254 Services Feasibility

Pre-Feasibility Study
FOOTWER RETAIL OUTLET
Small and Medium Enterprise Development Authority

Government of Pakistan
www.smeda.org.pk
HEAD OFFICE
6th & 8th Floor LDA Plaza, Egerton Road, Lahore.
Tel: (92 042) 111-111-456 Fax: (92 042) 6304926-7
Helpdesk@smeda.org.pk
REGIONAL OFFICE
PUNJAB
REGIONAL OFFICE
SINDH
REGIONAL OFFICE
NWFP
REGIONAL OFFICE
BALOCHISTAN
8th Floor LDA Plaza,

Egerton Road, Lahore.
Tel: (042) 111-111-456
Fax: (042) 6304926-7
helpdesk@smeda.org.pk
5TH Floor, Bahria

Complex II, M.T. Khan Road,
Karachi.
Tel: (021) 111-111-456
Fax: (021) 5610572
Helpdesk-khi@smeda.org.pk
Ground Floor
State Life Building
The Mall, Peshawar.
Tel: (091) 9213046-47
Fax: (091) 286908
helpdesk-pew@smeda.org.pk
Bungalow No. 15-A

Chaman Housing Scheme
Airport Road, Quetta.
Tel: (081) 831623, 831702
Fax: (081) 831922
helpdesk-qta@smeda.org.pk
September, 2006
Pre-feasibility Study
Footwear Retail Outlet
DISCLAIMER................................................................................................................................................3
1
PURPOSE OF THE DOCUMENT.......................................................................................................4
CRUCIAL FACTORS AND STEPS IN DECESION MAKING..........................................................4

2.1
SWOT ANALYSIS........................................................................................................................4
2.1.1
Strengths ...................................................................................................................................4
2.1.2
Weaknesses ...............................................................................................................................4
2.1.3
Opportunities.............................................................................................................................4
2.1.4
Threats ......................................................................................................................................4
PROJECT PROFILE............................................................................................................................5
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
3.9
3.9.1
3.9.2
3.9.3
3.9.4
3.9.5
MACROECONOMIC INDICATORS OF PAKISTAN.......................................................................8

4.1
4.2
4.3
LAND REQUIREMENT..............................................................................................................11
Recommended Mode ................................................................................................................11
UTILITIES REQUIREMENTS ....................................................................................................11
TIME SCHEDULE ......................................................................................................................11
SUITABLE LOCATION..............................................................................................................11
FURNITURE, FIXTURES & OFFICE EQUIPMENT...................................................................12
HUMAN RESOURCE REQUIREMENT .....................................................................................14
FINANCIAL PROJECTIONS............................................................................................................15
8.1
8.2
8.3
8.4
MARKET POTENTIAL...............................................................................................................10
COMPETITIVE ENVIRONMENT ..............................................................................................10
MAJOR PLAYERS FOOTWEAR OUTLET..............................................................................10
TARGET CUSTOMERS..............................................................................................................10
TRADE STATISTICS..................................................................................................................10
PROJECT PROFILE..........................................................................................................................11
7.1
7.1.1
7.2
7.3
7.4
7.5
7.6
SECTOR CHARACTERISTICS ....................................................................................................9

SUB SECTOR INFORMATION ....................................................................................................9
ISSUES REGARDING INDUSTRY ..............................................................................................9
MARKETING .....................................................................................................................................10
6.1
6.2
6.3
6.4
6.5
DEMOGRAPHY OF PAKISTAN ..................................................................................................8

POPULATION GROWTH .............................................................................................................9
DEMAND & SUPPLY...................................................................................................................9
SECTOR & INDUSTRY ANALYSIS...................................................................................................9

5.1
5.2
5.3
OPPORTUNITY RATIONAL........................................................................................................5
PROJECT BRIEF...........................................................................................................................5
MARKET ENTRY TIMINGS ........................................................................................................5
BUSINESS LEGAL STATUS ........................................................................................................5
PROJECT CAPACITY & RATIONAL...........................................................................................5
PROJECT INVESTMENT .............................................................................................................6
PROPOSED LOCATION...............................................................................................................7
KEY SUCCESS FACTORS ...........................................................................................................7
STRATEGIC RECOMMENDATION ............................................................................................7
Marketing..................................................................................................................................7
Pricing ......................................................................................................................................7
Store layout and presentation.....................................................................................................8
Use of computer.........................................................................................................................8
Inventory ...................................................................................................................................8
PROJECT SUMMARY ......................................................................................................................15

