Sie sind auf Seite 1von 42

University of Karachi

Commerce Department
Project File

Project

SANS Super Market

Class
Submitted To

:
:

3rd Semester

Submitted By
Asim Mehmood

Roll No

22

SANS SUPER MARKET..

41

Table of Contents
S.No
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37

Description
Acknowledgement
Project Profile
General Briefing
Specific Briefing
Overview of Project
S.W.O.T Analysis
Same Business
Market Analysis
Product Design
Organizational Chart
Project Costing
Estimated Sales
Fixed and Variable Cost Sheet
Organization Salary Sheet
Loan Amortization Sheet
WAAC Sheet
Insurance Expense Sheet
Rental Income Sheet
Depreciation Schedule
Projected Cash FLOW
Time Line of PV
NPV Calculation Sheet
Pay Back Period
Discounted Pay Back Period
IRR Calculation
MIRR Calculation
Financial Break Even Analysis
Accounting Break Even Analysis
Income Statement
Budgets Planning
Financial Analysis and Recommendations
Inventory Costing
Organizational MAP

Page No
3
4
5
7
13
14
16
17
18
19
20
20
21
22
23
24
25
26
27
31
33
34
35
36
37
38
39
40
41
42
44
47
58

41

Acknowledgement
This report has been prepared and submitted as a requirement for Finance PROJECT Course.
During the preparation of this report, we had to face several obstacles which were nevertheless removed through
combined group efforts to excel.
We take this opportunity to thank Our Beloved Teacher, Sir ARFEEN SIDDIQUI for his ever-present
guidance, support and ideas throughout the semester. We dedicate this report to him.
There are a number of people who have assisted us and we appreciate their efforts in helping us, especially our
family and friends who were extremely helpful, supportive and patient through the entire process gathering the
required data and completing the report.
All the material which we included in this report 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 report
but 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.
Once again we would like to take this opportunity to thank everyone, without which we would never have been
able to complete our project.

Project Profile
41

Our project SANS is to provide us the potential investment opportunity in setting up and operating a
Large sized Super Market to final consumers of Nazimabad. This report gives an insight into various aspects of
planning, Marketing and viability of project. The report is designed to provide relevant details (including
technical) to facilitate in making the decision by providing various technological as well as business
alternatives.
This launch of Project will give us a chance to capture a huge market.

Reason of Adopting the Project


One of the main reasons of adopting this business is its healthy growth chances because many
individuals in our country are moving towards separate family system and demand of house hold items are
going increase as population growth

Project Brief
Super Market is a multi-million dollar industry which continues to grow rapidly in many countries. Our
project is characterized both by trading which is supplied quickly after ordering, and by minimal service. We are
simple product outlet, which provide Domestic items for customers because we have the capital requirements to
start a super market particularly in a metropolitan area of Karachi like Nazimabad to target a huge and dense
population, as we all know that the population is increasing day by day.

General Briefing
Overview of industry:
Supermarket Trend is growing day by day. There are many areas in Karachi where many supermarkets
are providing their services. Demand of supermarket is increasing in every part of city because people mostly
like to save time and want to purchase goods with ease. Supermarket specialized in providing different
commodities in single vicinity. Supermarket is beneficial for customers who purchase in bulk quantity for whole
month.

Gap Availability:
Supermarkets and Super Stores are present in many big areas of Karachi but there are same areas,
where there is a need of such kind of super market like Nazimabad, which cover large area of population. In
Nazimabad and nearly located areas, there are no such types of super markets, which provide every kind of
thing that are easily available in one places. Other areas which cover North Nazimabad like Gulberg,
Liaquatabad and F.B. Area also have no super markets.

Market Analysis:

41

Currently the demand of house holds items are end less, Consumption trend shows that the items of
super market has end less demand as they are the basic necessities for final consumers therefore the future for
the super market will definitely be there.
Competition environment will not affect a lot because same business there but not located at our selected area.
Customer behavior and demographics analysis provides good results for our project.

Technical Analysis:
Raw material for our project is the inventory which is easily availability, Equipment for use are easily
available building site is available machinery chosen are sound and easily available.
Since the world become global village so every machinery can easily available now days. On the other hand that
every owner and investor dont faced any types of troubles to introduce their business due to availability of
technical resources easily.

Human Resources:
Human resources like managers, supervisors, inventory keeper, workers are easily available in this
scenario and there is no need of further training of staff. The world is become technical and super power,
through this skills and abilities can be seeing. Human resource prefers that how employees are managed by
organizations or to the personnel department. Every organization needs skillful employees who work for the
organization effectively and efficiently and also leads through success and development.

Capital Resources:
There are numerous ways to raise capital to start their business, including taking advantage of
government programs that cater to upstart small business owners; Liquidating assets or using them as collateral
for a loan; or encouraging a family or friend to become the creditor.

Economical Analysis:
Economically Supermarkets are providing savings for final consumers and society as they provide
discounts and acceptable prices
Provides employment and consumers satisfaction
Consumers can spend income with in their budget

Ecological Analysis
Ecologically no harms related to that type of projects, no water waste, no side affects, no environmental
pollution and no damage to the society.

41

Specific Briefing
Nature of Business
To provide a Place that will help the households and final consumers in getting their need and
requirements under one roof.
To decrease the tension of parking, to reduce the time consumption on buying, to provide the
alternatives to introduce the economic planning to flourishing the level of middle class people.

Consumer Appeal
Super Markets have become popular with consumers for several reasons. One is that through
economies of scale in purchasing to consumers at a very low cost.
Super markets like Makro and Metro rapidly gained a reputation for their cleanliness, fast service and a childfriendly atmosphere where families can spend time in shopping easily.
The super market provides a new alternative and appealed to consumers' instinct for ideas and products
associated with innovation and modification in product.
Super market featuring child play areas designed to appeal to younger customers. Parents can have a few
minutes of peace while children played or amused themselves with the toys included in the premises.
Many consumers see super markets as symbols of the wealth and well-ordered openness of Western society and
therefore become trendy attractions in many cities around Pakistan, particularly among younger people.

Focusing on Consumer Convenience


Sans Super market tend to focus on the eat while you SHOP philosophy where in seating space and
restaurant are also available for customers promoting the concept of Shop While You Eat.

