This implies that the project generates sufficient funds to cover

its cost, including loan repayments and interest payments during the period. This also

indicates that the project can continue making profits even after 10 years.

Based on the estimation of project cost and financial analysis production through

Hydroponic technic is financially viable, profitable with high rate of return.

It is recommended to entrepreneurs to scale up at Industrial level.

Sources

# Internet References

1 https://www.industryarc.com/Report/15233/hydroponics-market.html

2 https://www.indiamart.com/proddetail/hydroponic-environment-control-indoor-vegetable-

machine-21325206912.html

3 https://www.alibaba.com/showroom/hydroponics-cooling-system.html

4 https://www.alibaba.com/showroom/hydroponics-cooling-system.html

5 https://www.google.com/search?q=horizontal+air+fan+for+hydroponic+farming+price&sxsrf

=ALeKk03InZyYSWcWHz_2gfJZqVommdeg7A:1594793139992&source=univ&tbm=shop&tbo

=u&sa=X&ved=2ahUKEwjhvOW0y87qAhWMxzgGHZNQBioQ1TV6BAgNEFM

6 https://www.sciencedirect.com/science/article/pii/S1877050918302473

7 https://www.explainthatstuff.com/hydroponics.html

8 https://biologicperformance.com/hydroponics/

9 https://www.agrifarming.in/hydroponic-farming-cost-and-profit-analysis

10 https://www.foodprocessing-technology.com/features/featurehydroponics-the-future-of-

farming-5901289/

11 https://www.kisancentral.com/hydroponic-farming-information-guide

12 https://www.thespruce.com/hydroponic-gardens-ebb-and-flow-systems-

1939219#:~:text=Ebb%20and%20Flow%2C%20also%20known,set%20up%2C%20and%20extre

mely%20versatile.&text=The%20system%20uses%20gravity%20to,the%20reservoir%20to%20

be%20reused.

13 https://www.greenandvibrant.com/nutrient-film-technique

14 https://www.kisancentral.com/hydroponic-farming-information-guide

15 https://www.marketsandmarkets.com/Market-Reports/hydroponic-market-94055021.html

Investment Opportunity Study 2020 Project Profile: High Tech Geophysical and Mining

Exploration Services, Bhutan

Page | 179

Project Title: High Tech Geophysical and Mining




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1. High Tech Geophysical and Mining Exploration Services


Bhutan is a small landlocked country located between China and India. Industry, which

included the mineral industry, and services accounted for 43% and 31% of the

country’s gross domestic product (GDP), respectively. Mining of industrial minerals was

insignificant to Bhutan’s economy except for the production of ferrosilicon.

Out of the country’s total geographical area of 38,394 square kilometres, most of the

country’s areas have been geologically mapped. However, only about 6,500 square

kilometres have been geologically mapped in the scale of 1:50,000 systemically. In the

course of geological mapping, a host of metallic and industrial minerals have been

discovered.

The mineral industry of Bhutan was small in scale relative to its main economic sector

(agriculture and forestry), and was not a significant contributor to the country’s

economy. The country produced cement, coal, ferrosilicon (exported), iron ore, and

industrial minerals used for construction. Iron ore production increased by 448% to

20,505 MT from 3,741 T in 2012; limestone production by 49% to more than 1 million

MT from 677,128 T; dolomite production by 16% to 1.74 MT from about 1.5 MT; and

gypsum production by 12%. Production decreases were reported for talc (40%), coal

(21%), and stone (11%).

Rationale of Idea

Mining and quarrying have five divisions and 12 classes of which Bhutanese industries

have registered under four classes representing 11 economic activities with 163

establishments. Two establishments were registered in 1985, one for producing

dolomite powder and another was a Strone Crushing Unit. This Section had poor

performance until 2006 after which a few units were added each year. From 2017, there

has been an exponential growth resulting in 50% increase in establishments during the

last four years.



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Figure_ 1:Economic Activities and Growth Trend

Surface Collection of Stone and Boulders has about 55% of the establishments

followed by Mining of Quartzite (14.7%) and Stone quarry (12.9%). There is only one

unit of Coal Washery Plant and Marble block cutting and processing.

Geographically, Samtse dominates (25.6%) which has twice as much than the second

Dzongkhag, Chhukha (12.3%). Punakha, Gasa, Zhemgang and Lhuentse have no record

of these activities. P&M sector dominates this section almost wholly (95.7%) while the

remaining belongs to the service sector

Figure_ 2:Scale of industries and economic classification

Small and Medium scale account for the majority. However, Large and Cottage size is

also available. In terms of average investment, Large (Nu 218.7 million), Medium (Nu

34.5 million, Small (Nu 6.51 million) and Cottage (Nu 0.89 million). A gypsum mine with

investment of Nu. 900 million is the biggest industry in this section. Sole proprietorship

account for 65.6% while Company is 27.6%, Partnership is 5.5% and one establishment

each is recorded under Ministry (Manufacture of Briquette) and Others (Coal Extraction

by Samrang community).

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P&M

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Figure_ 3:Geographic Distribution and New EA Growth

Cottage Scale Industries and P&M account for 79% of the ownership type and

economic classification of this section has is no trade. Almost 98% is run by Sole

Proprietors, but there are five incorporated companies as well. Mountain Hazelnut

Venture Private Limited is the largest established with an investment of Nu. 1,061

million; while the average investment of Large Companies is Nu 484 million, the small

and cottage requires Nu. 2.4 and 0.4 million respectively. The usual trend of Thromde

Dzongkhags having more industries is not seen here (35%) and even those

Dzongkhags that rank poorly overall are on the Top 10 List (Trashigang, Tsirang and

Dagana).

Market Outlook International

The Global Geophysical Services Market is forecast to grow to $16.2 billion by 2024,

on account of increasing investments in mining and oil & gas exploration activities.

Moreover, the demand for geophysical services for mineral extraction is expected to

increase on account of the environmental regulations imposed by governments of

several countries.

High demand for geophysical data acquisition services and increase in investments in

the mining sector for geophysics are anticipated to propel the geophysical services

market during the forecast period. Additionally, revival in crude oil prices would further

fuel the growth of the Global Geophysical Services Market over the next five years.

The Global Geophysical Services Market is segmented based on technology, type,

services, end-user, region and company. Based on technology, the market can be

segmented into Seismic, Magnetic, Gravity, Electromagnetics, LIDAR, Ground

Penetrating and Others.

The Seismic technology segment is projected to register the highest CAGR during

forecast period owing to its widespread use in mining industry. Seismic services help

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the mining companies to make critical exploration and reservoir decisions. Based on

type, the market can be bifurcated into Aerial Based Survey and Land Based Survey.

The land-based surveys are expected to dominate the market during forecast period

attributable to the increase in demand for seismic surveys in the mining industry.

The Concept

High Tech Geophysical and Mining Exploration Services includes appropriate solutions

to users by defining the suitable investigation method, counseling the suitable

equipment, catering the high-quality scientific equipment & swift technical services to

fulfill the data analysis and requirement.

This service industry serves high tech solution to academic Institutions, Prime Research

Organizations, Government Departments, Private Organizations and Individual players

in Geophysical and Geo technical segment starting from basic user to progressing

researcher in global arena.

The high tech geophysical and mining exploration services needs highly skilled and

trained engineers, civil engineers, geo physic experts, experts in geology, mineral

exploration, software experts, equipment operators etc. Some of the equipment as

topographic, drone, high resolution cameras, and computers can be purchased but

high-tech sensors and radars can be arranged out sourced. Purchasing of all the

equipment needs heavy cost.

Around 1,200 sq. ft. office area is sufficient to operate such type of high skilled service

units. It requires a minimum of four-room office like Instrument store room, Software

and Data Handling, Engineers and Staff Room including Conference table and seating

room.

ISO 9001:2015 is the required certificate to manage the operation and services as such

drone and specific air survey needs legal permission as per government norms.

This business idea is under service sector which needs less capital investment and

higher recurring expenses as salaries, fringe benefits, instrument hiring fees, software

licensing etc.

Under the Bhutanese scenario, High Tech Geophysical and Mining Exploration Services

provider is needed for some Thimphu based companies and some companies like

APECS Consultancy, Bhutan Consultants & Research and Geo-Info Associates &

Surveying Consultancy are providing services in Topography survey but their work

domain is limited. Thus, opportunities are available and Department of Geology and

Mines avails maximum services in this sector.



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Minerals and Mines

1.5.1. Overview of the mining sector in Bhutan

There are three categories of mineral resources: proved, probable and possible. Proved

are economically mineable with high degree of certainty (high confidence level).

Probable are economically mineable with lower level of confidence than proved

reserves. Possible minerals are part of a mineral resource for which grade and mineral

content are estimated with a low level of confidence.

Metallic reserves particularly copper, iron ore and tungsten are probable reserve, while

lead-zinc reserve constitutes 86% as proven reserve. Non-metallic reserve such as Talc

(100%), Dolomite (99.68%) and coal (78.68%) are possible reserve. Quartzite and

gypsum are proven reserve with 100% and 85% respectively.

In terms of overall reserve, the country has 1.04 million MT of coal, 14,542.47 million

MT of dolomite, graphite ore 48.75 million MT, gypsum 134.22 million MT, limestone

164.65 million MT and quartzite 5.18 million MT. Non-metallic mineral such as copper

has a reserve of 2.04 million MT, lead-zinc 3.30 million MT, iron-ore 2.69 million MT

and tungsten 3.87 million MT.

Figure_ 4: Mineral Reserve in Bhutan (million MT)

1.5.2. Mining and GDP

Although, the growth rate has experienced spikes and falls over the years from 42.4% in 2012 to 7.7%

in 2017, its share in both absolute numbers as well as to the GDP has increased from 1,941 million in

2011 to 8,137 million in 2018 comprising 2.3% to 4.9% respectively.

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Copper Lead-Zinc Iron Ore Tungsten Coal GraphiteOre

Gypsum Limestone Quartzite Talc

Probable Proven Possible



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Figure_ 5:Mining and Quarrying Sector's GDP Contribution

1.5.3. Mining Operations

In terms of quantity, Pema Gatshel has the maximum expected extraction quantity

(Limestone and Gypsum). In terms of particular minerals, dolomite extraction is only

from Samtse while granite is only from Wangdue, and similarly coal from Samdrup

Jongkhar. Figure_ 6:Mining companies in Bhutan and expected production from mines

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Dagana

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Wangdue

Expected Production from Mines currently under Operation (Million MT)

Coal Dolomite Granite Gypsum Iron Ore

Limestone Marble Quartzite Talc



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1.5.4. Utilization of Minerals

Mineral extraction rate is relatively low given the terrain and

the lack of determination of proven minerals with volumes

decreasing. For example, Coal and Talc deposits as recorded

by 2018 was zero. The two least extracted minerals are

Limestone and Dolomite with annual extraction rate of

0.57% and 0.014% respectively. However, apart from this

database, other specific minerals such as Phyllite are also

being extracted. Table_ 1:Utilization of Minerals

Mineral Reserve (2010) Utilization (Till 2018) Balance Average %

Coal 1.04 1.04 0 11%

Limestone 164.65 8.52 156.13 0.575%

Gypsum 5.18 0.87 4.31 1.866%

Talc 0.13 0.13 0 13.675%

Iron Ore 2.69 0.18 2.51 1.115%

Dolomite 14542.47 17.96 14524.51 0.014%

Figure_ 7:Utilization of explored minerals and mineral production by type

Quartzite and Granite are least exported minerals, whereas all others are mostly

exported (over 60-80%).

Figure_ 8:Percentage of Export of Minerals

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Utilization of Explored Minerals in Bhutan

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Gypsum

Marble

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Calc Tufa

Mineral Production by Type, Bhutan, (2014-2018) in Million MT

2014 2015 2016 2017 2018



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Proposed Locations: Prominent mining sites in the Bhutan

• Gongkhola in Black Mountain area

• Zhemgang Dzongkhag

• Genekha area

• Thimphu Dzongkhag

• Dholpani and Bhurkhola

• Gelephu Dungkhag

• Deothang and Bangtar

• S/Jongkhar Dzongkhag

• Foothills of Southern Bhutan

• Khepchishi (above 3,992 m altitude)

• Paro Dzongkhag

• Khothakpa and Uri Chhu,

• Pemagatshel Dzongkhag,

• In northern region of Bhutan such as, Haa, Wangtsa, Chaylaila, Paro, Jemina,

Thimphu Sha Bhel Wangdue, Hasilo and Pangpeysa Paro and Bunakha, Chukha

Dzongkhag Pagli – Titi, Kanamarkra, Korungri and Kerungri S/Jongkhar

Dzongkhag, Khangkhu in Paro Dzongkhag

As of 2015, there were 48 active mines and quarries in operation. While 26 were stone

quarries, 22 were mineral mines located in different parts of the country. Minerals

found in Bhutan are limestone, talc, gypsum, quartzite, granite, marble, dolomite,

gypsum, coal, and iron ore. Current active mines and quarries are largely concentrated

in western Bhutan (42%) with the largest number in Thimphu (7), Wangdue Phodrang

(7) and Paro (6). The Southern region has 35% with the maximum in Samtse (11). The

eastern region has 19% with the highest number in Pema Gatshel (6).

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2014 2015 2016 2017 2018



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Status of Mineral Resources in the Country

Table_ 2:Status of Mineral Resources in the Country

# Mineral Location Reserve (in MT) & Grades

1. Copper Ore Gongkhola in Black Mountain

area, Zhemgang Dzongkhag

2.5 inferred, with 1.5% Cu

2. Lead-Zinc

Ore

In Genekha area, Thimphu

Dzongkhag

3.116 in Chakula – Proved

0.514 in Romegong Ri – Probable

3. Tungsten

Ore

Dholpani and Bhurkhola

Gelephu Dungkhag

0.45 estimated down to 30 m depth

in Dholpani .

4. Coal Deothang and Bangtar,

S/Jongkhar Dzongkhag

Reserve very tentative

5. Dolomite All along the foothill of

Southern Bhutan.

Very huge reserve. Proved reserve

will be rendered by DGM as and

when required

6. Graphite Khepchishi (above 3992 m

altitude) Paro, Dzongkhag

23.53 proved by drilling.

7. Gypsum Khothakpa and Uri Chu,

Pemagatshel Dzongkhag

56.45 proved (in Khothakpa);

13.60 estimated (in Uri Chu and

Khar). Remaining reserve much less,

mining going on

8. Limestone Pagli – Titi , Gholtey area,

Gelephu Dungkhag,

Kanamakra, Gelephu

Dungkhag, Korungri and

Kerungri, S/Jongkhar

Dzongkhag

Reserve almost exhausted by PCAL

Reserve being assessed

Huge Reserve of high-grade

Limestone Huge reserve of cement

grade limestone

9. Marble Khanku (Paro Dzongkhag)

In northern region of Bhutan

such as, Haa Wangtsa,

Chaylaila, Paro, Jemina

Thimphu Sha Bhel

Wangdiphodrang, Hasilo and

Pangpeysa Paro and Bunakha,

Chukha Dzongkhag

12.44 proved. 29.59 Probable.

Reserve not proven

10. Slate Bhel (Bonsegeoma) and Kobja

areas both in

Wangduephodrang

Dzongkhag

16 million cubic meters.

A large portion is already extracted

for roofing purposes in Bhutan

11. Talc All in foothill belts in SW

Bhutan

Reserve not assessed properly,

because the deposit is very erratic

and patchy in nature

12. Ferrosilicon

Grade

Quartzite

Quartzite in Shumar

Formation

Reserve not assessed systematically



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The mining sector has long been an important catalyst to the economic growth of the

country in terms of revenue and employment generation. A host of minerals have been

mined in the country till date. Major minerals currently mined are dolomite, limestone,

gypsum, marble, coal, talc, quartzite and various types of construction stones. All the

mines in the country are operated using opencast mining technique and the current

land coverage by mining activities is 0.033 % of the total area of the country.

Geophysical Methods

Geophysical methods are based on the study of different physical fields being

propagated through the earth's interior. The most important geophysical fields are

gravity, magnetic, electromagnetic, and seismic wave fields. The observed values of

these fields depend, first, on the physical properties of rocks.

Gravity and magnetic geophysical methods are passive. They rely on no controlled

sources but seek out naturally occurring variations in the earth’s gravity and magnetic

fields.

Metamorphosed, igneous and poly deformed rocks, which are common subjects of

mineral exploration, can be far more complicated than the stratified rocks examined

in the search for oil and gas. Hard-rock geology presents an explorer with a mind-

boggling array of lithologic, metamorphic and structural features, which can host an

equally mind-boggling variety of mineral deposits and generate very complex patterns

of geophysical anomalies. Each locality and each deposit are different from another,

necessitating detailed field mapping and varied geophysical surveys.

