Paper Carry Bag Manufacturing Business - Project Report, Machine & Process

Introduction

Paper bags are the important product used in packaging of retail items and it is used in every segment of retail market.

Although plastic bags are cost effective packaging material but it has become a major cause of environment pollution. Many State Governments have banned the polythene bags and it created a huge demand for eco-friendly packaging alternatives. 

In this post you will understand each and every aspect of paper bag business with all the information of raw material, uses and market potential, machinery, production process, project report, suppliers etc.

Use/Application

Paper bag is a common packaging product and used everywhere in retail market:

  • Textile Shops
  • Grocery Shops
  • Fancy Shops
  • Book Shops
  • Sweet Shops
  • Meat / Fish Shops
  • Vegetable Shops
  • Bakeries
  • Shoe / Chappal Shops
  • Stationery Shops
  • Hardware Shops
  • All departmental shops & consumer shops

Market Potential / SWOT Analysis

Strengths and Opportunities

  1. Polythene bags are threat to the environment and many State Governments in India have imposed ban on plastic carry bags.
  2. Paper carry bags are bio-degradable packaging products therefore it is considered as eco-friendly alternative to plastic carry bags.
  3. The growth of consumption sector in India and the increasing ban on plastic packaging material will result in high growth of paper packaging products.
  4. There is a high margin opportunity in the designer and luxury segment bag segment. These paper bags are used for packing of high value and branded items.

Weakness and Threats

  1. Cost of the paper carry bag is higher as compared to other alternatives.
  2. Paper carry bags are not waterproof and it’s difficult to reuse paper bags.

Raw Material/Consumption/Packaging Material

  • Kraft Paper ( 100-120 GSM)
  • Glue
  • Ink
  • Carton Boxes

Quality and types of paper bags are based upon the types of paper and volume/weight of the paper. Accordingly different types of papers are used based on GSM Criteria (Grams per Square Meter)

Manufacturing Methods

Although there are different methods of paper carry bag manufacturing but the fully automatic process is the most cost effective and profitable method:

Manual Method – In this the side and bottom pasting of the carry bag is done by the labour himself by applying the glue and pasting it.

Semi Automatic - In this all the pasting of the bag is done by the machine, where in only bottom folding to be done by the labour

Fully Automatic- In this the complete process of making a paper carry bag is done by the machine.

Step by Step Manufacturing Process

Based on budget and production requirement, you can choose fully automatic or semi automatic method. Following steps are involved in manufacturing process:

  • Cutting of Paper in proper size
  • Printing of paper
  • Making of Bags by Folding, Pasting and Shearing
  • Punching
  • Eyelet and Lace Fitting

Machinery Used in the Manufacturing Process

  • Automatic paper bag making machine.
  • Creezing machine.
  • Cutting machine.
  • tools and equipments.

Business Registrations and STATUTORY/ GOVERNMENT APPROVALS

The paper bag manufacturing business does not require any specific statutory requirement for paper conversion industry. However it may requires following types of registrations and statutory approvals depends upon the Rules of the particular law:

  1. GST Registration
  2. MSME Registration
  3. Shop and Establishment License
  4. Fire and Safety Approval
  5. Pollution Control Board Clearance
  6. ESI, PF and Labour laws

Training/Courses

To understand the packaging industry, courses are conducted by Indian Institute of Packaging, Mumbai and other similar institutes.

For technical aspects, the founder can get training from machinery suppliers and online material available on internet.

One can understand the important aspects of this business by visiting existing paper packaging factories and related businesses.

In starting, the founder can also enter into the partnership with existing businesses to get the experience of every crucial area of the paper bag business. 

Project Report - Paper Carry Bag and Pouches

COST OF PROJECT

Sr. No.

Particulars   Rs. In lakhs

1

Land and Building   32.00

2

Plant and Machinery   14.65

3

Miscellaneous Assets

 

3.05

4

P & P Expenses

 

2.15

5

Contingencies @ 10% on land and building and plant and machinery

 

4.67

6

Working capital margin

 

91.64

   

Total

148.16

MEANS OF FINANCE

Sr. No.

Particulars

Rs. (lakhs)

1

Promoter's contribution

44.448

2

Bank Finance

103.712

   

148.16

WORKING CAPITAL CALCULATION

Sr. No.

Particulars

Rs. lakhs

Stock Period days

Promoter Margin

Margin Amt.

Bank Finance

1

Salaries and wages

0.89

30

1

0.89

-

2

Raw material and packaging material

96.99

30

0.5

48.495

48.495

3

Utilities

0.48

30

0.5

0.24

0.24

4

Debtors

105.03

30

0.4

42.012

63.018

 

Total

203.39

   

91.637

 

LIST OF MACHINERY REQUIREDAND THEIR MANUFACTURERS

Sr. No.

Particulars

Rs. lakhs

1

Single Slit Slitting unit to size the paper from big width to small width to produce small bags with 3 HP Motor

8.5

2

Double Color Flexo printing unit with attachment

3

3

3 HP Motor for Main drive

0.15

4

Flat type size plates and Sachet type size plates

0.45

5

Gear Wheels

0.32

6

Eye letting Machine

0.25

7

Bag cutting machine

1.80

8

Stereo rollers

0.18

 

Total

14.65

LIST OF MACHINERY REQUIREDAND THEIR MANUFACTURERS

Sr. No.

Particulars

Year 1

Year 2

Year 3

Year 4

Year 5

(A)

Sales Realization perannum

88225284

100828896

113432508

113432508

113432508

(B)

Cost of production

         
             

1

Raw material per annum

81471600

93110400

104749200

104749200

104749200

2

Utilities

409500

468000

526500

526500

526500

3

Salaries

1062000

1115100

1168200

1168200

1168200

4

Repairs and maintenance

225000

240000

255000

270000

285000

5

Selling expenses (3%on sales value)

2646758.52

3024866.88

3402975.24

3402975.24

3402975.24

6

Administrative Expenses (other expenses)

375000

390000

405000

420000

435000

             
 

Total

86189858.52

98348366.88

110506875.2

110536875.2

110566875.2

             
             

(C)

Profit before interest & depreciation

2035425.48

2480529.12

2925632.76

2895632.76

2865632.76

             
 

depreciation

699750

699750

699750

699750

699750

 

Profit Before term loan and tax

1335675.48

1780779.12

2225882.76

2195882.76

2165882.76

 

Interest on term loan (11%)

1083790.4

912665.6

684499.2

456332.8

228166.4

 

Profit before tax

251885.08

868113.52

1541383.56

1739549.96

1937716.36

 

Tax (30%)

75565.524

260434.056

462415.068

521864.988

581314.908

 

Total Profit

176319.556

607679.464

1078968.492

1217684.972

1356401.452