Increasing Market for Super market The Population Boom


Pakistan, currently ranked as 6th in terms of total population, is characterized by a high population
growth rate of 1.9% (Pakistan Economic Survey 2007) and is set to take the top three positions in terms of total
population with already 169.28 Million people estimated 2010. With this, the GDP per capita ( ppp ) US$ 2600 (
2009 est) while the productive age group (15 to 64) years is said to take the major chunk of population (67% of
total population) by 2020.
The growth rate in food consumption is also augmented by the rapid increase in the population

The Future
The Pakistani economy is becoming increasingly service-oriented, and over the past several decades,
super markets that offer the highest levels of convenience have been rewarded with strong sales growth. In the
face of rising population, incomes and increasingly hectic work schedules, a nearly insatiable demand for

41

convenience will continue to drive super market sales. Super market Outlets will strive to find ways to make
their products even more accessible.
Even if incomes stagnate or attitudes change, consumers are unlikely to spend less time in shopping at super
market rather then to shop every thing or item separately at different places.
The value of consumer time, as well as the demand for consistent, high-quality low price products, will continue
to shape the super market image. Super market, once considered a novelty, has become an increasingly
significant part of the consumers

Future of the Company


Nowadays most of the companies are diverted towards marketing their products by utilizing a social
message in spite of marketing the products. This type of marketing is called is called socialistic concept of
marketing or social responsibility marketing. Our will use same technique of publicizing their products.

Key to Successes
Think, in your daily routine life,
How much time you left after a busy day?
How much time you spend for buying grocery?
And how much time you left for your buying garments and apparels?
Tension of car parking, at different shopping areas again and again, some time for garments, some time for
meal, some time for entertainment and decoration of houses etc.
All time consumption and tensions would become one fifth less?
If you go for shopping, on a super market, where you can find all things under one roof.

SANS Super Market can help you by doing this..


Demand of Supermarket
In Nazimabad and nearly located areas there is a need of supermarket. We will capture the area of
North Nazimabad which is approximately shown 750000 pop in 2009. The population of Gulberg town is about
500000. New Karachi town involve in covering approximately 700000 numbers of population, as well as the
population of Liaquatabad town and FB area covers huge population which is increasing day by day. These
thickly populated areas will be sufficient for providing a gap to us and the probability of availability of
consumers is very high.

Current Practices
A huge market is available for consumer goods.

41

Target Customers
Customers is a person who grow in an environment and start separate life so their age and gender not
matter, what does matters is lifestyle, interests, geographic location. Changing in life style interest and shifting
become the reason to grow our business.
Major customer groups

Residential customer
Business sector
Governments organization
Retail consumers

Our major consumers will be that group who are innovators and willingness to change life style, purchase
products at various price levels.

Neighbourhoods of North Nazimabad Town


The most densely populated neighbourhood is Paposh Nagar in the southwest of the town and the least densely
populated neighbourhood is Farooq-e-Azam in the centre of the town.

Buffer Zone II
Buffer Zone
Farooq-e-Azam
Hyderi
Jalalabad

North Nazimabad
Nusrat Bhutto Colony
Pahar Ganj
Paposh Nagar
Sakhi Hassan

Khandu Goth

Shadman Town

Product Strategy
Like any other type of company, SANS Super Market will need a concise business plan. This plan
should include but is not limited to: the overall concept and goal of the Project; specific financial information
and projections; a description of the target market; Pricing; equipment and employee details; advertising and
marketing plan; and a potential growth strategy.

Key Success Factors for SANS Super MARKET


There are some key factors for opening a one-of-a-kind of super market, there are winning principles
that can help shape our Project and improve its chances of succeeding INSHALLAH.

Selecting Prime Location


The specific location within our target area also is very critical. If we are situated in a undeveloped and
infrequently traveled area, we limit our earning potential. If our super market is right off of a major populated
and freeway heavily traveled area we may be highly successful.
Our outlet setup will be in a densely populated middle income area such as North Nazimabad, Karachi.
The main reason for selecting this location is the presence of target market and customer traffic which are the
prerequisites for our success

Market Research

41

This is probably the most critical factor for running a successful super market. We need to visit super
market outlets, franchises and other chains to see how our concept would fit into the neighborhood we are
planning to target. Talk to customers to know their preferences, some detailed meetings with super market
managers / owners over dinner would do the trick in obtaining best practices and critical information that
otherwise could have been overlooked.
We should Keep in mind that because a concept works in one area does not mean it will be wellreceived by customers in our location. Fashion and Tastes are subject to location preference and more often
target market. Another thing to consider is competition, If our market is saturated with similar super markets
and the population may not be large enough to support more super markets, then we may want to rethink our
concept.

Proposed Business Legal Status


Although the legal status of business tends to play an important role in any setup, the proposed super
market business is assumed to operate on a sole proprietorship basis which may extend to partnership in case of
addition of new products that might add significant business to the existing setup.
We are required to apply for the membership in chamber of commerce, acquire sales tax number and national
tax number.

Uniqueness
The super market will issue Loyalty card, introduce an exciting way to do grocery shopping while
earning valuable points which can be redeemed into rewards and incentives such as plasma TVs, cars , DVD
players, gift vouchers ,free tickets, digital cameras and more by just filling out application forms at any counter
and start earning. The more you shop, the more you WILL earn.
Availability of Restaurant
Availability of Sitting Area
Availability of Franchises
Availability of Huge Parking Area

Promotional Activities
Every business needs a comprehensive marketing plan. After determining our marketing budget, and
pricing, we will promote our project by billboard advertising, flyers in Newspapers and local cable TV
advertising. We must ask our customers how they found out about Super Market Services, so that we can record
where our advertising and marketing money are best spent.

Hiring Employees
One of the biggest challenge Super Market project face is a lack of qualified personnel. In order to get
and retain qualified employees, we must make sure our pay scales relate clearly to the job's duties and
responsibilities. In addition, we need to find out what other business are paying their employees so that we can
be competitive in the job market, without spending too much on payroll.

Human Resources
Human resources required for project is
Salesmen
Supervisor

Manager
Accountant

41

Receptionist
Security Guard.