Figure_ 9:Gravity and Magnetic Geophysical Method



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1.8.1. Seismic Methods

These are designed mainly for stratified rocks with relatively uncomplicated structures.

Mineral explorers rely on a wide range of geophysical techniques including magnetic,

gravity, electrical, electromagnetic and radiometric, and above all on strong knowledge

of hard-rock geology and on results of local field mapping and exploration drilling.

Reflection seismic surveys indicate changes in the acoustic impedance of rocks,

especially where these changes occur across relatively flat-lying boundaries. Lateral

variations in rock density give rise to gravity anomalies, and lateral variations in rock

magnetization produce magnetic anomalies. Contrary to an occasional misconception,

density and magnetization are rock properties quite independent of one another.

Vertical changes in rock magnetization and density in a perfectly flat and layered earth

would yield no magnetic or gravity anomalies, but these geophysical methods reveal

lateral variations and high-angle discontinuities.

Survey and data-gridding parameters are chosen to resolve all expected useful

anomaly wavelengths from the source under investigation, at minimal cost. At a

relatively low cost compared to seismic surveys, gravity and magnetic techniques can

provide geophysical coverage of large and small areas. Figure_ 10:Seismic Method



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Advanced Airborne Gravity Gradiometer Technology for

Mineral Exploration

Exploration for mineral bodies is time-consuming and expensive, making an

unsuccessful attempt extremely costly. The advanced gradiometer, operated from an

aircraft, incorporates technology to measure subtle changes in the Earth’s gravity field

and uses the data to produce a density map which can be used to identify ore bodies,

which are otherwise hard to detect.

3D imaging technologies have transformed the exploration of large mines and

continue to hold promise with a number of emerging technologies. Seismic surveys

for studying the geology of potential mining areas are not new but applications of 3D

imaging technologies have improved the efficacy of these studies greatly.

A new technology that has emerged in three-dimensional imaging is 3D laser

scanning, which helps to capture spatial data using laser light and enables geologists

to build 3D geological maps combining the surface mapping data.

3D laser scanning is a relatively new technology for the mining industry despite its

application for many years in other fields such as civil engineering, architectural design

and forensic investigation. In mining the technology has found uses in the hands of

rock engineers, ventilation engineers, safety officers as well as those surveying in

dangerous or inaccessible mining environments.

3D imaging technologies in a camera that can be used in open pit and underground

mining areas to capture three-dimensional images of the environment and

topography, eliminating the need for geologists, engineers and surveyors to physically

visit the mine. The technology enables design and analysis to be conducted from a

remote environment while also not disrupting the production while capturing the

imagery.

Analysis of the captured data will further help in exploration, mine scheduling,

planning and targeting of drill holes, and so on. Some 3D visualization and analysis

software solutions available in the market include CAE SirovisionTM, Maptek’s Vulcan,

ARANZ Geo’s Leapfrog Geo and Leapfrog Mining, Dassault System’s GEOVIA, and

Avizo Fire.



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Figure_ 11:Advanced airborne gravity gradiometer

Mining industry’s latest technological innovations

Some of latest technology innovations in mining industry are as follows:

1.10.1. Spatial Data Visualization

Mining is experiencing an exciting shift, thanks to spatial (or geospatial) data. Spatial

data is becoming more detailed and clearer than ever: Three-dimensional (3D)

Modelling creates a viewable, life-like impression with depth perception that allows

the human brain to understand and relate to complex interrelated issues. 3D modelling

supports firms by reimagining the mine more efficiently.

Virtual Reality (VR) is an artificially-created software environment that uses real-life

data. The virtual environment immerses people into a user-created 3-D environment.

VR presents an enhanced impression to help miners experience what it’s like working

in a mine or planning a new mine without being out in the field.

Augmented Reality (AR) overlays a digital visualization onto a real-world environment.

AR accomplishes this by enhancing the user’s visual field with computer-generated

inputs such as sound, video, applications, and graphics. Miners use augmented reality

to train using virtual simulators, which also helps the industry reduce equipment

maintenance costs.

By using new technology like spatial data effectively, the mining industry gains insights

into mine systems at a reduced cost and impact on the environment. The mining

industry is steadily moving toward a future where it’s possible to virtually construct

and deconstruct buildings, plants, mines, and all associated infrastructure before even

breaking ground to create a truly intelligent mine.



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1.10.2. Geographic Information Systems

Geographic information systems (GIS) are an integral tool that allows a deeper look at

how geographic relationships influence the world around us. With the help of GIS,

miners are able to solve real-life issues where location and accessibility are critical.

Geospatial data represents an object’s location, size, and shape. By visualizing this kind

of data, miners gain more insight into the represented system or mine environment.

GIS is used to gain insight into the following:

• Mineral exploration

• Geochemical and hydrology data

• Report generation

• Facility and tailings management

• Sustainability and regulatory compliance

Geospatial data software allows to train mine managers and employees in new ways,

and improve long-term understanding of mining with virtual interpretations of real-

life environments.

1.10.3. Artificial intelligence

Artificial intelligence (AI) now leads the decision-making at insight-driven firms. They

use smart data and machine learning to improve operational efficiency, mine safety,

and production workflow. Implementing artificial intelligence technology generates

day-to-day data in half the time than what has been used previously in the field.

The mining industry evolves rapidly, so machine learning and AI impact the way mines

today make choices for the future.

Here are some ways the latest technology in artificial intelligence impacts the working

mine:



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Figure_ 12:Artificial Intelligence

a. Mineral processing and exploration:

Companies can find minerals more easily by using high-performance AI technology.

b. Autonomous vehicles and drillers

For more than eight years, firms across the globe have used autonomous vehicles pit-

to-pit operations. Self-driving trucks can easily navigate through narrow tunnels with

AI. Now, drilling systems are also simplified with a single operator that controls several

drill rigs at once.

This is just another step towards optimal industry efficiency. As the mining industry

attempts to reduce costs and lessen its environmental impact, using mining equipment

like AI helps to ensure safety and reliability for both miners and the land that mines

use.

c. Automated Drones:

In recent years, drones or unmanned aerial systems (UAS) have started to make

headway across the mining industry. UAS now produce the same results as a helicopter

at a lower cost. Drones, when set to perform operational tasks, improve the industry

by providing the following services:

• Safety and surveillance in hazardous areas

• Asset management

• Time-lapse photography

• Measuring stockpile inventory

• Infrastructure upkeep and inspection



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• Site mapping

Figure_ 13:Automated Drones can be used in Tough Terrain

Equipment required for Geophysical and Mining Exploration

Services

There are various techniques or types of deploying Geophysical and Mining

Exploration. The most important geophysical fields are gravity, magnetic,

electromagnetic, and seismic wave fields.

Some of the required equipment’s are as below:

• 24-Channel Seismograph - 24 Bit

• Ground Penetrating Radar GPR up to 120meter Depth

• Advanced Resistivity Meter (2D ERT Function)

• MASW / 48 Channel Seismograph

• Portable Borehole Camera

• Geophone with 2 HZ, 2.5 HZ, 4 HZ, 10 HZ, 28 HZ, 40HZ, 60HZ, 100HZ

• Advanced Airborne Systems

• DJI Mavic Air/Mavic Air Fly More Combo drone 4K 100Mbps Video 3-Axis

Gimbal Camera with 4KM Remote Control Foldable RC Quadcopter

• GIS Software

• Other accessories and equipment

Cost Estimation in Geophysical and Mining Exploration Services

The total cost of the project has been considered as Nu. 17.2 million. The Break-Even

Months are 23. D.S.C.R value is 4.55 which show that the project will generate sufficient

to pay loans.

Other details are as follows:



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Table_ 3:Estimated Project Cost and Financials




2.1 Fixed Cost @100% Capacity 47.81








6. D.S.C.R. 4.55


8. NPR 55.47%

Other Requirements



✓ Head Consultant – Geotechnical Projects

✓ Geoscientist

✓ Survey Manager

✓ Surveyor

✓ System Analyst

✓ Data Compiler and Documentation

✓ Reception

✓ Office Assistant

✓ Driver

1.12.1. Project Cost

The cost of project is estimated to be a total value of plant and machinery, MFA,

preliminary expenses, pre-operative expenses and contingency. The required land is

around 1,200 m2 to be on lease. Equipment cost is about 79.35% of the total project

cost. Margin Money for working capital is not considered as part of project cost as per

fiscal loan pattern in Bhutan.

The summary of the project cost is as follows:



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Table_ 4:Head Wise Project Cost and Sharing Percentage


1. Land 1200 sq. meters On Lease

2. Building & Civil Construction On Lease






Total 102.60 100%

Means of Finance

Table_ 5:Means of Finance




Total Term Loan 172.32



Total Working Capital Loan 18.46

Table 5:

1.13.1. Equipment Cost

The cost estimates for equipment have been worked out based on the cost figures

received from the Indian equipment suppliers. The prices are considered without

Indian GST tax as it is exempted under supply of trade agreement between India and

Bhutan (Category Export). Installation and commissioning of equipment are

considered separately in the total equipment cost estimation. Freight and insurance

have been considered with the assumption that all goods are transported by road.

Goods of imported origin would be handled at the Kolkata port. The equipment list

with cost is given in table below:

Table_ 6:Plant & Machinery with Cost

# Equipment’s Qty. Rate Amount

(Nu. in Lacs)

1. 24-Channel Seismograph - 24 Bit 1 690000 6.90

2. Ground Penetrating Radar GPR up to

120meter Depth

1 4870000 48.70

3. Advanced Resistivity Meter (2D ERT

Function)

1 2500000 25.00

4. MASW / 48 Channel Seismograph 1 2500000 25.00

5. Portable Borehole Camera 1 460000 4.60



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6. Geophone with 2 HZ 2.5 HZ 4 HZ and 10

HZ, 28 HZ, 40HZ, 60HZ, 100HZ

4 120000 1.20

7. Advanced Airborne Systems 2 770000 7.70

8. DJI Mavic Air/Mavic Air Fly More Combo

drone 4K 100Mbps Video 3-Axis Gimbal

Camera with 4KM Remote Control

Foldable RC Quadcopter

2 210000 2.10

9. GIS Software 1 100000 1.00

10. Other accessories and equipment's 1 500000 5.00

Total 127.20


Grand Total 136.74




under this head “MFA” and presented in the table given on next page: Table_ 7:Misc. Fixed Assets Cost Estimation


1. Office Equipment, Laptop, Printer & Software’s 1 5.00



4. CCTV Surveillance System 4 0.34

5. Van – Vehicle 1 8.00

Total 17.44


Preliminary expenses are those that are incurred before the incorporation and


expenses are marked to be written off in the next ten years in profitability estimation. Table_ 8:Preliminary Expenses

# Particular Amount

(Nu.in Lacs)

1. Company formation expenses (ROC) and setup cost 1.00

Total 1.00



total of Nu. 1.3 million is estimated under this cost to be written off in the next 10

years. It is considered as exempted in the first year.

The details are given in the table below:



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Table_ 9:Pre- operative Expenses


1. Interest up to exploration 1.90






Total 12.51

1.13.5. Cost of Office Consumables

This is a service segment business opportunity and the the main office consumables are stationery, paper rim, cartage refilling items etc. The annual consumables cost is based on the present average market prices in Bhutan. A total of Nu. 240,000 has been estimated under this head. The details are given in the table below:


# Consumables Total AmountPer Annum (Nu.in Lacs)

1. Stationery Items, Paper Rim, Cartage refilling,

House Keeping Items and Misc.

2.40

Total 2.40


Salaries and wages (including benefits) for different categories of employees have




considered that salary will increase 5% annually.

The breakdown of manpower with estimated salaries is given in the following table:

Table_ 11:Salary & Wages


Month (Nu.)

Salary Per

Annum (Nu. In Lacs)

1. Head Consultant – Geotechnical Projects 1 70000 8.40

2. Geoscientist 1 40000 4.80

3. Survey Manager 1 30000 3.60

4. Surveyor 3 20000 7.20

5. System Analyst 1 20000 2.40

6. Data Compiler and Documentation 1 20000 2.40



Page | 200

7. Reception 1 15000 1.80

8. Office Assistant 1 10000 1.20

9. Driver 1 15000 1.80

Total (A+B+C) 11 33.60








increase @5% every year. Table_ 12:Electrical and Water Consumption Charges





Total 2.88

Source: Available on the link of https://www.bpc.bt/electricity-tariff/.

The details of electrical installations for power distribution have been considered







estimated term loan is Nu.11.7 million of which 68% will come as loan from financial

institution. The rest of the capital investment (Nu. 5.5 million consisting 32%) will be

managed by entrepreneurs on their own.

The details are as follows: Table_ 13:Term Loan Estimation


%

Amount (Nu.in Lacs)

Own Contribution (Nu. in Lacs)


1. Land 50% 0.00 0.00 0.00

2. Building & Civil Construction 10% 0.00 0.00 0.00

3. Plant & Machinery 25% 136.74 34.19 102.56




7. Contingencies 100% 4.63 4.63 0.00



Page | 201

Total 172.32 54.94 117.38

Sharing %

32% 68%

8 Margin Money for Working

Capital

100% 6.35 6.35 0.00




Margin money is estimated as Nu. 635,000.

Working capital requirements have been worked out in the following table: Table_ 14:Working Capital Loan Amount


%

Amount (Nu.in Lacs)

Own Contribution (Nu. in Lacs)


1. Office Consumables 15 days 50% 0.07 0.03 0.03

2. Receivable 30 days 25% 15.75 3.94 11.81


Consumables

15days 90% 2.64 2.37 0.26


The Interest Rate for term loan and working capital loan is referenced from the rate of

BNB, Bhutan, available on https://www.bnb.bt/wp-

content/uploads/dld/DOCUMENTS/interest-rates.pdf (Industrial Loan capital/Term

loan Interest rate 12% (fixed rate), working capital loan 13% (fixed rate).


Sales realization or estimated turnover is based on various geophysical surveys and

mining exploration. The sale price of products is determined as cost competitive with

presently available similar product whether supply is from domestic market or

international. The total of Nu. 27 million is estimated sales realization at 100% service

capacity.

The details are as follows: Table_ 15:Sales Realization/Estimated turnover

# Product Work per

month

Annual Minimum

Revenue

Per Work

(Nu.)

Total

Amount

Per Annum

(Nu in Lacs)

1 Various Geophysical

surveys and Mining

Exploration as required

15 180 150000 270

Total 270.00



Page | 202


The profitability projection has been worked out for 10 years at 70% capacity utilisation

to be achieved during the first year, 70% in the second year and 80% from fourth to

6th year, and 90% from 7 years onwards. Following assumptions and basis relevant

and applicable to Bhutan have been considered while preparing the profitability.

Repairs & maintenance have been taken at @1% per annum on plant & machinery &

misc. fixed assets.

Some of the Assumptions are as follows:

Repairs & maintenance have been taken as @ 2% per annum on equipment &

misc. fixed assets.

Bank interest rate has been calculated @12% per annum on term loan & @ 13%


Insurance charges @ 0.25% on all assets in first year, then decreases @5% every

year.

Power & water charges are increased @ 5% every year.

Administrative expenses have been increased @ 5% every year.

Margin money has been considered @ 40% on building, @ 25% on plant &

machinery and @25% on misc. fixed assets.

Bank loan has been considered for repayment in 7 years with one-year

moratorium.

Preliminary exp. will be written off @ 10% every year in next 10 years.

Pre-operative exp. will be written off from second year @ 10% every year in next

10 years.

Depreciation has been charged using Straight-Line Method

Insurance, lease rent & interest has been taken as fixed cost for calculating B.E.P.

Income tax has been charged @ 30% every year as per Bhutan's tax rates (Source:


DSCR - debt service coverage ratio - is defined as net operating income divided

by total debt service.