INCOME STATEMENT .....................................................................................................................16
BALANCE SHEET ...........................................................................................................................17
CASH-FLOW STATEMENT ..............................................................................................................18
KEY ASSUMPTIONS.........................................................................................................................19
PREF-96/September, 2006/ Rev 1
DISCLAIMER
The purpose and scope of this information memorandum is to introduce the subject matter
and provide a general idea and information on the said area. All the material included in this
document is based on data/information gathered from various sources and is based on certain
assumptions. Although, due care and diligence has been taken to compile this document, the
contained information may vary due to any change in any of the concerned factors, and the
actual results may differ substantially from the presented information. SMEDA does not
assume any liability for any financial or other loss resulting from this memorandum in
consequence of undertaking this activity. The prospective user of this memorandum is
encouraged to carry out additional diligence and gather any information he/she feels
necessary for making an informed decision.
For more information on services offered by SMEDA, please contact our website:
www.smeda.org.pk
DOCUMENT CONTROL
Document No.
PREF-96
Prepared by
SMEDA-Punjab
Issue Date
September 2006
Issued by
Library Officer
PURPOSE OF THE DOCUMENT
This document provides details of setting up a retail outlet of shoes. The objective of this pre
feasibility study is to provide information and overview about outlet of footwear and to
evaluate its viability under present circumstances. This document may form the basis to make
important investment decisions and in order serve the objective; this study covers various
aspects of project development, start up, marketing, finance and management.
2
2.1
CRUCIAL FACTORS AND STEPS IN DECESION MAKING

SWOT ANALYSIS
Before making any investment decision it is advisable to evaluate associated risk factors by
taking into consideration certain key elements.
SWOT analysis is a strategic planning tool used to evaluate Strengths, Weaknesses,
Opportunities and Threats involved in a project or a business venture. Strengths and
weaknesses are internal to company. Opportunities and threats originate outside the company.
A SWOT analysis usually performed early in the project development process, and helps
organization to evaluates internal factors and
2.1.1 Strengths
Availability of popular brands
Effective marketing/promotion schemes
Handsome market for consumption
Growing population
Status symbol to shop from big stores
2.1.2 Weaknesses
Operating at very low rather negligible profit margin in initial years.
Difficulty in building confidence among target customers.
Credibility factor in the initial phase, as suppliers do not give credit to newly
Entrants
2.1.3 Opportunities
Changing fashion style.
Spending is high and is expected to result in sales growth industry-wide.
2.1.4 Threats
Tough Competition
New entrants can easily share the business.
Footwear export is very exacting and competitive and demands high quality.
Consumers are becoming savvier and may lean towards discounted items.
Heavy taxes in the form of sales tax and income tax on retail business
3
3.1
PROJECT PROFILE
OPPORTUNITY RATIONAL
Footwear is a consumer product and relates to the basic human needs. It is difficult to specify
grade/type or model. However, it can be treated as product, which can be made by picking up
one from each of the following areas/class. For example a ladies shoes can be of leather in a
sandal form or it may be a canvass shoe. Manufacturer can produce mens formal shoe by
using synthetic materials and do on. So, it is very difficult to specify the product by grade,
type or model. We can treat it only as an essential consumer product.
In all countries of the world, the demand for footwear is high and in most developing
countries it is averagely growing. It is also estimated that about 60% of the worlds total
consumption consists of simple footwear made entirely of no-leather materials and that for
the remaining 40% only the upper part of the shoe is made of leather.
The business is of trading nature and carries larger potential for profit. Unfulfilled demand,
change in fashion and good profit margins are few incentives for a new entrants in this
business, especially for those who are committed to quality product.
3.2
PROJECT BRIEF
Footwear is a product use to cover feet as boot or shoe. This can be categorized on materials,
style and usage. The generally used materials are leather, man-made materials,
rubber/canvas/synthetic and textile along accessories. Further classification is Mens,
Ladies, and children. This can be further subdivided on the basis of style closed or open,
formal or casual, sandal or slipper or fancy shoes relates to fashion. The local industry also
caters the special users like army, sportsman, disabled persons, fire brigades and motorcyclist
etc. Domestic industry is also producing safety shoes for work force.
3.3
MARKET ENTRY TIMINGS
There is no time specification for starting such a business because there is no seasonal
impact. Product sold not only in summer, winter but also on occasions like Eid, after
summer vocation. So, business can be start at any time.
3.4
BUSINESS LEGAL STATUS
This Legal status is recommended to be a sole proprietorship/partnership because it requires

