Departmental Store Study
Pre-Feasibility Study DEPARTMENTAL STORE Small and Medium Enterprises Development Authority Government of Pakistan www. smeda. org. pk HEAD OFFICE 6th Floor ,LDA Plaza , Egerton Road , Lahore 54000, Pkaistan Tel: (042) 111-111-456, Fax: (042) 6304926-7 helpdesk@smeda. org.
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smeda. org. pk DOCUMENT CONTROL Document No. Prepared by Revision Revision Date Issued by PREF-76 SMEDA-Punjab 2 January 2010 SMEDA-Punjab PREF-76/ Jan, 2010/Rev2 2 Pre-Feasibility Study Departmental Store 1 2 EXECTIVE SUMMARY …
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… INTRODUCTION …
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… 6 2. 1 2. 2 2.
3 2. 4 PROJECT BRIEF….
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.. 6 OPPORTUNITY RATIONALE ….
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. 6 PROJECT CAPACITY AND COST …..
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6 PROJECT INVESTMENT …..
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. 7 3SECTOR AND INDUSTRY ANALYSIS ….
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………………………………………… 7 3. 1 3. 2 NATIONAL ANALYSIS ………………………………………………………………………….. 7 LEGAL ISSUES REGARDING INDUSTRY ……………………………………………………. 9 4 CRUCIAL FACTORS & STEPS IN DECISION MAKING FOR INVESTMENT ………………………………………………………………………………………….. 10 4. 1 SWOT ANALYSIS …………………………………………………………………………….. 0 Strengths and opportunities…………………………………………………………. 10 Weaknesses and threats………………………………………………………………. 10 4. 1. 1 4. 1. 2 5 PROJECT PROFILE …………………………………………………………………………… 10 5. 1 5. 2 5. 3 5. 4 PROPOSED BUSINESS LEGAL STATUS …………………………………………………… 10 PRODUCT MIX ………………………………………………………………………………….. 1 PROPOSED LOCATION………………………………………………………………………… 11 KEY SUCCESS FACTORS/PRACTICAL TIPS FOR SUCCESS…………………………… 12 6 STRATEGIC RECOMMENDATIONS ………………………………………………… 13 6. 1 6. 2 6. 3 6. 4 MARKETING …………………………………………………………………………………….. 13 PRICING…………………………………………………………………………………………… 13 STORE LAYOUT AND PRESENTATION ……………………………………………………. 3 USE OF COMPUTER ……………………………………………………………………………. 14 7 MARKET INFORMATION…………………………………………………………………. 14 7. 1 7. 2 7. 3 MARKET POTENTIAL …………………………………………………………………………. 14 TARGET CUSTOMERS ………………………………………………………………………… 14 RESOURCE MERCHANDISE …………………………………………………………………. 14 8 ELECTRIC AND OTHER EQUIPMENT REQUIREMENT ………………… 5 PREF-76/ January, 2010/Rev2 3 Pre-Feasibility Study Departmental Store 9 LAND AND BUILDING REQUIREMENT ………………………………………….. 16 9. 1 9. 2 9. 3 LAND REQUIREMENT ………………………………………………………………….. ……. 16 RENT COST ………………………………………………………………………………………. 16 UTILITIES REQUIREMENT ……………………………………………………………………. 16 HUMAN RESOURCE REQUIREMENT…………………………………………… 7 PROJECT DETAIL ………………………………………………………………………….. 18 FINANCIAL ANALYSIS ………………………………………………………………….. 19 PROJECTED INCOME STATEMENT ……………………………………………………… 19 PROJECTED BALANCE SHEET …………………………………………………………… 20 PROJECTED CASH FLOW STATEMENT ………………………………………………… 21 REVENUE CALCULATION ………………………………………………………………… 2 PURCHASES & STOCK CALCULATION ……………………………………………….. 23 ADMINISTRATIVE EXPENSES ……………………………………………………………. 24 10 11 12 12. 1 12. 2 12. 3 12. 4 12. 5 12. 6 13 KEY ASSUMPTIONS……………………………………………………………………….. 25 OPERATING ASSUMPTIONS ……………………………………………………………… 25 ECONOMY RELATED ASSUMPTIONS ………………………………………………….. 25 CASH FLOW ASSUMPTIONS ……………………………………………………………… 5 EXPENSE ASSUMPTIONS ………………………………………………………………….. 25 FINANCIALS ASSUMPTIONS ……………………………………………………………… 26 13. 1 13. 2 13. 3 13. 4 13. 5 14 ANNEXURES …………………………………………………………………………………… 27 PREF-76/ January, 2010/Rev2 4 Pre-Feasibility Study Departmental Store 1 EXECTIVE SUMMARY Departmental stores business is emerging as one of the good business ventures in Pakistan as it provides all the basic merchandise under one roof.The structure of Pakistan’s economy has changed from a mainly agricultural base to a service base. Agriculture and industry sector now account for about 22% and 24% of GDP respectively, while the services sector accounts for 54% of the GDP. A department store is a retail establishment which specializes in satisfying a wide range of the consumer’s personal and residential durable products needs; and at the same time offering the consumer a choice multiple merchandise lines, at variable price points, in all product categories.Departmental store is a large retail store organized into departments offering a variety of merchandize, commonly part of retail chain under one roof. In Pakistan concept of departmental store has gained popularity in late eighties after the emergence of Utility Stores by the government. The same concept has been used by Canteen Department Store (CSD). Keeping in