Investment Opportunity Study 2020 Project Profile: High Tech Geophysical and Mining Exploration Services, Bhutan

Page | 203

1.13.12. Estimation of Project Profitability Table_ 16:Estimation of Project Profitability


1 Installed Capacity 100% 270.00 270.00 270.00 283.50 283.50 283.50 297.68 297.68 297.68 297.68



4 Cost of Operation


4.2 Raw Material 1.68 1.68 1.68 1.92 1.92 1.92 2.16 2.16 2.16 2.16

4.3 Consumables @ 0% (Already taken) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00



4.6 Salary & Wages 33.60 35.28 37.04 38.90 40.84 42.88 45.03 47.28 49.64 52.12

4.7 Fringe Benefits @15% 5.04 5.29 5.56 5.83 6.13 6.43 6.75 7.09 7.45 7.82

4.8 Insurance 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00


Total 46.86 48.95 51.13 53.67 56.08 58.61 61.51 64.30 67.23 70.30

5 Marketing Expenses @5% on Sale 18.90 18.90 18.90 22.68 22.68 22.68 26.79 26.79 26.79 26.79






11 Total Interest 15.66 14.46 12.06 9.66 7.26 4.86 2.50 1.57 1.57 1.57


13 Depreciation 21.87 18.56 15.74 13.36 11.34 9.62 8.17 6.93 5.89 5.00










Total (A) 95.88 92.09 89.00 109.61 106.59 103.59 125.39 123.71 121.34 118.92



Total (B) 14.09 32.89 30.49 28.09 25.69 23.29 18.30 0.00 0.00 0.00


Page | 204

Surplus (A) - (B) 81.79 59.21 58.52 81.52 80.91 80.30 107.08 123.71 121.34 118.92

DSCR (A/B) 6.81 2.80 2.92 3.90 4.15 4.45 6.85 0.00 0.00 0.00

Average DSCR 4.55

1.13.13. Calculation of Interest on Term Loan (Nu. in Lacs) Table_ 17:Break Even Point


1 1st year 117.38 0 117.38 14.09 14.09

2 2nd year

1st Qtr. 117.38 5.00 112.38 3.45

2nd Qtr. 112.38 5.00 107.38 3.30

3rd Qtr. 107.38 5.00 102.38 3.15

4th Qtr. 102.38 5.00 97.38 3.00 12.89

3 3rd year

1st Qtr. 97.38 5.00 92.38 2.85

2nd Qtr. 92.38 5.00 87.38 2.70

3rd Qtr. 87.38 5.00 82.38 2.55

4th Qtr. 82.38 5.00 77.38 2.40 10.49

4 4th year

1st Qtr. 77.38 5.00 72.38 2.25

2nd Qtr. 72.38 5.00 67.38 2.10

3rd Qtr. 67.38 5.00 62.38 1.95

4th Qtr. 62.38 5.00 57.38 1.80 8.09

5 5th year

1st Qtr. 57.38 5.00 52.38 1.65

2nd Qtr. 52.38 5.00 47.38 1.50

3rd Qtr. 47.38 5.00 42.38 1.35

4th Qtr. 42.38 5.00 37.38 1.20 5.69

6 6th year

1st Qtr. 37.38 5.00 32.38 1.05

2nd Qtr. 32.38 5.00 27.38 0.90

3rd Qtr. 27.38 5.00 22.38 0.75


Page | 205

4th Qtr. 22.38 5.00 17.38 0.60 3.29

7 7th year

1st Qtr. 17.38 5.00 12.38 0.45

2nd Qtr. 12.38 5.00 7.38 0.30

3rd Qtr. 7.38 5.00 2.38 0.15

4th Qtr. 2.38 2.38 0.00 0.04 0.92

1.13.14. Break Even Point Table_ 18:Break Even Point



Variable Cost 23.12 23.12 23.12 27.14 27.14 27.14 31.49 31.49 31.49 31.49

Fixed Cost 85.34 82.90 79.88 72.94 70.95 69.39 68.26 68.91 70.82 73.03


1.13.15. Projected Balance Sheet for the Project (10 Year) Table_ 19:Projected Balance Sheet

# Description Construction Period Operation Period in Years


1 Liabilities

1.1 Equity 54.94 54.94 54.94 54.94 54.94 54.94 54.94 54.94 54.94 54.94 54.94


1.3 Debt 117.38 117.38 97.38 77.38 57.38 37.38 17.38 0.00 0.00 0.00 0.00




2 Assets



Page | 206



(2.01-2.02)

158.81 136.93 118.38 102.64 89.27 77.94 68.31 60.15 53.21 47.33 42.33



2.6 Current Assets 0.00 14.49 16.56 16.56 16.56 16.56 16.56 16.56 16.56 16.56 16.56



Total Assets 172.32 244.81 285.51 328.28 396.44 466.01 536.69 636.53 753.30 868.76 982.69

Investment Opportunity Study 2020 Project Profile: High Tech Geophysical and

Mining Exploration Services, Bhutan

Page | 207

Some of the Global Service providers for High Tech Geophysical

and Mining Exploration

Table_ 20:Some of the Global Service providers for High Tech Geophysical and Mining Exploration

# Company Name Address

1. Complete Instrumentation

Solutions Pvt Ltd

Suite 511, Suncity Business Towers, Golf Course R,

Gurgaon, Haryana 122003 India

2. Quantec Geoscience Ltd. 146 Sparks Ave., Toronto, Ontario M2H 2S4 Canada

3. WTS Geophysical Solutions,

India

No: 1, Triplicane High Road, Chennai-600 005 (M) 0091

98434 74810

4. Explorer Geophysical

Consultants Pvt. Ltd.

Banasthali, Kathmandu, Nepal, Contact +977-1-6923145

5. Geophysik GGD mbH Ehrensteinstr. 33, Leipzig, 04105 Germany

6. Mineral Exploration

Corporation Limited

Dr.Babasaheb Ambedkar Bhawan, Seminary Hills,

Nagpur 440006

7. Parsan overseas (Pvt.) Ltd 707, Eros Apartments, 56-Nehru Place, New Delhi

(INDIA) 110019

Conclusion

The Mining sector is one of the five jewels of the economy and accounts for 3% of GDP

in Bhutan. It is also play as an important catalyst role in terms of revenue collection and

employment generation.

Under the Bhutanese scenario, High Tech Geophysical and Mining Exploration Services

are the need of the present times. It will provide services which includes appropriate

solutions to users by defining the suitable investigation method, counseling the suitable

equipment, catering the high-quality scientific equipment & swift technical services to

fulfill the data analysis and requirement.

The total cost of the project has been considered as Nu. 17.2 million. The payback period

is 23 months. DSCR value is 4.55 which show that the project will generate sufficient to

pay loans. Based on the estimation of project cost and financial analysis, High Tech

Geophysical and Mining Exploration Services is a profitable project in Bhutan with high

rates of return. It is recommended to entrepreneurs to scale up at Industrial level.

Investment Opportunity Study 2020 Project Profile: High Tech Geophysical and

Mining Exploration Services, Bhutan

Page | 208

Sources

Internet References

https://www.indiamart.com/proddetail/24-channel-seismograph-24-bit-

14318915633.html

https://www.indiamart.com/proddetail/ground-penetrating-radar-gpr-up-to-

120meter-depth-22272705230.html

https://www.indiamart.com/proddetail/advanced-resistivity-meter-2d-ert-function-

12173198262.html

https://www.indiamart.com/proddetail/masw-48-channel-seismograph-

19555208873.html

https://www.indiamart.com/proddetail/portable-borehole-camera-

14319328988.html

https://onshopdeals.com/dji-mavic-air-mavic-air-fly-more-combo-drone-4k-

100mbps-video-3-axis-gimbal-camera-with-4km-remote-control-foldablerc-

quadcopter/?sku=32852583206_29_201336103&cmp_

id=1033612468&adg_id=56525683571&kwd=&device=c&gclid=Cj0KCQjwgJv4BRCrAR

IsAB17JI66vp0e9_bMy9TcjG-dj6xSXftGMRnIK8XD7XrGbAkayby

GzytGvIYaAoYNEALw_wcB

Investment Opportunity Study 2020 Project Profile: Multi-product Kiosks Services,

Bhutan

Page | 209

Project Title: Multi-product Kiosks Services, Bhutan


Bhutan

Page | 210

Multi-product Kiosks Services, Bhutan

Background of the idea

Kiosk is a very new, smart and interactive solution and service which is having various

type of uses and application. A kiosk is a small, stand-alone booth typically placed in

high-traffic areas for business purposes. It typically provides information and

applications on education, commerce, entertainment, and a variety of other topics.

Kiosks are popular due to the number of advantages they provide.

Any common people can use the services by kiosk and can save time to wait in the

long queues. The service provided can earn a handsome amount of money by

providing this service to common people of Bhutan without investing much. One can

establish these services from one office and service centre for maintaining the kiosk.

Recently, there has been many successful deployments in self-service kiosks in various

sectors. A successful kiosk deployment needs to replace a current service that is

currently being carried out manually, or meets the demand for a service that is not

currently happening.

Rationale of the idea

Kiosk services are very easy and can help the customers in various fields such as:

Healthcare – Check in for appointments, pay for prescriptions, vending of condoms

& sanitary pads.

Government – Citizens can print government ID cards directly at the Kiosk.

Corporate – Visitor registration facility (printing badges), facility for staff to update

details for HR purposes.

Industrial – Digital job cards, recording task data, reporting issues and project

reports.

Banking – Deposits and withdrawal machines are considered forms of Self-Service

kiosks.

Retail and showrooms – Pay mobile bill, buy a top up card, or perform account

updates.

Universities – Vast number of services that students perform such as request

transcript, letter of attendance, student card replacement, etc.

Schools – Registration kiosks to allow visitors to register themselves before

entering the school, against a pre-defined visitor/check list.

Events – Badge printing to fast track delegates with pre-registered tickets using

barcode scanner. Barcode scanner and badge printer are integrated into the kiosk.

Purchasing of all the equipment needs heavy cost.


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Restaurants and Grocery stores: Self-service kiosks at restaurants and grocery

stores.


The global interactive kiosk market size was valued at $14.76 billion in 2018, and is

projected to reach $32.51 billion by 2027, growing at a CAGR of 9.1% from 2020 to

20271. Interactive kiosk is a self-service device or a computer terminal deployed in

public sector and helps users to interact with digital content and information through

user friendly interface. Interactive kiosks are used for retail sales, bill payment,

wayfinding, information sharing, and tourism. These kiosks are used in multiple

application areas from healthcare and travel industries, as they help obtain personal

information easily from the users.

The emergence of advanced technologies offers enhanced visualizations in several

industry verticals including education, corporate, retail, sports & entertainment,

transportation, and others. In addition, interactive kiosk allows customers to get

control over their purchasing decisions, which will ensure higher degree of customer

satisfaction, and also is able to capture large number of customers. Self-service devices

are technological interfaces that enable customers to utilize a service independently

without intervention of service provider. The prominent factors impacting on the self-

service kiosk industry include rise in demand for self-service machines & automated

devices, wireless communication, technology advancements, and remote

management.

Increase in demand for automated systems fuels the growth of the interactive kiosk

market, as the seamless performance of the self-service machines enhances the overall

customer satisfaction and reduces the operational time as compared to manual

services. In addition, interactive kiosk technology has become emerging area of the

retail industry. Such systems provide moving brand experience inside or outside the

brick and mortar location. Thus, adoption of interactive systems in retail applications

is also expected to fuel the growth of the interactive kiosk market.

Furthermore, peoples shifting toward adoption of self-service systems is also

contributing to the growth of the interactive kiosk market, as these systems facilitate

users with quick and fast services without intervention of representative and eliminate

the waiting time. Moreover, the rapid developments in touch enabled technologies

drive the interactive display market growth. Nonetheless, advancement in interactive

kiosk such as tele-kiosks with global positioning system (GPS) technology is expected

to provide lucrative growth opportunities to the interactive kiosk market.

1 Report available on https://www.alliedmarketresearch.com/press-release/interactive-kiosk-market.html


Bhutan

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Figure_ 1:Global Kiosk Segmentation

The Concept

As per Kuensal Newspaper2, Bank of Bhutan Introduced the first banking services

through Kiosk in Bhutan in 2016. The Kiosk was equipped with two ATMs, a Cash

Deposit Machine (CDM), a computer terminal linked to the bank’s website for internet

banking and a pass-book printing machine. The Kiosk also served as an exchange

counter for visitors to exchange foreign currency during normal working hours. Clients

can use the ATM terminals to avail other varied services besides withdrawing cash.

No other kiosks are available for other useful services as in medical segment, ticketing,

utility bill payments and Food and Snacks services etc. Services through Kiosks will

provide a great help to the people of Bhutan.

As self-service kiosks are directly subjective to both customer requirements and

technological developments, the global self-service kiosk market has become a vital

part of most commercial sites, business and organisations where humans are in need

of guidance and information. Retail self-service kiosk are widely used in retail stores,

book stores, food courts, entertainments and other places because of self-service

technology. These self-service kiosks being the most interactive graphical user

interface, provides great customer satisfaction and good profits for the retailers by

reducing the operational costs.

2 2 https://kuenselonline.com/bob-introduces-kiosk-banking/

https://kuenselonline.com/bob-introduces-kiosk-banking/


Bhutan

Page | 213

Types of kiosks that are assisting us in everyday life

Self-service digital kiosks have been in use for a long time. These interactive devices

have been making lives easier. In a world where time is precious, and customers are

becoming increasingly tech-savvy, the kiosk services instantly elevate and personalise

customer experiences.

Mentioned below are the different types of kiosks that assist us in everyday lives.

1.5.1. Financial Kiosks

The self-service kiosk revolution actually began in the financial sector. With digital

kiosks like ATMs and other banking kiosks, customers can easily withdraw or deposit

cash and can also get concise and clear information about their account balance, etc.

The advancement in technology has enabled us to make day-to-day transactions via

financial kiosks. Self-service financial kiosks are a quick and easy way to facilitate

transactions, while simultaneously cutting costs. The self-service kiosk solutions have

simplified the services offered by the financial sector, and beneficial for customers.

1.5.2. Kiosks for bill payments and purchase of services

There are kiosks that facilitate bill payments, utility bills, electric & water bills and

purchase of various services like flight tickets, TV subscriptions, gift cards, online

gaming vouchers along with domestic or international mobile recharges. They can be

located anywhere and are usually helpful in thinning the footfall in retail shops and

services providing offices.

1.5.3. Check-in Kiosks

Kiosks provide services such as internet e-check-in and self-service, allowing the

processing of a significant number of passengers to be decentralised from the airport/

station itself. The check-in kiosks are not limited to the airport/stations but checking

in for doctor’s appointment or even a hotel room is now easier than ever through a

digital kiosk. The check-in kiosk machines cut down wait time for the customers while

making verification and identification quick and simple.

1.5.4. Self-service kiosks at restaurants and grocery stores

Restaurants and Grocery stores can adopt self-service kiosk. The digital kiosks are a

way of reaching people emotionally. These kiosks provide people with the level of

comfort and convenience they’re seeking when they resort to fast food.

The self-checkout kiosks in grocery stores allow shoppers to put their items on a

conveyor belt and a machine scans each item within seconds. Also, the ease of paying

with credit or debit cards via the kiosk adds to the advantage of the customer. The


Bhutan

Page | 214

retail kiosks can be used at stores to accept payments, issue gift/loyalty cards or

provide a catalogue of a store’s inventory.

It will make it easier for customers to peruse available items and request out of stock

items or additional models and colours.

1.5.5. Way finding and Map Directory kiosks

Wayfinding kiosks have the advantage to interact with boarding passes, shop receipts,

etc. to make it easy for users to navigate to their desired location. These kiosks offer

busy sightseers a fast and informative way to get the most out of their trip. They help

in establishing where they are exactly within a location, and what is nearby and how

to get there?

Benefits of Using Kiosks in Business

Kiosk services can help bring your company to even greater heights. Some of the most

important benefits of having a kiosk are outlined below:

1.6.1. Improves Customer Buying Experience

Kiosks can provide customers with detailed information about products and services.

Since kiosks are easily accessible, your customers will find it convenient to visit a kiosk

for inquiries such as product pricing, feature comparison, etc. It will also instil

confidence in potential customers, by using the latest technologies to improve their

buying experience.

1.6.2. Increases Your Customer Base

Since kiosks are often placed at strategic locations to reach more potential customers,

it helps expand the customer base, which ultimately increases company’s ability to sell

more products. Kiosks allow to expand reach and generate more sales without the

need for a costly investment.

1.6.3. Reduces Costs

Interactive kiosks can be used in place of staff. Also, since kiosks can provide the

customers with answers to many of their buying concerns. Moreover, opting for a kiosk

instead of a traditional retail space will keep rent and overhead costs down and

increased visibility.

1.6.4. Helps Save Time

Kiosk assist business operations to help save time. For example, if a shopkeeper can

have both a cashier and a kiosk helping to check out customers. This will cut waiting


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times by up to 50%. As a result, customers will have a more positive experience at store

and will be more likely to return.

1.6.5. Helps with Branding and Advertising

Kiosks provide a great opportunity for branding and advertising purposes. By

designing the exterior of kiosks according to specific corporate image, such as the

colour scheme, logo, taglines, etc. Innovative kiosks can effectively draw the attention

of potential customers by streaming brand message. The opportunities for messaging

are infinite.

