PROJECT APPRAISAL Project appraisal means the assessment of a project in terms of its economic, social and financial liability. This makes it necessary to recognize the interrelationship of various aspects of a project. This exercise is critical as it calls for a multidimensional analysis of the project. Financial institutions carry out project appraisal to assess its creditworthiness before giving finance to a project. Methods of project appraisal Project is appraisal under the following contexts: •
Economic analysis
•
Financial analysis
•
Technical feasibility
•
Managerial competence and
•
Market analysis.
On the basis of these factors I am going for the project appraisal of my Business plan of ‘Rented Bridal Wear’.
ECONOMIC ANALYSIS I have analyzed the various factors such as Sales Forecast, monthly and yearly Profits which goes with the promising Business. Sales forecast Particulars
1st year
2nd year
3rd year
4th year
5th year
Gross receipt
144
216
312
420
600
Cost of sales
120
180
260
350
500
Gross profit
24
36
52
70
100
3
3
5
7
10
Expenses Salaries and wages
Utilities
0.6
0.7
1
1.4
2
Rent/lease
3.6
3.6
4.5
4.5
6
Office supplies
0.2
0.4
0.8
1.2
2
Telephone
0.4
0.6
1
1.4
2.5
Printing/photocopy 0.2
0.3
0.7
1
2
Misc. exp.
0.2
0.4
0.9
1.3
2
Advertising
3
4
6
9
13
Insurance
1.2
1.8
2.6
3.5
5
Transportation
1
2
3
4
6
Packaging
0.6
1
2
3
5
Bank charges
0.1
0.2
0.5
0.8
1.5
Interest on loan
3
3
3
3
3
Decoration
1
1.5
3
4
6
Total expenses
16.1
22.8
34
43.1
66
Net profit
5.9
13.2
18
26.9
34
•
As mention above sales and the profit return as per the plan support my Business Plan.
•
As my Business Plan is Garment related so procurement of the raw materials is not a tough task. Apparel segment is vast.
•
We targeted our sales volume in such that comparing with it the profit return it will be achievable.
•
Today the customer are more aware of the product which is more customized.
•
As our store will be located in the Mumbai so it acquire huge market. Awareness diminished the risk to operate this business.
OPERATIONS
LOCATION
:
NAVI MUMBAI
MANUFACTURERS AND SUPPLIERS: S R Brothers Product Category :
Advertising And Promotional Products, Documentation File, Folders, Sportswear, Sportswear And Access...
Products :
Accessories, Travel Pouches, Travel Wallets, Conference Folders, Brief...
Address :
204 / 205, Balarama Bandra - Kurla Complex, Bandra (e), Mumbai 400051. Maharashtra India Tel. No. : 91-22-26590267
Spice Islands Apparels Ltd. Product Category :
Apparels And Clothing, Sportswear, Sportswear And Accessories
Products :
Mens Shirts, Ladies Blouses And Tops, Childrenswear, Pyjamas, Boxer Sh...
Address :
125 - A Wing, Mittal Towers, Nariman Point,, Mumbai - 400021. Maharashtra
India Tel. No. : 91-22-2823128
Welspun India Ltd. Product Category :
Bedspreads & Coverlets, Dyes And Pigment, Fabrics, Fabrics, Woven, Sportswear, Sportswear And Acces...
Products :
Home Textiles - Terry Towels, Bed Sheets
Address :
B/9 Trade World Premises Kamala Mills Compound, Lower Parel, Mumbai - 400013. Maharashtra India Tel. No. : 91-22-66136000
Regalia Apparels Pvt. Ltd. Product Category :
Sportswear, Sportswear And Accessories
Address :
Gala No. 2, Hitex Industrial Estate S. V. Road, Dahisar (e), Mumbai 400068. Maharashtra India Tel. No. : 91-22-28954880
Samit International Inc. Product Category :
Apparels And Clothing, Knitwear, Leather Goods, Sportswear, Sportswear And Accessories, Yarns
Address :
112, Amir Industrial Estate Sun Mill Compound, Lower Parel, Mumbai - 400013. Maharashtra India Tel. No. : 91-22-24949060
Budget and finance Capital required
50 lacs
SecurityDeposit for office space
10 lacs
Rent in advance
3.6 lacs (Rs.30,000x12 months)
Furniture n fittings
5 lacs
Purchase of inventory
30 lacs
Misc exp.
