Feasibility Report PM

8/8/2019 Feasibility Report PM

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FEASIBILITY REPORT

ON

INTERNET CAF

Under the supervision of:

Dr. Y. P. Singh

Submitted By:

Piu Chatterjee

PGDM II

Enroll. No:- 1081

International Institute For Special Education

Lucknow


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CONTENTS

Acknowledgement

Preface

1)Project at a glance2)Working Assumptions3)Background of the Project4)Marketing and Technical Analysis5)Economic and Ecological Analysis6)Financial Analysis7)Conclusion8)Bibliography


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ACKNOWLEDGNMENT

A mammoth project of this nature calls for intellectual nourishment,

professional help, and encouragement from many quarters. I would

like to express my gratitude to:

My Professor who taught me Financial Management, without whose

help it would have been impossible for me to do the difficult

calculations in this project.

The persons from whom I collected the data, who gave their valuable

time to provide me information.

My parents to encourage me in doing the project.


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PREFACE

The objective of this project is to provide information regarding the

investment opportunities for setting up an Internet Caf with focus on

product differentiation, i.e. providing some different services like

video/Audio chat and web developing which are offered by the typical

Internet Cafes in the area of Kalyanpur.

So I thought of taking up the venture of setting up a Internet caf

name Web Planet. But for setting up a business venture we need to

check its feasibility, so I can say that the motive of my making this

project is to check the feasibility of my venture.


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PROJECT AT A GLANCE

OBJECTIVES

For operating and establishing Web Planet Internet Caf, I am having some

objectives.To earn profit at less investments.

To satisfy our customers providing best quality service at effective price.Providing the service at low cost by providing the best quality ataffordable

price.To know a fair return on the capital invested by the owner .

MISSION STATEMENT

To achieve the economies of scale to minimize costs while maximizingvalue to Customers.

To achieve leadership, core and functional competencies internet cafe

business.

NAME OF THE PROMOTER

Piu Chatterjee

ADDRESS

International Institute of Special Education

Lucknow

MOBILE NO.

9389293988

PROPOSED CAPACITY

The proposed project is based on 10 computer systems.

TOTAL PROJECT COST

The total cost of the project is approximately Rs.


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NPV

NAME OF THE ORGANIZATION

Name of my Internet Cafe would be Web Planet Cyber Cafe, which would belocated at Kalyanpur, near Jagrani Hospital, Lucknow.

PROPOSED LOCATION

For the Proposed project following premises should be considered.

Proximity to the majority of people living are from middle income group .

Proximity to Private hostels setup in different areas of cities. Low cost rent. High visibility.


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WORKING ASSUMPTIONS

1) Project Life ( years) 5 yrs2)Equity 100%3)No. of Computers 104) Shifts per day 15)Depreciation of computer equipments -20%6)Depreciation of furniture and fixtures 20%7)Internet connection charges for year 1- 1,50,0008) Connection type 512 KB9)Rental Approximate rent @ Rs. 10000 p.m.10) The depreciation will be as per WDV( Written Down Value)

method.

11) The Tax is assumed to be 20%.12) The Salvage value is assumed to be Rs. 21350013) The Discount rate is assumed to be 20%


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BACKGROUND OF THE PROJECT

Web planet Internet Cafe is being promoted by Piu Chatterjee . The promoter of

the company well educated and command experience of the diversified areas in

their projects.The company will be incorporate to provide internet service, printing, net tocall etc.. The promoter have a considerable knowledge in this field. Besideshaving technical and marketing set up, the promoter is financially sound to set

up a project of this scale. All these factors combined together resulted intomaking this Internet Cafe a reality.

SCHEDULE OF IMPLEMENTATION

Particulars of Activity Apr May June July Aug

. Incorporation of Company

Acquisition of Land

Computer & other Equipments

Furniture & Fixtures

Arrangement for Power

Internet Connections

Trail Runs

DATE OF INCORPORATION:

The Company will be incorporated on 1October, 2010, with registrationNumber

TARGET CUSTOMERS

The proposed project intends to cater to students and middle income grouppeople Furthermore will be a magnet for local and traveling professionals whodesire to work or

check their e-mail massages in friendly environment.

