Organization of business on manufacturing carpets Esenkul Karashash

Business plan • • Executive summary Marketing research Location Organization, management and staff Financial analysis Opportunities to enter the world market Socio-economic importance of the business

Executive summary Create comfort technology become more widespread. Those interior elements that were once considered luxuries in modern conditions of developed technologies become available to a wide range of consumers. The last two decades were a time of mass distribution of carpets and floor coverings. The apartments and office facilities - creating comfort and functional amenities; wool and polypropylene carpets can make a significant contribution to the formation of high -grade living space. Rugs - nice and warm; they bring to our lives that is able to do every day back home pleasant - homeliness. Heat and sound insulation, noise absorption, as well as vibrocomfort - these are the basic properties of the carpets. In this case, there are varieties of carpets, each designed for a specific intended use (lounge, bedroom, home, kids room, hotel, office and so on). The concept of the project provides for the organization of the enterprise on the production of textile coverings, including carpets, rugs and mats, floor coverings. According to the project they will be considered the following issues as is it available to open the business on this industry, whether it is profitable, and what economic and social impact it has.

Carpet manufacturing company “Tomiris” The company has the legal form of a limited liability company and applies generally established tax regime for small businesses. Mission: Creating a better future: for our customers, for our people, for our company and for our communities. Vision: To be the top performing and most admired carpet production company in Kazakhstan • • • Strategy Competitively priced quality carpets Realize the potential of our people Meet our customer requirements Maximize the benefits of our company Deliver structural cost reductions

Feasibility analysis • Industry and market analysis • Product and services analysis • Financial analysis

Industry and market analysis Ø Rivalry among existing competitors is high within the industry our company operates in with major competitors like Almaty-kilem, Aigul line, Oner and distributers. Ø Carpets customers possess average amount of bargaining power because there is not so high level of switching cost of customers. People can consume other product instead of carpet, but if we think deeper we recognized that every family or house have at least one carpet with high quality. Ø The threat of substitute products and services for our production is substantial. Specifically, substitutes for our company include carpets and pugs from other companies which also produce these products. People also can consume synthetic carpets, etc. But in general people cannot substitute carpet with another product, because depreciation of carpets are lower that cheap substantial products. Ø Our suppliers have middle bargaining power due to the fact that the demand for carpet is high in country level and carpets can be produced not only in certain geographical areas. Moreover, in most areas of Kazakhstan people have ranches, which are the main resources for carpet. But if we want to reduce our costs of goods, it is relevant to produce goods near the material sources. Ø However, the threat of new entrants to the industry to compete with our future production is not so high; because the market is highly saturated and substantial amount of financial resources associated with buildings and properties, and resources are abound in order to enter into the industry.

Product and service analysis Knowledge of manufacturers of carpets (citizens of Kazakhstan) Other marks SP Moldabella Atlantic Gay Larosh Chinese Nobilis Erdenet carpet Erkaplan carpet Rodjer vanden berg Osta carpet Premium hally Solomon carpet Mashad carpet Floar carpet Belka Kartal carpets "Bresta carpets" Afganish Egyptian Turkmenish Imperial Kazakhstani Indian Arabian Turkish 12% 1% 1% 2% 7% 7% 8% 8% 9% 12% 12% 13% 22% 25% 26% 34% 35% 51% 0% 10% 20% 30% 40% 50% 60%

Decision criterion buying carpets I buy the same marks because I believe them 40% I buy that marks which easier to find 37% I buy carpets which consultants advice 33% I always carpets which have low price 32% I buy always popular carpets I buy only expensive marks 28% 16%

Financial analysis Capital requirement Owners Equity: 30654000 KZT Bank Loan: 60856000 KZT Total: 91510000 KZT Return on investment: Earnings – 90962956 KZT Start up costs – 91510000 KZT ROI=0. 9

Marketing research • • • According to this data my target audience will be: Females Age: 35 -55 Income: high Location: Bostandyk, Medeo districts Hobby: restaurant, museum, exhibitions 45 -54 years old, 24% 55 -64 years old, 11% 36 -44 years old, 28% 20 -25 years old, 11% 26 -35 years old, 29% 1001 -1500 $ 1501 -2000 $ Didn't answer, 2001 and US, 5% 5% more $ US, 1% 501 -1000 $ US, 20% Less than 500 $ US, 67%

My competitors Last bought brand carpets Other marks 12% Erdenet carpet 1% Nobilise 1% Chinese 1% Solomon carpet 2% Mashad carpet 3% Premium hally 3% Osta carpet Egyptian 4% 5% Floar carpet 6% "Brest carpets" 6% Rodjer vanden berg 6% Belka 6% Turkmenish 6% Indian 6% Kartal carpets Kazakhstani 8% 11% Imperial 12% Arabian 12% Turkish 61%

v Advertising: We should advertise our product through TV channels, journals, also at a place where our customers spend most of their time (Esentay Mall, Airport, etc). The main force goes to satisfaction of client’s requirements, because people trust more to their relatives and friends than other channels. v Sales: Locations of potential customers are districts of Bostandyk and Medeu. It will be easy to sell at these districts through boutiques, stores, shops. Location of manufacture would be in Almaty.

E-commerce q Anytime Creative Library q Websites q Digital Media q Social Media q Public Relations

Location • Manufacturing place – Almaty region • Head-office – Almaty city • Shopping-mall – Almaty city, Medeu district.

Financial analysis of the industry • Pricing strategy Variable costs Name of materials Blended yarn (wool + acrylic) Latex Paints Electricity Total for 1 unit Unit of changes kg l kg kw*h Cost 895 696 1 500 14 Direct Labor Cost = 1 720 000 tg Per unit=68 800 tg Variable cost per unit = 127 023 tg Carpet Cost of 1 m 2 Sum of 1 m 2 4, 00 3 579 1, 10 766 0, 60 900 3, 52 48 5 293 58 223 tg

Fixed costs Expenses Labor(table 3, except production personnel) Utilities Security Guard Company Overalls, gloves, household goods Maintenance and repair of the OS POL Advertising costs Other unexpected costs Total For month, th. tg 580 150 50 50 20 49 100 1099 Break-even point price = [(127 023 x 25) + 1 099 000] / 25 = 170 983 tg

Project evaluation

Sources of financing Financial resources Thousand tg. % Fixed capital investment 60 856 67% Working capital 30 654 33% Total 91 510 100% Crediting conditions: Parameters Meaning Credit currency tenge Annual interest rate 8. 0% Maturity, year 7. 0 Payments of interest and principal monthly Type of repayment of principal annuity * The program "Damu-Ondiris [JSC "Halyk Bank of Kazakhstan"]

Opportunities to enter the world market Kazakhstan is located in the center of intensive markets of the CIS and Eastern Europe. Exporting • Customs Union • CIS

Intellectual property • The World intellectual property organization “The Eurasian Patent Organization” • BMF Group LLP The object of the protection: - Trademark - Designs and Models

Socio-economic importance of the business With project implementation is provided the following objectives: Ø Creation of a new venture for the production of carpets; Ø An increase in the gross regional product; Ø Import substitution products; Ø Entry in the budget of Almaty oblast taxes and other deductions. Among the social impacts can be identified: Ø To meet the demand of the population and corporate sector in high-quality products; Ø Contribution to the development of the textile industry in Kazakhstan; Ø Creation of new jobs that will allow workers to receive a stable income.

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