Inventory keeper

Technical Resources
Specific and ideal location
Computing Machines
Screens
Cable lines
Gas supplies.
Pcs,

Trained technical staff


Research and development
Landline
Electric supplies
Calculators
Panaflex

Distribution
We will establish a suitable distribution network so that the customers will find it easy to access. The
dealership will be provided to sound distributors with good market goodwill.

Our Services
Students, Club Members and Sports Persons get a 15% a discount. Just show your I.D card. We accept
all major credit and debit card. Citi Bank, Bank Alfalah, Faisal Bank, MCB, Habib Bank. Standard Chartered
Bank etc. and Gift Vouchers

Grand Strategy
As Grand Strategy we will adopt Growth Strategy and Penetrating Pricing Policy.

Growth Strategy
We will increase our product line and product width and depth and try to capture mass market to
achieve high sales volume utilize low and affordable prices for both consumers and for us.

41

Overview of Project
S.No

Particulars

1.
2.
3.
4.
5.

Proposed Project
Promoters
Operators
Location
Area

6.
7.
8.

Current Practice
Technical experts
Human Resources

Description
Super Market
Owners
Chairman, Managers
North Naizmabad
3500sq yard for Building
1000sq yard for Parking
A huge market is available for consumer goods
Easily Available
Easily Available

Selection of Area
Our outlet setup will be in a densely populated middle income area such as North Nazimabad, the main
reason for selecting this location is the presence of target market and customer traffic which are the prerequisites
for our success.

Area Selected for Supermarket


North Nazimabad.
Address:
North Nazimabad block J E59, near Imam clinic,5 Star Chowrangi, Karachi.

Area Required
3500 sq yard for building
1000sq yard for parking.

Initial Capital
(150 million)

Same Businesses
41

Name

Address

Naheed Super Market

Plot 156 The Square, Sirajudaula Road, Karachi


111-624-333
Shop No1, Uzma Court, DC-3, Block 8, Clifton,
Karachi
92-21-3-259-4014,3-259-4015
NA-Class 190-219 DEH, Okewari, Near Safari
Park, Gulshan Iqbal, Karachi
92-21-3-403-1000
Park Towers, Ground Floor, Shahrah-e-Faisal,
Clifton, Karachi
32-21-3-583-2525
Rashid Minhas Road, Near millennium mall,
Karachi
Shah Faisal Colony Flyover, Karachi
0214604271
Liaquat Market Road, Karachi
Nazimabad, Karachi
0216612602
Gulshan-e-Iqbal, Karachi
Gulshan-e-Iqbal Town, University Road, Karachi
Malir Cant Road, Karachi
16, Abdullah Haroon Road,
(Victiria Road) Karachi.
111-112-233
Gulshan-e-Iqbal, Near gulshan Chorongi, Karachi

Aghas Super Market


Metro
My Super Store
ARY Cash and Carry
Makro Super Market
Super Liaquat Market
Diamond Super Market
Habitt Super Market
Discover Super Market
Ordinance Mart
RBS
One 10 Super Market

Market and Demand Analysis..


Buyers
Final Consumers of nearly areas

Current Demand
Industry Analysis
Population of Pakistan is at about 17Billion and increasing at very fast rate. Current market size is very
vast and number of independent families is making their separate houses.
There is a trend of living independently and separately and market's growth potential is very high.
As life is become very fast and consumer do not have time and their demand changes due to so many
related factors like income level, personality, class consciousness, attitude and so many factors there fore we
must need to improve technological developments in production like durability, new styles, lucky draw gifts and
innovations etc.

Economy
Karachi is the financial and commercial capital of Pakistan. It accounts for a lions share of Pakistans
revenue generation. It generates 70% of the total national revenue

41

What to Expect
Fresh produce, an extensive selection of local and international groceries & products, local and
international brand cosmetics on the second level, a huge variety of baby items on the third level, caring and
dedicated management.

Business hours: 11 am 11pm daily


Centrally Air Conditioned: Yes
Food Court: Yes
Grocery store: Yes
Gift Vouchers: Available
Parking Garage: Yes
Designer Shops: Mostly
Smoking Policy: Entire store is non-smoking
Parking: Plenty of self-parking available
Accepts Credit Cards: Yes, major credit and debit cards accepted
Restaurant (sitting area): Available
Franchises: Available

PRODUCT DESIGN:
STORE SITE MAP
GROUND FLOOR:

Rice, Floor & Beans


Spices
Cereals
Cheese & Yogurt
Chocolate
Nuts & Seeds
Baking Ingredients
Baby Food
Imported Ethnic Food Items
Cosmetics
Shampoo & Lotions
Perfume & Cologne

FLOOR 1:

Household Items &Kitchen Accessories


Pharmacy
Extensive Selection of Baby Products, Toys & Clothing
Womens garments
Mens Clothing

41

FLOOR 2:
Franchises

OFFICIAL WEBSITES:
http://www.sanssupermarket.com
TEL: (92-21) UAN: 111-666-333
E-MAIL : info@sanssupermarket.com

41

Project Cost
S.N
o
1
2
3
4
5
6
7

Quantity
Land
Building Construction & Decoration
Security Cameras Computer
Trolleys
Generators
A.C Plant
Truck
Total

1
1
20 / 6
200
1
1
1

Price
50000000
40000000
0
2100
850000
1100000
1400000

Total
Rs

Salvag
e Value

50000000
40000000
450000
420000
850000
1100000
1400000
94220000

1000000
45000
42000
85000
110000
140000
1422000

Reference
Land and building rate is given by
Al Sharif State Agency.
Truck, Generator, Trolley, A.C Plant rates given by
Shahzad Enterprises, Constriction Company

Estimated Sales

No of Families Targeted
Population / Average Family Member
( 750000/7 ) Expected Families Visit Daily
No of Families*10%
Expected Families Shop
No of Families / 2
Shopping At least by Each Family
Sales Amount
Expected Families * 6000
Per Month Sales
Per Year Sales

750000
107143
10714
5357
6000
32142857
32142857
38571428
6

Assumptio
n
Targeted Market Nazimabad Karachi

41

Fixed Cost
S.No

Per Year

Description

Per Quarter

1
2
3
4

Insurance
Salary
Utilities
Total (1+2+3)

Rs.
Rs.
Rs.
Rs.