less legal requirement to start with than a company. Also the small and medium stores in
existing industry are sole proprietorships or partnerships. Similarly a lower income tax rate of
tax is applicable to sole proprietorship than that of companies.
3.5
PROJECT CAPACITY & RATIONAL
Pakistan is the 7th largest populated country in the world. Each year, 3.2 million new children
are born. The population growth rate has been reported as 2.25% during the year 2005-06.
This high population growth rate provides an opportunity for the investor to set up a retail
outlet meet the demands of this sector and earn substantial profits.
The proposed project is to provide footwear for men, ladies and children simultaneously. This
will provide the minimum feasible size for the project and minimum capital outlay for project
instigation.
Table 1 First years capacity

Imported shoes
Branded
Men
Ladies
Children
Non-Branded
Men
Ladies
Children
945
1,215
540
945
1,215
540
Local Shoes
Branded
Men
Ladies
Children
Non-Branded
Men
Ladies
Children
756
972
432
504
648
288
Total
3.6
9,000
PROJECT INVESTMENT
Cost of the project will consist of the following.

Table 2: Project Investment
Lahore Branch Head Office Warehouse
Furniture & Fixture
Office Equipment
Vehicles
Security deposit
Pre-operating Expenses
Total Fixed Cost
Initial Working Capital
Total Project Cost
1,500,000
700,000
1,400,000
960,000
110,000
4,670,000
1,338,688
6,008,688
3.7
PROPOSED LOCATION
Location of outlet is of primary concern with any retail organization. Spending time and
money wisely in the process of site selection is of primary importance. Keeping in view
products offered it is recommended that outlet must be in area like Defence, Gulberg and
Fortress stadium etc. The expansion is planned in various big cities with a single branch
opened every year.
3.8
KEY SUCCESS FACTORS
The most important factor for the success of a project is quality of product provided to the
customer. Customer satisfaction will be the key success factor.
Retail store is full of opportunities for success, but that success is reserved for those who
are prepared to commit themselves to everlasting change.
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.
Frequent discount policies used to enhance customer motivation.
The store should have an ample space for customer car parking. It is advisable to
maintain a parking space whereby around 10-15 cars can be parked
The staff hired should be well mannered and well trained in dealing with the customers.
3.9
STRATEGIC RECOMMENDATION
3.9.1 Marketing
Regular and sustained marketing is required for a successful business of retail shop. The
important marketing channels would be flyer distribution, Cable TV, etc. Regular
advertisement expense should be at least 1% to 2% of sales in such business. Some marketing
and promotional tips are as under:
Existing customers are best referrals.
Know customers needs.
Frequent clearance sales
3.9.2 Pricing
Retailers have 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
Feature your discounted prices predominantly.
3.9.3 Store layout and presentation

Todays 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 all key factors 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 consumers 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 airconditioned. There should be proper arrangement of lightening.
3.9.4 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 for example 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 update stock
and cash position after every transaction.
3.9.5 Inventory
Stock of finished goods kept must be for 180 days by farseeing major occasions, holidays,
weather and Islamic events like Eid. Supply source would be outsourcing from leading
manufacturers with own developed brands. There must be well-known imported brand
category and other footwear accessories like socks polishes, laces and gifts for children.
4
4.1
MACROECONOMIC INDICATORS OF PAKISTAN

DEMOGRAPHY OF PAKISTAN
The population of Pakistan was 32.5 million in 1947. Over the last fifty-five years, it has
increased by four folds reaching to a figure of 156 Million approximately. It is expected to
172 million marks in the year 2010. The demographic details of Pakistans population are
given below:
Table 3: Demography of Pakistan 20061
Total Estimated Population
156 Million
Population Density:
185/sq. km
Population Growth
2.25%
Population Doubling Time:
32 Years
Birth Rate:
27.3 per 1000 population
4.2
POPULATION GROWTH
Achieving a world of population in balance with its environmental resources is crucial to the
future of our planet and the welfare of its people. Population growth is a complex issue that
directly or indirectly impacts all aspects of our lives and the conditions under which we live.
During the past 25 years, cultivable land has increased by 27 percent compared to 98 percent
increase in population.1 Due to high birth rate urban population will double in the next 20
years causing more and more opportunity for the promotion of furniture business.
At present year 2005-6 the annual population growth rate is around 2.25 in country.
Pakistans population will be twice over in less than 32 years. Punjab is the most thickly
populated area and Karachi is the most densely populated city. Keeping in view the growth
rate of population of the country it is likely that housing requirements will enhance and
automatically demand for home and office furniture will be increase.
4.3
DEMAND & SUPPLY
On the basis of present population and assuming the per capita consumption of one pair, the
present estimated domestic consumption is 160 million pairs as there are no imports of
footwear in the country2.
To match the annual growth in population projected future requirement of footwear must be
8% for local consumption and 20 %growth for export.
5
5.1
SECTOR & INDUSTRY ANALYSIS