view on consumer’s needs and requirements, large investment has been made in super store by few multinational companies. i. e. Metro, Macro, Cosmo Cash & Carry etc and thousands of departmental stores in almost all cities of Pakistan.The proposed departmental store requires an area of approx 3,000 sq. ft. it is recommended that departmental store should be started at owned place rather on rented premises. Location of stores is important factor with any retail organization. Spending time and money wisely in the process of site selection is of primary importance. In this pre feasibility study it has been assumed that the proposed departmental store is opened in that area where there are 3,000 house hold are present and their monthly spending on an average is Rs. 4,000.The total cost of establishing a departmental store in developing areas is estimated at Rs. 15. 38 million including Rs. 12. 14 Million capital cost and Rs. 3. 24 million is required for working capital. Projected IRR, Net Present Value and pay back period for proposed departmental store are 49%, Rs. 23,148,555 and 3. 65 years respectively. PREF-76/ January, 2010/Rev2 5 Pre-Feasibility Study Departmental Store 2 2. 1 INTRODUCTION Project Brief The proposed departmental store will provide variety of goods ranges from grocery to garments and alike to customers under one roof.The proposed project is a single floor departmental store on an area of approximately 3,000 sq. ft. The project will offer following broad categories of goods to its customers: • • • • • • • • • • • 2. 2 Groceries and food items Baby garments and baby products Crockery and plastic items Soaps detergents and chemicals Cosmetics and artificial Jewellery Ice-cream and beverages Stationery, greeting cards and gifts Watches and clocks Electronics/electrical products General items Bakery Items Opportunity RationaleIn Pakistan concept of departmental store has gained popularity in late eighties after the emergence of Utility Stores by the government. The same concept has been used by Canteen Department Store (CSD). Currently there is new trend and large investment has been made in super store by few multinational companies i. e. Metro, Macro, Cosmo Cash & Carry, etc. However in small size departmental stores, private sector made it one of the successful businesses in Pakistan. Public has liked this concept due to the availability of all basic utilities under one roof which saves their time about which people are more conscious these days.The factors that make this project viable in Pakistan are: • • • • • • 2. 3 Easy access to wholesale markets Plentiful availability of resources/salesman No process/transformation involve Variety of goods under one roof Margin for innovation Easy diversification towards new product mix Project Capacity and Cost The proposed departmental store will have an area of 3,000 sq. ft. having covered/indoor shopping facilities. The store will operate for 12 to 16 hours from morning to midnight. Operating time depend on localities requirements.PREF-76/ January, 2010/Rev2 6 Pre-Feasibility Study Departmental Store 2. 4 Sr. # 1. 2. Project investment Description Capital Cost Working capital/Cash in Hand Total Rs. 12,143,600 3,244,858 15,388,458 3 3. 1 SECTOR AND INDUSTRY ANALYSIS National Analysis Departmental stores business is emerging as one of the good business ventures in Pakistan as it provides all the basic merchandise under one roof. In late eighties a paradigm shift in grocery store science occurred. The concept of the “Self-Serving Store” was started.Customers entered the revolutionary store and walked through a narrow maze of shelves containing groceries. They selected their goods as they continued through the maze to a cashier. This phenomenon grew rapidly; and today thousands of stores exist in the big cities. These stores also began to offer products beyond the normal scope of the dry-good grocery store. They added meat, dairy, fruit and vegetables, and breads to their offerings (which had formerly been offered by individual stores such as butchers, bakeries, and the “milk man”).Over the decades, the departmental stores have evolved even further. Now, one sees that offer greeting cards, flowers, video rental, fast food, childcare, and much more. Departmental stores business falls under retail sector. This sector has shown a significant growth over the last few years. In 2005-2006 this sector showed a growth of 3. 1%. 1 This sector’s contribution towards GDP in the year 2008-2009 is 17. 5%2. The following table shows the contribution of retail and wholesale sector towards GDP for the last 5 years at constant factor cost.Table 3–1: Contribution of retail and whole sale sector towards GDP3 Year 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 Share %age 18. 