794307
10716000
1800000
13310307

0
2679000
450000
3129000

5
6

Total Depreciation
Sub Total (4+5)

Rs.
Rs.

1353850
14664157

338463
3467463

7
8

Interest
Loan Payable

Rs.
Rs.

8000000
2345054

0
0

Grand Total (6+7+8)

Rs.

25009211

3467463

Variable Cost
S.No

Per Year

Description

Per Quarter

1
2
3

Maintenance Cost
Transportation
Sub Total (1+2)

Rs.
Rs.
Rs.

240000
1200000
1440000

60000
300000
360000

Inventory

Rs.

364299732

91074933

Total (3+4)

Rs.

365739732

91434933

41

Salary Chart
Human
Resources

S.No

No. Of
Workers

Salary
(Rs)

Total
(RS)

Manager

30000

90000

1080000

Auditor

25000

25000

300000

Accountant

15000

30000

360000

Supervisor

20000

120000

1440000

Salesman

40

8000

320000

3840000

Inventory Keeper

10000

40000

480000

Helpers

20

7000

140000

1680000

Receptionist

8000

32000

384000

Security Guards

10

6000

60000

720000

6000

36000

432000

10

Sweepers

893,000.00

Salary Expense
1st Year
2nd Year
3rd Year
4th Year
5th Year
6ht Year
7th Year
8th Year
9th Year
10th Year
Total

Per Year
(Rs)

10,716,000

In Rs.
Per Quarter

Per Year

2679000
2679000
2679000
2812950
2812950
2812950
2953598
2953598
2953598
3101277

10,716,000
10,716,000
10,716,000
11,251,800
11,251,800
11,251,800
11,814,390
11,814,390
11,814,390
12,405,110
113,751,68
0

28437920

Assumption
5% Increase in salary after every 3 year

Loan Amortization Schedule


41

In Rs.

Year

Loan Amount

Installment

Interest

Principle

Balance

1st

50,000,000

10,345,054.15

8,000,000

2,345,054

47,654,946

2nd

47,654,946

10,345,054.15

7,624,791

2,720,263

44,934,683

3rd

44,934,683

10,345,054.15

7,189,549

3,155,505

41,779,178

4th

41,779,178

10,345,054.15

6,684,669

3,660,386

38,118,793

5th

38,118,793

10,345,054.15

6,099,007

4,246,047

33,872,745

6th

33,872,745

10,345,054.15

5,419,639

4,925,415

28,947,330

7th

28,947,330

10,345,054.15

4,631,573

5,713,481

23,233,849

8th

23,233,849

10,345,054.15

3,717,416

6,627,638

16,606,211

9th

16,606,211

10,345,054.15

2,656,994

7,688,060

8,918,150

10th

8,918,150

10,345,054.15

1,426,904

8,918,150

103,450,541.50

53,450,542

50,000,000

Total
Ist Year Loan
($10,345,054.15)

10,345,054
Financial Formula

Referenc
e
Interest rate given by Soneri Bank
Dated: 13.04.2010.

Weighted Average Cost of Capital ( WACC )


41

Equity

100000000

Debt

50000000

Assets

150000000

Tax

{ ( E / A)

30

Cost of Equity ( Ks )

21

Cost of Debt

16

( Kd )

WACC

( Cost of Equity) }

WACC

0.66667

WACC

0.14

WACC

0.177333333

WACC

17.73

0.21

{ ( D / A)

0.33333

0.03733

( Cost of Debt )
0.16

(1 - Tax ) }
0.7

Ks = Bond yield + Risk premium


Bond yeild
Risk premium

ks =

16%
5%

21%

Assumption
5% Risk added in cost of equity

Insurance Expense
41

In Rs.

Item

Cost

Premium Amount

Fire Insurance
Building
Security Computers
Trolleys
Generator
A.C Plant
Truck
Total
Fire Insurance

40000000
450000
425000
850000
1100000
1400000
44225000
(Rs. 15 Per Thousand)

663375

Other Damages
Security Computers
Trolleys
Generator
A.C Plant
Truck
Total
Other Insurance

Clause A & C
F.I.F
C.E.D

Insurance Expense
1st Year
2nd Year
3rd Year
4th Year
5th Year
6ht Year
7th Year
8th Year
9th Year
10th Year
Total

450000
425000
850000
1100000
1400000
4225000
(Rs. 3.2 Per Thousand)
TOTAL
5% or Maxim 2000
TOTAL
1% of Total
16% of Total
Chargeable Premium

13520
676895
2000
678895
6789
108623
794307

In Rs.
794307
794307
794307
794307
794307
794307
794307
794307
794307
794307
7943070

Reference
By Adam jee Insurance Company I.I Chundrigar Road Karachi

Rental Income
41

S.No
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15

Item
Franchises
Parlor
Restaurant
Ice Cream Shop
Gift Shop
Toy Shop
Men Garments
Women Garments
Children Garments
Shoes Shop
Purse and Imported Item
Jewelry
Crockery
Pharmacy
Cd's Shop
Total

Quantity

Amount Rs.
2
1
1
1
1
1
1
1
1
1
1
1
1
1
1

Amount Rs.

100000

1200000

30000

360000

50000

600000

20000

240000

20000

240000

20000

240000

30000

360000

30000

360000

30000

360000

20000

240000

20000

240000

20000

240000

30000

360000

30000

360000

20000

240000

470000

5640000

Rental Income
1st Year
2nd Year
3rd Year
4th Year
5th Year
6th Year
7th Year
8th Year
9th Year
10th Year
Total

Per Year Rs.


5640000
5640000
5640000
5922000
5922000
5922000
6218100
6218100
6218100
6529005
59869305

Per Quarter Rs.