SECTOR CHARACTERISTICS
The footwear industry has been growing since 1996. There has been a continuous increase in
both production and consumption of footwear in Pakistan till the year 1999. During the year
2000, a nominal growth of 0.2% and 0.6% has been recorded in the production and
consumption of shoes respectively. Children shoes being a necessity product, is directly
linked with the population growth rate, and keeping into consideration the per capita
consumption of footwear in Pakistan, estimates can be
5.2
SUB SECTOR INFORMATION
Focal points of footwear outlets are big cities including Karachi, Lahore, and Rawalpindi.
5.3
ISSUES REGARDING INDUSTRY
Departmental stores business like any other business activity must be registered with income
tax department and sales tax department. Prevailing rate of income tax for sole proprietorship
is in various slabs max 35%. There are two types of registration available to retailers in Sales
tax3. Either it can be enrolled for turnover tax if sales are up to Rs. 20M per annum or if sales
exceed Rs. 20 M it must be registered under Retail Tax. Prevailing turnover tax rate is 2% of
all taxable sales without deducting/adjusting any input tax (sales tax paid on purchase of raw
material). The rate of prevailing retail tax is 15% of taxable sales subject to adjustment of
input tax (sales tax paid on purchases).
1
Economic survey of Pakistan 2005-06

www.pakboi.org.pk
3
Sales Tax Act 1990
2
6
6.1
MARKETING
MARKET POTENTIAL
Paper marketing is essential for attracting clients towards newly established business. Once a
reasonable clientele is established the stress on marketing can be decreased, as it will be
automatically done through word on mouth.
Major marketing is done through advertisement. This includes giving advertisement in
newspapers and magazines. An effective marketing campaign plays a vital role in the success
of business.
6.2
COMPETITIVE ENVIRONMENT
For a newly established outlet it is imperative to face a competitive environment in the

market as competition enhances a ability to strive for continuous improvement. Some big
manufacturer of footwear have outlet chain world wide, some of which are listed below:
6.3
MAJOR PLAYERS FOOTWEAR OUTLET
Table 2: Key Footwear Outlet

Key Players
Areas of Operations
Bata Pakistan Limited
International
Service (Pvt.) Ltd
Nation wide
Hush Puppies
Nation wide
English Shoes
Nation wide
Starlet (Pvt.) Ltd
Nation wide
Borjan (Pvt.) Ltd
Lahore & Surroundings
Stylo Shoes
Elegant Shoes
Milli Shoes
National wide
Reboc
Lahore
Ehsan Chappal Store
Dulhosie Shoes
Lahore
6.4
TARGET CUSTOMERS
The target customer for the proposed project would be the Men, Women and children of
upper middle class and upper class.
6.5
TRADE STATISTICS
Outlet for footwear falls under retail sector. This sector has shown a significant growth over
the last few years. In 2002-2003 this sector showed a growth of 7.30%. This sectors
10
contribution towards GDP in the year 2002-2003 is 15.50%. The following table shows the
contribution of retail and wholesale sector towards GDP for the last 5 years at constant factor
cost.
Table 3: Contribution of Retail and Wholesale sector towards GDP
Year
Total GDP
1998-1999
625,233
Wholesale &
Retail trade
94,891
1999-2000
649,656
2000-2001
Share % age
Growth %age
15.18
2.97
96,713
14.89
1.92
663,206
101,911
15.30
5.40
2001-2002
686,382
104,237
15.20
2.30
2002-2003
721,251
111,870
15.50
7.30
2003-2004
2004-2005
7
7.1
PROJECT PROFILE
LAND REQUIREMENT
For the Purpose of this study it is recommended to start project in a rented shop. The
approximately area required is 30*30 feet. This space should be available in Lahore at around
Rs.60, 000 per month.
7.1.1 Recommended Mode
One recommendation is to acquire shop on rent.
7.2
UTILITIES REQUIREMENTS
Telephone-2 lines, one for fax, one for telephone usage
Electricity 3-phase commercial connection
Internet facility
7.3
TIME SCHEDULE
Time required for establishing a set up is six to eight weeks.

