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Marching Ahead

Confidential

DRAFT BUSINESS PLAN


This is a draft business plan, prepared to chart out the future growth path of JnJ (name masked), a fast growing and profitable Architectural and Interior Design Firm from India. For more information write infojacknjill@gmail.com Aug 2011

All information made available in this document are made in good faith and represent the companys professional judgment based upon information obtained from a range of sources. Since the contents of the report are based partly on third party information and therefore conditioned by factors outside the control of JnJ, JnJ cannot accept liability for the accuracy of such information and the consequent conclusions drawn from it.

For more information write infojacknjill@gmail.com

TABLE OF CONTENTS
1 2 3 4 5 6 7 8 EXECUTIVE SUMMARY BUSINESS BACKGROUND SERVICES MARKET OPERATIONS PROPOSED GROWTH STRATEGY FINANCIAL INFORMATION ALLIANCES FORGED
4 5 6 7 8 9 10 11

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The promoters propose to expand a fast growing and profitable business of Design and Project Management. Amongst other things, this requires the promoters to focus on an allied line of business, which is generating large volumes of business for JnJ. The expansion model proposes utilization of existing resources to capture new market segments and catapult the group into greater heights. With its growing goodwill and reputation, JnJ increasingly secures more and more business leads in the aforementioned new areas of operations. The introduction of the 2 new lines of business will allow the group to do justice to such leads and grow further from there. It will also allow the group to make best use of the following relationships, in a focused manner. 1. JnJ enjoys tremendous goodwill amongst global firms offering allied services like Project Management and Due Diligence, and is often recommended to clients by such firms. At the same time, a few International Firms outsource their Design & Project Management services to JnJ on a regular basis.

EXECUTIVE SUMMARY

The existing business is unique in the fact that it offers Design & Project Management Solutions of Corporate FitOuts to large Corporations only, in a market where all Architectural and Interior Design Firms practically offer its services to any type of client across any segment like Residential, Retail, Hospitality, etc. JnJ enjoys tremendous goodwill and is well know for its focused line of service. It has specialized in this line of business and has launched certain niche sub-services catering only to large Corporations. The new lines of businesses being set up include 1) Retail & Hospitality Consulting and 2) Architecture & Masterplanning. Whilst its existing line of business has a market growth of over 50% annually, the 2 new lines of businesses proposed enjoy even a higher rate of growth and are segments which does not have too many established players offering professional services. A large gap is waiting to be filled.
By launching 2 new lines of services, and by utilizing common resources, the profitability of the group is expected to rise much higher than what it is today. It goes without saying that creating new lines of service also protect the group against any ups and downs in the economy or within the business segments.

2.

It is fair to conclude that the promoters are seeking a part sellout of JnJs business, primarily because of the need to focus in its allied line of business. Such focus allows JnJ to grow very fast. The following is expected of new part-owners: That they be in the same/similar line of business as JnJ They be looking at starting operations in India; JnJ provides an instant entry into the market with clients They buy equity into the company

The promoters are NOT looking at mere financial investors as funding is NOT the need of the hour. The need of the hour is a strategic partner from the same/allied line of work, who wishes to jump start operations in India.
Allied Line of Business that JnJs promoters are focussed on: This is creating a line of new business opportunities for JnJ. XYZ (name changed) is Indias first and only firm specialised in Land Development Management. This is promoted by JnJs promoters. XYZ is a true client representative and acts as a consultant for landowners to turn their land into a project which generates perpetual income for them. A high end, boutique consulting practice, XYZ outsources all its design related work to iDream. Amongst others, XYZ has consulted for a 50 acre Education City, a 15 acre Holiday Resort, a 30 acre Healthcare Tourism Project, a 4 acre hotel project, a 200 acre integrated township and others. Besides private investment, an asset management firm is a co-owner of XYZ. This opens several doors for XYZ into the assets that the asset management firm manages in India, and subsequently for JnJ. XYZs research wing also does research into alternative ways of construction and has developed some path breaking solutions in this area, in conjunction with some global leaders.