1410000
1410000
1410000
1480500
1480500
1480500
1554525
1554525
1554525
1632251
14967326

Reference
Rent charges by Hyderi market, U.P Society,
Assumptio
n
5% Increase in Rental income after every 3
year

DEPRECIATION SCHEDULE

41

Building
Straight Line Method
Building Cost
Life (in years)
Salvage Value
Years Cost
1
40000000
2
40000000
3
40000000
4
40000000
5
40000000
6
40000000
7
40000000
8
40000000
9
40000000
10
40000000

40000000
40
1000000
Salvage Value
1000000
1000000
1000000
1000000
1000000
1000000
1000000
1000000
1000000
1000000

Life
40
40
40
40
40
40
40
40
40
40
Total

Dep. Cost
975000
975000
975000
975000
975000
975000
975000
975000
975000
975000
9750000

Trolley Depreciation
Straight Line Method
Cost
life (in years)
Salvage Value
Year
1
2
3
4
5
6

Cost
425000
425000
425000
425000
425000
425000

425000
6
42500
Salvage Value
42500
42500
42500
42500
42500
42500

Life
6
6
6
6
6
6

Total
Dep.

Dep. Cost
63750
63750
63750
63750
63750
63750

382500

A.C Plant
Diminishing Balance Method
Cost
Life (in years)

1100000
12

41

Rate

0.083333333

Years
1
2
3
4
5
6
7
8
9
10

Cost
1100000
1008700
924978
848205
777804
713246
654047
599761
549981
504332

Rate
0.083
0.083
0.083
0.083
0.083
0.083
0.083
0.083
0.083
0.083

Dep.
Cost
91300
83722
76773
70401
64558
59199
54286
49780
45648
41860
Total
Dep.

Book Value
1008700
924978
848205
777804
713246
654047
599761
549981
504332
462473
637527

Generator
Diminishing Balance Method
Cost
Life (in years)
Rate
Years
1
2
3
4
5
6
7
8
9
10

Cost
850000
765000
688500
619650
557685
501917
451725
406552
365897
329307

850000
10
0.1
Rate
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1

Dep. Cost
85000
76500
68850
61965
55769
50192
45172
40655
36590
32931
Total Dep.

Book Value
765000
688500
619650
557685
501917
451725
406552
365897
329307
296377
553623

Security and Clearance Computer


Diminishing Balance Method
Computer cost
Life (in years)
Rate

450000
10 years
0.1

41

Years
1
2
3
4
5
6
7
8
9
10

Cost
450000
405000
364500
328050
295245
265721
239148
215234
193710
174339

Rate
0.1000
0.1000
0.1000
0.1000
0.1000
0.1000
0.1000
0.1000
0.1000
0.1000

Dep Cost
45000
40500
36450
32805
29525
26572
23915
21523
19371
17434
Total Dep.

Book value
405000
364500
328050
295245
265721
239148
215234
193710
174339
156905
293095

Truck
Diminishing Balance Method
Cost
Life (in years)
Rate
Years
1
2
3
4
5
6
7
8
9
10

1400000
15
0.066670

Cost
1400000
1306200
1218685
1137033
1060852
989774
923460
861588
803861
750003

Rate
0.067
0.067
0.067
0.067
0.067
0.067
0.067
0.067
0.067
0.067

Dep. Cost
93800
87515
81652
76181
71077
66315
61872
57726
53859
50250
Total Dep.

Book Value
1306200
1218685
1137033
1060852
989774
923460
861588
803861
750003
699753
700247

Depreciation Schedule Summary


S.
N

Asset

Cost

Salvage
Value

Life of
Asset

Dep Exp
1st Year

Total Dep
Exp of 10

Book
Value

41

o
1
2
3
4
5
6
7

Year
Land
Building
Trolleys
A.C Plant
Computer, camera
Truck
Generator
Total

50000000
40000000
425000
1100000
450000
1400000
850000
94225000

0
1000000
42500
110000
45000
140000
85000
1422500

40
40
6
12
10
15
10

0
975000
63750
91300
45000
93800
85000
1353850

0
9750000
382500
637527
293095
700247
553623
12316992

50000000
30250000
42500
462473
156905
699753
296377
81908008

Depreciation Expense

Per Year
1st Year
2nd Year
3rd Year
4th Year
5th Year
6ht Year
7th Year
8th Year
9th Year
10th Year
Total

1353850
1326988
1302475
1280102
1259678
1241028
1160245
1144685
1130468
1117474
12316992

Per
Quarter
338463
331747
325619
320026
314919
310257
290061
286171
282617
279369
3079248

Projected Cash Flows For 10 Years


In Rs.
0 Year

Ist Year

2nd

3rd

4th

5th

41

1
2
3

Fixed Cost Investment


Working Capital
Rental Income

Inventory Sales

Total Revenue ( 3+4 )

6
7
8
9
10

C.O.G.S ( Inventory Cost)


Insurance
Transportation
Utilities
Salaries

11
12
13
14
15
16
17
18

All Cost ( 6+7+8+9+10 )


Operating Profit ( 5-11 )
Deprecation
Profit before tax (12-13 )
Tax 30%

19
20

Initial Out Lay ( 1+2 )


Operating cash flow (13+16 )
Terminal Cash inflow
( 17+18 )

21

94220000
55780000

Profit after tax (14-15 )


Net Salvage value (Assets)
Working Capital Recovery

5640000
40276800
0
40840800
0
36429973
2
794307
1200000
1800000
10716000
37881003
9
29597961
1353850
28244111
8473233

5640000
42290640
0
42854640
0
38251471
9
794307
1200000
1800000
10716000
39702502
6
31521374
1326988
30194387
9058316

5640000
44405172
0
44969172
0
40164045
5
797307
1200000
1800000
10716000
41615376
2
33537958
1302475
32235483
9670645

5922000
46625430
6
47217630
6
41770607
3
837172
1260000
1890000
11251800
43294504
5
39231261
1280102
37951159
11385348

5922000

19770878

21136071

22564838

26565811

31203239

21124728

22463058

23867313

27845913

32462917

21124728

22463058

23867313

27845913

32462917

14864615
0

14731916
3

14601668
7

14473658
5

143476908

489567021
495489021
434414316
837172
1260000
1890000
11251800
449653288
45835734
1259678
44576056
13372817

15000000
0

22

Net Cash flow ( 20+21 )

15000000
0

24

Book Value of Investment

15000000
0

41

Projected Cash Flows For 10 Years


6th

7th

8th

9th

5922000
51404537
2
51996737
2
45179088
8
837172
1260000
1890000
11251800
46702986
0
52937512
1241028
51696484
15508945