1.4 lacs
Total capital required
50 lacs
Source of finance Owners capital
12.5 lacs
Bank loan
37.5 lacs
Total
50 lacs
•
Above mention are the basic financial details which will be going for the investment.
•
All the Assets, Capital working capitals has been planned to operate the business smoothly.
•
Adequate amount is allocated in different departments to start and proper execution of the Business plan.
•
Analyzing the above details it is concluded that it is fruitful to the business as faras Benefits are concern.
TECHNICAL FEASIBILITY •
For the proper execution of this business we require a list of items that I mention above. That is minimum requirement in Financial analysis.
•
From the computers to the software, websites etc.
•
All this facilities are easily available in hands.
•
We have selected the location for the store in Mumbai where customer can easily access there.
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The product is a fashion symbol and lots of advanced Technology has been used for the up gradation.
MANAGERIAL COMPETENCE •
As I am holding the degree of the Master in Fashion Management so I am capable of manage the things. All the managerial skills I have developed through the courses offered by my institution.
•
The working staff and the employed that I am going to employed should have the minimum criteria to understand and work in the place.
•
Plan for the time to time training will has been executed.
•
A proper action plan is followed and executed with the concern of respective team members.
•
Best use of human resource we are going to utilized.
•
Employment is based on stage for selection so that we can get the best employee to work with.
MARKET ANALYSIS Target Market: Middle to Upper Middle class customers The business is supposed to operate in the selected part of the Mumbai in the beginning. As Mumbai is a Metropolitan city as well as economic capital and Fashion city of India, the interest and knowledge of the people about the brands and trends is very high. The disposable income of the people is also good which is a good sign and opportunity for starting new stores in that
locality. A result of market research done by me shows that the average customer of the target segment spends 25-30 thousand rupees annually on kids apparel and accessories. And also the frequency of visiting the stores is 6 times annually which is comparatively higher. The market of Mumbai is very attractive that’s why every companies are entering into this city. Age group
:
5-16 years old kids
Gender
:
Unisex
Store format preference
EOB'S (stand alone) 17% Dept. Stores 12% Malls 71%
EOB'S (stand alone) Dept. Stores Malls
Frequency of visiting stores
6 month or more 3 month 3% 24%
Every month 31%
Every month 2 month 3 month 6 month or more
2 month 42%
Medium of brand awareness Internet 3% television 1%
In store display In store display 11% Word of mouth 13%
Print Media 44% Attractive shop window display 28%
Word of mouth Attractive shop window display Print Media television Internet
Attributes preference while purchasing
Fabric/quality 17%
Design/Pattern 26%
Fabric/quality Fit/size Price
Brand 5% Convenience 6% Colors 15%
Colors
Fit/size 24%
Convenience Brand
Price 7%
Design/Pattern
No. of respondants
Monthly Income 45 40 35 30 25 20 15 10 5 0
39
36
Series1 11
12 2 <15000
15-30000
30-50000 Income(in Rs.)
50-100000
100000>
Annual spending on Kids wear
%age of response
30 24
25 20 15
20
19 15
Series1
11
10
6
5
35-40
40>
5 0 <15
15-20
20-25
25-30
30-35
Value in Rs.'000
Projected Cash Flow Our projected cash flow is outlined in the following chart and table. The table lists sales tax collected and paid out, as well as repayment of the loan we are seeking.
Important Assumptions I assume that the economic conditions will improve in the next two to three years. Therefore, business will be good in year one, but years two and years three. One, Two, Step! will be very successful. The table below outlines the projected balance sheet. While, as a retail store, we have no plans for long-term assets, we will have a healthy cash balance, growing over the next five years. We plan to pay off our loan within six years.