BUSINESS BACKGROUND

JnJ is a eight year old company specializing in Interior Design and Project Management of Corporate Fit-Outs. It was established in 2003 by a qualified Architect with a Management Degree, in Mumbai. GEOGRAPHIC SPREAD Ever since its first office in Mumbai setup in 2003, iDream has spread its wings and has presence in New Delhi, Bangalore and Pune. Out of these, iDream has rendered its services to clients in practically every major city of India. GROWTH The company has had consistent growth since its beginning, barring 2009 and 2010, due to a slowdown in the overall economy. Since early 2011, the company has seen renewed growth and high profitability. CLIENT BASE JnJs client base, from the very beginning, has been large Multinational Corporations. Some notable clients which have given iDream multiple projects are Metlife, Kennametal, Diageo, Hewlett Packard, Verizon, Tata Group. A BUSINESS MODELLED ALONG INTERNATIONAL LINES The Business Model at JnJ has been modelled along the lines of Business Models of International Companies and structured to meet expectations of International Clients in India. It is noteworthy that over 95% of JnJs clients are multinational companies.

A TEAM USED TO WORKING WITH INTERNATIONAL CLIENTS Over 95% of JnJs Clients are Multinational Corporations. The JnJ Team is used to meeting expectations of such clients. The team is also used to reporting to clients based across different time zones.

BUSINESS FOCUS

FOCUS ON MULTINATIONALS & LARGE INDIAN CORPORATIONS JnJ has developed a penchant for securing and servicing Multinational Companies and large Indian corporations as clients and meeting high standards of such clients.
OFFER VALUE ADDED SERVICE AND ASK FOR PREMIUM Service, rather unfortunately, is still not a common feature with most Interior Fit-Out companies in India. With a focus on service, and ability to meet given deadlines, quick turnaround, JnJ manages to secure a premium pricing for its projects.

EXISTING BUSINESS RELATIONSHIPS ENSURE CONTINUOUS BUSINESS JnJ enjoys tremendous goodwill amongst global firms offering allied services like Project Management and Due Diligence, and is often recommended to clients by such firms. At the same time, a few International Firms outsource their Design & Project Management services to JnJ on a regular basis.

SERVICE CLIENTS WELL, AND SECURE REPEAT PROJECTS This keeps the cost of business development low, while also leading to new client generation with strong references from existing clients. OFFER CONSISTENT PAN-INDIA SERVICE For clients like Diageo, MetLife, FedEx and others JnJ offers the same level of service across India.

CONTINUOUSLY TRAIN STAFF & INCULCATE TEAM SPIRIT A weekend affair in JnJ offices, regular national level training and Team Building meets are held.
PROMISE WHAT CAN BE DELIVERED WHILE PITCHING FOR PROJECTS At the point of securing a project JnJ gives realistic expectations to a client and then resolve to meet such expectations. JnJ does NOT secure a project by making a promise which cannot be kept.

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From the beginning JnJ has specialised in offering Design and Project Management Solutions of corporate fit-outs to Multinational Corporations and large Indian Corporations. This has been the companys focus from which it has not deviated. VALUE ADDITIONS With its strong focus on Corporate Fit-outs, JnJ usually gets appointed very early during a projects life cycle, as it has been able to demonstrate its ability to offer certain value added services, unheard of amongst competitors. Some of these value additions include: Fit Out Standardisation Manuals Space Audits & Space Optimization Lowering Operating Costs Test Fits Space Due Diligence

SERVICES

WORK HARD PLAY HARD In an industry where securing service from a service provider as promised at the business development stage is still a challenge, JnJ breaks ground by putting service up front. Staff members are trained and appreciate that ones bread and butter is largely dependent on the quality of service rendered to clients. Honesty is a non-negotiable trait at JnJ and there is a strong and conscious in-house HR practice to inculcate this in everything that JnJ does. This also becomes a strong differentiator, especially while working with large corporations. This may sound trivial to a western reader, but is a very pertinent point in the given industry that JnJ operates in.

