Footwear Retail Outlet (Rs. 1.31 Million)

8/11/2019 Footwear Retail Outlet (Rs. 1.31 Million)

1/18

Pre-Feasibility Study(Footwear Retail Outlet Ladies & Children)

Small and Medium Enterprises Development AuthorityMinistry of Industries & Production

Government of Pakistanwww.smeda.org.pk

HEAD OFFICE4th Floor, Building No. 3, Aiwan-e-Iqbal Complex, Egerton Road,

LahoreTel: (92 42) 111 111 456, Fax: (92 42) 36304926-7

[email protected]

REGIONAL OFFICEPunjab

REGIONAL OFFICESindh

REGIONAL OFFICEKhyber Pakhtunkhwa

REGIONAL OFFICEBalochistan

3rd Floor, Building No. 3,Aiwan-e-Iqbal Complex,

Egerton Road Lahore,Tel: (042) 111-111-456Fax: (042) 36304926-7

[email protected]

5th Floor, BahriaComplex II, M.T. Khan Road,

Karachi.Tel: (021) 111-111-456

Fax: (021) [email protected]

Ground FloorState Life Building

The Mall, Peshawar.Tel: (091) 111-111-456


Bungalow No. 15-AChaman Housing Scheme

Airport Road, Quetta.Tel: (081) 2831623, 2831702


Note: All SMEDA Services / information related to PM's Youth Business Loan are Free of Cost

May, 2014
mailto:[email protected]:[email protected]:[email protected]://c/Users/Kashif/Downloads/WEBSITE%20-01-%2014-UPLOAD/Downloads/[email protected]://c/Users/Kashif/Downloads/WEBSITE%20-01-%2014-UPLOAD/Downloads/[email protected]://c/Users/Kashif/Downloads/WEBSITE%20-01-%2014-UPLOAD/Downloads/[email protected]://c/Users/Kashif/Downloads/WEBSITE%20-01-%2014-UPLOAD/Downloads/[email protected]://c/Users/Kashif/Downloads/WEBSITE%20-01-%2014-UPLOAD/Downloads/[email protected]://c/Users/Kashif/Downloads/WEBSITE%20-01-%2014-UPLOAD/Downloads/[email protected]:[email protected]:[email protected]


2/18

Pre-Feasibility Study Footwear Retail Outlet - Ladies and Children (Rs. 1.31 Million)

TABLE OF CONTENTS

1 DISCLAIMER ......................................................................................................................................... 2 2 PURPOSE OF THE DOCUMENT ........................................................................................................ 3 3 INTRODUCTION TO SMEDA ............................................................................................................. 3 4 INTRODUCTION TO SCHEME .......................................................................................................... 4 5 EXECUTIVE SUMMARY ..................................................................................................................... 4 6 BRIEF DESCRITION OF PROJECT & PRODUCT .......... ........... .......... ........... .......... ........... .......... . 5 7 CRITICAL FACTORS ........................................................................................................................... 5 8 INSTALLED & OPERATIONAL CAPACITIES ........... ........... .......... ........... .......... ........... .......... ...... 5 9 GEOGRAPHICAL POTENTIAL FOR INVESTMENT .................................................................... 5 10 POTENTIAL TARGET MARKETS / CITIES .................................................................................... 6 11 PROJECT COST SUMMARY .............................................................................................................. 6

11.1 PROJECT ECONOMICS ...................................................................................................................... 6 11.2 PROJECT F INANCING ........................................................................................................................ 6 11.3 PROJECT COST ................................................................................................................................. 7 11.4 SPACE R EQUIREMENT ...................................................................................................................... 7 11.5 FURNITURE & F IXTURE ................................................................................................................... 8 11.6 OFFICE EQUIPMENT ......................................................................................................................... 8 11.7 R AW M ATERIAL R EQUIREMENTS .................................................................................................... 9 11.8 HUMAN R ESOURCE R EQUIREMENT .................................................................................................. 9 11.9 R EVENUE GENERATION ..................................................................................................................10 11.10 OTHER COSTS ...............................................................................................................................10 12 CONTACT DETAILS OF GOVERNMENT INSTITUTIONS ........................................................ 11 13 ANNEXURE .......................................................................................................................................... 12

13.1 I NCOME STATEMENT ......................................................................................................................12 13.2 BALANCE SHEET .............................................................................................................................13 13.3 CASH FLOW STATEMENT ................................................................................................................14 13.4 USEFUL PROJECT MANAGEMENT T IPS ............................................................................................15 13.5 USEFUL L INKS ................................................................................................................................15 14 KEY ASSUMPTIONS ........................................................................................................................... 17


3/18


1 DISCLAIMERThis information memorandum is to introduce the subject matter and provide ageneral idea and information on the said subject. Although, the material includedin this document is based on data/information gathered from various reliablesources; however, it is based upon certain assumptions, which may differ fromcase to case. The information has been provided on as is where is basiswithout any warranties or assertions as to the correctness or soundness thereof.