7 17. 2 17. 1 17. 3 17. 5 Growth %age 12. 0 -2. 4 5. 8 5. 3 3. 1 1 2 Source: Economic Survey of Pakistan 2008-09 Source: Economic Survey of Pakistan 2008-09 3 Source: Economic Survey of Pakistan 2008-09 PREF-76/ January, 2010/Rev2 7 Pre-Feasibility Study Departmental Store Gross fixed capital formation (Investment in fixed assets) in this industry by private sector has also shown a progressive trend.In year 2005-2006 growth in gross fixed capital formation by private sector has shown an increase of 17. 2%. The following table shows gross fixed capital formation by the private sector for the last five years: Table 3–2: Gross fixed capital formation by private sector in wholesale and retail sector at constant prices (Rupees in Million) Year 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 Retail and wholesale sector Rs. M 15,165 18,123 22,578 23,816 23,059 There are thousands of departmental stores in Lahore, Rawalpindi, Faisalabad, Multan, Gujranwala and this number is increasing day by day.Some of these stores are: Table 3–3: Major Industry Players Name Lahore PACE Value Mart Decent Akbari store H Karim Bukhsh Pot Pouri Metro Macro Best Mart Al Fatah Naimat Khana CSD Stores Raheem Store Rawalpindi/Islamabad Macro CSD Herald’s City Mart D. Watson Locations Gulberg, Model Town, M. M. Alam Road Gulberg, Allama Iqbal Town etc Wahdat Rd. , Johar Town Allama Iqbal Town, Jain Mandar Gulberg, The Mall, DHA Fortress, DHA etc Thokar Niaz Baig Ravi Road, Model Town Link Road Shadman Liberty Gulberg The Mall Cavalry Ground Allama Iqbal Town Islamabad Chaklala Cantt, Lalkurti Behria Town Rwp Satellite Town Rwp,Islamabad Sadder, Gulraiz Colony, Commercial Market PREF-76/ January, 2010/Rev2 8 Pre-Feasibility Study Departmental Store W Wilson Sargodha Al-Rehman Trade Center Taj Mehal Departmental Store Taj Mehal Departmental Store Faisalabad Bambino Super Store City Mega Mart S Super Market Family Mart E Mart Sadder, Market Gulraiz Colony, Commercial University Road Shaheen Park Umer Pakistan D Ground D Ground People Colony D Ground Susan Road Although in Pakistan the retail business is not providing employment at a large scale directly, but indirectly it is contributing in the employment growth.As more and more retail outlets are opening and consumer buying has shifted towards packaged/branded products. Companies are coming with top quality products and with the increase in production level the employment also increases. 3. 2 Legal issues regarding industry4 In order to fulfill its liabilities under Income Tax Ordinance, 2001 and Sales Tax Act, 1990, a sole proprietor, firm or company doing only retail business as departmental store shall obtain NTN and Sales tax registration number from concerned departments.Under Sales Tax Act, 1990, a retailer whose annual turnover from supplies, whatsoever taxable or otherwise, made in any tax period during the last twelve months ending any tax period if exceeds rupees five million are required to register with sales tax department. A registered retailer shall issue invoice and charge and collect sales tax at the rate of three percent (two percent sales tax and one percent income tax) of the value of taxable supplies at the time of supplies thereof, which shall be paid on monthly basis with return by the 15th day of the month following the tax period in which supplies are made.Retailers shall not be entitled to adjustment of any input tax or claim refund of sales tax or income tax. However, one third of tax paid by the company shall be adjustable against the final income tax liability. For the year 2008-09 rate of tax for a small company is 20% of taxable income, while 35% income tax rate shall be applicable on all other companies. For the year 2008-2009, income up to Rs100, 000/- of a retailer (sole proprietor and firm whose 4 All information only relates to retail business under departmental storePREF-76/ January, 2010/Rev2 9 Pre-Feasibility Study Departmental Store supplies are exempt from sales tax) in a year is exempt from income tax. Income exceeding Rs. 100,000/- shall be charged to tax in various slabs ranging from 0. 50% to 25%. 4 CRUCIAL FACTORS & STEPS IN DECISION MAKING FOR INVESTMENT SWOT Analysis 4. 1 A SWOT Analysis is a strategic planning tool used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or business venture. Strengths and weaknesses are internal to the company.Opportunities and threats originate from outside the company. A SWOT analysis is usually performed early in the project development process, and helps organizations evaluate the environmental factors and internal situation facing a project. 