JnJ acts as an end to end solutions provider for corporations in relation to design and project management of Corporate FitOuts. JnJ is often hired to render one of its value added services at times when competitors do not see a project out there.
JnJs business model is fool proof against economic ups and downs, as it is able to offer its services even when a client is downsizing, while competitors approach clients only when they are growing.

With a young team, where the average age is in the 20s, letting ones hair down is part of the companys ethos, where hard work and diligence is part and parcel, given the high expectations that international clients put forth.

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INDIA STORY The India growth story is well known by now. In short, India is one of the fastest growing economies in the world, and thousands of Multinational Corporations have made India its home over the last 10 years. ECONOMIC DOWNTURN AND INDIA India has been relatively less affected by the economic downturn of 2008-2009 largely during to a substantial domestic consumption pattern. It has also been one of the first countries to show recovery, with the stock markets gaining over 100% during the last one year. Conservative estimates put expected GDP growth to continue in the 7-8% range. 10 YEAR OLD INDUSTRY Interior Design & Project Management of Corporate Fit-outs, as an organized industry, can be best described as a 10 year old industry in India and it began evolving soon after the Indian economy was opened up to foreign companies in the early nineties. Today it is estimated to be a $1 billion industry with 90% of this coming from 6-7 major cities. Prior to the nineties, nothing much happened in the name of interior design, except in Mumbai and in Delhi, where it was a paucity of space, which gave a mild fillip. In terms of the volume of work being done in the pre-liberalization days, it was miniscule. There were a handful of local Architects who did majority of the projects, be it Architecture or Interior Design. It was really the mid-late nineties, which opened the floodgates and opportunities for Architects and Interior Designers. New Architecture Colleges opened, new Interior Design Institutes opened and they began to chum out designers to fill in the sudden need for good quality design and services, expected mostly by the Multinational Companies. Smart local Design Firms metamorphosed from mom and pop shops to become organized companies. Between 1995 till 2000, the smarter ones grew quickly and by the end of the century about 10 Design Firms had emerged as the forerunners.

THE MARKET

COMPETITION Late 90s and the early 00s saw the entry of a few overseas Design firms into the market. Over the last 5 years a few more have entered. All in all, about 25 odd foreign Design firms are now operating in India, in one form or the other. Out of the International Firms about 5 or so are very active at a local level. Along with these, a few local companies have smartened up and have started offering services very similar to what the foreign companies have to offer. A majority of projects in India today are in the hands of about 20 of these firms. A few erstwhile contracting firms also make an attempt once in a while to reposition themselves as a Design & Project Management firm. Most of these companies have more interior fit-out projects in hand than Architectural projects. A few of these firms are making a conscious effort to bag Architectural projects. It is noteworthy that there is no other firm in India which has as strong a focus as JnJ in specializing in Design and Project Management of Corporate Fit-Outs. Most of competition does pretty much everything in Architecture and Interior Design. PRICE DRIVEN Due to competition, the market has been observed to be cost driven with one firm undercutting the other on fees and costs. It is a fact that rarely has JnJ fought the price war and in most cases has commanded a premium pricing, mostly due to its value added services on offer. DIFFERENTIATION JnJ differentiates itself from the myriad of Architectural and Interior Design firms as a specialist in Design and Project Management of Corporate Fit-Outs. There is none in the market with such a strong differentiation.

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INDUSTRY PLAYERS Most players in the market offer a plethora of services like Architectural Design, Retail & Hospitality Design, Residential Design, Office Design, Master Planning, etc Within this, a few firms have become well know for any one category, but that does not stop them from offering other types of services. JnJ has resisted the urge to offer everything under the umbrella despite an increasing number of enquiries.