Although, due care and diligence has been taken to compile this document, thecontained information may vary due to any change in any of the concernedfactors, and the actual results may differ substantially from the presentedinformation. SMEDA, its employees or agents do not assume any liability for anyfinancial or other loss resulting from this memorandum in consequence ofundertaking this activity. The contained information does not preclude any furtherprofessional advice. The prospective user of this memorandum is encouraged to

carry out additional diligence and gather any information which is necessary formaking an informed decision including taking professional advice from a qualifiedconsultant/technical expert before taking any decision to act upon theinformation.

For more information on services offered by SMEDA, please contact our website:www.smeda.org.pk

SMEDA Services / Information related to PMs Youth Business Loan are FREE OF COST - 2
http://www.smeda.org.pk/http://www.smeda.org.pk/http://www.smeda.org.pk/


4/18


2 PURPOSE OF THE DOCUMENTThe objective of the pre-feasibility study is primarily to facilitate potentialentrepreneurs in project identification for investment. The project pre-feasibilitymay form the basis of an important investment decision and in order to serve thisobjective, the document/study covers various aspects of project conceptdevelopment, start-up, production, marketing, finance and businessmanagement.

The purpose of this document is to facilitate potential investors in FootwearRetail Outlet (Ladies and Children) by providing them a general understandingof the business with the intention of supporting potential investors in crucialinvestment decisions.

The need to come up with pre-feasibility reports for undocumented or minimallydocumented sectors attains greater imminence as the research that precedes

such reports reveal certain thumb rules; best practices developed by existingenterprises by trial and error, and certain industrial norms that become a guidingsource regarding various aspects of business set-up and its successfulmanagement.

Apart from carefully studying the whole document one must consider criticalaspects provided later on, which form basis of any investment decision.

3 INTRODUCTION TO SMEDAThe Small and Medium Enterprises Development Authority (SMEDA) wasestablished in October 1998 with an objective to provide fresh impetus to theeconomy through development of Small and Medium Enterprises (SMEs).

With a mission "to assist in employment generation and value addition to thenational income, through development of the SME sector, by helping increasethe number, scale and competitiveness of SMEs, SMEDA has carried outsectoral research to identify policy, access to finance, business developmentservices, strategic initiatives and institutional collaboration and networkinginitiatives.

Preparation and dissemination of prefeasibility studies in key areas of investmenthas been a hallmark of SME facilitation by SMEDA.

Concurrent to the prefeasibility studies, a broad spectrum of businessdevelopment services is also offered to the SMEs by SMEDA. These servicesinclude identification of experts and consultants and delivery of need based



5/18


capacity building programs of different types in addition to business guidancethrough help desk services.

4 INTRODUCTION TO SCHEME

Prime Ministers Youth Business Loan scheme, for young entrepreneurs, with anallocated budget of Rs. 5.0 Billion for the year 2013-14, is designed to providesubsidised financing at 8% mark-up per annum for one hundred thousand(100,000) beneficiaries, through designated financial institutions, initially by theNational Bank of Pakistan (NBP) and the First Women Bank Ltd. (FWBL).

Small business loans up to Rs. 2 million with tenure up to 8 years, inclusive ofgrace period of 1 year and a debt : equity of 90 : 10 will be disbursed to SMEbeneficiaries across Pakistan, covering; Punjab, Sindh, Khyber Pakhtunkhwa,Balochistan, Gilgit Baltistan, Azad Jammu &Kashmir and Federally Administered

Tribal Areas (FATA).

5 EXECUTIVE SUMMARYFootwear Retail Outlet is proposed to be set up in urban areas. The outlet wouldcater to the demand for ladies and children footwear, belonging to middle andupper middle income groups.

The demand for footwear is constantly rising and there are a number of localmanufacturers producing good quality footwear. The consumers are becomingincreasingly quality conscious and seek products offering value for money. Thistrend has led to strong growth in retail footwear outlets all across Pakistan.