1.6.6. Helps Validate Product Ideas

Mall kiosks and carts can serve as testing grounds for new products and can help

generate public interest. Just make sure product or service is appropriate for where

kiosk is located.

Estimated Project Cost and Financials

The project is suggested under the M&L service sector industry category (Investment

above Nu. 10 million). The required land for this manufacturing plant is about 1,000

sq. ft. and it could be arranged on a lease basis. Storage, repairing centre will be

constructed through pre-fabricated structure. The total cost of the project has been

estimated as Nu. 14.6 million. The Break-Even months are 53. DSCR value is 2.17 which

show that the project will generate sufficient to pay loans.

Other details are as follows:

Table_ 1:Project Summary










6. D.S.C.R. 2.17

7. Rate of Return 22.82%

8. NPR 36.42%


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1.7.1. Means of Finance Table_ 2:Means of Finance

# Particulars Value (Nu. in Lacs) Percentage

1. Promoters Equity 40.76 29%

2. Term Loan from Bank 99.84 71%

3. Total 155.66 100%

4. Margin Money for Working

Capital

Nu. 3.84 Lacs

1.7.2. Project Cost

The cost of project is estimated with sum of equipment MFA, preliminary expenses,

pre-operative expenses and contingency. The total office space required for this

project is around 1,000 sq. ft. It will be arranged on a lease basis. The main capital

investment cost is equipment cost which covers about 88.62% of overall capital

investment. Margin Money for working capital is not considered as part of project cost.

The summary of the project cost is as follows: Table_ 3:Head Wise Project Cost and Sharing Percentage


1. Land 1000 sq. ft (Size 25ft. *40ft.) On Lease

2. Building & Civil Construction

3. Equipment Cost 124.59 88.62%





Total 140.59 100%

i). Plant and Machinery Cost (Equipment Cost)

The cost estimates for equipment has been worked out based on the cost figures

received from the Indian Kiosks suppliers. The prices are considered without Indian

GST tax as it is exempted under supply of trade agreement between India and Bhutan

(Category Export). Installation and commissioning of equipment are considered

separately in the total cost estimation.

Freight and insurance have been considered with the assumption that all goods are

transported by road. Goods of imported origin would be handled at the Kolkata port.

The equipment list with cost is given in table below:


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Table_ 4:Equipment’s with Cost

# Machine & Equipment's Qty. Rate (In Nu.)

Amount (Nu. in Lacs)

1. Utility Bill Payment Kiosk Machine: (Screen Size 15 Inches)

18 200000 36.00

2. Health Monitoring Kiosk (Screen Size: 20 Inch)

5 800000 40.00

3. Blood Pressure Kiosk (Fully Automated) 4 140000 5.60

4. Sanitary Napkin (Women Pad) Vending

Automatic Machine

15 30000 4.50

5. Condom Vending Machine 15 20000 3.00

6. Self Service Kiosk - Tickets generation (Public

Transport) 4 175000 7.00

7. Self-Ordering Kiosk (QSR) Machine, for

Restaurant, Size/Dimension: 680 X 780 X

2125 Mm

2 200000 4.00

8. Softy Vending Machine 4 175000 7.00

9. Fruit/Vegetable Vending Machine, Cash and

Cashless (UPI)

1 250000 2.50

10. Snacks Vending Machine 1 160000 1.60

11. CCTV Camera and Surveillance System 60 7000 4.2

12. Maintenance Tools and Portable

Equipment's

1 50000 0.50

Total Amount

115.90

13. Packaging & Forwarding 7.5%

8.69

14. Erection and Commissioning 7.5%

8.69

Grand Total

124.59

ii). Misc. Fixed Assets


peripherals, firefighting equipment, vehicle etc.

Nu. 752,000 has been estimated under this head “MFA” and presented in the below

table: Table_ 5:Misc. Fixed Assets Cost Estimation


1. Laptop, Printer & Copier Machine 1 1.00



4. Pick up 1 5.0

Total 7.52


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iii).Preliminary Expenses

Preliminary expenses are those that are incurred before the incorporation and


expenses are marked to be written off in the next ten years in profitability estimation

The Preliminary Expenses details are as follows: Table_ 6:Preliminary Expenses


1. Company formation expenses and setup approval

expenses

0.50

Total 0.50

iv). Pre-operative Expenses


total of Nu. 402,000 is estimated under this cost to be written off in the next 10 years.

It is considered as exempted in the first year. The details are given in the table below:

Table_ 7:Pre-operative Expenses


1. Interest up to production on Term Loan 0.90

2. Training of Machine Operation and Maintenance @2% of

Machine cost

2.32



Total 4.02

v). Cost of Raw Material

The cost of raw materials consists of the cost of main ingredients, raw materials and


market prices in Bhutan. A total of Nu. 264,000 has been estimated for raw material

cost. The details are as follow given in the table below:


# Raw Material Qty. Total Amount

1. Stationery Items, Paper Rim, Cartage refilling, House

Keeping Items and Misc.

Set

Annua

l

1.20

2. Paper Roll, Kiosk Pad 1.44

Total (Nu. In Lacs) 2.64

vi). Salary & Wages

Salaries and wages (including benefits) for different categories of employees have




Bhutan

Page | 219


considered that salary will increase 5% annually. The breakdown of manpower with

estimated salaries is given in the following table: Table_ 9:Salary & Wages

# Description Intake Salary Per Month (Nu.)

Salary Per Annum (Nu. In Lacs)

1. Operation Head 1 50000 6.00

2. Office Assistant 1 12000 1.44

3. Marketing & Sales 2 25000 6.00

4. Technicians 3 20000 7.20

5. Driver 1 15000 1.80

Total 8

22.44

vii). Electrical and Water Consumption Charges







increase @ 5% every year. The utility charges are as follows: Table_ 10:Electrical and Water Consumption Charges

# Description Amount Per Annum (Nu.in Lacs)

1. Power Consumption Charges 1.20

2. Water Consumption Charges 0.48

Total 1.68

viii). Term Loan Estimation





estimated term loan is Nu. 14.1 million of which 71% will come as loan from financial

institution. The rest of the capital investment (Nu. 4 million consisting 29%) will be

managed by entrepreneurs on their own. The estimated term loan calculation is as

follows: Table_ 11:Term Loan Requirement from Financial Institution

# Particulars Margin % Amount (Nu.in Lacs)

Own



1. Equipment’s 25% 124.59 31.15 93.44



Bhutan

Page | 220



5. Contingencies 100% 3.96 3.96 0.00

Total 140.59 40.76 99.84

Sharing % 29% 71%

ix). Working Capital Loan Amount



margin money is estimated as Nu. 384,000. The working capital loan is available from

the banks in Bhutan with an interest rate of 13% (fixed rate as well as floating). Working

capital requirements have been worked out in the following table: Table_ 12:Working Capital Loan Amount


%

Amount (Nu.inLacs)

Own


Bank Loan

(Nu.in Lacs)

1. Consumables 15 days 0.08 0.04 0.04 0.08

2. Receivable 30 days 8.13 2.03 6.10 8.13

3. Cash for

Expenses &

Consumables

15 days 1.96 1.77 0.20 1.96


W.C. Sharing 38% 62%

Margin Money for Working Capital @ 100%

Capacity

Nu. 3.84 Lacs

x). Rental Services Realization/Estimated turnover

Rental Service Realisation or estimated turnover is based on the service price. The

rental services price of kiosks is determined as cost competitive with presently available

similar product whether supply is from domestic market or international. The rent per

month from one kiosk (Health Kiosk, Condom and Sanitary Pad, Utility Services, Food

and Snacks & Self-Services kiosk) varies from Nu. 7,500 a kiosk to Nu. 30,000 a kiosk

and the total of Nu. 13.9 million is the estimated service realization at 100% rental. The

estimated turnover details are as follows: Table_ 13:Rental service Realization/Estimated turnover

# Product Total

No. of

Kiosk

Rent per

month from

one kiosk

Annual

Rent (Nu.)

Total Amount

Per Annum (Nu in Lacs)

1. Health Kiosk 9 30000 3240000 32.40

2. Condom and Sanitary

Pad

30 7500 2700000 27.00

3. Utility Services 18 22000 4752000 47.52


Bhutan

Page | 221

4. Food and Snacks 6 20000 1440000 14.40

5. Self-Services 6 25000 1800000 18.00

Total Revenue Collection 139.32

xi). Estimated Cost of Production and Profitability

The profitability projection has been worked out for 10 years at 70% capacity utilisation

to be achieved during the first three years, 80% in fourth to sixth year. Following

assumptions and relevant basis applicable to Bhutan have been considered while

preparing the profitability:

• Rental Services Price is assumed same for three years and increased by 5% after

every three Years.

• Spare Part Inventory and Maintenance @ 5% per annum on equipment & misc.

fixed assets.

• Bank interest rate has been calculated @12% per annum on term loan & @ 13%


• Insurance charges will be @ Nu. 1,000 per year per kiosk machine.






• Preliminary exp. will be written off @10% every year in next 10 years.

• Pre-operative exp. will be written off from the second year @10% every year.

• Depreciation has been charged using the Straight-Line Method.


• Income tax has been charged @ 30% every year as per Bhutan's tax rates (Source:



total debt service.

Investment Opportunity Study 2020 Project Profile: Multi-product Kiosks Services, Bhutan

Page | 222

a) Estimation of Project Profitability Table_ 14:Estimation of Project Profitability

S. No. Particulars 1st Yr. 2nd Yr. 3rd Yr. 4th Yr. 5th Yr. 6th Yr. 7th Yr. 8th Yr. 9th Yr. 10th Yr.

1 Installed Capacity @100% 139.32 139.32 139.32 146.29 146.29 146.29 153.60 153.60 153.60 153.60



4 Cost of Operation

4.1 Office Lease Charges 3.96 4.16 4.37 4.58 4.81 5.05 5.31 5.57 5.85 6.14

4.2 Consumables 1.85 1.85 1.85 2.11 2.11 2.11 2.38 2.38 2.38 2.64

4.3 Spare Part Inventory and Maintenance @5% 5.80 5.80 5.80 6.37 6.37 6.37 7.01 7.01 7.71 7.71



4.6 Salary & Wages 22.44 23.56 24.74 25.98 27.28 28.64 30.07 31.58 33.15 34.81

4.7 Fringe Benefits @15% 3.37 3.53 3.71 3.90 4.09 4.30 4.51 4.74 4.97 5.22

4.8 Insurance 0.69 0.69 0.69 0.69 0.69 0.69 0.69 0.69 0.69 0.69


Total 39.82 41.39 43.05 45.63 47.45 49.36 52.27 54.38 57.30 59.89

5 Marketing Expenses @10% of Sale 9.75 9.75 9.75 11.70 11.70 11.70 13.82 13.82 13.82 15.36






11 Total Interest 12.80 11.80 9.78 7.76 5.75 3.73 1.73 0.82 0.82 0.82


13 Depreciation 12.79 11.44 10.23 9.16 8.20 7.34 6.58 5.90 5.29 4.74


15 Pre -operative Exp. W. Off 0.00 0.45 0.45 0.45 0.45 0.45 0.45 0.45 0.45 0.45






Page | 223




Total (A) 40.39 38.26 36.14 45.70 43.53 41.33 50.92 49.87 47.64 55.34


24 Repayment on Term Loan 0 16.80 16.80 16.80 16.80 16.80 15.84 0.00 0.00 0.00

Total (B) 11.98 27.77 25.76 23.74 21.72 19.71 16.74 0.00 0.00 0.00

Surplus (A) - (B) 28.41 10.49 10.38 21.96 21.80 21.62 34.17 49.87 47.64 55.34

DSCR (A/B) 3.37 1.38 1.40 1.92 2.00 2.10 3.04 0.00 0.00 0.00

Average DSCR 2.17


Bhutan

Page | 224

b) Calculation of Interest on Term Loan (Nu. in Lacs) Table_ 15:Repayment of Interest on Term Loan

# Year Opening

Balance

Repayment Closing

Balance

Interest

1 1st year 99.84 0 99.84 11.98 11.98

2 2nd year

1st Qtr. 99.84 4.20 95.64 2.93

2nd Qtr. 95.64 4.20 91.44 2.81

3rd Qtr. 91.44 4.20 87.24 2.68

4th Qtr. 87.24 4.20 83.04 2.55 10.97

3 3rd year

1st Qtr. 83.04 4.20 78.84 2.43

2nd Qtr. 78.84 4.20 74.64 2.30

3rd Qtr. 74.64 4.20 70.44 2.18

4th Qtr. 70.44 4.20 66.24 2.05 8.96

4 4th year

1st Qtr. 66.24 4.20 62.04 1.92

2nd Qtr. 62.04 4.20 57.84 1.80

3rd Qtr. 57.84 4.20 53.64 1.67

4th Qtr. 53.64 4.20 49.44 1.55 6.94

5 5th year

1st Qtr. 49.44 4.20 45.24 1.42

2nd Qtr. 45.24 4.20 41.04 1.29

3rd Qtr. 41.04 4.20 36.84 1.17

4th Qtr. 36.84 4.20 32.64 1.04 4.92

6 6th year

1st Qtr. 32.64 4.20 28.44 0.92

2nd Qtr. 28.44 4.20 24.24 0.79

3rd Qtr. 24.24 4.20 20.04 0.66

4th Qtr. 20.04 4.20 15.84 0.54 2.91

7 7th year

1st Qtr. 15.84 4.20 11.64 0.41

2nd Qtr. 11.64 4.20 7.44 0.29

3rd Qtr. 7.44 4.20 3.24 0.16

4th Qtr. 3.24 3.24 0.00 0.05 0.91


Page | 225

c) Break Even Point Table_ 16:Break Even Point



Variable Cost 19.08 19.16 19.25 22.13 22.23 22.33 25.46 25.58 26.40 28.32

Fixed Cost 60.05 59.38 57.93 56.70 55.68 54.86 54.25 54.92 56.69 58.63


d) Projected Balance Sheet for the Project (10 Year) Table_ 17:Projected Balance Sheet


Period



1 Liabilities

1.1 Equity 40.76 40.76 40.76 40.76 40.76 40.76 40.76 40.76 40.76 40.76 40.76


1.3 Debt 99.84 99.84 83.04 66.24 49.44 32.64 15.84 0.00 0.00 0.00 0.00




2 Assets




(2.01-2.02)

136.08 123.28 111.84 101.61 92.45 84.26 76.91 70.33 64.44 59.15 54.41



2.6 Current Assets 0.00 14.49 16.56 16.56 16.56 16.56 16.56 16.56 16.56 16.56 16.56



Total Assets 140.59 163.00 162.10 162.25 175.05 188.65 202.93 231.43 275.40 317.76 368.37


Bhutan

Page | 226

Conclusion

The proposed Kiosk Services on rental is a viable project in terms of common facility

for people of Bhutan. The project needs use of electricity and manpower to operate

the machines and material handling.

Anyone can use the services by kiosk and can save time to wait in the long queues.

The service provided can earn a handsome amount of money by providing this service

to common people of Bhutan without investing much. One can establish these services

only from one office and service centre for maintaining the kiosk.

The positive Return on Investment and user-friendly nature of self-service kiosks has

boosted its popularity making it exist in every sphere of our lives. Bhutan is a very good

market to start these types of services in different places.

Working capital mainly consisting of the amount required to purchase the kiosks. The

means of finance can be sharing between the investor and a bank loan. Required

margin money for this project is Nu. 384,000. The rate of return is 22.82% with BEP of

53 months.

The project is financially viable with a net profit ratio of 36.42%. It needs around 11

employees including managerial staff, skilled and unskilled staff to operate the plant.

A dedicated post graduate marketing executive is required to manage marketing,

supply chain management and revenue collection.

The average DSCR is 2.17 which implies that the project generates sufficient funds to

cover its cost, including loan repayments and interest payments during the period. This

also indicates that the project can continue making profits and is recommended as a

viable project in Bhutan.