OPERATIONS

Within firms catering to corporate fit-outs, there are broadly 2 types of players:

Design & Build Firms: These are firms which are primarily contracting firms, which by hiring a few designers; offer a Design & Build or Turnkey service to clients. As most of them have their own contracting teams, they are rather cost competitive but often lack transparency. This type of operation is highly profitable and margins are in the 20-30% (of project value) range.
Design & Project Management Consulting Firms: Such firms offer consultancy service and often sell transparency and professional services as their hallmark. Fees are in the range of 5-12% and depend on the scale of the project and the scope of services. JnJ JnJ offers both type of services. However while offering Design & Build Services; JnJ sub-contracts all services related to construction and retains in-house all services related to Design & Project Management. As it sub-contracts and does not have its own labour force, JnJ rarely competes with Contracting Firms for business, which are much more cost competitive.

JnJs boutique services offered in a highly professional and international style are often found attractive by Multinational Corporations and large Indian Corporations, who pay a premium for its services.

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JnJ is proposed to be restructured along new lines of Service which will be launched. This is being done for the following purposes: To avoid having all eggs in one basket. Currently over 95% of JnJs revenues come from Corporate Interiors To capture market share in allied lines of Service Cost advantage by using existing resources and infrastructure It is noteworthy that the new lines of business proposed are a fallout of the promoters focus on its allied business of land development management. NOTES New lines of business proposed are fast growing sectors in India Existing line of business (Office Interior Design), after a slack period of about 9 months, is fast picking up again

PROPOSED GROWTH STRATEGY

JnJ

COMMON RESOURCES

OFFICE INTERIOR DESIGN

Industry growing at over 30% in India Post the financial meltdown in 2008-1009, the industry is growing again and commercial activity has picked up

ADMIN & HR FIN & AC BUSINESS DEVT DRAFTING 3D ANIMATION DOCUMENTATION TQM

RETAIL & HOSPITALITY CONSULTANCY

Sunrise industry in India with over 50% annual growth Differentiates itself by offering retail consultancy from a strategic level, as against retail design

Use Common Resources Use Common Infrastructure Expenses shared Profitability per Business becomes relatively high Business Units become Cost Competitive aiding higher volume of Sales

ARCHITECTURE & MASTER PLANNING

Industry growing at over 50% annually in India Already secured few projects

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INDUSTRY ALLIANCES
JnJ has forged strong relationships with a few alliance partners in its efforts to grow in a very focused manner in the Indian market.

ALLIANCES FORGED

XYZ (name changed): XYZ is Indias first and only firm specialised in Land Development Management. This is promoted by JnJs promoters. XYZ is a true client representative and acts as a consultant for landowners to turn their land into a project which generates perpetual income for them. A high end, boutique consulting practice, XYZ outsources all its design related work to iDream. Amongst others, XYZ has consulted for a 50 acre Education City, a 15 acre Holiday Resort, a 30 acre Healthcare Tourism Project, a 4 acre hotel project, a 200 acre integrated township and others. Besides private investment, an asset management firm is a coowner of XYZ. This opens several doors for XYZ into the assets that the asset management firm manages in India, and subsequently for JnJ. XYZs research wing also does research into alternative ways of construction and has developed some path breaking solutions in this area, in conjunction with some global leaders.
EcoConsult: EcoConsult is a pioneer Green Development Consultancy in India. Amongst others, EcoConsult has been involved LEED certified green developments in India. EcoConsult founding members have been regular speakers on global platforms like TED conferences. EcoConsult has tied up with a Canadian firm to reach up to the North American and European markets, offering a diversified learning platform. JnJ enjoys a symbiotic relationship with EcoConsult, and works hand in hand with EcoConsult on sustainable projects. XYZ Partners: XYZPartners (name masked) is a North American Pure tenant-rep and Project Management Firm. XYZPartnerss Project Management division in India has an exclusive partnership with JnJ which ensures an inflow of regular projects across the length and breadth of India.

For more information write infojacknjill@gmail.com