The focus of the business would be to provide casual, semi-formal and formal,quality footwear at affordable prices. Shoes are assumed to be purchased fromdifferent subcontracted manufacturers and sold at the retail outlet.

The total project cost for setting up a footwear retail outlet is estimated at Rs.1.31 million out of which Rs. 0.62 million is capital cost and Rs. 0.69 million isworking capital. The project NPV is calculated to be around Rs 4.23 million, withan IRR of 37% and payback period of 3.85 years. This business will provide

employment opportunity to 5 individuals including the owner/manager. The outletwill remain operational for 12 hours per day, and with estimated sales of 9,200pairs of shoes in the first year. The legal business status of this project isproposed as Sole Proprietorship.



6/18


6 BRIEF DESCRITION OF PROJECT & PRODUCTThis document provides information for setting up a Footwear Retail Outlet forladies and children. It involves purchase of ladies and children shoes from anylocal manufacturer and selling it through a retail outlet established in a rentedpremise under a brand name, in any of the urban cities of Pakistan. The retail

outlet will have a covered area of 600 sq. ft. Shoes of the required quality andquantity will be sourced from wholesale markets and small shoe manufacturers.

The product mix would include ladies and children shoes in all sizes. Thisproduct mix is divided into further categories; casual, semi-formal and formalfootwear which includes pumps, heels, coat shoes, sandals, slippers, etc. madeof leather and other materials. The three categories among ladies and childrenshoes are further classified by proposed selling prices, ranging between Rs. 700

Rs. 1,100 for ladies shoes and Rs. 325 Rs. 650 for children shoes.

7 CRITICAL FACTORSFollowing factors are critical for the success of footwear retail business: Develop strong linkages with suppliers for sourcing good quality products at

competitive prices. Efficient management of stock to keep inventory cost at the minimum. Selection of a central location keeping in mind the target market. Knowledge about the latest market trends. Induction of trained sales personnel for efficient customer handling. Strong competition with similar shops in the same commercial area.

8 INSTALLED & OPERATIONAL CAPACITIESSince the proposed venture is a trading business, there are no installedcapacities per se. The turnover will depend on seasonal sales and ability of theventure to attract customers through quality and price incentives. Experiencedand efficient sales staff also plays a critical role in determining the sales revenueof the business. The business is expected to have a capacity to sell 12,000shoes in a year.

The proposed project assumes to have a stock of 9,600 pairs at 80% capacity,out of which 400 pairs would be kept in inventory while remaining 9,200 pairs willbe sold during first year of operation. The outlet will operate for 12 hours daily.

9 GEOGRAPHICAL POTENTIAL FOR INVESTMENTThere is significant domestic demand for footwear in all the urban and semi-urban areas, year round. Thus, the outlet can be opened in any urban location in



7/18


the country, where customers have an easy access to the outlet, like shoppingmalls, busy markets or similar high traffic.

10 POTENTIAL TARGET MARKETS / CITIES

Most of the shoe manufacturing units and a number of shoe stores are present incities like Lahore, Karachi, Faisalabad, Quetta, Hyderabad, Peshawar, Sahiwal,Gujranwala and Rawalpindi. Hence, these cities and other comparable cities inthe country are considered as a suitable option for setting up a footwear retailoutlet.

11 PROJECT COST SUMMARY A detailed financial model has been developed to analyze the commercialviability of Footwear Retail Outlet under the Prime Ministers Youth Business

Loan scheme. Various cost and revenue related assumptions along with resultsof the analysis are outlined in this section.

The projected Income Statement, Cash Flow Statement and Balance Sheet areattached as appendix.

11.1 Project Economics

A target sale of 9,200 shoe pairs would be achieved by footwear retail outlet inthe first year. The following table shows internal rate of return, payback periodand NPV:

Table 1: Project Economics

Description DetailsInternal Rate of Return (IRR) 37%Payback Period (yrs) 3.85Net Present Value (NPV) Rs. 4,231,339

Returns on the investment and its profitability are highly dependent on theefficiency of the entrepreneur in selecting the appropriate business location,hiring trained sales persons and maintaining good quality, in terms of shoe

designs and customer services.

11.2 Project Financing

Following table provides details of the equity required and variables related tobank loan:



8/18


Table 2: Project Financing

Description DetailsTotal Equity (10%) Rs. 131,053Bank Loan (90%) Rs.1,179,476Markup to the Borrower (%age/annum) 8%

Tenure of the Loan (Years) 8Grace Period (Years) 1

11.3 Project Cost

Following requirements have been identified for operations of the proposedbusiness.

