Approved by:

Mr. Yoshihisa Kurosaka

President

THE BUSINESS PLANNING TEAM

KAPCO Manufacturing, Inc.
Business Plan 2006
Page 1 of 17

APRILYN S. ARMINTIA Admin. Manager/QMR

NENE JOY REYES Accounting Manager
ENRIQUE ESPINOSA Operations Manager
GERALDO FLORES Production Manager Bldg. I
BONIFACIO NAVARRO Production Manager Bldg. II
ANTHONY BUCA QC Manager
REMEDIOS CADAON Factory Manager
RYUSHI NAITO Assistant from KPC
TAKESHI KUROSAKA Vice President
YOSHIHISA KUROSAKA - President

KAPCO Manufacturing, Inc.

Business Plan 2006
Page 2 of 17

I. COMPANY INFORMATION:

Company Name: KAPCO Manufacturing Inc.

Contact Information:

Mr. Yoshihisa Kurosaka, President

KAPCO Manufacturing Inc.
Lot 1& 2 Block 15, Phase III
Philippine Economic Zone Authority
Rosario, Cavite, Philippines
Tel. (046) 4371591/ 4371819 to 20
Fax (046) 4371821
Email: kapcosales@eastern.com.ph
kapcomfg@eastern.com.ph

Company Income Tax Form : 1702 Annual

1702 Q for Quarterly
Sales on Credit: 100% 60 days terms.
Start of BP Implementation: February 2006

II. INCOME SECTION

Income Category: PLATING
ElectroDeposition Coating (ED)
Electroless-Nickel Plating (EN)
KAPCO Manufacturing, Inc.
Business Plan 2006
Page 3 of 17

0.85 Top Cover/RC Clamper Cleanroom

COGS Cost of Goods Sold: Material, Labor & others
(P16,000,000 per month)
Monthly Income Projections
Income
category

Feb
200
6
28M

Plating

Mar
2006
28M

Apr
200
6
28M

May
2006
28M

Jun
200
6
28M

Jul
2006
28M

Aug
200
6
28M

Sep
200
6
28M

Oct
2006
28M

Nov
200
6
28M

Dec
2006
28M

Jan
200
7
28M

Total per Annum : P336,000,000.00 (Feb 06 Jan 07)

III. EXPENSES SECTION

Expenses Category: Plating
Monthly Expenses Projections
Expenses
category
Plating

Feb
2006
21M

Mar
2006
21M

Apr
2006
21M

May
2006
21M

Jun
2006
21M

Jul
2006
21M

Aug
2006
21M

Sep
2006
21M

Oct
2006
21M

Nov
2006
21M

Dec
2006
21M

Total per Annum: P252,000,000.00 (Feb 06 Jan 07)

IV COMPANY ACCOUNT INFORMATION

Projected Beginning Balance
Ite
m
1

Description

2
3.

Accounts
Receivable
(Trade)
Inventory Asset

4.
5.

Fixed Assets
Other Assets

Banks

Account Type
BTM US $
BTM P
BPI US $
BPI P
BPI - JPY
Dollar
JPY

Balance
US $ 200,000.00
P 1.5 Million
US $ 2,000.00
P 3 Million
JPY 500,000.00
US $ 1.5 Million
JPY 13 Million

Direct Materials
Indirect Materials
Deposits

P 8 Million
P 1 Million
P 150 Million
P 700,000

Minimum Bank Balance

Account Name
1. BPI Peso Account
2. BTMP Peso Account

Account Balance
1M
P 50,000.00
KAPCO Manufacturing, Inc.
Business Plan 2006
Page 4 of 17

Jan
2007
21M

3. BPI US $
4. BTM US $
5. BPI JPY

US $ 500.00
US $ 5,000.00
JPY 100,000.00

Purchase Assets at the beginning of your Projection

New Asset List:
Asset Classification Table
Category
Life
Machinery
5 years
Transportation
Office
Equipment
Small Tools

Description
Jig Hole

5 years
5 years

ED Filament
Toyota Innova

3 years

Computer
printer
Mitsubishi
Geard Motor
Wilden Air
Operated pump
Ebarra Pump
Motor

3 years
3 years
3 years

Total Cost
Php
1,207,598.00
Php 213,854.00
Php
1,088,217.00
Php 2,550.00
Php 127,774.47
Php 85,855.00
Php 33,618.00

Vendor Financing (NONE)

Loan description: _____________________________
Loan Type: Standard- fixed monthly principal & interest payments
Term: 84 months
Loan
Description

Loan
Type

Amount
Financed

A.P.R.