References

• www.indiamart.com/proddetail/utility-bill-payment-kiosk-machine-19000028312.html

• www.indiamart.com/proddetail/posiflex-self-service-kiosk-19942429162.html

• www.indiamart.com/proddetail/self-ordering-kiosk-qsr-machine-22363281297.html

• www.indiamart.com/proddetail/condom-box-vending-machine-6823373333.html

• www.indiamart.com/proddetail/automatic-sanitary-napkin-vending-machine-

9357467812.html

• www.indiamart.com/proddetail/snacks-vending-machine-19233066162.html

• www.indiamart.com/proddetail/fruit-vegetable-vending-machine-22324816988.html

• www.indiamart.com/proddetail/softy-vending-machine-15064429662.html

• www.indiamart.com/proddetail/swayam-anytime-health-monitoring-kiosk-

21584364791.html

• www.indiamart.com/proddetail/fully-automated-blood-pressure-kiosk-18340599591.html

Investment Opportunity Study 2020 Project Profile- Car Detailing and Certified Resell

Page | 227

Project Title: Car Detailing and Certified Resell


Page | 228

Car Detailing and Certified Resell Services


The growth in Bhutanese economy is directly reflected through the increase in car sales

in the automobile industry. The number of vehicles has increased tremendously over

the years. Figure_ 1:: Light Vehicle Growth in Bhutan

The sharp drop in vehicle imports in 2102 and 2013 can be attributed to the ban on

vehicle import due to current account deficits and the accompanying shortage of

Indian Rupee. Although the growth rate increased from 2014 despite the increase in

tax (which could be attributed to lifting vehicle ban), the number has gradually

decreased since then (Growth Rates; 2015-14%, 2016-14%, 2017-10%, 2018-9%).


The Bhutan Living Standard and Survey (BLSS) 2017, show that only 23% of Bhutanese

households owned a family car. The remaining 77% of households did not own a family

car. Table_ 1:Percent of HH owning Family Car (BLSS 2017)

1Quintile

(Poorest)

2 Quintile 3 Quintile 4 Quintile 5Quintile

(Richest)

3.2 10.6 17.9 31.8 53

As seen above, there is still a great disparity between the percentage of vehicles owned

between 2nd and 3rd Quintile and the 4th and 5th Quintile. While the factor of growing

income and easy credit access has been the contributing factor for the upper two

quintiles, for others, it is still a constraint to purchase brand new vehicles.

Further, the increasing issues of Non-Performing Loans and COVID-19 will possibly

result in lower access to credit facilities. The growing concern on air quality due to

0%

5%

10%

15%

20%

25%

0

20,000

40,000

60,000

80,000

100,000

120,000

Total Number of Vehicles Number of Light Vehicle Growth Rate (LV)


Page | 229

vehicle emissions is compelling policy makers to discourage the use of vehicles

powered by fossil fuels which could come in terms of increased taxation thereby

making imports more expensive1.

All of these factors contribute in creating a higher demand for the second-hand car

market which has considerably developed itself in the form of formalized car

brokerage business since 2012. However, the cars are sold usually in as-is condition

without detailing and improving its feel and looks.

Market Outlook International2

The Indian used car market was valued at USD 24.24 billion in 2019, and it is expected

to register a CAGR of 15.12% during the forecast period (2020-2025).

• Recently, the used car market in India evolved with the growth of the organised

and semi-organised resell sector. The pre-owned car or used car market crossed

the 4 million units mark in FY 2018, which states that the used car market is 1.3

times the new car market. One of the key growth drivers of the market is the

revision of the GST rate on used cars from 28% to 12-18%.

• As the Indian auto industry is entering the BS-VI era from April 2020, the value

proposition of used cars can grow more robust, as new cars are expected to

become expensive due to additional technology costs. Additionally, according

to the MD and CEO of Mahindra First Choice Wheels (MFCW), the companies'

focus on reducing the production of diesel cars, like Maruti Suzuki's decision to

exit the diesel car segment by April 2020, is also expected to increase the

demand for compact diesel cars in the used car market, unless there is a

backlash against diesel cars.

• Factors, such as standardized dealership experience, good price experience, and

high financing cost for used cars, may hinder the growth of the used car market.

Some of the major players dominating the market are OLX, Mahindra First

Choice Wheels, Cars24, Maruti True Value, and Hyundai H Promise, among

others.

The Concept

1.4.1. Core Business Areas

The core business of Car Detailing and Resell will involve the following scope:

1 In 2018, the total fuel import bill at 10.276 billion closed in with hydro exports at Nu. 10.578 billion

with a nominal gap of Nu. 301 million 2 https://www.mordorintelligence.com/industry-reports/india-used-car-market


Page | 230

i. Purchase of second-hand vehicles

ii. Repair and Detailing

iii. Reselling

Alternatively, the business can also cater to car owners who only want the detailing

service or other car brokers. The service is unique to conventional car repair workshop

which only repair a specific damage and not overhaul the looks and quality of the cars.

a) On Car Detailing

▪ Exterior Services

Complete exterior detailing including washing the vehicle, claying the paint,

removal of all bugs & tar followed by paint correction (scratch removal) will

prepare the vehicle of cleaning and polishing the finish. During this operation

all exterior rubber trim and tires will be dressed to like new condition.

▪ Interior Services

The interior of the vehicle will be purged of all loose material carpets, seats

miscellaneous upholstery will be spot treated shampooed and deep cleaned

with a special heated extractor.

▪ Engine Cleaning & Dressing

Engines will be cleaned using the finest products to remove grease and grim

from the surfaces. A special non-silicone dressing will be applied to ensure a

bright clean surface for a long time.

1.4.2. Certified Car Resell

The business can establish itself as a premium seller of used cars. The USP would be

certifying the used cars after a complete detailing. This is a growing industry around

the world and a particular example of the business model can be drawn from

companies such as Mahindra First Choice, Zig wheels, Budget Preowned Cars among

others.


Page | 231

Figure_ 2:Car Detailing and Certified Resell Service Provider

1.4.3. Unique Selling Point (USP)

The business would have to leverage on the concept of ‘Certified Resell’. This will

require a proper due diligence in preparing the contract documents detailing specific

coverage of the certification and the conditions on the warranty. The business should

not make false promises to ensure that both parties are satisfied and the brand name

is not damaged.

▪ Existing Competitors

The number of automobile workshops are to the tune of about 450 while there

are about 35 brokerage service firms who deal in buying and selling of used car.

However, the concept of Certified Used Car Services is brand new in Bhutan.

▪ Expected Customer Number

Projections are made under conservative assumptions of about 1,000 vehicle

transaction in a year. The proposed business unit would cater to 3 cars in a week

totalling to 144 cars in a year.

▪ Equipment Requirement

The following plant, machinery and equipment are required for the proposed

project presented with some idea of price. Table_ 2:List of Equipment

# Particular Qty. Rate (Nu. In

Lacs)

Value (Nu. in Lacs)

1 Car Washer– Tunnel 1 6.50 6.50

2 Hydraulic Lift 2 1.50 3.00

3 Car Painting Unit (this includes Compressor, Spray

Guns, HVLP Systems, accessory equipment, etc.

2 3.50 7.00


Page | 232

2 Vacuum Cleaner (Carpet Extractors) 1 0.45 0.45

3 Wax polishing Machine Set (Rotary Polisher Kit -3) 1 0.10 0.10

4 Tools and Spanners sets, jack and small pneumatic

tools

1 0.25 0.25

5 Random Orbital Polishers LHR21ES 1 0.28 0.28

6 Vapor Steamers (Vapor Prof II Stem Cleaner) 1 0.30 0.30

7 Pressure Washers - Bosch 1 0.40 0.40

8 Water Tanks 4 0.08 0.32

9 Foam Guns (4 Types) 1 0.10 0.10

10 Air Compressor, Air Movers & Dryers 1 0.48 0.48

11 Ozone Generators 1 1.80 1.80

12 Cleaners Pads and Sealant 1 0.10 0.10

13 Wipers and Brushes 1 0.10 0.10

14 Misc. 1 0.50 0.50

Equipment Cost (Nu. in Lacs) 21.68

1.4.4. More Details

More details on this business idea can be found from the following sources and videos

for better understanding: Table_ 3:Reading Materials & Videos


https://publish.manheim.com/content/dam/consulting/

2017-Manheim-Used-Car-Market-Report.pdf

https://www.cars.com/cpo/

https://www.edmunds.com/car-buying/certified-pre-

owned-cars-a-reality-check.html

https://www.youtube.com/watch?v=oRxP

GC8QTxk

http://www.rsta.gov.bt/rstaweb/load.html?id=82&field_

cons=MENU

a) Other Requirements



o Manager

o Accounts and Administration

o Lawyer

o 4- Mechanical Section

o 4- Detailing Section

o 2- Painting Section

o 2- Marketing and Resale Section

1.4.5. Basic Financial Calculations

The calculation is based on fairly conservative values of selling 100 cars in a year with

a minimum profit margin of Nu. 50,000 per car. This is a realistic amount as vehicle

https://www.detailking.com/store-home/auto-detailing-equipment/random-orbital-polishers/

https://www.detailking.com/store-home/auto-detailing-equipment/vapor-steamers/

https://www.detailking.com/store-home/mobile-auto-detailing-equipment/pressure-washers-cold-water/

https://www.detailking.com/store-home/mobile-auto-detailing-equipment/water-tanks/

https://www.detailking.com/store-home/auto-detailing-tools/foam-cannon/

https://www.detailking.com/store-home/auto-detailing-equipment/ozone-generators/

https://www.youtube.com/watch?v=oRxPGC8QTxk

https://www.youtube.com/watch?v=oRxPGC8QTxk


Page | 233

brokers, without any value addition, charge about 5% transaction fee (assuming a mid-

range car of Nu. 500,000 value, the cost is Nu. 25,000).

Other assumptions include;

• Salary of Nu. 25,000 per employee

• Overhead cost of 15% of the Salaries Cost

• No variable cost is taken as it would depend largely on the condition of the

vehicle

• No cost on purchase is taken as the vehicle would be resold thereby inclusive

of the cost price plus repair and maintenance cost

• The BEP in months is 15 months and 174 units. Table_ 4:Basic Financial Calculations

Particulars Description Amount in Nu.

Equipment Cost 21,68,000

Fixed Cost 5,175,000


Overhead Cots (15%) 675,000

Variable Costs NA

Cannot be determined as it will depend

on the type of vehicle

Profit Margin Assuming 100 cars with Nu. 50,000

MPM

7,000,000

Break Even Units 173.50

Break Even Months 15

Annual PAT after BEP 1,825,000

Annual PBT after BEP 1,277,500

Conclusion

As the economy has improved and disposable income has increased in Bhutan, people

are purchasing new cars as well as used cars. To maintain car performance and

appearance, car detailing industry in Bhutan has bright prospects and good business

opportunity.

Consumer attitudes to maintain the car has become more sophisticated as vehicles

have improved in quality and reliability. While these changes involve significant

financial investments, they hold the potential for great returns and are, in fact,

necessary in today’s market.

Car detailing businesses offer meticulous cleaning services that include a car’s exterior,

interior, and underside. Detailing a car offers many benefits, making it an appealing


Page | 234

service to many vehicle owners. Regular detailing helps to protect drivers from germs

and allergies while also helping to maintain the vehicle’s condition.

Vehicle owners often have a car detailed just before selling it, since a clean car has a

higher resale value than a dirty vehicle. It’s an eco-friendly business activity but needs

to follow rules as per guidelines issued by the National Environment Commission.

The suggested business is covered under small scale sector and suggested viable with

good opportunity for entrepreneurs.

Source of equipment

The equipment required for car detailing are available in India. These can be purchased

from Kolkata, New Delhi, Ahmedabad and Pune. Some supplier names are as follows:

▪ New Age Cleaning Solutions

P 88 5 Hellen Keller Sarani, New Alipur

Kolkata - 700053, West Bengal, India

Mobile: 092300 68081

Email: Infor@ newagecleaningsolutions.in

Website: www.newagecleaningsolutions.in

▪ Auto Global Equipment’s

Yesh Bhardwaj

A- 20, Ground Floor, Gazipur Village

New Delhi - 110096, Delhi, India

Mobile: +91-9716510236


Website: https://autoglobalequipments.com/

▪ AutoFresh.in

204, Siddhi Vinayak Platinum,

Althan Bamroli Road, Surat - 394 220, Gujarat, India

Mobile: +91 98256 04000


Website: autofresh.in

▪ GreenZ Car Care India

#21, Baglur Road, Hosur, Tamilnadu, India

Mobile: +91 80 5688 5999 / +91 89 2910 0699

Email: sales @ greenzcarcare.com

Website: greenzcarcare.com


Page | 235

▪ Treo Engineering Private Limited

Plot No. A-54/55, 2nd Floor, H-BLOCK, MIDC, Pimpri, Pune – 411018

Mobile: +91-840-800-2080/40


Website: www.treo.co.in

http://www.treo.co.in/

Investment Opportunity Study 2020 Project Profile: Financial Consulting for

Investments and Market Research

Page | 236

Project Title:

Financial Consulting for Investments and Market

Research



Page | 237

Financial Consulting for Investments and Market Research


Bhutan has a stable political and economic environment. It maintains substantial

growth and macroeconomic stability with decreasing poverty and improvements in

human development indicators, i.e. single-digit inflation, a steady exchange rate, and

accumulating international reserves attest to the stability.

Around 56 licenses have been issued in Bhutan under consultancy category. These

consultancy companies are working in different sectors as Civil Infrastructure,

Architectural Design, Energy and Hydropower and Audit consultant. The "Rinzing

Financial Group” (RFG), “Bhutan Consultancy Services” and “Taxoservice" are the

prominent names among Financial Audit firms in Bhutan. Audit firm's need mandatory

registration in the department of "Royal Audit Authority of Bhutan".

“APECS consultancy”, “Bhutan Interdisciplinary Research & Development (BIRD)” and

“Bhutan Marketing Agency” are providing services in market survey and research

segment. Most of them are based in Thimphu.

The available services are limited to tax audit, risk, internal audit and corporate finance,

due diligence and compliance audit, tax accounting and Bhutan tax advisory etc.

Quality Services, and Integrity and Confidentiality are the core strengths of consultancy

companies in Bhutan. Consultants are committed to raising the standard of data

security and compliance to the highest level in the industry.


Bhutan's GDP was expected to grow by 5.2% in 2020 and 5.8% in 2021 as per the report

by Asian Development Bank titled ‘Economic indicators for Bhutan: A Fact Sheet’. The

Gross Domestic Product (GDP) in Bhutan was worth USD 2.53 billion in 2018, according

to official data from the World Bank and projections from Trading Economics.

The country is famous for its unique philosophy – Gross National Happiness (GNH) –

which guides its development. Abundant water resources create ideal conditions for

hydropower development which has spurred economic growth. Fiscal revenues from

hydropower has helped large finance investments in human capital which led to

significant improvements in service delivery and educational and health outcomes.



Page | 238

The current national literacy rate is 71% and the youth literacy rate is 93%. Bhutan has

maintained its course of sustainable public finances, with the fiscal deficit estimated to

have reduced to 2.1% of GDP in FY2019, from 4.6% two years prior.

The overall scenario is the economic development is on a progressive path, and many

of the schemes and funded projects are in the pipeline. In Bhutan, a prospective FDI

investor needs to conduct an in-depth study on various aspects such as customer,

market scenario, feasibilities, approval of government licenses, economic and social

points.

To understand the various schemes, fund flow mechanism and monitoring to budget,

it is crucial to provide helping hand to entrepreneurs, start-ups and people and as

such, an advisory consultancy company in Bhutan is viable who can offer quality

services in an integrated manner.


Along with Financial Institutions, international organizations such as the World Bank

Group, Asian Development Bank (ADB), SAARC, UNDP, UNIDO, FAO, WHO and WTO

also provide grants and project funds for economic development in Bhutan.

Government of Bhutan also has bilateral relations with Government of India, Japan,

South Korea, Vietnam, Turkey, Armenia, Egypt, South Africa, European Union, Canada,

Australia, New Zealand, Switzerland, Monaco, Cuba and Brazil.

Government of Bhutan is also dedicatedly providing support to develop

sustainable industrial development. The service sector is also growing by the day.

The Concept

Under the Investment opportunity study, a suggested business plan is titled "Financial

Consultant for Investments and Market Research" under the service sector – Cottage

segment. A key constraint to private investment and micro, small and medium

enterprise growth in Bhutan includes access to, and the cost of, finance.

A Financial and Marketing company and its consultant will be well familiar with

Bhutanese financial and economic scenarios and business environment, industry

knowledge for Private Sector Development, Public-Private Partnerships and Foreign

Direct Investment in Bhutan.

Company will help individuals and small businesses manage and grow their wealth.

They are more likely to service individuals than large corporations, but small business

will also be prepared even at the village level. Marketing research can be defined as

the development, interpretation and interaction of decision-oriented information to

be used in all phases of the marketing process.



Page | 239

Managers require information to introduce products and services that create value in

the mind of the customer. Marketing research involves researching to support

marketing activities and the statistical interpretation of data into information.

This information is then used by managers to plan marketing activities, gauge the

nature of a firm’s marketing environment and attain information from suppliers.

Becoming a financial consultant requires a college degree in commerce and work

experience, and must be registered with the Royal Audit Authority of Bhutan.