6218100
53974764
1
54596574
1
46986252
4
879031
1323000
1984500
11814390
48586344
4
60102297
1160245
58942052
17682615

6218100
56673502
3
57295312
3
48865702
5
879031
1323000
1984500
11814390
50465794
6
68295177
1144685
67150492
20145148

6218100
59507177
4
60128987
4
50820330
6
879031
1323000
1984500
11814390
52420422
7
77085647
1130468
75955180
22786554

Profit after tax (14-15 )


Net Salvage value (Assets)
Working Capital Recovery
Initial Out Lay ( 1+2 )
Operating cash flow (13+16 )
Terminal Cash inflow ( 17+18 )

36187539

41259436

47005345

53168626

59433142
81908008
55780000

37428567

42419681

48150030

54299094

60550616
137688008

1
2
3

Fixed Cost Investment


Working Capital
Rental Income

Inventory Sales

Total Revenue ( 3+4 )

10th

6529005
624825363
631354368

6
7
8
9
10

C.O.G.S ( Inventory Cost)


Insurance
Transportation
Utilities
Salaries

11
12
13
14
15
16
17
18
19
20
21
22

All Cost ( 6+7+8+9+10 )


Operating Profit ( 5-11 )
Deprecation
Profit before tax (12-13 )
Tax 30%

Net Cash flow ( 20+21 )

37428567

42419681

48150030

54299094

198238624

24

Book Value of Investment

14223588
0

14107563
5

13993094
9

13880048
2

137683007

528531438
922983
1389150
2083725
12405110
545332405
86021963
1117474
84904488
25471347

Assumptions

The Sales are expected to increase by 5% every year and Rental income is additional which will also,
would be increasing 5% after every 3year while the cost of raw materials is assumed to increase by
5%.

Life of Project 10 year

Principles followed in estimation


o Separation Principle
o Consistency Principle
o Post tax Principle

41

Time Line of Present Value


PV

150000000

15000000
0

2112472
8

2246305
8

2386731
3

2784591
3

3246291
7

3742856
7

4241968
1

4815003
0

5429909
4

19823862
4

10

(1.173)1

(1.173)2

(1.173)3

(1.173)4

(1.173)5

(1.173)6

(1.173)7

(1.173)8

(1.173)9

(1.173)10

17942860
16205782

_____________/
________________________/

14625315

____________________________________/

14493181

_______________________________________________/

14351270

__________________________________________________________/

14054214

_____________________________________________________________________/

13529175

________________________________________________________________________________/

13043707

___________________________________________________________________________________________/

12493888

______________________________________________________________________________________________________/

38743056

_________________________________________________________________________________________________________________/

169482449

19482449

41

Net Present Value ( NVP )


WACC Rate 17.73 %
Yea
r

Cash Flows

-150000000

21124728

PV
21124728

22463058

/( 1.1773 )^1
/( 1.1773 )
^2

22463058

23867313

/( 1.1773 )^3

23867313

27845913

/( 1.1773 )^4

27845913

32462917

/( 1.1773 )^5

32462917

37428567

/( 1.1773 )^6

37428567

42419681

/( 1.1773 )^7

42419681

48150030

/( 1.1773 )^8

48150030

54299094

/( 1.1773 )^9

10

198238624

/( 1.1773 )^10

54299094
19823862
4

1.177
3
1.386
1
1.631
9
1.921
3
2.262
0
2.663
2
3.135
4
3.691
4
4.346
1
5.116
8

17942860

16205782

14625315

14493181

14351270

14054214

13529175

13043707

12493888

38743056

169482449
NPV

NPV
NPV

=
=

Present value of In Flow 169482449

Present Value of Out Flows


-

15000000
0

19482449

41

Pay Back Period


Year

Cash Flows

Cost

Recovered

Balance

-150000000

21124728

150000000

21124728

128875272

22463058

128875272

22463058

106412214

23867313

106412214

23867313

82544901

27845913

82544901

27845913

54698987

32462917

54698987

32462917

22236070

37428567

22236070

37428567

-15192497

42419681

48150030

54299094

10

198238624

Pay Back Period =

Year before full recovery + Unrecovered amount / Cash flow of the Year

Pay Back Period =

Pay Back Period =

+
5

22236070
+

Pay Back Period =

5.5940936

Pay Back Period =

5 Year 6 Month

37428567

0.59409355

41

Discounted Pay Back Period


Year

In Flows

-150000000

PV

21124728

/( 1.1773 )1

21124728

1.1773

17942860

22463058

/( 1.1773 )2

22463058

1.3861

16205782

23867313

/( 1.1773 )3

23867313

1.6319

14625315

27845913

/( 1.1773 )4

27845913

1.9213

14493181

32462917

/( 1.1773 )5

32462917

2.2620

14351270

37428567

/( 1.1773 )6

37428567

2.6632

14054214

42419681

/( 1.1773 )7

42419681

3.1354

13529175

48150030

/( 1.1773 )8

48150030

3.6914

13043707

54299094

/( 1.1773 )9

54299094

4.3461

12493888

10

198238624

/( 1.1773 )10

198238624

5.1168

38743056

15000000
0
S.N
o

Cost

16948244
9
Recovere
d

Balance

150000000

17942860

132057140

132057140

16205782

115851357

115851357

14625315

101226043

101226043

14493181

86732862

86732862

14351270

72381592

72381592

14054214

58327378

58327378

13529175

44798203

44798203

13043707

31754496

31754496

12493888

19260607

10

19260607

38743056

-19482449

Pay Back Period =

Pay Back Period =


Pay Back Period =

1948244
9

Year before full recovery + Unrecovered amount / Cash flow of the Year

19260607
9

3874305
6

0.497137

Pay Back Period =

9.49713702

Pay Back Period =

9 Year 5 Month

41

Internal Rate of Return ( IRR )