Monthly
paymen
t

Term
(months)

Beginning Balances for Liability Accounts

1
2

Description
Accounts
Payable
Other current
Liabilities
Long Term
Liabilities

Account Type
Trade Payables
Others
Government
Payables &
other Employee
Benefits
Parent Company

Balance
Php 8 Million
Php 3 Million
Php 7 Million
KAPCO Manufacturing, Inc.
Business Plan 2006
Page 5 of 17

Php 78 Million

Line of Credit limit

Companys Total Line of Credit Limit
Account Name
Balance
Loan/Notes Payable
P 26 Million
Long Term Debt-Current
P 12.5 Million

I. EXECUTIVE SUMMARY
Introduction
Mitsugu Kurosaka had a vision in the early 1960s to start a metal
plating business that would provide plated products to manufacturing
companies throughout Japan. KUROSAKA Plating Co., Ltd. (KPC) was
KAPCO Manufacturing, Inc.
Business Plan 2006
Page 6 of 17

formed in 1962 out of Kurosakas vision and now has been successfully
operating in Tojo Oyama and Hanamaki City in Japan for the past 45
years.
Yoshihisa Kurosaka the son of Mitsugu Kurosaka expanded the business
and put up KAPCO (Kurosaka Advance Plating Co., Ltd.) Manufacturing
Inc. in the Philippines on 1996. This was made to cater the needs of its
prestige customers situated in the Philippines. KAPCO has built a
profitable business by maintaining a small skilled work force and low
operating costs. Although the business have been profitable sales
opportunities needs to be continuously sourced out to facilitate growth
of the business.
KAPCO has started to apply new plating processes targeted to
accommodate high demand of coating and plating products for
electronic industry. This market has been growing in the last several
years and the company aims to lead over its competitors through
technological innovation, cost effectiveness, product reliability and
small step expansion.
Business Opportunity
KAPCO faces a substantial business opportunity. Currently, KAPCO is
operating within its maximum capacity and the market for coating and
plating business is large and growing. With the right strategic decision
in expanding the production capacity, KAPCO projects that larger
market share can be acquired, resulting in favorable profits. The
companys competitiveness in cost and quality had proven superior
over its local competitors. This makes the likelihood of KAPCO
achieving success very high. Positive feedbacks with customers have
KAPCO convinced of its timing and the opportunity it faces.
Product/Service Description
KAPCO is engaged in metal surface plating and coating treatment for
manufacturers of Hard Disk Parts and Components. Customers supplied
the products to be treated and once the parts had been plated or
coated they are then shipped to the manufacturers to be incorporated
to the finished product.
Current Business Position
KAPCO Manufacturing Inc. is a corporation registered in the Philippines
and a wholly owned subsidiary of KUROSAKA Plating Co. Ltd, with Head
office at 4-15-15 Sannou, Ohta-ku, Tokyo Japan, factory is based in
Oyaman and Hanamaki Japan.
KAPCO Manufacturing, Inc.
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KAPCOs 200-person employee team includes Filipino and Japanese

with more than 60 combined years of experience in plating and coating
industry. Management projects that a much larger sales gain and
market share could be obtained given the KAPCOs demonstrable
superiority to competitive plating or coating process. However, the
companys existing production and distribution capacity offer
significant constraints when compared with the opportunity that exists
for its product.
Financial Potential
KAPCO expects to generate P386 Million in year 2006 base on the sales
of approximately P28M /month for EN Production and 2.5M JPY/month
for ED Production, and Cleanroom. Sales are expected to escalate by
20% in the year 2007. net Income before taxes and interest is
projected to be 72,000,000.00 in year 2006 and 155 ,000,000 in year
2007.
The Request for Funding
KAPCO principals are willing to invest an additional P 40,000,000 and
are seeking funding of 30,000,000 from Mother company KUROSAKA
Plating Co. Ltd. These funds will be used for purchasing land, building
and machinery.
The beginning of 2006 KAPCO needs to secure funding amounting to
JPY 30,000,000.

II. COMPANY BACKGROUND

Business Description and History
In 1996 KAPCO Manufacturing Inc. explore the business opportunity to
provide metal surface treatment as its primary line of products. Our
KAPCO Manufacturing, Inc.
Business Plan 2006
Page 8 of 17

company got approved under the name of KAPCO Manufacturing Inc.