The consultancy company needs a mix of human resource from multiple professional

backgrounds. These individuals ought to possess personal knowledge and skills

earned from their several longstanding experience.

Financial Consultant

Expected Services from the proposed business outlet:

➢ Banking and Fund Management Services.

➢ FDI Bhutan Entry services covering tax and legal advisory, registration,

monitoring and reporting.

➢ Legal services such as due diligence, shareholder agreements, and other

Bhutanese law advisories.

➢ Transaction including IPOs and other public offerings, transaction tax, mergers

and acquisitions and PPP Projects.

➢ Advisable services on how to avail bank loans, manage the credits productively

and fruitfully and also act as trusted loan counsellor be it on a personal loan,

business loan or project loans in Bhutan.

➢ Consulting services not only on investments but also savings, budget, insurance,

and tax strategies.

➢ Constructing personalized financial plans that aim to achieve the financial goals

of clients.

➢ Monitoring services regularly to re-evaluate their current situation and future

goals and plan accordingly.

➢ Liquidation and Valuation.

➢ Financial Reporting Advisory Services - Financial Statement Audit and

Attestation Services.

➢ Risk Analysis – Global Mobility Services.

Market Management and Research

A consultant helps create a detailed marketing plan, determine a business's marketing

message, and identify the appropriate marketing mix to get the message out to the

target market. Some of the offered services are as follows:



Page | 240

➢ Preparation of Project Proposals

➢ Preparation of Detailed Feasibilities Reports

➢ Preparation of Procurement Plan

➢ Consultancy for implementation of Quality Management System Impact

Assessment Evaluations and Consultancies

➢ The market research report delivers insight across a wide range of crucial factors

such as market size, growth drivers, competitive landscape, trends, and

forecasts

➢ Data collection solutions, One to one survey, data management and statistical

analysis, policy review and analysis, and research studies etc.

➢ Business plan, Joint Venture, technological and financial tie-up with overseas

partners for successful implementation of the business blueprint

➢ Market dynamics, identify new opportunities or increase profitability through

management reforms (time, money and people)

➢ Strategic Growth Consulting, Market Entry Strategy, Capital Investment

Analysis, Opportunity Screening, and Target Screening

➢ Campaign Assessment Survey

The Financial and Marketing consultancy company provides core high-value market

research and advisory services. Also, it provides its customers with to help them

identify new market opportunities, growth engines and innovative ways to capture the

market share.

Company will work through close collaboration with Government Organisations,

Departments, International Agencies, Non-Governmental Organizations, and Civil

Society Organisations.

Business Structure and Required Sources

The proposed consultancy company will work under the service category and needs

higher working capital instead of capital investment. Arrangement of human resources

and experts are the main cost-sharing head of working capital. A fully furnished office

of 600 sq. ft. carpet area with modern office amenities is required to operate the

business. It needs laptops, online survey tools, IOS survey equipment, cameras & stuff.

The initial need for human resources is as follows: Table_ 1:Required Experts and Human Resources

Proposed Staff (12) Qualification

Financial Consultant (1) PG in Finance, Business Management,

Economics or related field.

Marketing Consultant (1) MBA- with more than ten years'

experience

QMS Expert (1) Engineering Graduate and CA

Product Marketing Expert (1) MBA – Marketing Management



Page | 241

Tele Networking (1) Expertise in mass communication

Survey Manager (1) Post Graduate

Enumerators (2) Graduate

Data Compiler and Documentation (1) Graduate and Certification course in

Microsoft office tools

Reception (1) Female – Graduate

Chauffeur (2) Literate with valid Driving Licenses

Basic Financial Calculations

Revenue collections under the above services are based on fee structure on a case-to-

case basis. It will be collected from company activities based on fees charges and on a

percentage basis (ranges from 1% to 8.5% of project cost) and calculated in the

involvement of the consultant, human resource and infrastructure.

The calculation is considered under the following assumptions:

• Cost of services is reasonably estimated as of Nu. 500,000 per month.

• Salary of Nu. 50,000 for the manager and 35,000 for executives and Nu.15,000

for Support Staff. The requirement of 12 experts would be in an initial start-up

for business enhancement.

• The overhead cost would be 20% of the Salaries Cost.

The primary financial calculation is as follows:

Table_ 2:Basic Financial Calculation and Financial Projections

Particulars Details Nu.

Establishment Cost 1,375,000



Overhead Cots (20%) including utility bills 720,000

Variable Costs NA

Cannot be determined as it will depend on

the type of service

Profit Margin Per month revenue collection of Nu.5 Lacs

per month

6,000,000

Break-Even Months 12.00



Market Bhutan Industrial as service sectors,

International investors, New Entrepreneurs,

Startup companies etc.

Suggested Management

System




Page | 242

More Details:

More details on this business idea can be extracted from the following sources for


Table_ 3:Web Sources for further References

References

www.adb.org/countries/bhutan/main

www.bt.undp.org,

www.worldbank.org

www.indembthimphu.gov.in

http://blog.meritusindia.com/2012/07/12/emerging-trends-in-indian-management

consulting-2/ Nature Thoughts & Symmetry

https://www.statista.com/statistics/527240/gross-domestic-product-gdp-in-

bhutan/#:~:text=GDP%20is%20an%20important%20indicator,around%207.94%20

billion%20international%20dollars.

Conclusion

Bhutan is on a progressive economic path. The government is keen to provide financial

support to people of Bhutan through its financial institutions and banks. It is also

committed to sustainable domestic industrial development and foreign direct

investment policy of Bhutan. International organisations are also active in Bhutan and

consultancy business is growing by the day.

Ordinary people, new entrepreneurs, existing industries, national as well as

international organisations and interested investors need local support to implement

their goals. Thus, the opening of a Financial Consultant for Investments and Market

Research Company is a Business Opportunity and a viable project under service

segment.

Investment Opportunity Study 2020 Project Profile: Domestic Tourism Company

Page | 243

Project Title: Domestic Tourism Company


Page | 244

1. Domestic Tourism Company

1.1. Background of the Idea

Dwelling on its tourism industry, Bhutan attracts many travellers from across the globe

because of its untouched mountains, serenity, and vibrancy. The Punakha Dzong-

arguably the most beautiful Dzong in the country, Trashichhodzong, the Paro Dzong

and the Taktshang Monastery, also known as the Tiger's Nest Monastery, are the main

attractions of the country.

The country has been consistently nurturing the tourism sector as an important source

of government revenue through well laid out plans and clearly defined policy

objectives.

However, such planning is limited to only international tourism market as very limited

attention is given towards domestic tourism market in Bhutan by authorities,

communities, and academicians.

There is a significant demand for rural tourism in the country and given the fact that

majority of the tourists are satisfied with the supply of rural tourism products. The ‘high

value, low volume’ policy controlled the number of tourist arrivals in Bhutan. Tourism

in Bhutan is mostly limited to western and central valleys for cultural tours, while the

social costs are borne by the people throughout the country.

The Bhutanese government has undertaken projects to introduce ecotourism in certain

conservation areas like the Phobjikha valley, a winter habitat to the endangered black-

necked crane and the community-based tourism trial in Nabji-Korphu in Trongsa.

People are not aware about their own culture and tourism scenario.


During this IOS study survey, respondents replied that domestic tourists could easily

pay around Nu. 5,000 -10,000 for a two-day one-night tour program. These has the

potential to become an attractive tourism package. They commented that no tour

companies are available in Bhutan who is dedicatedly working to promote domestic

tourism. Private car is the most popular choice of transport to domestic tour

destinations. Group tours are also liked but in limited numbers. Domestic tourists

prefer hotel stay but night stay in camp sites is also preferable if provided.

One respondant noted Bumthang to be the most beautiful place in Bhutan offering

interesting religious attractions. Owing to the valley’s pristine backdrop, natural

abundance, laid-back ambience, warm-hearted locals, and pleasant climate, Bumthang

can also be called as the ‘Shangri-La of Bhutan’. It has a great potential for domestic

tourism. A package of 3-4 days domestic tourism could be arranged to offer local


Page | 245

sightseeing, spiritual tours, trekking, attend festivals etc. Similarly, there are several

prospects all over Bhutan for domestic tourism.

1.3. The Concept

Bhutan tourism potential is diversified in many areas as possible to ensure economic

growth and diversification. Culture tourism, eco-tourism and adventure/sports

tourism- (rafting, canoeing and climbing) offer numerous opportunities and

attractions. Local tourist also wants to enjoy these during holidays and during the

movement through one Dzongkhag to another. Numerous pilgrimages sites exist in

multiple places and there are annual religious festivals, hundreds of natural wonders

including hot springs, village culture life, different dishes and locals miss such

attractions in the absence of local tourism packages.

In conclusion, there is an ardent need and demand for a tour company completely

focussed on providing local tourism services for local tourists.

1.4. Some of domestic travel packages could focus on

• Offering holiday packages

• Offering nature-based recreational such as hiking, trekking, nature watching,

rafting, hot spring/stone bath and other related activities etc.

• Tour Packages for cultural, pilgrimage and festive activities

• Offering travel packages to attractive local destinations

Following services and tour packages will be provided by domestic tourism company:

1. Car Rental and Traveller Coach Rental Services

2. Domestic Air Ticket – Paro to Gelephu and Bumthang

3. Luxury Tour Packages - Destination based.

4. Picnic Spot Preparation

5. Pre–wedding photography trips and Honeymoon Packages

6. Educational and Research Tours

7. Snowman Trek and Mountain Trekking Tour

8. National Park Tour Packages

9. Enjoy Festival Package

10. Best Monastery Package

11. Community-based Village and Agriculture Tour Package


Page | 246

12. Hotel and Homestay Booking

13. Traditional Food and Lifestyle Packages

14. Breath-taking Adventures

15. Mountain Biking Trails Along with Camp Accommodation

16. Bicycling Tour

17. Bird Watching and Fishing

18. River Rafting and White-Water Sports

19. Medicinal Springs – Gasa Tour Package

20. Spiritual and Meditation Tour Packages

21. Cultural Programs and Events

22. Traditional Medicines and Healing Tour Packages

23. Packages for Youth Sports Festivals and Camps

24. Bhutan Handicraft and Heritage

25. The company could provide camping services, trekking suites, and bicycles along

with escorted trip accompanied by experienced travel executives specializing in

remote trekking, exploration and mountaineering.

26. The productive target age population could be between 20-59 years and the

population in this group is about 405,667 people constituting 56% of total

population of Bhutan. These are the most movable people across the country.

The main active population under age group is as follows:

Table_ 1: Percentage Distribution of Population by Age Group of 20 -54 Years and Sex, Bhutan 2017

# Age Group Male % Female % Total

Population

1. 20-24 41,075 54.5 34,340 45.5 75,415

2. 25-29 42,802 54.0 36,478 46.0 79,280

3. 30-34 35,059 53.8 30,121 46.2 65,180

4. 35-39 29,689 53.4 25,860 46.6 55,549

5. 40-44 22,274 53.7 19,221 46.3 41,495

6. 45-49 18,865 53.1 16,668 46.9 35,533

7. 50-54 15,456 52.7 13,861 47.3 29,317

8. 55-59 15,456 52.7 13,861 47.3 23898

Total 205,220 176,549 405,667


Page | 247

Some attractive destinations for local tourists include:

# Tourist Node

1. Lamperi (Thimphu) 13. Chelela (Paro)

2. Phobjikha Valley (Wangdue) 14. Dochula (Thimphu)

3. Buli (Zhemgang) 15. Dzomlithang (Punakha)

4. Gelephu (Sarpang) 16. Chorten Kora and Gom Kora

(Trashiyangtse)

5. Diana River (Samtse) 17. Serbithang (Thimphu)

6. Toorsa River (Chukha) 18. Ramtokto (Thimphu)

7. Bumthang Valley (Bumthang) 19. Debsi (Thimphu)

8. Yonphula (Trashigang) 20. Panbang (Zhemgang)

9. Bumdeling (Trashiyangtse) 21. Gasa Tsachu (Gasa)

10. Merak and Sakteng (Trashigang) 22. Gedu (Chukha)

11. Shaba (Paro) 23. Dewathang (Samdrup Jongkhar)

12. Bondey (Paro) 24. Sipsoo (Samtse)

1.5. Unique Selling Point (USP)

The services would have to leverage on the concept of ‘Domestic Tourism” and a

company focussed on local tourism targeting local tourists in much wanted in Bhutan.

There is enough market for such a company.

1.5.1. Equipment Requirements

Following equipment are required for the proposed project Table_ 2: Cost of Equipment

# Particulars Qty. Rate

(Nu.)

Amount (Nu.in

lacs)

1. Desk top Computer Printer and Photo Copier

Machine

2 58000 1.16

2. Aluminum Patrician, Furniture & Fixture with Interior 1 100000 1.00

3. IT Equipment’s - Mobile and IOS 1 30000 0.30

4. Fire Fighting Equipment’s 1 2000 0.02

5. Fixed Rope/ Climbing Rope/ Ascender (Jumar) 4 7000 0.28

6. Tent/ Sleeping Bags/ Climbing Backpacks 4 12000 0.48

7. Crampons/ Mountaineering/ Climbing Boots 6 8000 0.48

8. Gas Stove/ Gas Fuel 4 4000 0.16

9. Mattress 6 600 0.04

10. Carabiner/ Tape Slings/ Helmets 6 4500 0.27

11. Ice Screw/ Ice Axe/ Harness/ Trekking Poles/ Ski

Poles/ Snow shovel

4 7000 0.28

12. Belay Gloves Ski Goggles/ Headlamps 6 4000 0.24


Page | 248

13. Large Thermos/ Water Bottle/ Cooking Pots and

Equipment

4 6000 0.24

14. Mountaineering Jackets/ Waterproof Trousers 6 4000 0.24

15. First Aid Kit 5 2000 0.10

16. Vehicle - CAR 2 550000 11.00

Total 16.29

1.5.2. Other Requirements

• Land: About 300 sq. ft. with three floors and outdoor playing area

• Manpower of 9 people which includes;

• Tour Operator Manager

• Receptionist

• Office Assistant Caretaker

• Tour Guides

• Driver

1.6. Basic Financial Calculations

The calculation is based on fairly conservative values considering 30 tours in a month

with an average charge of Nu. 15,000 per tour which will translate to a business of Nu.

5.4 million in a year.

1.6.1. Other assumptions include:

• Salary varies as per the designation of employee

• Overhead cost of 15% of the Salaries Cost

• Variable cost is Nu. 198,000 which includes consumables and miscellaneous

items.

• The BEP in months is 9 months and 271 units.

Particulars Description Amount in

Nu


Operation Cost 2,613,000



Overhead Cots (15%) including utility bills 315,000

Variable Costs 198,000

Consumables 180,000

Misc. 18,000


Generation)

Intake of 30 Tour Services per month

charges @15000 per Tour

5,400,000

Break Even Units (Production) 271

Packages



Page | 249

Annual Profit Before Tax 1,337,000

Annual Profit After Tax 935,900

1.7. Conclusion:

The tourism sector needs diversification and there is a serious need to promote local

tourism. As such, there is enough market and ample opportunities for a company

focussed entirely on local tourism targeting local tourists. The Covid-19 pandemic has

also shown the importance of promoting local tourism.

Domestic Tourism services are very much feasible in Bhutan and it is a very good

business proposal in terms of profitability and also for the local people of Bhutan. The

BEP is marked as 9 Months with annual profit after tax Nu. 935,900. It shows that

project will generate sufficient funds. It is suggested as a viable project under cottage

service sector.

The project cost for 30 tours per month is about Nu. 1.5 million.

More Details:

More details on this business idea can be found from the following sources for better

understanding:

References

www.tourism.gov.bt/uploads/attachment_files/tcb_jJocRL3Q_The%20Druk%20Journ

al%2010.pdf

www.tourism.gov.bt

www.esikkimtourism.in/bhutan/destination/bumthang/

https://www.esikkimtourism.in/bhutan/destination/bumthang/

Bhutan IOS -2006

http://www.nsb.gov.bt/publication/files/PHCB2017_national.pdf

Dzongkhag web portals


Page | 250

1.8. Annexure:

Prominent Dzongkhag wise attractions are as follows:

# Dzongkhags Attractions View

Western Region:

1. Thimphu Trashichho Dzong, Changangkha

Lhakhang, Tango Goemba, National

Memorial Chorten

Motithang Takin Preserve, Dechen

Phodrang

2. Paro Rinpung Dzong, Chumphu Ney, Kichu

Monastery, Paro Museum, Rinpung Dzong

3. Haa Wangtsa Lhakhang, Lungkha Lhakhang,

Bali Lhakhang Ungney Drag, village life.

