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Private Placement Investment Planning is a principle of the activity of any enterprise. The business - plan needs to be used with a view of perfection of economic efficiency decisions calculation methods and commercial expediency of investments in designing and construction of objects and town-planning complexes. The Business - plan acts as an objective estimation of the firm activity and necessary tool of the investment decisions according to the market requirements. Basic aspects of the commercial enterprise are characterized in it, problems which the firm will face are analyzed, and ways of their decision are determined. Hence, business - plan is a search, scientific, research and design work. It is possible to call business - plan a basis of management not only of the commercial project, but also of the enterprise itself.
Due to business-plan management has an opportunity to look at the own enterprise as from the outside). The process of business- plan development including the detailed analysis of economic and organizational questions, forces to be mobilized. The purpose of business -the plan may be the reception of the credit, or attraction of investments, definition of strategic and tactical reference points of the firm etc. Present business plan is for the Private Placement Investment.
Public Corporation "Cron" is going to manufacture electrotechnical engineering, namely welding transformers. Overall objective of the present business is the reception of the profit due to the manufacture and realizations of competitive production. Realization of business - plan will allow to solve the following problems: " To satisfy needs of the market for the given electrotechnical engineering. " To create new sources of reception of the profit for the account enterprises diversification. " To provide congestion of capacities The purpose of the present business - plan is the analysis of prospective production and a substantiation of decisions of strategic planning of Public Corporation "Cron." Necessary investments for the organization of a batch production of the electric engineering, the specified kind make 709. 1 thousand dollars, including means of the investor at a rate of 222. 2 thousand dollars. Annual volume after getting the planned sales volume will make 611. 1 thousand dollars. The investment credit is preferential (the interest rate makes 11. 7 % annual).
The term of its repayment at the work of the enterprise on the planned diagram is 25 months. Source of repayment of the credit and interests is the profit from the manufacture of the specified engineering, and repayment of interests on the credit begins in 6 months after the beginning of investment. Participation of the investor in the authorized capital stock of the enterprise and reception of interests will allow him to receive by 2008 the income equal to 274. 1 thousand dollars. Maintenance of the borrower under the given credit is the pledge of property of the enterprise and the profit received from all the directions of financial and economic activity. The carried out marketing researches on offered production testify of the existence of significant volume of demand for welding transformers. Potential consumers are civil engineering firms and physical persons.
Demand for given production is stable, as welding is the major component of technological process of construction. The marketing researches which were carried out on this market, testify that the market is oligopoly, and at an existing price level and qualitative parameters of production of Limited Society "Cron" may become the leading enterprise in this area. Prospects of development of the market of electrotechnical products allow to predict increase of sales volumes and the appropriate loading of capacities of the enterprise. The necessary sizes of investments are connected to the development of new manufacture and new technologies. In this connection realization of reconstruction and modernization of some manufactures is required. For this purpose the following is necessary: " Equipment purchasing; " building and assembly works connected to the installation and dismantling of the equipment; " Necessary construction work; " Technological preparation of manufacture; The plan of marketing actions includes a complex of actions, including a commodity, price, sales and service policy and strategy.
The commodity policy of Public Corporation "Cron" includes maintenance of wide assortment of various offered transformers models updating and flexible adaptation to market conditions. Commodity strategy of the enterprise provides: " Creation of various updating of the given electric engineering on the limited set of base models; " account of requirements of the consumer to the characteristics of offered engineering; " Various complete set during the delivery; " Constant improvement of electrotechnical parameters and operational characteristics. The price policy on electric engineering is coordinated to overall aims of the enterprise and includes formation of the briefly and long-term objectives on the basis of production costs and demand for production, and also the prices of competitors. Price strategy should be based on a commodity policy and includes: " Use of the flexible prices mechanism on updating and complete sets of electric engineering; " High quality at the prices lower than foreign analogues; " System engineering of privileges and discounts depending on conditions of delivery. In a basis of strategy of pricing there is a the method of average expenses which provides an establishment of a market price proceeding from production costs at loading capacities (80 %) and the predicted profit level, comparable with an average discount rate. The marketing policy of Open Society "Crone" is focused on formation and stimulation of demand for production.
Marketing strategy consists in: " Creation and regulation of commercial connections; " Advertising activity in various forms; " Participation in exhibitions and fairs and presentation of demonstration samples. The service policy of the enterprise includes the service before and after selling Service before the selling is focused on constant studying, the analysis and the account of requirements of customers with the purpose of products perfection. Service after the selling provides a complex of works on guarantee (repair, delivery of spare parts, training of the personnel etc. ). The warranty period for this engineering is one year that exceeds the appropriate world standards. Potential risks of Public Corporation "Cron" are represented by industrial risks, commercial risks, financial risks and the risks connected to force-major circumstances. Industrial risks are connected to various infringements in industrial process or during deliveries of raw material, materials and completing products.
