Last updated: December 17th, 2019 3:48 PM

Paper Napkin Manufacturing Business - Startup Plan

Paper napkin is a piece of tissue paper used for cleaning the hand or face which are absorbent, hygienic and small. Paper napkins are used widely in restaurants, parties, beauty parlours, homes and offices. With the culture of fast food rising and impacting our dining habits, the demand for paper napkins has steadily risen. In this article, we look at the process for starting a paper napkin manufacturing business.

Manufacturing Process

To manufacture paper napkin, tissue paper rolls are fed to the flexographic printing machine with modification for cutting the printed tissue paper rolls into sizes that are pre-determined.

Machinery & Equipment

The machinery and equipment cost for setting up a paper napkin manufacturing unit is minimal and costs just around Rs.5 lakhs. A two colour flexographic machine with attachment of paper napkin, edge sealing and cutting machine would be required  for a total investment of about Rs.5 lakhs.

Working Capital

A small paper napkin manufacturing unit with an annual sales turnover of about Rs.1 crore would require a working capital of Rs.10 lakhs towards raw material, salaries, other expenditures and receivables.

Financial Performance

A typical paper napkin manufacturing unit with an investment of about 10 lakhs can generate about Rs.1 crore in annual sales turnover and a profit of about 5-8 lakhs after all expenditures. Typical profit on sales is 5% with break-even point at 45% operating capacity.

Employment

Paper napkin units can generate direct employment for about 5 persons to 6 persons. Three persons would be required for administrative and marketing functions, whereas another three skilled or unskilled labour would be required to manufacture the paper napkins.

Licenses and Registrations

It recommended that a paper napkin manufacturing unit be setup as a private limited company, as the annual sales turnover is nearly 100 lakhs. Further, having a private limited company would make bank finance easier to access with better credibility amongst suppliers and creditors. In addition to the business registration, the unit would also require VAT registration or GST registration and/or trademark registration. Talk to an IndiaFilings Advisor for more information about business registration and license requirement.