Under the Securities and Exchange Commission (SEC) on May 7, 1996.
We requested registration of our products to PEZA since we expect to
export our products. Our approved registration was released on May 9,
1996 as Ecozone Export Enterprise at Philippine Economic Zone
Authority, Rosario Cavite Philippines.
KAPCO Started its operation in January 1997 with the first installed line,
the E-coat (Electro-deposition line) that coats HDD Base (Hard Disk
Drive) with total of 35 personnel only.
KAPCO eventually extended its business and installed the second line
in May 1999 with its latest innovation in plating industry, the EN
(Electroless-Nickel Line) that consist of two major process, the Nickel
plating and acid etching for HDD top covers in various sizes and other
computer parts. In April 2000, Cleanroom was established to support
the EN Line operation and to ensure that the finished products are
properly kept and handled with a favorable room for storage and
inspection.
As a result of our efforts to make reliable products with competitive
price, KAPCO gained very good orders from clients and enjoy good
reputation from them.
We are operating three EN Line, one ED Line and one Cleanroom in
three shifting schedules supported by 200 employees targeting to
deliver good quality products on time.
Management and Staff are working hand in hand to achieve its vision
and mission striving to be more competitive in the global market.
Ownership
Currently KAPCO Manufacturing, Inc. has a total of 240,000 shares. KPC
Japan owns 214,500 shares (89.37%), Mr. Takeshi Kurosaka owns
11,000 shares (4.58%), Mr Yoshihisa Kurosaka owns 10,000 shares
(4.17%), Ms. Kumiko Kurosaka owns 1,000 shares (0.42%), Mr. Enrico
Pedro Ingles 500 shares (0.21%) and others 3,000 shares (1.25%).

III. COMPETITIVE ANALYSIS

Currently, there are four prominent competitors for surface treatment
in the Philippines. KAPCO believes no other company in the industry
that can compare with the capability of our manufacturing technology.
Sales distribution for our products is more accessible for locally
situated customers specially those acquiring materials outside the
country. Since our product is locally produced, this has allowed KAPCO
KAPCO Manufacturing, Inc.
Business Plan 2006
Page 9 of 17

to pass its savings on to the customers as a mark up profit. KAPCOs

comparable price range, combined with the product advantages should
easily allow the company to expand its market share.

IV. SUPPLIERS & INVENTORIES

KAPCO will maintain sufficient raw materials to satisfy customer
requirements. Forty percent of direct materials will be imported to
provide adequate stocks to support 1 and months of production.
Sixty percent of materials are purchased directly from local suppliers
maintaining at least 1 week stocks to ensure availability of use in the
production. Because of the rising cost of raw materials used in the
manufacturing process, inventory is kept at a minimum to avoid over
stocking and high cost of inventory. Monthly delivery schedule are
provided by the customer securing the high probability of production
operation. Once customer sent their materials for plating or coating
this will initiate processing not exceeding one day (24 hours) of standby. Re-ordering point is established every direct materials to keep track
of stock movement. This practice minimizes inventory-carrying costs
while maintaining an acceptable level of responsiveness in the majority
of situations.

V. RESEARCH AND DEVELOPMENT

KUROSAKA Plating Co., Ltd. In Japan is currently working on the
development of new technology for surface treatment. This is called
Magnetic Barreling and Etching process designed to apply strong
magnetic attraction that will allow the media (stainless steel needle)
together with wash solution to continuously move in circular motion.
This process is expected to polish metal surface finish and eliminate
unwanted particles. Because KAPCO is in an expansionary phase of
company growth, and has an existing production line, this research and
development effort are currently being undertaken. The company plans
on expanding its production line once a more significant percentage of
the market is acquired. At that point, related product demands will be
investigated as potential additional production lines.