7.4
SUITABLE LOCATION
Big cities are suitable location for such type of outlets. It is assumed in this pre-feasibility
that a single new outlet will be opened every year in a new city.
11
7.5
FURNITURE, FIXTURES & OFFICE EQUIPMENT
Furniture & Fixtures

Lahore Branch
Shoe Racks
Sofa and other sitting arrangements
Table & Chair
Interior Designing
Branches
Yr 1 Yr 2
Lahore
1
Gujranwala
1
Rawalpindi
Islamabad
Faisalabad
Sialkot
Multan
NWFP
Karachi
Balochistan
Store & office on roof
sq/ft
1000
500
3
1000
PKR
500
250
10,000
350
500,000
125,000
30,000
350,000
Yr 3
Yr 4
Yr 5
Yr 6
Yr 7
Yr 8
Yr 9
Yr 10
1
-
1
-
1
-
1
-
1
-
1
-
1
-
Head Office
Table & Chair
Interior Designing
Warehouse
Table & Chair
Office Equipment
7
1000
15,000
350
105,000
350,000
10,000
40,000
1,500,000
PKR
Qty
Main Branch Lahore

Air-conditioning
Telephone Exchange(Including
Telephone Sets)
Fax Machines
Computers
Standard
Printers
Laser Printer
Dot Matrix
Head Office
Air-conditioning
Rate
12
Rate
4
1
25,000
40,000
100,000
40,000
18,000
18,000
25,000
25,000
1
1
18,000
6,000
18,000
6,000
25,000
100,000
Fax Machines
Computers
Standard Computer
Printers
Laser Printer
Networking
Telephone Exchange(Including
Telephone Sets)
Warehouse
Air-conditioning
Fax Machines
Computers
Standard
Printers
Laser Printer
Dot Matrix
18,000
18,000
25,000
150,000
2
1
1
18,000
50,000
40,000
36,000
50,000
40,000
2
1
25,000
18,000
50,000
18,000
25,000
25,000
18,000
6,000
6,000
700,000
Other Branches (Year 2 onwards)

Description
Rs.
Fixture & Furniture
650,000
Electrical Equipment
Office Equipment
68,000
43,000
TOTAL
13
761,000
7.6
HUMAN RESOURCE REQUIREMENT
Table 4: Human Resource Requirement
Lahore (Head Office & Ware House) (1st Year)

Position
Reqd.
Executive Director
Accounts Officer
Accountant
Purchase Officer
Store In-charge
Office Assistant
Office Boys
Security Guard
Sweeper
1
1
1
1
1
2
1
2
1
11
10%
Other Benefits
Gross Monthly wages and salaries
Gross wages and salaries per annum
25,000
10,000
7,500
8,000
8,000
5,000
3,000
3,500
2,000
Total
25,000
10,000
7,500
8,000
8,000
10,000
3,000
7,000
2,000
80,500
8,050
88,550
1,062,600
For Lahore Branch (1 st Year)

Position
Reqd.
1
3
2
6
10%
Branch Manager
Salesmen
Helper
Other Benefits
Salary / Month
Salary / Month
15,000
6,000
4,000
Total
15,000
18,000
8,000
41,000
4,100
45,100
541,200
For Other Branches (2nd year onwards)

Position
Reqd.
1
2
1
4
10%
Branch Manager
Salesmen
Helper
Other Benefits
14
Salary / Month
10,000
6,000
4,000
Total
10,000
12,000
4,000
26,000
2,600
28,600
343,200
8
8.1
FINANCIAL PROJECTIONS
Project Summary
PROJECT COST
Furniture & Fixture