Gues
s
Yea
r

Cash Flows

20.2222577

Rate

PV

-150000000

21124728

/( 1+IRR )1

21124728

1.2022

17571395

22463058

/( 1+IRR )2

22463058

1.4453

15541722

23867313

/( 1+IRR )3

23867313

1.7376

13735640

27845913

/( 1+IRR )4

27845913

2.0890

13329748

32462917

/( 1+IRR )5

32462917

2.5114

12925970

37428567

/( 1+IRR )6

37428567

3.0193

12396353

42419681

/( 1+IRR )7

42419681

3.6299

11686198

48150030

/( 1+IRR )8

48150030

4.3639

11033607

54299094

/( 1+IRR )9

5.2464

10349722

10

198238624

/( 1+IRR )10

54299094
19823862
4

6.3074

31429645

508299925
Formula

Out Flow = In Flow

IRR

Present value of In Flow

IRR
IRR
IRR

=
=
=

20.2222577

IRR

20.222258%

150000000

150000000

Present Value of Out Flows


15000000
0

Financial Formula

41

Modified Internal Rate of Return ( MIRR )


N
Yea
r

Cash Flows

Out Flow = In Flow / ( 1+MIRR)

-150000000

21124728

*( 1.1773 )9

21124728

4.3461

FV
91809174

22463058

*( 1.1773 )8

22463058

3.6914

82920976

23867313

*( 1.1773 )7

23867313

3.1354

74834113

27845913

*( 1.1773 )6

27845913

2.6632

74158017

32462917

*( 1.1773 )5

32462917

2.2620

73431896

37428567

*( 1.1773 )4

37428567

1.9213

71911932

42419681

*( 1.1773 )3

42419681

1.6319

69225439

48150030

*( 1.1773 )2

48150030

1.3861

66741420

54299094

*( 1.1773 )1

54299094

1.1773

63928133

10

198238624

*( 1.1773 )0

198238624

1.0000

198238624

867199725
Present Value of Out Flow

= Future Value of In Flow / (1+MIRR)10

150000000

867199725

(1+ MIRR) 10

(1+ MIRR) 10

867199725
5.78133150
1

(1+ MIRR)
10/10

5.78133150
1

(1+ MIRR)

1.19179837

MIRR

0.19179837

MIRR

19.18%

(1+MIRR)1
0
150000000

1/10
^0.
1

41

Financial Break Even Analysis


Yearly
Revenue
Variable Cost
Contribution Margin
Fixed Cost
Depreciation
Pre tax Profit
Tax 30%
Profit after tax
Cash flow

100.00%
89.55%
10.45%

408408000
365739732
42668268
13310307
1353850
28004111
8401233
19602878

20956728

89.55% of Sales
10.45 % of Sales
14664157
10.45% Sales - fc, dep
30% ( 10.45 % sale - fc, dep)
70% ( 10.45 % sale - fc,dep )
Dep+ 70% ( 10.45 Sales-fc,
dep)

10 Year Data
Fixed Cost
Decrication 10 Year
Total Fixed Cost
Cash flow
Cash flow
Cash flow

Rs
.
Rs
.

=
=
=

Investment
Discount rate
Year
150000000
150000000
150000000
150000000
177171691
Break even sales

13310307
12316992
25627299
Deprecation +
12316992
0.07315 Sales

0.7 ( 0.1045 sales +0.07315 sales


-5622117

25627299
17939109

150million
16%
10
=
=
=
=
=
=

0.07315 sales-5622117
0.07315 sales-5622117
0.07315 sales-5622117
0.35353395 Sales0.35353 Sales
501150373

(PVIFA)
{ 1- 1/(1.16)`10 } / 0.16
4.833
27171691

41

Accounting Break Even Analysis


Revenue
Variable Cost
Contribution Margin
Fixed Cost
Depreciation
Pre tax Profit

100.00%
89.55%
10.45%

408408000
365739732
42668268
13310307
1353850
28004111

Break Even Sales = Total Fixed Cost/ C.M Ratio


Break Even Sales
= Fixed + Depreciation / 10.45 %
Break Even Sales
= 13310307 + 1353850 / 0.1045
Break Even Sales
= 14664157
/0.1045
Break Even Sales
=
140326861

Sales 1st Year


Rental Income
Total Revenue
Fixed Cost
Dep
Fixed Cost

402768000
5640000
408408000
14664157
1353850
13310307

41

Income Statement
Ist Year

2nd

3rd

4th

5640000
44405172
0
44969172
0
40164045
5

5922000
46625430
6
47217630
6
41770607
3

5th

Rental Income

Inventory Sales

402768000

Total Revenue ( 1+2 )

408408000

C.O.G.S ( Inventory Cost)

364299732

5640000
42290640
0
42854640
0
38251471
9

Contribution Margin (3-4)


Insurance
Transportation
Utilities
Salaries

44108268
794307
1200000
1800000
10716000

46031681
794307
1200000
1800000
10716000

48051265
797307
1200000
1800000
10716000

54470233
837172
1260000
1890000
11251800

61074706
837172
1260000
1890000
11251800

All Cost ( 6+7+8+9 )


Operating Profit ( 5-10 )
Deprecation
Profit before tax (11-12 )
Tax 30%

14510307
29597961
1353850
28244111
8473233

14510307
31521374
1326988
30194387
9058316

14513307
33537958
1302475
32235483
9670645

15238972
39231261
1280102
37951159
11385348

15238972
45835734
1259678
44576056
13372817

Profit after tax (13-14 )

19770878

21136071

22564838

26565811

31203239

7th

8th

9th

6218100
56673502
3
57295312
3
48865702
5

6218100
59507177
4
60128987
4
50820330
6

84296098
879031
1323000

93086568
879031
1323000

4
5
6
7
8
9
10
11
12
13
14
15

5640000

6th

Rental Income

Inventory Sales

514045372

Total Revenue ( 1+2 )

519967372

4
5
6
7

C.O.G.S ( Inventory Cost)

451790888

6218100
53974764
1
54596574
1
46986252
4

Contribution Margin (3-4)


Insurance
Transportation

68176484
837172
1260000

76103217
879031
1323000

5922000

5922000
489567021
495489021
434414316

10th
6529005
624825363
631354368
528531438
102822930
922983
1389150

41

8
9
10
11
12
13
14
15

Utilities
Salaries

1890000
11251800

1984500
11814390

1984500
11814390

1984500
11814390

2083725
12405110

All Cost ( 6+7+8+9 )


Operating Profit ( 5-10 )
Deprecation
Profit before tax (11-12 )
Tax 30%

15238972
52937512
1241028
51696484
15508945

16000921
60102297
1160245
58942052
17682615

16000921
68295177
1144685
67150492
20145148

16000921
77085647
1130468
75955180
22786554

16800967
86021963
1117474
84904488
25471347

Profit after tax (13-14 )

36187539

41259436

47005345

53168626

59433142

Budgeting

Sales Budget
Budgeted Sales
Selling Price
Budgeted Sales Rs.