4. 1. 1 • • • • • • Strengths and opportunities Easy availability of resources(manpower/salesmen) Growing population Expanding cities Status symbol to shop from big stores Popularity of variety shopping under single roof No specialized/technical knowledge required for entrepreneur Weaknesses and threats 4. 1. 2 • • • •Heavy taxes in the form of sales tax and income tax on retail business High competition Credibility factor in the initial phase, as suppliers do not give credit to newly entrants Opening of large scale chain stores like Metro, Macro, Cosmo Cash & Carry etc. 5 5. 1 PROJECT PROFILE Proposed Business Legal Status Legal status is recommended to be a sole proprietorship/partnership because it requires less legal requirement to start with than a company. Similarly a lower income tax rate of tax is applicable to sole proprietorship than that of companies. PREF-76/ January, 2010/Rev2 10Pre-Feasibility Study Departmental Store 5. 2 Product Mix The store will offer the following broad categories of goods to its customer: Table 5–1 Category of item Groceries and food items Baby garments and baby products Crockery and plastic items Soaps detergents and chemicals Cosmetics and artificial Jewellery Ice cream and Beverages Stationery and greeting cards/gifts Watches and Clocks Electronic and electrical appliances General items Bakery Items Total 5. 3 Proposed Location Proportion 55% 5% 4% 15% 5% 5% 1% 1% 2% 2% 5% 100% Avg. Gross Margin 15% 35% 30% 10% 30% 10% 20% 30% 30% 15% 20%Location of stores is of primary concern with any retail organization. Spending time and money wisely in the process of site selection is of primary importance. Some retailers open shop in a location simply because it is the only vacant space within a stones throw of their home or office. Knowledgeable retailers make a thorough examination of possible locations before investing their money and dreams. The departmental store should be centrally and conveniently located within a developing or a newly developed residential town in any of the big cities like Lahore Islamabad/Rawalpindi, Faisalabad, and Sargodha etc.Table 5–2: Location City Lahore Areas Mustafa Town Johar Town Wapda Town Nespak PIA Colony Chacklala Scheme III Saddar Commercial Market DHA Bahria Town Islamabad/Rawalpindi PREF-76/ January, 2010/Rev2 11 Pre-Feasibility Study Departmental Store F-10 G-9 G-8 Abpara Market Faisalabad D Ground Peoples Colony Batala Colony Muslim Town Sargodha University Road Shaheen Park Umer Park The proposed departmental store is feasible in any area where there are 3,000 houses/family units. 5. • • Key success factors/Practical Tips for success Retail/departmental store is full of opportunities for success, but that success is reserved for those who are prepared to commit themselves to everlasting changes. Customer card system can be one of the best strategies for the retention of existing customer and developing new customers. Card System maintains data base of customer which can be later on used for permanent promotional and marketing activities. Customer Card System is one of the best CRM practices used globally.To obtain a good average of profits it is necessary to provide state of art facilities to customers. There should be regular and sustained marketing through fliers distribution and Cable TV. The store should have an ample space for customer car parking. It is advisable to maintain a parking space whereby around 15-20 cars can be parked The staff hired should be well mannered and well trained in dealing with the customers. Customers free gift schemes and surprise gift, valuable customer dinner can be additional success factors. • • • • • PREF-76/ January, 2010/Rev2 12 Pre-Feasibility StudyDepartmental Store 6 6. 1 STRATEGIC RECOMMENDATIONS Marketing Regular and sustained marketing is required for a successful business of departmental store. The important marketing channels would be flyer distribution, billboards, banners, Cable TV, etc. Regular advertisement expense should be at least 0. 5% to 1% of sales in the departmental store business. Some marketing and promotional tips are as under: • Existing customers are best referrals. • Know customers’ needs. • Introduce home delivery services free of cost for shopping of more then Rs. 2,000/-. • Frequent clearance sales 6. 