Students

Business people


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Middle Income Groups

Private Hostels

The large student population will become an important part of the Net Cafcustomer base. The student population continues to grow with the success of the

educational institutes. Evening entertainment, access to the In ternet, and theup- scale ambiance will attract the students. Business community is growing

rapidly with the addition of new companies day by day. Internet caf willprovide an

opportunity to local and traveling professionals to check their e -mailscommunications, this will be an attracting entity for the Middle income groupand for the residents of private hostels as they do not have ccess to the internet

at their living places .

MARKET NEED

As the popularity of internet continues to grow at an exponential rate, easy andaffordable access is quickly becoming a necessity of life. Public wants access tothe methods of communication and volumes of information now available on the

internet, and access at a cost they can afford and in such a way that they are notsocially, economically and politically isolated.

MARKET TRENDS

More than 90 percent of visitors of these cafes and clubs are youngsters andtheir sole objective to get to these is to get enjoyment.

INTERNET CONNECTION

The major cost of an Internet caf is the Internet connection. For providingbetterservice,

the proposed project will use a High Band width connection for better speed asthe project is going to provide service of video chat. It is recommended that the

Internet connection should be taken from the best Internet service provider.

RECOMMENDED CONNECTION

If the project is set up in area, where DSL Internet connection is available, it isrecommended to use DSL Internet connection instead of a any other Internet

connection.This will improve the speed of Internet, which will improve the performance of

Video chat and will also reduce the telephone expense.


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MARKETING AND TECHNICAL ANALYSIS

MARKETING

Marketing will play an important role in success of the project, as majority ofthe

players in the industry are following the strategy of low price with no

differentiation, i.e., they are providing similar services and competing with eachother on the basis of lower prices. It is recommended to follow a different

strategy for the proposed project, which is the product differentiation. For this purpose, a special service of video chat facility is going to be offered by the

proposed project. To build an image of a reliable and excellent Internet service,extensive promotion in the locality near the project will be done by use of print

media and billboards.

TECHNICAL ANALYSIS

Equipment Requirement:

Equipment No. TotalComputer 10 2,50,000

Hub 1 6,000Camera 10 10,000

UPS 1 60,000

Printer 1 7,000

Scanner 1 4,000

Modem DSL 1 8,000

OtherEquipments

Networking Cable 350 ft. 3500

TOTAL 348500

Furniture and Fixture:

Equipment No. Rate Total cost

Computer tables

and cabins

10 5000 50000

Computer Chairs 10 2000 20000


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Air conditioners 2 25000 50000

Telephone sets 2 1500 3000

Carpet 700 sq. ft 30 sq.ft 21000

144000

Human Resource Requirement:

Network Administrator 1 person would be appointed @ Rs. 2000 per month.Annual salary would be Rs. 24,000.

Rent:

Rental Approximate rent @ Rs. 10000 per month. Annual rent for the shop

would be Rs.1,20,000.

Pre-operatingExpenses:-

Rs. 28000


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ECONOMIC AND ECOLOGICAL ANALYSIS

The population of daily Internet users is increasing everyday. The importance of

Internet almost equals to that of Telephone. As the population of daily Internet

users are Increasing daily so an Internet caf would be a profitable venture.

As by now we have already understood that an Internet Caf in a area like

Kalyanpur would be of a great help for the school going as well as college

going student. As students and professionals might find it to be a really good

idea to find an Internet caf at a stone throw distance.

Now let us see the ecological part ; that is also important to consider the

feasibility of my business venture . This includes the environmental aspect of the

business. So for this I can say that an Internet caf not only will help to upgrade

the usage of technology for the people residing in this area but also save their

time and problems. Moreover, this business venture will not cause any pollution

and it wont be harmful for the society as well.

It will be considered with the same esteem as people cons ider a book store or a

library which will impart knowledge to the society.