VI. SERVICES
Introduction
One of KAPCOs top priorities is to keep every customer satisfied.
KAPCO will not only grow its operation by adding new customers, the
company will need to maintain the satisfaction of existing customers.
KAPCO has put into place the following standards in order to ensure
customer satisfaction:
KAPCO Manufacturing, Inc.
Business Plan 2006
Page 10 of 17

1. Order processing standard shall be 2 days before the actual date

of delivery.
2. KAPCO will use high quality of materials.
3. Strengthen QAQC process.
4. Calls will be placed following every product delivery to ensure
customer satisfaction.
After Sales Service
In case of nonconforming product after delivery or use has started, the
customer may contact Sales Department (046) 431-1819 for
reconciliation. QAQC will verify the affected units whether it needs reprocessing or repair. If verified for re-processing, the customer will
identify the lot number on the failed products and KAPCO will authorize
its return and new products will be sent to the customer immediately. If
the products needs to be repaired on the customers site KAPCO will
send manpower support to perform the service activities free of
charge.

VII. INDUSTRY COMPETITION & MARKET

Introduction
Surface treatment plating or metal coating industry is a very large
industry that changes daily. The huge demand for Hard Disk Parts and
electronic parts presents enormous growth potential for KAPCO
products. Companies within this type of industry are continuously
improving manufacturing techniques and developing new products to
remain competitive.

Industry Definition
Although metal plating or coating industry is diverse and heavily
populated with competitors, KAPCO will not be competing directly with
traditional manufacturers. KAPCO aims to capture and lead the market
for products ranging from HDD parts, electrical and electronic parts
used for computers and other electronic devices that require anticorrosive application. KAPCOs production processes are monitored and
controlled by technically trained employees whose expertise are
KAPCO Manufacturing, Inc.
Business Plan 2006
Page 11 of 17

acquired through extensive training that is found only at KAPCOs

facilities.
Primary Competitors
KAPCO faces four known competitors for HDD and electronic parts used
both for computers. Surtec Cariya Laguna Techno Park, Miyoshi
Philippines Calmelray Canlubang Laguna, Kedica Phils. Calmelray Sto.
Tomas Batangas, Cam Phils. LISP II Calamba Laguna.
Market Size
According to KPC Japan, KAPCO has a direct market share of 70-80% for
HDD Base and Carriage spacer for MKP Inc. No acquired statistical data
at present for other customer and competitors.
Customer Profile
Purchases of KAPCO products are the makers of computers and,
electronics parts. Primary customers for computer parts are MKP Inc.,
Nidec Philippines Corp., FUJITSU Die Tech, MSM Manila, DIUP Inc.,
Tsukuba Philippine Die Casting Corp., and ASAHI Cast Phils.

VIII. MARKETING PLAN

Pricing
When manufacturers contact KAPCO for a custom price quote, they
usually provide the company with drawings or actual sample for the
product. The cost of production is estimated by taking the dimensions
(i.e surface area x plating thickness reqd. x price per dm2), cost of the
chemicals to be used, how many units will need to be produced, and
the type of material to be used. On average, KAPCOs prices are 1525% less than the competition. The reason why the prices are lower is
because the cost of labor is less and the savings are passed onto the
customer.

Distribution Channels
KAPCO will market its products through its marketing representatives
based in KPC Japan. The President and KPC Representatives perform
sales activities, responsible for attending KAPCOs customers. The
company will assign local Sales Engineer in order to attend customer
requirements and increase business from existing customers. The
Japanese Sales Executive will concentrate on penetrating and
establishing strong network with other potential market.
KAPCO Manufacturing, Inc.
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Promotional Plan
KAPCO Sales and Marketing representatives will try to arrange
meetings with important buyers from large manufacturing companies
in Asia. Other marketing activities will also be geared towards getting
potential customers to meet with KAPCOs Sales and Marketing team.
KAPCO has a monthly marketing budget of Php 40,000.00. Marketing
efforts will focus on buyer visits and meetings.
Feedback
KAPCO holds regular customer meeting at least once a month in order
to determine the level of satisfaction and discuss how to solve product
quality issues.

IX. OPERATING PLAN

Location
KAPCOs building is located in an industrial park in Rosario, Cavite
Philippines. The area is properly zoned by PEZA authorities to allow
KAPCO to conduct all of its manufacturing activities. The building is
situated on a lot area of 6600 sqm. offering adequate space for
anticipated expansion over the next five years.
Equipment
Below is the list of machines and equipment owned by the company
and currently used for production.
See Appendix A

General Operations
KAPCO will maintain a standard three shifts operations 6AM -2PM, 2PM10PM, 10PM-6AM, Mondays through Saturdays. Should demand require
additional production KAPCO will run three shifts during Sundays.
X. MANAGEMENT, ORGANIZATION & OWNERSHIP
a. Management or principals
KAPCO Manufacturing, Inc.
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Page 13 of 17