2 PricingEvery retailer has a basic philosophy towards pricing their product. What is important is that they create and stick to a strategy for pricing so as to convey a clear message to the consumer. The market has certainly created the need for all retailers, even those at the higher end, to become more value oriented. That is not to suggest that you necessarily need to compete on price, only that you be aware of providing consumer perceived value. Some value pricing strategies are as follows: • Provides the consumer with an incentive to become a repeat customer by offering a future discount. Frequent clearance sales • Include a gift with purchase, buy one get one free. • Feature your discounted prices predominantly. 6. 3 Store layout and presentation Today’s successful retailer is the one making the most profitable use of every square foot of space in the store and in the warehouse. Because space is costly, retailers need to take a strategic approach to its use. Floor patterns, location of merchandise, amounts of merchandise and the appropriate displays are critical in determining space. Misuse of space can be as detrimental to success as poor buying.It is very important for every store to create a suitable atmosphere and appealing presentations in order to trigger the consumer’s buying decision. In a world where one can find identical merchandise in more than one store, layout and presentation becomes a key-differentiating factor. The proposed store should be air-conditioned. Goods should be properly arranged in shelves categorically having ample passage between the shelves for service trolleys and customers. There should be proper arrangement of lightening. PREF-76/ January, 2010/Rev2 13 Pre-Feasibility Study Departmental Store . 4 Use of computer The computer is an invaluable aid in processing the large number of transactions and vast amounts of information involved in managing a retail operation. The amount of data needed for merchandise planning would require hundreds of man-hours to produce, whereas a well-designed computer system can perform the task in seconds. Software for inventory and sales recording and management should be used to have updated data at all the times. This software not only records each and every sales transaction but also updates stock and cash position after every transaction.The software for a departmental store management is easily available from different companies and cost around Rs. 20,000/- 7 7. 1 MARKET INFORMATION Market Potential The market for departmental stores industry in Pakistan has been developing steadily over the last decade and a mushroom growth of large stores observed in all big cities. Still a good potential is available for new stores as population of big cities increasing day by day and new societies are being developed. New residential towns are being developed. Location and amenities are some of the most vital factors in the success of a store. . 2 Target Customers The target customer for departmental stores is the population/family units of big cities. Population of urban areas of Pakistan is 33% of total population. Total estimated current population of Pakistan is 169,665,000 5(169 million). 7. 3 Resource Merchandise Pakistan is one of those countries where abundance of grocery merchandise is available in wholesale markets of every city. Suppliers normally hesitate to supply goods on credit to new stores but after confidence building process a reasonable credit period of 15 days to one month is available to purchasers.The major wholesale markets Lahore and Rawalpindi are: • • • • • • • Shahalam Market/Rang Mahal , Lahore Akbari Mandi, Lahore Hall Road , Lahore Urdu Bazar, Lahore Abid Market Temple Road, Lahore Moochi Gate, Lahore Anwari Gate Rawalpindi 5 Source: FBS PREF-76/ January, 2010/Rev2 14 Pre-Feasibility Study Departmental Store • Raja Bazaar, Rawalpindi • Nankari Bazar, Rawalpindi More over most of the multi-national and national companies supply their products along with other equipments like refrigerators directly to the departmental stores. 8 ELECTRIC AND OTHER EQUIPMENT REQUIREMENTFollowing is the detail of equipment required for this project. Table 8–1: Detail of Equipment Sr. No. 1 2 3 4 5 6 7 8 9 10 11 12 Description Split Air Conditioners Cash Drawer and Bar Code Readers Computers + Barcode Readers Software (sales and stock management) Printer Fax machine, Telephone connections Signboard Motor cycle with delivery cabin Electric Fittings and installation Generator 15 KW Service Trolleys UPS Total No. of Units 6 2 2 1 1 1 1 1 1 15 2 Cost per unit Rs. 35,000 15,800 30,000 20,000 15,000 16,000 60,000 60,000 325,000 5,000 5,000 Total Cost Rs. 10,000 31,600 60,000 20,000 15,000 16,000 60,000 60,000 150,000 325,000 75,000 10,000 1,032,600 PREF-76/ January, 2010/Rev2 15 Pre-Feasibility Study Departmental Store 9 9. 