Paper Cup Manufacturing Business - Project Report, Machine, Process

Product - Paper Cup (Disposable Food Service)

Target Market – Railways, Tea and Coffee Shops, Restaurants, Hotels, Domestic Application etc.

Market Potential – Daily Use Product, Treated as Marketing Medium, Eco-friendly Product, Increasing Ban on Plastic products

Raw Material – Poly coated paper, Printing Chemicals & Dyes

Minimum Investment – Rs. 10-15 Lakh

Starting a Paper Cup Business

Paper cups are common disposable products made out of paper and it is used everywhere for ready to drink products. It is a cost effective and eco friendly product for daily uses. The cups are made from food grade paper to ensure hygiene and it can be use to serve hot and cold liquid or drinks.

The Paper Cup Manufacturing Business is very easy to start with least resources. The paper cup manufacturing process is fully automatic and it requires minimum human labor.

Use/Application

Paper cup is a common disposable product of daily consumption and necessity. It is widely used to serve all sorts of beverages and other food products like tea, coffee, cold drinks or energy drinks, lassi, juice, sweet corn, sweet delicacies, ice cream etc.:-

  • Railway and Public Transports
  • Restaurants/Food Chains
  • Organized Events
  • Tea & Coffee shops
  • Food canteens
  • Educational institutions
  • Supermarkets
  • Homes
  • Companies
  • Hotels

Market Potential

  • India is the fastest growing major economy in the world and consumption demand is the main driver of this growth.
  • In India, Paper cups are used everywhere to serve drinks and other food items as it is cost-effective, easy to use, hygienic and eco-friendly product.
  • As per an estimate the demand of paper cups are growing by 8% annually. Increasing demand in urban and rural market, new food chains, acceptability as quality, easy to use and eco-friendly product are the main factors of the growth
  • Paper cups are hygienic and bio-degradable product and it is treated as a good alternative to plastic products.
  • There is huge domestic and international market for paper cup and marketing will not be the problem. Paper cups are most preferred beverage/food serving disposable products as the consumers are aware of the advantages.

Paper Cups as “Marketing Medium”

Today, the paper cups are new advertisement medium for marketing companies. Many marketing companies are tying up with paper cup manufacturers to provide free paper cups to organizations, Colleges and institutes with their advertisements on the paper cups.

This is a unique marketing method where organizations get paper cups at free or discount price and marketing companies get benefits from wider reach of paper cups.

Raw Material/Consumption/Packaging Material

  • Printed PE Paper
  • Bottom Reel
  • Packing Material

Manufacturing Methods

Based on budget, you can choose semi automatic or fully automatic machines for paper cup manufacturing. The fully automatic process is the most cost effective and profitable method. The general structure of paper cup manufacturing is as following:

  • Cutting of poly-coated paper in required size
  • Shaping and forming of paper cup’s sidewall
  • Shaping cup bottom and joining the shaped side-wall with cup bottom
  • Charging of the shaped cup and curling the shaped cup's edge
  • 45 degree angle separating, preheating, curling bottom, curling rim etc.
  • Packing by plastic cover in 100 paper cups in a set

Machinery Used in the Manufacturing Process

Sr. No. Particulars Estimated Cost (Rs. lakhs)
1 Paper Cups making machine 8.50
2 Moulds, dies. 1.50
  Total 10.00

Business Registrations and Statutory/ Government Approvals

 

The paper cup manufacturing business may require following types of statutory approvals and registration depends upon the provisions of particular laws:

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

Starting the Business – Implementation Schedule

Sr. No. Particulars Time Period
1 The Time requirement for preparation of Project report Two months
2 Time requirement for selection of Site One month
3 Time required for registration as Small Scale Unit One Week
  Time required for acquiring the loan Machinery procurement,  
4 erection and commissioning Three Months
5 Recruitment of labourer etc. One month
6 Trial runs Three Months

Project Report

Cost of Project

Sr. No. Particulars Rs. In lakhs
1 Land and Building 35.00
2 Plant and Machinery 10.50
3 Miscellaneous Assets 3.50
4 P & P Expenses 2.50
5 Contingencies @ 10% on land and building and plant and machinery 4.55
6 Working capital margin 5.10
  Total 61.15

Means of Finance

Sr. No. Particulars Rs. (lakhs)
1 Promoter's contribution 18.345
2 Bank Finance 42.805
    61.15

Working Capital Calculation

Sr. No. Particulars Rs. Lakhs Stock Period day Promoter Margin Margin Amt. Bank Finance
1 Salaries and wages 0.76 30 1 0.76  
2 Raw material and packaging material 2.91 30 0.5 1.455 1.455
3 Utilities 0.32 30 0.5 0.16 0.16
4 Debtors 6.82 30 0.4 2.728 4.092
  Total 10.81     5.103  

Profitability Calculations

Sr. No. Particulars Year 1 Year 2 Year 3 Year 4 Year 5
(A) Sales Realization per annum 5733000 6552000 7371000 7371000 7371000
             
(B) Cost of Production          
1 Raw material per annum 2450000 2800000 3150000 3150000 3150000
2 Utilities 270200 308800 347400 347400 347400
3 Salaries 912000 984960 1057920 1130880 1203840
Sr. No. Particulars Year 1 Year 2 Year 3 Year 4 Year 5
4 Repairs and maintenance 180000 200000 220000 240000 260000
5 Selling expenses (2% on sales value) 114660 131040 147420 147420 147420
6 Administrative Expenses (other expenses) 200000 220000 240000 260000 280000
  Total 4126860 4644800 5162740 5275700 5388660
             
(C) Profit before interest & depreciation 1606140 1907200 2208260 2095300 1982340
  depreciation 682500 682500 682500 682500 682500
  Profit Before term loan and tax 923640 1224700 1525760 1412800 1299840
  Interest on term loan (11%) 447312.25 376684 282513 188342 94171
  Profit before tax 476327.75 848016 1243247 1224458 1205669
  Tax (30%) 142898.325 254404.8 372974.1 367337.4 361700.7
             
  Total Profit 333429.425 593611.2 870272.9 857120.6 843968.3

Breakeven Analysis

Fixed Cost (FC): Rs. In lakhs
Wages & Salaries 9.12
Repairs & Maintenance 2.7
Depreciation 6.825
Admin. & General expenses 2
Interest on Term Loan 4.47
Total 25.115

Fixed Cost: 25.115

Profit After Tax: 3.33

BEP = FC x 100/FC+P

25.115 /28.44 x 70/100 x 100

61.81%