4. Samtse Samtse Dzong, pilgrimage sites, Sidhok

Khorlo Chorten, Sipsu, Tendu, Dorokha

5. Chuukha Dokhachu Goenpa, Gelling Goenpa, Thadra

Goenpa, Chhukha Zangdo Pelri and

Tumdra Aminey

6. Punakha Punakha Dzong, Khamsum Yulley Namgyal

Chorten, River Rafting & Kayaking, Chimi

Lhakhang

7. Gasa Gasa Dzong, Laya Run, Annual Gasa

Tshechu, Royal Highland Festival


Page | 251

Central Region:

8. Wangdue

Phodrang

Wangdue Eco Lodge, Adha Rukha, Gangtey

Lhakhang, Dolung Sherab Yoedsel

Chhoeling, Black Necked Crane Festival

9. Dagana The Daga Dzong, Do Kepai Goenthoe, Do

Rangthan, Do Pata Chapsa, Do Dung Chen,

Dungchen Menchu

10. Tsirang Rigsum Pemai Dumra, Buddhist-Hindu

Temple, Lung Si Gang, Lung Si Gang,

Tsirang Namgyel Chholing Dratsang

11. Sarpang Gelephu Tshachu

12. Zhemgang Bhutan Bird Festival, Cyclothon, Buli Tsho

(lake), Duenmang Tshachu (Hot spring),

Bermo Botanical Garden, Khengrig

Namsum, Zhemgang Flora and Fauna,

Marchang

13. Trongsa Trongsa Dzong, Taa Dzong, Tsheringma

Drupchhu, Jigme Singye Wangchuck

National Park

14. Bumthang Choekhor, Ura, Chumey, and Tang,

numerous pilgrimage sites, temples and

monasteries


Page | 252

Eastern Region:

15. Mongar Yakgang Lhakhang, Aja Ney, Dramedtse

Lhakhang, Ruins of Zhonggar Dzong

16. Lhuentse Kishuthara- Vibrant Colored Silk Kira,

Singye Dzong, Takila-Guru Statue, Dungkar

Naktshang

17. Pema Gatshel Phrumshingla National Park, Royal Manas

National Park, Pema Gatshel Tshechu

Festival, bird-watching, Nganglam

18. Trashi Yangtse Pemaling Ney, Black-necked cranes,

Ludlow's Bhutan Glory, Gongza Ney,

Dechenphodrang Ney, Rigsum Gonpa,

Omba Ney, Gom Kora, Chorten Kora,

Pemaling Ney

19. Trashigang Trashigang Town, Rangjung Woesel

Choling Monastry, Sherubtse College,

Kanglung, Tiger's nest, Taktsang, Lorem

ipsum, Lorem ipsum dolor

20. Samdrup

Jongkhar

Mithun Breeding Farm, Dratshang, the

Zangdo Pelri, the local town and

Dewathang, bird-watching

Investment Opportunity Study 2020 Project Profile-Outdoor Sports Organiser

Page | 253

Project Title: Outdoor Sports Organiser


Page | 254

1. Services: Outdoor Sporting Organiser


Archery, Daykor, and Khuru are the popular traditional games in Bhutan. Amongst

these, Archery is the national sport. Besides, Bhutanese are fond of other games and

sports. Since the establishment of the Bhutan Olympic Committee (BOC) in 1983, the

development in the games and sports sector has gained momentum and has been

improving.

There are 15 Sports Associations that are currently affiliated to the BOC. The affiliated

associations include Badminton, Football, Basketball, Cricket, Volleyball, Boxing, Golf,

Weightlifting, Shooting, Table Tennis, Taekwondo, Tennis and Indigenous games and

sports. Karate, Judo, Skating, Rafting and Cycling are the new entrants.

The Bhutan Olympic Committee organises sporting events in coordination with the

associations and Yangphel, a private firm that organises archery and khuru

tournaments across the country. There are also many sporting events organised across

the country by various sports association, clubs and individuals.

1.2. The rationale of the Idea

Games and Sports are essential for a healthy life and to energise oneself. It has also

become a daily activity with most people aligning to one sport or the other. Its

popularity and engagement have empowered people and has led to the establishment

of sporting brands in the country, most notably, Nivia Sports and KELME. These two

brands supply and caters the market for games and essential sports kits.

The Bhutan Olympic Committee, Dzongkhag Sports Association and the BOC affiliated

associations are engaged in organising sporting events for decades. The fact that

Yangphel only organises Archery and Khuru tournaments in the country offers

opportunities for a private outdoor sports organiser to step in.


Page | 255

Today, the country boasts of sports infrastructure all over the country. It provides an

ideal avenue for the sports organiser to capitalise and start a business.

Today, there are nine volleyball clubs, two-division football clubs (A and B division),

and 20 sports association registered in the country. There are two private sports hubs

in Paro and Thimphu which facilitates football, basketball, volleyball and futsal.

The popular annual sporting events today include the Yangphel Open Archery

Tournament, Jigme Dorji Wangchuck Archery Championship, Bhutan Premier League,

Bhutan Volleyball Championship, Tour of the Dragon, Bhutan Super League, Bhutan

Basketball Championship, and Thimphu Women's League.

Apart from this, the new annual events such as the Chancellors Cup, Coca Cola

Championship, Winter Football Championship are other events that are organised by

Sherubtse College, Phuentsholing Sports Association and High-Quality United Football

Club.

1.3. Market Outlook

Recent trends show an increase in the number of sporting events organised in the

country and it attracts more spectators every year. It is also observed that most of the

sporting events are organised in Thimphu, Phuentsholing, Paro and Sarpang.

Project Dantak organises the annual mountain bike race in association with the Bhutan

Olympic Committee and participation is increasing every year. The Snowman Run –

branded as the most difficult marathon in the world - was held for the first time in


Page | 256

2019, and local saw four enthusiastic participants where the theme on Climate Change

was conveyed.

1.4. The Concept

Core Business Areas:

The core business of Outdoor Sports Organiser will involve the following scope:

i. Preparation of Timeline

ii. Sports coverage

iii. Advertisement and Media

Preparation of Timeline

The sports organiser should frame an annual timeline for the conduct of the sporting

events according to the feasibility and convenient of the people. The preparation of a

timeline can be organised in line with that of the annual festival that every district

conduct.

Since the organiser needs to have a coverage of the sports events all over the country,

there is a need for consultation and collaboration with various sports associations to

help the entrepreneur organise events in all 20 districts. The contribution from those

associations and clubs would further enhance his preparation.

Sports Coverage

The annual sports events in every district must be designed in a way that it meets the

expectation and need of the people there. The events such as Highland festival for

highlander and southern foothill festival are some of the tourism activities which met

expectations of the people. In line with it, the sport organiser should design and make

a similar sporting event which would suffice the needs of the region. The organiser can

plan annual national sporting events.


Page | 257

Advertisement and Media

In this era of the 21st Century, advertisement and media coverage plays an essential

role in promoting events. This emphasises the crucial position that it can play in

improving sporting events where the participants and spectators will be kept informed

on the events that are taking place. It is encouraged that the organiser has his separate

team to handle all aspects with the media including advertisement, media coverage

and company promotion.

1.5. Basic requirements

The organiser is expected to have the following infrastructure and logistics in place for

effective organisation of sporting events:

# Particular

1 A bus

2 A Pick-Up Truck

3 Referees

4 Event Manager

5 Event Executives

6 Photographers and Media Executives

7 Program Officer/Manager

8 Focal Person (Districts)

9 Sporting Kits

10 Sporting Equipment

11 Sound Systems/ Announcer

12 Ticketing Manager and Executives

13 Lawyer/ Conflict manager

14 Medical Team

1.6. Basic Financial Requirement

The minimum initial financial requirement is calculated to be Nu 3 million which could

be obtained as loan from banks.

1.7. Conclusion

Games and Sports are a big business all over the world. Bhutan is yet to economise

and capitalise from the sector. As such, an Outdoor Sporting Organiser has much

business scope. The company can also become a crucial player in the sports industry

in Bhutan given the fact that there is no one doing it today.

https://www.detailking.com/store-home/auto-detailing-equipment/vapor-steamers/

https://www.detailking.com/store-home/mobile-auto-detailing-equipment/pressure-washers-cold-water/

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https://www.detailking.com/store-home/auto-detailing-equipment/random-orbital-polishers/

Investment Opportunity Study 2020 Project Profile- Child Care Agency for

Children under 3 years

Page | 258

Project Title: Child Care Agency for




Page | 259

1. Services: Child Care Agency for Children under 3 years


Today, Bhutan has several Early Childhood Care and Development centres which

broadly fall into two age-group categories: 3 to 5 years, and 6 to 8 years, including

those run by private, non-governmental organisations and corporations. But there is

no child care agency for the children below 3 years of age and babysitters are not

easily available in Bhutan. The concept is to open a childcare agency for infants and

target working mothers of infants.

Children who used to grow up in the secure and warm laps of their grandmothers and

aunts are now confronted with an insecure and neglected environment. Therefore,

women need a safe place for their children in their absence. It has become necessary

to provide support to the infants in terms of quality, substitute care and other services

while the mothers are at work.

Early childhood is a time of remarkable brain development that lays the foundation for

later learning and any damage or impoverishment suffered at this stage is likely to be

irreparable. These are years of extreme vulnerability and tremendous potential during

which adequate protection, care and stimulation are essential to provide the

foundation for the child’s well-being and development.


• To provide day-care facilities for children (6 months to 3 years) of working

mothers in the community.

• To improve nutrition and health status of children.

• To promote physical, cognitive, social and emotional development (holistic

development) of children.

• To educate and empower parents /caregivers for better childcare.

1.3. Services

The agency will provide an integrated package for the following services:

• Day-care facilities including sleeping facilities.

• Early stimulation for children below 3 years

• Supplementary nutrition (to be locally sourced)

• Growth monitoring

• Health check-up and immunization.



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1.4. The Concept

A childcare agency to provide facility and services enabling parents to leave their

children while they are at work and where children are provided stimulating

environment for their holistic development. The agency is designed to provide group

care to children, usually up to 3 years of age, who need care, guidance and supervision

away from their home during the day.

1.4.1. Target Group

Children of 6 months to 3 years of working women in rural and urban areas who are

employed.

1.4.2. Number of Beneficiaries and Functionaries

Ideally, the number of children in the child care agency should not be more than 30. It

is important that adequately trained nurses and babysitters are there to provide day

care facilities and to supervise day-to-day functioning.

To maintain the standard of care, the nurses should have minimum qualifications and

requisite training at the time of appointment itself to enable them to understand and

cater to the children’s individual needs and developmental capabilities. Thus, the

agency should engage only such staff who have been trained.

1.5. Physical Infrastructure

1.5.1. Location/Environment

The child care agency should be located in a safe and secure place which is welcoming

and child friendly. It is ideal to have the crèche near the homes of children or near the

place of work of the parents (at a walkable distance i.e. ½ - 1 km) for the following

reasons:

• Mothers breastfeeding their babies can conveniently come to feed their babies.

• Parents can be contacted in case of emergencies.

• Easy to pick up, bring or send the child from home.

• If a child is absent for a long period of time, the agency worker can contact

parents to enquire about the child.

• The childcare environment should be similar to the child’s home atmosphere

and should also reflect the life style of the community.

1.5.2. Building / Space Specifications

The agency should preferably have separate breast-feeding room and rest room. Other

requirements could include:

• Nursing room for sick babies.

• Daily laundry services for washing of blankets, bed sheets, pillow covers etc.

• Physical environment should be reasonably suitable for children with special

needs.



Page | 261

• A childcare centre must have sufficient space to ensure that children can play,

rest, and learn without any hindrance and to ensure a safe and protective

environment for children.

• Care should be taken that there is sufficient space both indoors and outdoors

(preferably of equal size) at the centre.

• The space in the centre may be utilised in a multi-purpose manner, for example,

playing area can be converted into a make-shift sleeping place for children by

spreading out some durries and mats. This will facilitate organising activities for

the children to promote their development.

• In summers, the space outdoors should have a shaded area which is clean and

safe.

• In an ideal centre, the kitchen should be 25% of the covered area and toilet

should be 5% of the covered area.

• The centre should have at least two flats with 3BHK type rooms which would

have multiple rooms and congestion will be avoided for children to rest and

sleep, and a playing area.

• The rooms should have well colourful plastered walls having enough space for

display of pictorial material in each room of the centre.

1.5.3. Light and Ventilation Arrangements

The Centre should be clean, well-lighted with adequate ventilation. A fan should also

be installed at the centre where electricity supply is available. In case there is

irregular/no electricity supply; provision of installing an inverter may be made by the

agency.

1.6. Other Facilities

1.6.1. Drinking water and Sanitary Facilities

The Centre must have safe and regular drinking water facility. For this, the centre

should install a water filter/purifier which should be cleaned regularly. In places where

there is shortage of water, adequate arrangements for storage of water may be

arranged.

Child friendly toilets including for children with special needs should be available

keeping in view the safety and security of children at the centre. A clean, child-friendly

toilet with water facilities, soap, clean cloth/towel, garbage bin, wash basin/sink at low

level and an exhaust fan should be part of the centre. The centre should have a regular

supply of cleaning materials such as phenyl, disinfectants, brooms and swabs, dustbins,

garbage bins etc. Regular supervision may be done for improving the services and

maintaining hygienic conditions.



Page | 262

1.6.2. Food and Cooking Facilities

Food provided to the children must have adequate nutritional value. As the child stays

for 8 hours at the centre, three meals and one afternoon snack may be provided. Small

children may be provided from milk time to time. There should be variety in the food

that is given to the children every day. The food should be acceptable to both babies

and children.

For this, the nurse should know what are the nutritious preparations suitable for

children, and they must cook them with due care and cleanliness. The centre must have

adequate cooking facilities, cooking utensils, utensils to feed the children – which

should be cleaned regularly before and after use. The cooking area must be located at

the place which is away from the activity area of the children to avoid accidents. Basic

cooking equipment like gas cylinder, feeding equipment, storage bins and boxes must

be available and safely placed.

1.6.3. Growth Monitoring

Assessment of nutritional status of children using new WHO child growth standards is

recognized as an important tool. The growth of children should be regularly monitored

and recorded in separate growth charts for boys and girls, which should be maintained

by nurse. Children in the age group 6 months to 3 years may be weighed on a monthly

basis.

1.6.4. Health Check-up, Medicine & First Aid Kit

The health check-up of all children registered with the centre should be done at least

once every quarter by a registered medical practitioner/doctors. The centre must at all

times be equipped with basic First Aid & Medicine Kit containing paediatric medicines

for common ailments like fever, body ache, vomiting, cough and cold, diarrhoea, ear-

ache, eye infection, stomach ache, worm infestation etc. and band-aids/ bandages,

cotton wool and disinfectants for minor injuries. ORS packets, scissors, thermometer

and antiseptic ointment should also be part of the medicine kit.

1.6.5. Equipment and Play Material

Within the centre, there should be sleeping facilities for children. Equipment, furniture

and toys should be available which are age appropriate and help to create an

accessible and stimulating environment. The facilities shall include:

Type of Facility Material/Equipment

• Sleeping & rest durries, bed sheets, cradles/ cots, pillows, mats and mosquito

nets and basic furniture to meet the requirement of the children

• Breastfeeding Room

• Room to keep sick babies

• Live monitoring using CCTV

• Laundry services



Page | 263

• Play/Pre-school activities

• Out-door equipment and material like swings, slides, material for balancing

activities seesaw, sandpit etc.

• Pre School Education (PSE) Kit including games and toys for play activities –

doll, ball, ring, picture books, puppets and material for painting & colouring

• Cooking and Feeding, gas stove and cooking utensils like pressure cooker,

frying pans, feeding utensils like plates, bowls, spoons, tumblers etc.

• Audio-visual micro-processor-based equipment which can also be used for

interactive learning.

• Storage plastic/aluminium drums/bins/boxes for storing food material and pre-

school material

• The cradles and cots should be made of washable material to maintain

cleanliness.

1.7. Records and Registers

The enrolment forms of children duly filled in by the parents should be available with

nurses after the child is registered at the centre. In addition, the agency is required to

maintain the following basic records and registers, which should be available for

inspection at any time during the working hours of the childcare centres:

• Admission/Enrolment register for recording profile of children and their parents

including profession/income of both parents.

• Attendance registers of children.

• Attendance registers of functionaries.

• Health check-ups records including immunization of the child.

• Register for consumable and non-consumable items.

• Supplementary nutrition register for recording the food provided to the

children.

• The medical record of children to be shared with doctor.

• Mother’s meeting register.

• Visitors register.

• Register for User fee.

All records and registers should have specific entry for severely underweight children.