Office Equipment
Vehicles
1,500,000
700,000
1,400,000
960,000
110,000
4,670,000
1,338,688
6,008,688
Security deposit
Total Fixed Cost
Initial Working Capital
Total Project Cost
FINANCIAL PLAN
Capital
Long term loan
Short Term loan
Other Liabilities/Criditors
Total Funds
50%
15
3,004,344
1,425,131
1,079,213
500,000
6,008,688
8.2
Income Statement
FOR THE YEAR
10
Revenue
Less: Cost of Services
6,709,500
4,948,730
15,408,846
12,297,600
27,269,363
19,764,194
42,984,548
29,347,193
63,369,811
41,424,560
87,408,113
55,221,125
115,626,210
71,179,093
148,619,677
89,481,628
187,061,407
110,466,125
231,711,119
134,494,920
Gross Profit / ( Loss )
1,760,770
3,111,246
7,505,169
13,637,355
21,945,251
32,186,988
44,447,117
59,138,049
76,595,282
97,216,199
Operating Expenses
Administration & Selling
Expenses
Financial Charges
2,965,570
3,652,327
4,537,000
5,580,304
6,559,118
7,626,113
8,837,536
10,184,981
12,163,541
14,177,963
423,095
3,388,665
(1,627,895)
523,508
4,175,835
(1,064,589)
659,123
5,196,123
2,309,046
827,826
6,408,130
7,229,225
1,025,911
7,585,030
14,360,221
1,284,136
8,910,249
23,276,739
1,617,522
10,455,057
33,992,059
2,022,749
12,207,730
46,930,319
2,481,483
14,645,024
61,950,258
222,300
14,400,263
82,815,937
33,548
77,044
461,809
1,445,845
2,872,044
4,655,348
6,798,412
9,386,064
12,390,052
16,563,187
Net Profit After Tax

Balance brought forward
(1,661,443)
(1,661,443)
(1,141,633)
(1,661,443)
(2,803,076)
1,847,237
(2,803,076)
(955,839)
5,783,380
(955,839)
4,827,540
11,488,177
4,827,540
16,315,717
18,621,391
16,315,717
34,937,109
27,193,647
34,937,109
62,130,756
37,544,256
62,130,756
99,675,012
49,560,206
99,675,012
149,235,218
66,252,749
149,235,218
215,487,967
Retained Earning
(1,661,443)
(2,803,076)
(955,839)
4,827,540
16,315,717
34,937,109
62,130,756
99,675,012
149,235,218
215,487,967
Profit Before Taxation

Income tax
16
8.3
Balance Sheet
CAPITAL AND
LIABILITIES
Paid up Capital
Retained Earning
Total Equity
Long Term Loan
10
3,004,344
3,004,344
1,425,131
3,004,344
(1,661,443)
1,342,901
1,213,487
3,803,394
(2,803,076)
1,000,318
970,234
4,642,397
(955,839)
3,686,557
690,654
5,523,349
4,827,540
10,350,890
369,321
6,448,349
16,315,717
22,764,067
0
7,419,600
34,937,109
42,356,708
-
8,439,412
62,130,756
70,570,169
-
9,510,216
99,675,012
109,185,228
-
10,634,559
149,235,218
159,869,777
-
11,815,120
215,487,967
227,303,087
-
500,000
487,000
600,000
746,000
917,000
1,078,000
1,254,000
1,453,000
1,674,000
1,999,000
2,331,000
1,079,213
1,821,663
33,548
2,342,211
4,898,599
2,837,202
77,044
3,514,246
5,484,799
4,159,841
461,809
5,367,650
9,744,862
5,778,736
1,445,845
8,141,581
18,861,792
7,671,608
2,872,044
11,621,653
34,385,719
9,877,966
4,655,348
15,787,314
58,144,022
12,442,476
6,798,412
20,693,888
91,264,056
15,559,606
9,386,064
26,619,669
135,804,897
19,088,334
12,390,052
33,477,385
193,347,163
1,710,000
16,563,187
20,604,187
247,907,275
3,600,000
1
3,600,000
616,400
2,983,600
2
4,399,050
1,192,940
3,206,110
3
5,238,053
1,755,572
3,482,481
4
6,119,005
2,324,753
3,794,252
5
7,044,005
2,859,721
4,184,284
6
8,015,256
3,448,923
4,566,332
7
9,035,068
4,100,442
4,934,626
8
10,105,872
4,822,085
5,283,787
9
11,230,215
5,621,705
5,608,510
10
12,410,776
6,325,896
6,084,880
110,000
88,000
66,000
44,000
22,000
Current Assets
Inventory
838,688
1,926,106
3,408,670
5,373,068
7,921,226
10,926,014
14,453,276
18,577,460
23,382,676
28,963,890
960,000
500000
2,298,688
6,008,688
1,110,000
(1,209,107)
1,826,998
4,898,598
1,320,000
(2,515,982)
2,212,689
5,484,799
1,560,000
(714,687)
6,218,381
9,744,862
1,710,000
5,414,313
15,045,539
18,861,791
1,860,000
17,415,421
30,201,435
34,385,719
2,010,000
37,114,413
53,577,689
58,144,022
2,160,000
65,591,970
86,329,430
91,264,056
2,550,000
104,588,434
130,521,109
135,804,897
2,850,000
155,924,762
187,738,652
193,347,162
2,850,000
238,972,395
241,822,395
247,907,275
Current Liabilities
Creditors And Other
Liabilities
Short Term Loan
Tax payable
Total Current Liabilities
Total Capital And
Liabilities
ASSETS
Fixed Assets
Less Depreciation
Net Fixed Assets
Security deposit
Cash And Bank Balances
Total Current Assets
Total Assets
1,579,213
6,008,688
0
3,600,000
17
8.4
Cash-Flow Statement
FOR THE YEAR