1 LAND AND BUILDING REQUIREMENT Land Requirement The proposed departmental store requires an area of approx 3,000 sq. ft. It is recommended that departmental store should be started at owned place rather on rented premises. The main investment in this business is of land and building, which is very high due to very expensive land in the proposed locations and high construction cost.The cost of commercial land situated in a well populated housing society will be ranging from Rs. 4 Million to Rs. 6 Million. In this pre feasibility the cost of 3,000 sq. ft. land is taken Rs. 6 million. Following table shows the covered area requirement for a departmental store: Table 9–1: Area Utilization Description Owner’s Office Accounts & Admin. Office Warehouse Display/shopping area/Till Total Table 9–2: Construction cost Area (sq. ft. ) 3,000 9. 2 Rent cost Cost (Rs/Sq. ft. ) 1,300 Total Cost Rs. 3,900,000 Area 120 120 225 2,535 3,000If the required land acquired on rent, it will cost around Rs. 100,000 to Rs. 250,000 per month depending upon the location of store in different proposed areas of Lahore and Rawalpindi. 9. 3 Utilities requirement The necessary utilities are Electricity, telephone and water. A three-phase commercial electricity connection is required. Current rate of electricity for these connections is Rs 14 per kilowatt-hour. At least two telephone connections are required; one solely used for home delivery service calls. PREF-76/ January, 2010/Rev2 16 Pre-Feasibility Study Departmental Store 0 HUMAN RESOURCE REQUIREMENT Skilled salesmen are easily available at competitive wage rates. Number of workers required for each department is given below: Table 10–1: Human resource required Positions Store manager Salesmen? Purchase Officer Asst. Purchase Officer Cashiers* Helpers/cleaners* Accounts Officer Asst. Account Officer Security Guards* Total Number 1 12 1 1 4 4 1 1 2 27 Salary/month (Rs. ) 25,000 10,000 20,000 12,000 10,000 7,000 20,000 12,000 8,000 293,000 Annual salary (Rs. ) 300,000 1,440,000 240,000 144,000 480,000 336,000 240,000 144,000 192,000 3,516,000These people will work in two shifts: 5 Salesmen work in the morning, 7 will work in the evening; 2 Cashier & Helpers/Cleaners in morning, 2 in evening; 1 security guard in morning and 1 in evening shift will work. ? PREF-76/ January, 2010/Rev2 17 Pre-Feasibility Study Departmental Store 11 PROJECT DETAIL Table 11–1: Project Economics Capital Investment Land Building/Infrastructure Equipments Pre-Operating Cost Shelves & Counters Total Capital Investment Working Capital Initial Stock Cash in hand needed for three month expenses (Admin, etc. Total Working Capital Total Investment Initial Financing Debt Equity Project Returns Internal Rate of Return (IRR) Payback Period (yrs) Net Present Value (Rs. ) Rs. 6,000,000 3,900,000 1,032,600 461,000 750,000 12,143,600 1,596,400 1,648,458 3,244,858 15,388,458 Rs. 7,694,229 7,694,229 50% 50% 49% 3. 65 23,148,555 PREF-76/ January, 2010/Rev2 18 Pre-Feasibility Study Departmental Store 12 FINANCIAL ANALYSIS 12. 1 Projected Income StatementRupees (000) Year – I Sales/Revenue Cost of Sales: Add opening stock Purchases Less closing stock Sales tax 57,600 1,596 47,750 1,596 (4,138) 43,612 13,988 7,059 6,929 1,153 5,775 1,444 4,332 4,332 Year – II 67,162 1,596 55,677 1,861 (4,825) 50,587 16,575 7,947 8,628 965 7,663 1,916 5,747 4,332 10,079 Year – III 78,310 1,861 64,919 2,170 (5,626) 58,984 19,327 8,795 10,532 745 9,787 2,447 7,340 10,079 17,419 Year – IV 91,310 2,170 75,696 2,531 (6,560) 68,775 22,535 9,747 12,788 486 12,302 3,075 9,226 17,419 26,646 Year – V 106,467 2,531 88,261 2,951 (7,649) 80,192 26,275 10,817 15,459 183 15,276 3,819 11,457 26,646 38,103 Year – VI 124,141 2,951 102,913 3,441 (8,919) 93,504 30,637 11,926 18,711 18,711 4,678 14,033 38,103 52,136 Year – VII 144,748 3,441 119,996 4,012 (10,400) 109,025 35,723 13,277 22,446 22,446 5,612 16,835 52,136 68,971 Year – VIII 168,777 4,012 139,916 4,678 (12,126) 127,124 41,653 14,795 26,858 26,858 6,714 20,143 68,971 89,114 Year – IX 196,794 4,678 163,142 5,454 (14,139) 148,226 48,567 16,504 32,064 32,064 8,016 24,048 89,114 113,162 Year – X 218,956 5,454 181,515 6,068 (15,732) 165,169 53,787 18,178 35,609 35,609 8,902 26,707 113,162 139,869Gross Profit Operating Expenses: Operating Profit Financial Charges Profit before Taxation Taxation Profit after Taxation Acc. Profit b/f Un-appropriated Profit c/f 19 PREF-76/ January, 2010/Rev2 Pre-Feasibility Study Departmental Store 12. 