1.8. Training of Functionaries

The training would enable centre nurses to:

• Develop better understanding of critical issues of child survival, growth and

development and to orient them to integrated approach to child development.

• Emphasize on areas such as childcare, health care including first-aid.

• Inculcate basic personal hygienic habits in children.

• Coordinate with ministry of health/public health departments/Govt. & Private

hospitals for immunization, health related services.

• Develop skills for monitoring growth of children.



Page | 264

• Develop basic understanding of nutritional needs of children and methods of

cooking healthy, tasty and nutritious food.

• Develop basic understanding among the centre staff about the need and

importance of day care for children.

• Develop skills for organising various activities to promote all-round

development of children with adequate teaching/learning material.

• Develop skills in addressing the psycho-social care of young infants and

toddlers.

• Develop an appreciation about the need of parent’s participation and

community involvement in the centre program and skills to work with parent

and community.

After training the nurses and centre staff will be expected to perform following

functions:

• Organise stimulation activities for infants/children.

• Monitor growth of children and accordingly provide counselling to parents.

• Prepare nutritious food for children attending the centre.

• Keep the centre and its surroundings neat and clean.

• Motivate parents for immunization and coordinate with ministry of

health/public health departments/ Govt. & Private hospitals for health-related

activities.

• Provide proper arrangements for sleep and rest of children.

• Create awareness about better child care in the community through mothers’

meetings

• Maintain records and registers

• Ensure visits by doctors/health workers

1.9. Unique Selling Point

The services would have to leverage on the concept of ‘childcare agencies for infants

and target to working mothers of infants. This will require to provide a proper facility

which enables parents to leave their children while they are at work and where children

are provided stimulating environment for their holistic development.

▪ Existing Competitors

The number of Early Child hood care centres today are 163 but they don’t have the

facilities to care the children under 3 years of age. However, the concept of Child

Care Agency for Children under 3 Years is brand new in Bhutan.

▪ Expected Customer Number

Projections are made under conservative assumptions of a batch of about 30

children in a month.



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▪ Equipment Requirements

Following equipment are required for the proposed project is as follows with some

idea of price.

Table 1: Cost of Early Childhood Care Equipment and Furniture

# Particulars Qty

.

Rate

(Nu.)

Amoun

t (Nu.in

lacs)

1. Desk Top Computer and Printer (Data and Record keeping) 1 28000 0.28

2. Outdoor Playing Equipment’s 10000

0

1.00

3. Toys 75000 0.75

4. Kitchen Utensils 8000 0.08

5. Sleeping beds 12500

0

1.25

6. CCTV Camera and equipment such as DVR, Monitor

etc.

8 8500 0.68

7. First Aid Kit 2 1500 0.03

Total 4.07

Consumables Table 2: Cost of Consumables


Per day

Requirement

Per Child

Rate

Nu.

Total Amount

Per Annum (Nu. in Lacs)

1 Food Items, Milk,

Fuel, Pads etc.

30 120.00 1080000.00 10.80

Total 120.00 10.80

1.10. More Details:

More details on this business idea can be found from the following sources for better

understanding: Table 3: Further Reading Materials Web Portals Links

http://www.child-encyclopedia.com/child-care-early-childhood-education-and-

care/according-experts/impact-child-care-young-children-0-2

https://www.sba.gov/sites/default/files/files/pub_mp29.pdf

https://www.purdue.edu/hhs/hdfs/cff/wp-

content/uploads/past_projects/comm_childcare_proje.pdf

https://www.kccc.ie/Parents/Guide-to-Choosing-Childcare/Choosing-Childcare-

for-Infants-0-3-year-olds



Page | 266

https://www.zerotothree.org/early-development/ages-and-stages

http://www.womensownresource.org/rope/Bus_Plan_Sample/Child%20Day%20Car

e%20Services%20Business%20Plan.pdf

1.10.1. Other Requirements

Land: About 500-650 sq. ft. with three floors and outdoor playing area

Manpower of 5 people which includes;

o Manager - Female

o Female - Nurse

o Cook - Female

o Caretaker


The calculation is based on fairly conservative values of taking care of 30 children in a

month with fees Nu. 10,000 per month which will be Nu. 3.6 million per year.

Other assumptions include:

▪ Salary varies as per employee designation

▪ Overhead cost is 15% of the Salary Cost

▪ Variable cost is Nu. 1.1 million which includes consumables and miscellaneous

items.

▪ The BEP in months is 9 months and 22 units.


Particulars Description Amount in Nu.

Establishment Cost 477,000

Operation Cost 2,140,000


Salaries (5 people) 900,000

Overhead Cots (15%) including utility

bills

135,000

Variable Costs 1,105,000

Consumables 1,080,000

Misc. 25,000


Generation)

Intake of Take care services 30, rate

@10000per children

3,600,000

Break Even Units

(Production)

22.00 Kids

Break Even Months 9.00 Months

Annual Profit Before Tax 983,000

Annual Profit After Tax 688,100



Page | 267

1.12. Conclusion

The development of new child care centres for children below 3 years will help in

development and early caring. Children with access to centre-based programmes are

more active than children without access to these programmes. Early Childhood Care

is recommended as cottage industry and can be operated with optimum infrastructure.

The project cost for 30 children per month comes to about Nu. 477,000. An average

feeding expenses per child is about Nu. 120 considering monthly fees of Nu. 10,000

per child. The cost of salary for 5 staff is about Nu. 900,000 per annum.

Investment Opportunity Study 2020 Project Profile- Branding and Marketing

Intermediary Services Provider Company

Page | 268

Project Title: Branding and Marketing Intermediary

Services Provider Company



Page | 269

1. Branding and Marketing Intermediary Services Provider

Company


From the past two decades, the Government of Bhutan has focused much to develop

cottage and small Industries to propel economic development and employment. The

efforts are converting in results and entrepreneurs and new start-ups are exploring the

business opportunities and contributing their expertise in manufacturing and service

sectors.

Bhutan has some Medium and Large industries in cement, steel, and ferroalloy etc. but

cottage and small industries account for more than 95% of the total number of

industries. These CSI are playing a vital role in the industrialisation and diversification

of the economy. As per the Industrial statics1 of Bhutan around 19,000 CSIs units are

licensed. Several new cottage and small Industry are also coming up. These small

cottage industries are producing dairy products, engineering goods, handloom and

many other useful items.

Over the period, specialist consulting advice services are being sought by these small

cottage industries in Bhutan under the segment of marketing and brand promotion.

This requirement and need opened the opportunity for a number of specialist

organisation to draw on their specialist knowledge base and resource to meet the

demand for specialist consulting services in this segment.


Bhutanese entrepreneurs are doing their best but the tough geographical terrain and

segregated marketing is a big hurdle. Support mechanism is weak, entrepreneurs are

lacking in marking and branding and also facing reluctance to supply in export market

even to India. CSIs of Bhutan can’t afford to have a dedicated team for branding and

marketing activities including web presence.

They do not know how to go about quality management systems. People are lost on

how to increase their web presence. They don’t know how to make attractive

packaging solutions? And many similar questions are unanswered including: What is

market demand? How to get licenses required for export to India and other countries?

1 CSI annual report published by the Department of Cottage and Small Industry (DCSI) in Bhutan).



Page | 270

How could one benefit from government schemes? What are the export formalities?

And many more.

As example is provided in an article published on dailybhutan.com2 where a cottage

unit known as “Mountain Mist Soap Unit” is manufacturing natural herbal bathing

soap. It is operated by Chimi Lhamo since 2014 supplying products to five

Dzongkhags. She confesses that the challenges facing her business is that she is not

financially stable and marketing is very difficult because people do not trust a new

product easily.

Apart from the above example, a potential foreign investor needs a depth study on

various aspects about the customer needs, market scenario, feasibilities, approval of

government licenses, economic and social assessments etc. Companies also need

helping hands to understand the various schemes, fund flow mechanism and

monitoring to budget and accounting process.

There are about 56 licenses consultancy companies operational in Bhutan providing

support to industries and working in different segments as civil infrastructure,

architectural design, energy and hydro power and audit consultancy. Most of them

are providing tax audit, tax accounting, due diligence, compliance audit and internal

audit services.

In such a scenario, there is a good scope for a consultancy company to help create a

detailed marketing plan, determine marketing message, and identify the

appropriate marketing mix to get the message out to the target market, and also be

involved in implementing the actual product marketing developed.

The proposed Branding and Marketing Intermediary Services Provider Company will

also monitor results and tweak campaigns as they go to ensure that cottage units

get the best results from their marketing efforts3.

2 https://dailybhutan.com/article/home-made-mountain-mist-soaps-well-received-in-bhutan

3 https://dailybhutan.com/article/two-made-in-bhutan-products-to-hit-the-market-soon-also-

eyeing-overseas-foray - (Source: Future Brand)

https://www.thebalancesmb.com/what-is-a-marketing-mix-2295520



Page | 271

1.3. Market Outlook International

A study by Assocham4 forecasts the consulting sector in India to grow at an annual

rate of 30% yearly. In 2010, the consulting industry in India, reportedly stood at Rs

1,700 million. As of now, the business is valued at around INR 1,800 million. It is

propelled by increasing demand for consultancy services, both for domestic and

foreign firms. Presently, the consulting industry in India is dominated in the areas of

business development, engineering, designing, financing, auditing, and hospitality.

McKinsey & Company, IKON, INCO, Boston Consulting Group (BCG), A.T. Kearney, Bain

& Company, Booz & Co, etc. are the prominent names in Branding and Marketing

Consultancy companies in India.

A list of world’s best marketing and branding companies is available on

www.nogood.io5 among which the top names are Equibrand, Bain & Company, Berma

& Co, Seedx, Brolik, Bellwether (Dubai), Blue Marlin (UK) Brandimage, (USA).

1.4. The Concept

While conducting the Bhutan Investment Opportunity Study, 2020, some notable

issues from entrepreneurs included that they are facing problems to complete

compliances of export business, getting ISO certifications, to know the market

response etc. After secondary level analysis, it is inferred that there is a requirement of

a consultancy company that dedicatedly works for branding and marketing of

products produced by cottage and small-scale industries. It is suggested that the

business be labelled “Branding and Marketing Intermediary Services Provider

Company, Bhutan”.

Branding and Marketing Intermediary Services Provider Company could be an advisory

service provider company focussed to help organisations on providing special

trainings to assist in an objective and independent manner, identify management

problems, analysis such problems and recommend solutions to these problems and

help in the implementation of solutions.

Scope of work:

4 https://www.slideshare.net/MunishGoyal1/consultancy-management-business-

scenario-in-india and

5 https://nogood.io/2020/05/15/marketing-consulting-firms/

ASSOCHAM, The Associated Chambers of Commerce of India; Oldest, Leading,

largest and Apex Chamber of Commerce and Industry of India.



Page | 272

• Clear understanding of industry, customers and competitors.

• Identify market opportunities to drive revenue growth.

• Make better decisions to market expansion or product development.

• Deep insights and reliable data to develop marketing strategies.

• Minimize risks of investment in new or existing business.

1.5. Core Business Areas

• Supply specialized skills and expertise that a company lacks.

• Provide an external viewpoint to internal challenges.

• Prompt a new perspective on customers or marketing strategies.

• Allow a business to focus on product development and overall operations.

• Identify the new market opportunities and make better business decisions.

• Build a powerful brand.

• Ensure business growth through data driven marketing strategies and effective

implementation.

• Understand customers better and identify the most profitable customers to

target.

• Give customers a compelling reason to buy your products.

• Create differentiation and get recognized in the market.

• Set a price that is affordable to customers and profitable to you and channels.

• Create awareness and persuade customers to buy your products.

• Reach customers more effectively and efficiently.

• Improve the performance of the sales team to increase the conversion.

• Build and deploy an efficient team for the effective implementation of strategy.

• Get better results of recommended strategies through effective

implementation.

• Recognized as an export brand and increase the revenue potential.

• Discover actionable insights to optimize the marketing performance.

• Consultancy for implementation of quality management system

(ISO – Environment Management System HACCP, HAALA, GMP and Others).

• Advisable services fiscal credit service.

1.6. Business Structure & Required Resources

The proposed advisory company will work under service category and it needs higher

working capital instead of capital investment. Arrangement of human resources and

experts are the main cost sharing head of working capital. A fully furnished office of

600 sq. ft. carpet area with modern office amenities is required to operate this business.

It needs laptops, online survey tools, IOS survey equipment, cameras & stuffs.

The initial need of human resources is as follows:



Page | 273

Table_ 1: Required Experts and Human Resources

Proposed Experts (12) Qualification

Head Consultant – Brand building and

Marketing (1)

MBA – Marketing and Finance with

10 years working experience.

Web- SEO Manager (1) Graduate in IT and Certification in

SEO

QMS Expert (1) Engineering Graduate and Certified

Auditor

Product Marketing Expert (1) MBA – Marketing Management

Tele Networking (1) Expertise in mass communication

Survey Manager (1) Post Graduate

Enumerators (2) Graduate

Data Compiler and Documentation (1) Graduate and Certification course in

Microsoft office tools

Reception (1) Female – Graduate

Chauffeur (2) Literate with valid Driving Licenses

The proposed location for this business is “Thimphu Tech Park and Incubation Centre,

Babesa, Thimphu” while it could be also be located in other places if Tech Park is not

feasible. This company will also make a consortium with website developer companies,

printing press, packaging units etc. to provide products development, interpretation,

and interaction of decision-oriented information and marketing process with

integrated manner to provide quality services ensuring integrity and confidentiality.


Revenue collections under the above services are based on a fee structure

calculated on a case-to-case basis involving expert’s man days, human resource

and infrastructure. Some services are sale in package services i.e. search engine

optimization (SEO) work, telecommunication marketing services- bulk short

message service, social networking app message and email services etc.

The calculation is based on following assumption

• Cost of services fairly estimated as of Nu. 500,000 per month.

• Salary of Nu. 50,000 for manager and 35,000 for executives and Nu.15,000 for

support staff. It is estimated that around 12 experts are required to start the

business effectively.

• Overhead cost is estimated at 20% of the salary cost.

The basic financial calculation is as follows:



Page | 274

Table_ 2: Basic Financial Calculation and Financial Projections

Particulars Details Nu.




Overhead Cots (20%) including utilities

bills

720,000

Variable Costs NA

Cannot be determined as it will depend on

the type of service

Profit Margin Per month revenue collection of Nu.5 Lacs

per month

6,000,000

Break Even Months 12.00



Market Bhutan Industrial as service sectors,

International investors, New Entrepreneurs,

Startup companies etc.

Suggested Management

System


1.8. Conclusion

The proposed “branding and marketing intermediary services” provider company

will provide high value market research and advisory services and support to

customers to identify new market opportunities, growth engines and innovative

ways to capture the market share. It will work in close collaboration with government

organisations, departments, international agencies, non-governmental and civil

society organisations.

The agency will arrange a team of experts who will be well familiar with international

business (Export & Import), quality management standards, Bhutanese financial and

economic scenarios and business environment, industry knowledge for private

sector development, public private partnerships and foreign direct investment in

Bhutan. The company will have an efficient and professional in-house qualified

marketing team.

The proposed agency will provide services that create value in the mind of the

customer, provide product-to-product marketing research to support marketing

activities, and the statistical interpretation of data into information. Further, this

information will be used to plan marketing activities, gauge the nature of a firm’s



Page | 275

marketing environment, and attain information from suppliers including overall

product development and sale.

Government of Bhutan is keen to provide support to CSI industries through its

fiscal assistance schemes, trainings and implementation of sustainable Cottage and

Small Industry Policy, 2019. Common people, new entrepreneurs, existing industries,

national as well as international organisations and prospective investors need local

support to implement their business scope of work. Thus, opening of a Branding

and Marketing Intermediary Services Provider Company is a viable business

opportunity under small scale service segment.

References

More details on this business idea can be found from the following sources and videos

for better understanding:

• http://blog.meritusindia.com/2012/07/12/emerging-trends-in-indian-

management-consulting-2/ Nature Thoughts & Symmetry

• https://www.statista.com/statistics/527240/gross-domestic-product-gdp-in-

bhutan/#:~:text=GDP%20is%20an%20important%20indicator,around%207.94

%20billion%20international%20dollars.

https://www.statista.com/statistics/527240/gross-domestic-product-gdp-in-bhutan/#:~:text=GDP%20is%20an%20important%20indicator,around%207.94%20billion%20international%20dollars.



Industrial Development Division

Department of Industry

Ministry of Economic Affairs

Tel: 322295/325112/330370

Website: www.moea.gov.bt

http://www.moea.gov.bt/

investment opportunity study

Documents