Schedule 1

Q1
10069200
0

Q2
10069200
0

Q3
10069200
0

Q4
10069200
0

10069200
0

10069200
0

10069200
0

10069200
0

Q3

Q4

Collection Budget
Q1

Q2

Beginning Balance
10069200
0

Quarter 1st Collection

10069200
0

Quarter 2nd Collection

10069200
0

Quarter 3rd Collection

10069200
0

10069200
0
10069200
0

Q3
91074933

Q4
91074933

Quarter 4th Collection


Total
Assumption
100% Collect in during Sales Expenditures Quarter

Schedule 3
Cost of Budgeted Sales

10069200
0

10069200
0

Purchase Of R.M
Q1
91074933

Q2
91074933

41

Add:
Less:

Desired R.M Ending 4.552554655 % Assumed


Required Inventory
Beginning Balance
Cost of Inventory to be Purchased

Schedule 4
Beginning Balance ( Given)
Quarter 1st Collection
Quarter 2nd Collection
Quarter 3rd Collection
Quarter 4th Collection
Total
Assumption
50% Payment in Current Quarter

Schedule 7

Add:

Less:

Budgeted Sales ( Schedule 1 )


Variable Selling & Adm Exp per unit
Variable cost
Transportation
Fixed Cost
Executive Salary
Utilities
Depreciation
Insurance
Total Selling & Adm
Exp
Depreciation
Cash Disbursement

Schedule 8

5500870
96575803
0
96575803

Add:

Receipt ( Collection from Customers )

Less

Total Cash Available


Cash Disbursement

5500870
96575803
5500870
91074933

5500870
96575803
5500870
91074933

Payment Schedule of Purchase


Q1

Q2

48287902

48287902
45537467

48287902

93825368

Q3

45537467
45537467
91074933

Q4

45537467
45537467
91074933

Selling & Adm Exp Budget


Q1

Q2

Q3

Q4

90000
300000

80000
300000

110000
300000

80000
300000

2679000
450000
338463

2679000
450000
338463

2679000
450000
338463

2679000
450000
338463
794307

3857463
338463
3519000

3847463
338463
3509000

3877463
338463
3539000

4641770
338463
4303307

Q2
10466509
9
10069200
0
20535709
9

Q3
10802273
1
10069200
0
20871473
1

Q4
11410079
8
10069200
0
21479279
8

Cash Budget
Q1

Beginning Cash Budget

5500870
96575803
5500870
91074933

55780000
10069200
0
15647200
0

41

D.R.M Inventory
Selling & Adm
Equipment Purchase
Total Disbursement

Add:
Less:
Less:
Less:

Excess ( Deficit )
Financing
Borrowing
Repayment of Loan
Interest @ 16%
Tax @ 30%

48287902
3519000

93825368
3509000

91074933
3539000

91074933
4303307

51806902
10466509
9

97334368
10802273
1

94613933
11410079
8

95378240
11941455
8

11410079
8

2345054
8000000
6073233
10299627
0

10466509
9

Cash Balance

10802273
1

FINANCIALANALYSIS
The cost projections cover the cost of land, building, inventory, equipment including office furniture etc. The
specific assumptions relating to individual cost components are given as under:

Revenue & Cost Projections


The Sales are expected to increase by 5% every year and Rental income is additional which will also,
would be increasing 5% after every 3year while the cost of raw materials is assumed to increase by 5%. The 5%
annual increase in revenue is expected to result from increase in population and increase in product price.

Account Receivables:
All sales will be made strictly on cash basis. It is not advisable to operate a super market on credit basis.

Account Payables:

41

All purchases will be made on credit basis which was paid 50% in current quarter and 50% in next
quarter. It would be beneficial for as to maintain cash balance in hand.

Financial Charges:
It is assumed that long-term financing for 10 years will be obtained in order to finance Sans Super
Market setup which would mainly include construction & dcor of Building, Purchase of machinery &
equipment, purchase of inventory etc. This facility would be required at a rate of 16% annum with Yearly
installments over a period of 10 years. The installments are assumed to be paid at the end of every year.

Taxation:
The tax rate is 30% would be paid after end of year

Depreciation on Equipment:
Depreciation on Stores fixtures Equipment like computers and security cameras are assumed to be at
the rate of 10% per annum based on the diminishing balance method, Trolleys depreciation assumed to be at
the rate of 17% per annum based on Straight line method, Stores Machinery like AC Plant, Generator and
Truck are assumed to be at the rate of 8%, 10% and 7%per annum respectively based on the diminishing
balance method for the projected period. Building depreciation based on straight line method having life of 40
years.

Utilities consumption:
The Utility consumptions per month Rs.150000, It is assumed that utilities expenses will be increased
by 5% every year.

Working Capital & Pre Operating Costs


It is estimated that an additional amount of approximately Rs. 31501311 will be required as cash in
hand to meet the working capital requirements / contingency cash for the initial stages. The requirement is
based on the utilities, Transportation, Inventory and salaries expenses for a month and 15 days raw material
inventory.

Miscellaneous Outlet Expenses:


A monthly figure of Rs. 60,000 (2000 maintenance per day) is assumed to be incurred for
miscellaneous expenses which are expected to increase at the rate of 10% per annum for the projected period.

NPV Analysis:
41

NPV

NPV
NPV

=
=

Present value of In Flow 169482449

Present Value of Out Flows

150000000

19482449

Net Present value of the out flows of the project is positive.


RRR of the project is 16%
WACC of the project is 17.73%
MIRR of the project is 19.8%
IRR of the project is 20.22%
Pay back period is 5 year 6 month
While Discounted Pay back period is 9 year 4 month
All shows the feasibility of the project.

Recommendation:

Diversification of products

New Branch

Credit Cards

Promotional Offers

Proper Exit Strategy and Succession Planning.

41