Measures of decrease of industrial risk are the effective control above a course of production and strengthening of influence on suppliers by their duplication. Commercial risks are connected to the realization of production in the commodity market (reduction of the sizes and market capacities, decrease of solvent demand, occurrence of new competitors etc. ) Measures on reduction of commercial risk are: " Regular studying of market conditions; " Creation of a dealer network " Rational price policy " Creation of a network of service " Advertising etc. Financial risks are caused by inflationary processes, universal non-payments, fluctuations of a dollars exchange rate etc. They may be reduced by creation of the system of financial management at the enterprise, work with dealers and consumers on conditions of the advance payment etc. The risks connected to force-major circumstances, are the risks caused by unforeseen circumstances (nature, change of political rate of the country, strike etc. ). The measure of their reduction is working with the enterprises with a sufficient stock of financial durability serves.
The purpose of development of the present financial plan is the definition of the production efficiency of the given kinds of electric engineering. The general need for investments which is determined in item 2. 6 makes 709. 1 thousand dollars, including in 2005 - 271. 27 thousand dollars. Sources of financing are: " Means of the investor in the amount of 222. 22 thousand dollars with financing in second quarter of 2005; " Own means of the enterprise in a total sum of 486. 89 dollars, including - 49. 05 thousand dollars in 2005. (for the account of re-investment parts of the profit and depreciation charges). The plan of incomes and charges and calculation of net profit is submitted in tab. 1.
Manufacture of electric engineering will be unprofitable within one quarter from the moment of investment. Since 2 quarters, reception of the profit at a rate of 19 % from a sales volume is planned. In calculations the taxation is taken into account. Table 1 Net income Income taxes
Gross profit
Taxes included in net cost
Expenses on the sold products
sale proceeds
item
- 12, 4167
1, 583333
- 10, 8333
1, 572222
60, 69444
47, 36111
2 quarter.
2005
19, 91667
3, 583333
25, 16667
3, 527778
91, 16667
116, 3333
3.
47, 08333
5, 083333
52, 16667
4, 977778
114, 0278
166, 1944
4.
32, 91667
5, 166667
38, 08333
5, 588889
152, 2778
190, 3611
1.
2006
44, 75
6, 861111
51, 61111
7, 572222
206, 4167
258, 0278
2.
75, 80556
10, 61111
81, 19444
11, 93333
324, 75
405, 9444
3.
75, 80556
11, 36111
87, 16667
12, 80556
348, 6111
435, 7778
4
161, 4722
22, 05556
183, 5278
26, 65
734, 0556
917, 6111
1 six months
2007
242, 6667
32, 61111
275, 2778
39, 97222
1101, 111
1376, 389
2 six months
625, 1667
78, 91667
704, 1111
101, 3333
2814, 222
3520, 5
year
2008 The balance of a monetary outlay and receipts is submitted in tab. 2 where the estimation of receipt and an expenditure of money resources in dynamics is made.
Expenses item,
2005
2006
2007.
2008
2 quarter
3
4
1
2
3
4
1 six months
2 six months
1
2
3
4
5
6
7
8
9
10
11
Cash at the beginning of the period
0, 00
- 8, 39
- 2, 72
4, 94
0, 39
0, 56
0, 17
0, 39
1, 17
87, 44
Total cash inflow
270, 06
119, 86
171, 22
195, 78
263, 44
411, 36
441, 19
928, 42
1387, 22
3542, 17
Including sale proceeds
49, 86
116, 33
166, 19
190, 36
258, 03
405, 94
435, 78
917, 58
1375, 28
3520, 50
Investment credit
222, 22
0, 00
0, 00
0, 00
0, 00
0, 00
0, 00
0, 00
0, 00
0, 00
Amortization
3, 53
3, 53
5, 03
5, 42
5, 42
5, 42
5, 42
10, 83
10, 83
21, 67
Total cash outflow
284, 00
114, 19
163, 56
200, 33
263, 28
411, 75
440, 97
927, 64
1300, 94
3088, 94
Including process costs
60, 69
91, 17
114, 03
152, 28
206, 42
324, 75
348, 61
734, 06
1101, 11
316, 42
Investment expenses
122, 00
0, 00
0, 00
0, 00
0, 00
0, 00
0, 00
0, 00
0, 00
0, 00
Equipment purchase
57, 17
0, 00
0, 00
0, 00
0, 00
0, 00
0, 00
0, 00
0, 00
0, 00
Reconstruction
60, 78
0, 00
0, 00
0, 00
0, 00
0, 00
0, 00
0, 00
0, 00
0, 00
Other investment expenses
4, 06
0, 00
0, 00
0, 00
0, 00
0, 00
0, 00
0, 00
0, 00
0, 00
Working capital Replenishment
99, 72
19, 44
27, 78
30, 69
44, 44
33, 33
277, 78
69, 44
97, 22
125, 00
Investment credit interests
0, 00
0, 00
16, 67
5, 56
5, 56
5, 56
4, 61
6, 81