Net Profit Before Tax
Add Depreciation
(Inc)/Dec in current
assets
Inventory
Security deposit
Inc/(Dec) in current
liabilities
Creditors & Other
Liabilities
Change in working capital
Net Inflow/Outflow from
Operating Activities
Capital Expenditure
Cash-flow from
Financing Activities
Addition to long term loan
Repay long term loans
Incr in short term Loan
Tax paid
Owners Investment
Net Inc/(Dec) in Cash
Cash in beginning of year
Cash balance (end of
year)
1
(1,627,895)
616,400
22,000
(989,495)
2
(1,064,589)
576,540
22,000
(466,049)
3
2,309,046
562,632
22,000
2,893,678
4
7,229,225
569,181
22,000
7,820,406
5
14,360,221
534,968
22,000
14,917,190
6
23,276,739
589,202
23,865,941
7
33,992,059
651,519
34,643,578
8
46,930,319
721,642
47,651,962
9
61,950,258
799,621
62,749,878
10
82,815,937
704,191
83,520,128
(838,688)
(960,000)
(1,087,418)
(150,000)
(1,482,565)
(210,000)
(1,964,398)
(240,000)
(2,548,158)
(150,000)
(3,004,788)
(150,000)
(3,527,262)
(150,000)
(4,124,183)
(150,000)
(4,805,216)
(390,000)
(5,581,214)
(300,000)
28,963,890
-
(13,000)
113,000
146,000
171,000
161,000
176,000
199,000
221,000
325,000
332,000
(1,298,688)
(1,298,688)
(1,250,418)
(2,239,914)
(1,579,565)
(2,045,613)
(2,058,398)
835,280
(2,527,158)
5,293,248
(2,993,788)
11,923,402
(3,501,262)
20,364,679
(4,075,183)
30,568,395
(4,974,216)
42,677,745
(5,556,214)
57,193,664
29,295,890
112,816,018
(4,210,000)
(211,645)
742,451
(1,709,107)
(243,252)
1,015,539
(33,548)
(1,306,874)
(279,580)
1,322,639
(77,044)
1,801,294
(321,333)
1,618,895
(461,809)
6,129,000
(369,321)
1,892,873
(1,445,845)
12,001,108
2,206,357
(2,872,044)
19,698,992
2,564,510
(4,655,348)
28,477,557
3,117,130
(6,798,412)
38,996,463
3,528,728
(9,386,064)
51,336,329
(17,378,334)
(12,390,052)
83,047,632
500,000
(1,209,107)
(1,209,107)
(2,515,982)
(2,515,982)
(714,687)
(714,687)
5,414,313
5,414,313
17,415,421
17,415,421
37,114,413
37,114,413
65,591,970
65,591,970
104,588,434
104,588,434
155,924,762
155,924,762
238,972,395
500,000
1,425,131
1,079,213
3,004,344
500,000
500,000
18
KEY ASSUMPTIONS
Capacity Utilization Assumptions

