The BP is clear in its statements on Replay's mission and business objectives. The BP describes in detail company's sales, gross margins and net profits to highlight the profitable nature of its venture.
The BP indicates clearly what the keys to the success of this venture are and how they business will address them. It explains how the company will source the raw material and how it will sell its products. The critical issues that the business will face and how the company will face them have been explained.
The company will have two divisions and will manufacture two products. The first plant (Recycling division) will produce cleaned and recycled plastic PET Flake (RPET) for which the raw material will be post-consumer beverage bottles. Waste material from Replay's sheets manufacturing customers will also be a source of raw material.
Even though the output of raw material from this division can be sold directly in the market as flake, Replay proposes to use most of it in its second plant (Extrusion division). The output from here will be extruded roll stock PET sheets and extruded high strength strapping.
Currently there are no competitors offering recycled PET materials in the western coast. All the major producers of this are in the eastern coast. There are distinctive cost advantages for manufactures in packaging industry and strapping material users when using the proposed products of Replay as there is a difference in cost of material of $ 0.2 per pound between virgin PET and recycled PET. Strapping material to be made from RPET is preferred by user industry over other currently used material like steel and virgin polypropylene, because of cost advantage.
Locating a plant close to the source of raw material and market is a very important consideration for success of the project. This is because of the high cost of transportation and other logistics. By locating the plant in the west coast, the success of Replays business is assured.
The company proposes to use the best technology possible. The plant that is being purchased for recycling PET bottles is state of art and well proven. Several companies are already using it. It uses an environmentally friendly technology. The owner of the patent of the technology is also one of the promoters of Replay.
Because of the link of the promoter to the manufacturer, Replay will be able to source the plant at a relatively lower price, which will decrease their initial capital cost. This will further increase the profitability of the company.
The raw material availability close to the plant is huge and growing because of increasing public awareness and initiative for recycling. The promoters have already made tie-up with one of the main "consolidators" for sourcing of adequate raw material for their entire requirement of Replay at competitive prices.
Replay believes that price and quality will be the main considerations while selling. Its target market is the users of PET for roll stock sheet manufacturers (for producing high visibility packaging) and strapping producers for lumber industry. It expects to be able to give a clear price advantage as well as quality through the plant it is setting up. There is also a huge market for flake. Any material not consumed by their