2 Projected Balance Sheet Rupees (ooo) Year – X 8,957 6,068 140,101 146,169 155,126 Year – 0 Tangible Fixed Assets Preoperational expenses Current Assets: Stocks Cash in Hand / Bank 11,683 461 1,596 1,648 3,245 15,388 Year – I 11,309 369 1,596 7,343 8,940 20,618 Year – II 10,964 277 1,861 12,314 14,175 25,415 Year – III 10,643 184 2,170 18,642 20,812 31,640 Year – IV 10,346 92 2,531 26,587 29,118 39,556 Year – V 10,070 2,951 36,453 39,404 49,474 Year – VI 9,814 3,441 50,864 54,304 64,118Year – VII 9,576 4,012 68,077 72,089 81,665 Year – VIII 9,355 4,678 88,606 93,284 102,638 Year – IX 9,149 5,454 113,051 118,505 127,654 Total Assets Owners Equity: Capital Accumulated Profit Long Term Loan Current Liabilities: Current Portion of Long Term Loan Accounts Payable 7,694 7,694 7,694 4,332 6,602 7,694 10,079 5,322 7,694 17,419 3,821 7,694 26,646 2,062 7,694 38,103 0 7,694 52,136 – 7,694 68,971 – 7,694 89,114 – 7,694 113,162 – 7,694 139,869 – – 1,990 1,990 20,618 2,320 2,320 25,415 2,705 2,705 31,640 3,154 3,154 39,556 3,678 3,678 49,474 4,288 4,288 64,118 5,000 5,000 81,665 5,830 5,830 102,638 6,798 6,798 127,654 7,563 7,563 155,126 Total Liabilites & O.Equity 15,388 20 PREF-76/ January, 2010/Rev2 Pre-Feasibility Study Departmental Store 12. 3 Projected Cash flow Statement Rupees (ooo) Year 0 Profit before Financial Charges & Taxation Amortization Depreciation Working Capital Change Cash form other Sources Owners Bank Finance Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 – 4,332 92 373 4,797 1,990 5,747 92 346 6,185 65 7,340 92 320 7,753 76 9,226 92 297 9,616 89 11,457 92 276 11,825 103 14,033 256 14,290 121 16,835 238 17,073 141 20,143 221 20,365 164 24,048 206 24,254 191 26,707 192 26,899 151 7,694 7,694 15,388 15,388 6,787 6,251 7,829 9,704 11,928 14,410 17,214 20,529 4,445 27,050 Total Sources Applications: Fixed Assets Preoperational Expenses Working Capital Re -Payment of Loan Tax 11,683 461 3,245 15,388 1,648 1,648 1,092 1,092 5,695 1,648 7,343 – – – – – – – – – 1,280 1,280 4,970 7,343 12,314 1,501 1,501 6,328 12,314 18,642 1,759 1,759 7,945 18,642 26,587 2,062 2,062 9,866 26,587 36,453 14,410 36,453 50,864 17,214 50,864 68,077 20,529 68,077 88,606 24,445 88,606 113,051 27,050 113,051 140,101 Cash Increase/(Decrease) Opening Balance Closing Balance 21 PREF-76/ January, 2010/Rev2 Pre-Feasibility Study Departmental Store 12. 4 Revenue Calculation Rs(000) Optimum Projection Projected Revenue (Rupees) (Rs. 00,000 per day) Sale Price growth rate Accumulated Purchase price growth rate Accumulated Revenue (Rupees): 1 2 3 4 5 6 7 8 9 10 11 Groceries and food items Baby garments and baby products Crockery and plastic items Soaps detergents and chemicals Cosmetics and artificial jewellery Ice cream and Beverages Stationery and greeting cards/gifts Watches and Clocks Electronic and electrical appliances General items Bakery Items Total Proportion 55% 5% 4% 15% 5% 5% 1% 1% 2% 2% 5% 100% 31,680,000 2,880,000 2,304,000 8,640,000 2,880,000 2,880,000 576,000 576,000 1,152,000 1,152,000 2,880,000 57,600,000 36,938,880 3,358,080 2,686,464 10,074,240 3,358,080 3,358,080 671,616 671,616 1,343,232 1,343,232 3,358,080 67,161,600 43,070,734 3,915,521 3,132,417 11,746,564 3,915,521 3,915,521 783,104 783,104 1,566,209 1,566,209 3,915,521 78,310,426 50,220,476 4,565,498 3,652,398 13,696,493 4,565,498 4,565,498 913,100 913,100 1,826,199 1,826,199 4,565,498 91,309,956 58,557,075 5,323,370 4,258,696 15,970,111 5,323,370 5,323,370 1,064,674 1,064,674 2,129,348 2,129,348 5,323,370 106,467,409 68,277,549 6,207,050 4,965,640 18,621,150 6,207,050 6,207,050 1,241,410 1,241,410 2,482,820 2,482,820 6,207,050 124,140,999 79,611,623 7,237,420 5,789,936 21,712,261 7,237,420 7,237,420 1,447,484 1,447,484 2,894,968 2,894,968 7,237,420 144,748,405 92,827,152 8,438,832 6,751,066 25,316,496 8,438,832 8,438,832 1,687,766 1,687,766 3,375,533 3,375,533 8,438,832 168,776,640 108,236,459 9,839,678 7,871,742 29,519,034 9,839,678 9,839,678 1,967,936 1,967,936 3,935,871 3,935,871 9,839,678 196,793,562 120,426,060 10,947,824 8,758,259 32,843,471 10,947,824 10,947,824 2,189,565 2,189,565 4,379,129 4,379,129 10,947,824 218,956,473 100% 144,000,000 Year – I 40% 57,600,000 Year – II 44% 67,161,600 Year – III 48% 78,310,426 Year – IV 53% 91,309,956 Year – V 59% 106,467,409 Year – VI 64% 124,140,999 Year – VII 71% 144,748,405 Year – VIII 78% 168,776,640 Year – IX 86% 196,793,562 Year – X 90% 218,956,473 6% 6% 12% 12% 19% 19% 26% 26% 34% 34% 42% 42% 50% 50% 59% 59% 69% 69% 22 PREF-76/ January, 2010/Rev2 Pre-Feasibility Study Departmental Store 12. 