President :
Vice President:
Asst. from KPC:
Plant Manager:
Operations Manager:
Production Manager Bldg.:
Quality Manager:
Accounting Manager:
Admin Mgr./QMR:

Mr. Yoshihisa Kurosaka

Mr. Takeshi Kurosaka
Mr. Ryushi Naito
Ms. Remedios Cadaon
Mr. Enrique Espinosa
Mr. Geraldo Flores
Mr. Anthony Buca
Ms. Nene Joy Reyes
Ms. Aprilyn S. Armintia

b. Org. structure
See Appendix B
c. Ownership & Boards
See Appendix C

XI. Goals & Strategies

Business Goals
Sales Target in 2006 : P 336,000,000 (P 28,000,000 per month)
Sales Target in 2007 : P 320,000,000
Breakdown (2006):

EN Production 22,500,00 per month

ED Production 2,500,000 per month

KAPCO Manufacturing, Inc.

Business Plan 2006
Page 14 of 17

Key to Success: Maintain & improve the Quality Management System

and investigate and study the challenge of ISO 14000
in 2006.
Improve production process, reduce NG rate and
improve/maintain on time delivery of products.
Future Plans:

EN Production
a. Set up new mould New Model(SFF-N) Base in
August 2005
b. Additional Mould in October
c. Investigation and negotiation for Base, 0.85 inch
before January 2006
d. Investigation and negotiation for Base, 1inch with
NIDEC
e. Investigation and negotiation for 3 metal parts
with LAMCOR
f. Investigation and negotiation for more metal parts
with TRP
ED Production
a. Start a two shift schedule of production after
arrival of engineers trained in Japan.
b. Invest a drilling machine for round items.
c. Improve system to meet the increased amount of
order for RR Pin.
d. Strengthen business relationship with Nippon
Sekkei

Department Objectives & Targets

DEPARTME
NT
HR

F&M

OBJECTIVES
Compliance with the new Manpower
Requisition Lead Time
Establish Performance Appraisal
System
Develop Salary & Wage Structure
Lower the calibration cost
Establish tools and spare parts
management
Establish monthly reporting of

TARGET
100%
100%
100%
80%
100%
100%
KAPCO Manufacturing, Inc.
Business Plan 2006
Page 15 of 17

ACCTG

SAFETY
SALES
PPIC
WHSE
IMPEX

Purchasing

machine downtime
Updated on monthly recording of
company's business activity
Updated on payments of employees'
compensation and government
contribution
No delays on Acctg. Documents to be
presented to each department
concerned
Full implementation of Safety &
Health Program
Maintain Zero Accident
Increase in Sales
Additional New Customer
Maintain Schedule Compliance
Maintain on time delivery
Conduct Time Study
To be the 5S Champion for year 2005
To maintain the supply of Materials
On time delivery on constructive
export
On time delivery on both Importation
& Exportation based on the shipment
schedule given by the Forwarder
Monitoring of Suppliers' Performance
Conduct quarterly meeting with
Supplier
Ensure 100% inspection done for all
purchase materials
Ensure 100% document compliance
per delivery

EN PROD.
QAQC

ED PROD

QM

Monitors PR lead time (as per

delivery requirement)
Improvement on Purchasing
activities
Reduce reject rate
Conduct tool life study
Increase line efficiency
No recurrence of customer
complaints
Support production in reducing
rejection rate of the defect
contributor (per customer)
Limit Tool & Die products reject
rate - Die Parts
Limit Tool & Die products reject
rate - RR Pin
Ontime conduct of Mgt Review
Ontime conduct of IQA

100%
100%
100%
100%
Zero Accident
10%
At least 1
100%
95%
100%
5S Champion
95%
100%
100%
100%
100%
100%
100%

100%
100%
20%
10%
5%
0%
10%
0.50%
10%
2 Mgt Review
2 IQA
KAPCO Manufacturing, Inc.
Business Plan 2006
Page 16 of 17

TRAINING

Conduct of TNA
Implementation of Training
Plan/Program

100%
100%

DCC

Timely registration of documents

Timely distribution of documents
Implementation of 5S Program

100%
100%
100%

XII. FINANCIAL ASSUMPTIONS

See Appendix D

KAPCO Manufacturing, Inc.

Business Plan 2006
Page 17 of 17