3, 33
0, 00
Investment credit repayment
0, 00
0, 00
0, 00
0, 00
0, 00
37, 50
48, 61
69, 44
66, 67
0, 00
Investors guaranteed income
0, 00
0, 00
0, 00
6, 64
0, 00
0, 00
0, 00
25, 83
0, 00
68, 61
Income taxes
1, 58
3, 58
5, 08
5, 17
6, 86
10, 61
11, 36
7, 61
38, 17
78, 92
Cash at the end of the period
- 8, 39
- 2, 72
4, 94
0, 39
0, 56
0, 17
0, 39
1, 17
87, 44
540, 67 Calculation of the need for a working capital is submitted in tab. 3. Table 3 Working capital elements
Years
2005
2006
2007
2008
Total current assets
199, 8611
433, 3056
778, 0833
1207, 694
Raw materials
8, 805556
34, 83333
62, 83333
100, 4722
Manufactured Products
11, 08333
43
76, 44444
117, 3333
Accounts receivable
132, 9444
258, 0278
458, 7778
704, 1111
Funds
40, 13889
71, 66667
134, 1667
215, 3611
goods in process,
6, 888889
25, 77778
45, 86111
70, 41667
Total current liabilities
52, 91667
150, 1111
328, 2222
632, 8333
account payable,
52, 91667
150, 1111
328, 2222
632, 8333
Total working capital-
146, 9444
283, 1944
449, 8611
574, 8611
Working capital change
146, 9444
136, 25
166, 6667
125
turnover ratio
2, 26
4, 56
5, 1
6, 12 Thus calculation is made proceeding from planned specifications of turnaround means on elements in view of turnover acceleration of turnaround means. The term of recoupment of the project is 5. 5 months from the beginning of investment at the rate of 11. 7 %. for the credit Thus the investor will receive the income as interests in the sum of 48. 8 thousand dollars and the guaranteed income as dividends in the sum of 101. 08 thousand dollars. Besides, the participation in the profit of 2008 will allow to receive 125 thousand dollars. At discounting this income by the interest rate of 11. 7 % annual, the investor will receive the income of 149. 2 thousand dollars (in a nominal estimation of 274. 2 thousand dollars).
Thus, the profit on realization of welding transformers will allow to carry out financing of development of manufacture, repayment of the credit and interests, and also payment of dividends to all the participants of the project, since 2007 (including the investor, since 2005). The diagram of repayment of the investment credit and interests is specified in the tab. 4. Table 4 Item
2005
2006
2007
2008.
Total
2 q.
3 q.
4 q
1 q.
2 q
3 q.
4 q.
1 six months
2 six months
Credit interests
0, 00
0, 00
16, 67
5, 56
5, 56
5, 56
4, 61
6, 81
3, 33
0, 00
38, 14
Repayment of the main debt
0, 00
0, 00
0, 00
0, 00
0, 00
37, 50
48, 61
69, 44
66, 67
0, 00
222, 22
Total
0, 00
0, 00
16, 67
5, 56
5, 56
43, 06
53, 22
76, 25
70, 00
0, 00
270, 31 The parameter of credit covering of investments makes 33 %, accordingly parameter of self-financing of investments is 69 %.
The factor of a covering of financial and working costs makes 102 %. Thus, the full covering of financial and operational needs is provided. Calculation of parameters of break-even and financial durability of Public Corporation Crone activity allows to determine volume of manufacture at which enterprise does not carry losses and does not receive the profit. Calculation of break-even and financial durability is provided in tab. 5 and illustrated with the circuit 1. Table 5 Item
2005.
2008
Volume of sales, thousand dollars.
402, 78
4652, 78
Conditionally constant expenses, thousand dollars
113, 53
1028, 56
Weight of conditionally constant expenses in sales volume, %
21, 00
21, 33
Break-even point, thousand dollars.
182, 50
1669, 72
Financial durability reserve, thousand dollars.
220, 28
2983, 06 Thus, the point of break-even (a threshold of profitability) in 2005 makes 182. 5 thousand dollars; in 2008 - 1669. 72 thousand dollars (i. e.
accordingly the volume of proceeds should make not less than specified sizes). The stock of financial durability makes 220. 28 thousand dollars in 2005 and 2983. 6 thousand dollars in 2002. Having considered the purposes and essence of planning, and also various aspects of practice of drawing up of business - plans, it is possible to draw a conclusion, that this plan is an integral part of the inside firm planning, one of the major documents developed in the enterprise. It is the effective tool of management that helps the enterprise to define prospects of growth of the affair, to supervise the current situation
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