5 Purchases & Stock Calculation Year – I Gross margin % of Sales : 1 2 3 4 5 6 7 8 9 10 11 Year – II 15% 35% 30% 10% 30% 10% 20% 30% 30% 15% 20% Year – III 15% 35% 30% 10% 30% 10% 20% 30% 30% 15% 20% Year – IV 15% 35% 30% 10% 30% 10% 20% 30% 30% 15% 20% Year – V 5% 35% 30% 10% 30% 10% 20% 30% 30% 15% 20% Year – VI 15% 35% 30% 10% 30% 10% 20% 30% 30% 15% 20% Year – VII 15% 35% 30% 10% 30% 10% 20% 30% 30% 15% 20% Year – VIII 15% 35% 30% 10% 30% 10% 20% 30% 30% 15% 20% Year – IX 15% 35% 30% 10% 30% 10% 20% 30% 30% 15% 20% Year – X 15% 35% 30% 10% 30% 10% 20% 30% 30% 15% 20% Groceries and food items Baby garments and baby products Crockery and plastic items Soaps detergents and chemicals Cosmetics and artificial jewellery Ice cream and Beverages Stationery and greeting cards/gifts Watches and Clocks Electronic and electrical appliances General items Bakery Items 15% 35% 30% 10% 30% 10% 20% 30% 30% 15% 20%Purchases (Rupees): 1 2 3 4 5 6 7 8 9 10 Groceries and food items Baby garments and baby products Crockery and plastic items Soaps detergents and chemicals Cosmetics and artificial jewellery Ice cream and Beverages Stationery and greeting cards/gifts Watches and Clocks Electronic and electrical appliances General items 26,928,000 1,872,000 1,612,800 7,776,000 2,016,000 2,592,000 460,800 403,200 806,400 979,200 2,304,000 47,750,400 31,398,048 2,182,752 1,880,525 9,066,816 2,350,656 3,022,272 537,293 470,131 940,262 1,141,747 2,686,464 55,676,966 36,610,124 2,545,089 2,192,692 10,571,907 2,740,865 3,523,969 626,483 548,173 1,096,346 1,331,277 3,132,417 64,919,343 2,687,405 2,967,574 2,556,679 12,326,844 3,195,848 4,108,948 730,480 639,170 1,278,339 1,552,269 3,652,398 75,695,954 49,773,514 3,460,191 2,981,087 14,373,100 3,726,359 4,791,033 851,739 745,272 1,490,544 1,809,946 4,258,696 88,261,482 58,035,917 4,034,582 3,475,948 16,759,035 4,344,935 5,586,345 993,128 868,987 1,737,974 2,110,397 4,965,640 102,912,888 67,669,879 4,704,323 4,052,955 19,541,035 5,066,194 6,513,678 1,157,987 1,013,239 2,026,478 2,460,723 5,789,936 119,996,427 78,903,079 5,485,241 4,725,746 22,784,846 5,907,182 7,594,949 1,350,213 1,181,436 2,362,873 2,869,203 6,751,066 139,915,834 92,000,990 6,395,791 5,510,220 26,567,131 6,887,775 8,855,710 1,574,348 1,377,555 2,755,110 3,345,491 7,871,742 163,141,863 02,362,151 7,116,085 6,130,781 29,559,124 7,663,477 9,853,041 1,751,652 1,532,695 3,065,391 3,722,260 8,758,259 181,514,916 11 Bakery Items Stocks (Rupees) 1 Groceries and food items 2 Baby garments and baby products 3 Crockery and plastic items 4 Soaps detergents and chemicals 5 Cosmetics and artificial jewellery 6 Ice cream and Beverages 7 Stationery and greating cards/gifts 8 Watches and Clocks 9 Electronic and electrical appliances 10 General items 11 Bakery Items 523,600 156,000 134,400 324,000 168,000 50,400 38,400 33,600 67,200 81,600 19,200 1,596,400 610,518 181,896 156,710 377,784 195,888 58,766 44,774 39,178 78,355 95,146 22,387 1,861,402 11,864 212,091 182,724 440,496 228,405 68,522 52,207 45,681 91,362 110,940 26,103 2,170,395 830,033 247,298 213,057 513,619 266,321 79,896 60,873 53,264 106,528 129,356 30,437 2,530,681 967,818 288,349 248,424 598,879 310,530 93,159 70,978 62,106 124,212 150,829 35,489 2,950,774 1,128,476 336,215 289,662 698,293 362,078 108,623 82,761 72,416 144,831 175,866 41,380 3,440,602 1,315,803 392,027 337,746 814,210 422,183 126,655 96,499 84,437 168,873 205,060 48,249 4,011,742 1,534,227 457,103 393,812 949,369 492,265 147,680 112,518 98,453 196,906 239,100 56,259 4,677,691 1,788,908 532,983 459,185 1,106,964 573,981 172,194 131,196 114,796 229,592 278,791 65,598 5,454,188 ,990,375 593,007 510,898 1,231,630 638,623 191,587 145,971 127,725 255,449 310,188 72,985 6,068,439 23 PREF-76/ January, 2010/Rev2 Pre-Feasibility Study Departmental Store 12. 6 Administrative Expenses Rupees Year – I Year – II Year – III Year – IV Year – V Year – VI Year – VII Year – VIII Year – IX Year – X Administrative Salaries legal & Audit Fee Entertainment Telephone, Fax and Postage Electricity Advertisement Repair of building and equip Delivery motorcycle Insurance stocks Travelling conveyance Printing and stationery Depreciation Amortization 3,516,000 30,000 288,000 172,800 1,621,368 576,000 49,326 103,680 63,856 115,200 57,600 373,260 92,200 7,059,290 ,026,000 33,000 335,808 201,485 1,783,505 671,616 73,989 120,891 74,456 134,323 53,729 345,684 92,200 7,946,686 4,428,600 36,300 391,552 234,931 1,961,855 783,104 98,652 140,959 86,816 156,621 62,648 320,378 92,200 8,794,617 4,871,460 39,930 456,550 273,930 2,158,041 913,100 123,315 164,358 101,227 182,620 73,048 297,140 92,200 9,746,918 5,358,606 43,923 532,337 319,402 2,373,845 1,064,674 147,978 191,641 118,031 212,935 85,174 275,785 92,200 10,816,531 5,894,467 48,315 620,705 372,423 2,611,229 1,241,410 172,641 223,454 137,624 248,282 99,313 256,148 11,926,011 6,483,913 53,147 723,742 434,245 2,872,352 1,447,484 197,304 260,547 160,470 289,497 115,799 238,078 13,276,578