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FINANCIAL ANAYSIS

The Initial outlay of Rs.640500, out of which Rs. 348500 will be used to buy

Equipments, Rs. 144000 will be used to buy furniture and fixture, Rs. 28000 will

be used for pre-operating expenses and Rs. 120000 will be used against

working capital margin.

RevenueEarned:- Years

Particulars 2011 2012 2013 2014 2015

Internet

Revenue

665280 712800 760320 807840 855360

Printing 133056 142560 152064 161568 171072Web

development

Revenue

- - 5000 7000 9000

TOTAL

REVENUE

798336 855360 917389 976408 1035432

Operating Expenses:-Years

Particulars 2011 2012 2013 2014 2015

Internet

Connection

charges

150000 148500 147015 145545 144089.50

Printing

charges

66528 71280 76032 80784 85536

Web

development

- - 2500 3500 4500

Machinemaintenance

20000 28000 30000 32000 34000

Direct

Electricity

137553 119766 129217 138668 148118

TOTAL 374081 367546 384764 400497 416243.50


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Depreciation Chart:-

WDVmethod (@ 20%)Particulars O pening balance Depreciation BookValue

0 492500 98500 394000

1 394000 78800 315200

2 315200 63040 252160

3 252160 50432 2021728

4 2021728 40345.60 161382.40

5 161382.40 32276.48 129105.92

Project Cash Flow

Particulars 0 yr 1st yr 2nd yr 3rd yr 4th yr 5th yr2010 2011 2012 2013 2014 2015

A.Preliminary &pre-operating

expenses

(28000)

B. Capital assets (492500)

C. Working capitalmargin

(120000

)

D. Revenue 798336

855360 91738

4

976408 1035432

E. Operatingexpenses

37408

1367546 38476

4400497 416243.50

F.Depreciation@ 20%

98500 78800 63040 50432 40345.60

G. EBT {D-(E+F) 325755

409014 469580

525479 578842.90

H. Tax@20%

65151 81802.80 93916 105095.8

0

115768.58

I. PAT(G-H) 260604

327211.2

0

37566

4

420383.2

0

463074.32

J. Salvage value 13500K.Recovery of

WMC120000

L.InitialInvestment(A+

B+C)

(640500)

M.Operating cashflow(I+F)

35910

4

406011.2

0

43870

4

470815.2

0

5003419.9

2

N. Terminal CashFlow(J+K)

333500

O.Project Cashinflow

35910

4

406011.2

0

43870

4

470815.2

0

5336919.9

2


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Pay back Period:-

Years Cash Flow

0 (640500)

1 359104

2 406011.20

3 438704

4 470815.20

5 83691.92

Calculation-

406011.20 12 months

281396 - 12 / 406011.20 *281396 ( 640500-359104=281396)

= 8.316 months

= 1 yr 8 months and approximately 10 days.

AAR calculation:-

Average cash flow

AAR= *100Initial Investment

= 351665264/ 640500*100

= 54.90%

NPVCalculation:-

NPV = PV (benefits)- Investments

Cost of the Project = Rs. 520500

Discount Rate = 20%

NPV =

359104*PVIF(20%,1)+406011.20*PVIF(20%,2)+438704*PVIF(20%,3) +470815.20*PVIF(

20%,4)+83691.92*PVIF(20%,5)

=299133.63+281771.77+254009.61+226932.92+33644.15

=1095492.07

NPV = 1095492.07 520500

= 574992.07

If the NPV is positive then the project is to be accepted.


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CONCLUSION

After making this report I have faced real environment stress in real

business. This research work has enabled me to gather a lot of

information about the caf business and I have been able to apply my

classroom knowledge to the practical life very effectively.

In conclusion, from the above Projected Balance Sheet, Projected

Income, Projected Cash Flow and other major financial analysis and

calculations it can be said that the project is very much feasible,

having good profitability, conceived by the people already

experienced in the similar field.


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BIBLIOGRAPHY

Data collected from existing Internet cafes and Variousother people related to the sales of equipments and

other fixtures required for the business.

Financial management Book of Mr. Prasanna Chandra.

Documents

Feasibility Report PM