Starting Capacity Utilization
Annual Growth Rate in Capacity Utilization
Maximum Capacity Utilization for the Project
50%
10%
90%
Financial Projections
Debt
Equity
Interest on Long term Loan
Debt tenure (Years)
No. of installments per year
Amortization (years)
Income tax rate
50%
50%
14%
5 Years
12
5
20%
Operational Assumptions
No. of working days in a month
Working days in a year
Sales per annum (60 pairs per day) @ 100%
25
300
18,000
Product Mix
Ratio
60.0%
50%
50%
40%
60%
40%
Imported
Branded 60 %
Non-Branded
Local
Branded
Non-Branded
Men
Ladies
Children
35%
45%
20%
Cash Flow Related Assumptions

Sales 100% cash based
Creditors
Inventory
Cash in Bank
60
45
45
19
Depreciation Assumptions
Depreciation Method
Furniture and Fixture
Vehicle
Office equipment
WDV
10%
20%
30%
Price Assumption( Average basis)

Imported
Branded
Men
Ladies
Children
Non-Branded
Men
Ladies
Children
Local
1,500
900
500
1,000
500
300
Branded
Men
Ladies
Children
Non-Branded
Men
Ladies
Children
600
650
350
500
400
250
Cost Assumption
Rupees
Imported
Branded
Men
Ladies
Children
Non-Branded
Men
Ladies
Children
Local
750
450
250
500
250
150
Branded
Men
Ladies
300
325
20
Children
Non-Branded
Men
Ladies
Children
175
250
200
125
Furniture & Fixtures

Interior Designing of store includes:
Walls
Fall ceiling
Flooring
Lighting
Space Assumptions
Outlets
Warehouse
Head office
Rent
Rent
Rent
Outlets Rents
Lahore main branch
Lahore Outlet
Gujranwala
Rawalpindi
Islamabad
Faisalabad
Sialkot
Multan
NWFP
Karachi
Head office
Warehouse
60,000
35,000
25,000
35,000
40,000
25,000
25,000
25,000
25,000
65,000
40,000
25,000
21

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Pre-Feasibility Study

FOOTWER RETAIL OUTLET

Small and Medium Enterprise Development Authority

8th Floor LDA Plaza,

5TH Floor, Bahria

Bungalow No. 15-A

Footwear Retail Outlet

PURPOSE OF THE DOCUMENT.......................................................................................................4

CRUCIAL FACTORS AND STEPS IN DECESION MAKING..........................................................4

MACROECONOMIC INDICATORS OF PAKISTAN.......................................................................8

SECTOR CHARACTERISTICS ....................................................................................................9

DEMOGRAPHY OF PAKISTAN ..................................................................................................8

SECTOR & INDUSTRY ANALYSIS...................................................................................................9

PROJECT SUMMARY ......................................................................................................................15

PREF-96/September, 2006/ Rev 1

Footwear Retail Outlet

PREF-96/September, 2006/ Rev 1

Footwear Retail Outlet

PURPOSE OF THE DOCUMENT

CRUCIAL FACTORS AND STEPS IN DECESION MAKING

Availability of popular brands

Effective marketing/promotion schemes

Handsome market for consumption

Status symbol to shop from big stores

Operating at very low rather negligible profit margin in initial years.

Difficulty in building confidence among target customers.

Changing fashion style.

Spending is high and is expected to result in sales growth industry-wide.

New entrants can easily share the business.

PREF-96/September, 2006/ Rev 1

Footwear Retail Outlet

MARKET ENTRY TIMINGS

BUSINESS LEGAL STATUS

This Legal status is recommended to be a sole proprietorship/partnership because it requires

PROJECT CAPACITY & RATIONAL

PREF-96/September, 2006/ Rev 1

Footwear Retail Outlet

Table 1 First years capacity

Cost of the project will consist of the following.

PREF-96/September, 2006/ Rev 1

Footwear Retail Outlet

KEY SUCCESS FACTORS

To obtain a good average of profits it is necessary to provide state of art facilities to

Frequent discount policies used to enhance customer motivation.

Existing customers are best referrals.

Know customers needs.

Frequent clearance sales

Frequent clearance sales

Include a gift with purchase

PREF-96/September, 2006/ Rev 1

Footwear Retail Outlet

Feature your discounted prices predominantly.

3.9.3 Store layout and presentation

MACROECONOMIC INDICATORS OF PAKISTAN

Population Doubling Time:

PREF-96/September, 2006/ Rev 1

27.3 per 1000 population

Footwear Retail Outlet

DEMAND & SUPPLY

SECTOR & INDUSTRY ANALYSIS

SUB SECTOR INFORMATION

ISSUES REGARDING INDUSTRY

Economic survey of Pakistan 2005-06