Furniture and fixture is required for display of shoes and storing of stock. Officeequipment such as computer, printer and air conditioner are essential for routinebusiness operations and for giving a professional outlook to attract customers

and achieve customer satisfaction.Table 3: Capital Investment for the Project

Capital Investment Rs.Furniture & fixtures 560,500Office equipment 46,000Pre-operating costs 18,270Total Capital Costs 624,770Working CapitalEquipment / Spare part inventory 3,065

Opening inventory 426,400Upfront building rent 120,000Cash 136,295Total Working Capital 685,760Total Investment 1,310,529

11.4 Space Requirement

The area for the outlet has been calculated on the basis of space required for

display area, store, management space and washroom. Following table showscalculations for project space requirement.

Table 4: Space Requirement

Space Requirement (in ft.) Rs/Sq. Ft. Area (Sq.Ft.) Amount (Rs.)

Shop 50 600 30,000



9/18


11.5 Furniture & Fixture

Following table shows costs such as furniture, interior designing and electricalequipment etc.

Table 5: Furni ture & Equipment Requirements

Description Quantity / AreaCost /Rate Amount / Other

FurnitureExecutive Chairs 1 5,000 5,000Counter 1 20,000 20,000Seating for customers 5 3,000 15,000Floor equipment (baskets, mirrors

etc.) 1 15,000 15,000

Interior Designing

Shoe Racks with glass material 300 500 150,000False ceiling, front door & paint 300 400 120,000Flooring 300 sq ft @ 175 300 175 52,500

Electrical equipment Air conditioner (1.5 ton split) 1 50,000 50,000Generator (3 KVA) 1 40,000 40,000Electric wiring & lighting 30,000Bracket fans 4 2,500 10,000

Shoe storeShoe Racks with iron & Wood 150 200 30,000Lighting & Wiring 5,000Wooden Stools 2 1,500 3,000

Admin OfficeDesks and Chairs 1 15,000 15,000

Total Furniture & Equipment 560,500

11.6 Office Equipment

Computer and printer are required for routine office operations and recordmaintenance. Similarly, barcode reader and inventory management software isnecessary for keeping track of inventory and for ease of reference for bothcustomer and owner.

Table 6: Office Equipment Costs

Description Quantity / Area Cost / Rate Amount / OtherComputers 1 25,000 25,000UPS 1 10,000 10,000



10/18


Computer printer (s) 1 10,000 10,000Telephones 1 1,000 1,000Total Office Equipment 46,000

Rental vehicle is proposed as a mode of transportation of goods.

11.7 Raw Material RequirementsShoes will be purchased from manufacturers and wholesalers. Purchase priceper unit is depicted in the following below:

Table 7: Cost of Material

Purchase price per unit year 1 - Ladiesshoes Qty %age Price (Rs)

Pair A 20% 725Pair B 50% 600

Pair C 30% 475Purchase price per unit in year 1 - ChildrenshoePair A 20% 425Pair B 50% 325Pair C 30% 225

11.8 Human Resource Requirement

Table 8: Human Resource Requirement

Description No. of Employees Salary / Employee/ MonthStore manager/ Owner 1 15,000Salesmen 2 11,000Helper 2 10,000Total 5

The above table provides details of human resource required in the 1 st year torun this project. Salaries of all employees are estimated to increase at 10%annually.



11/18


11.9 Revenue Generation

Table 9: Revenue Generation in 1 st Year of Operation*

Product Unit QtySalesPrice

(Rs./Unit)

First YearSales

Revenue(Rs)

Ladies ShoesPair A No. 1,472 1,088 1,600,800Pair B No. 3,680 900 3,312,000Pair C No. 2,208 713 1,573,200Sub-Total 6,486,000Children ShoesPair A No. 368 638 234,600Pair B No. 920 488 448,500Pair C No. 552 338 186,300Sub-Total 869,400Total 7,355,400

* Figures are rounded off at zero decimal place.

11.10 Other Costs

Other costs include fixing and repairing material which is estimated at 0.50% ofsales revenue, transportation expenses 2.0% of cost of shoes purchased, salescommission is estimated at 2.0% of revenue and lump sum monthly provision ofRs. 10,000 for promotional expenses.



12/18


12 CONTACT DETAILS OF GOVERNMENT INSTITUTIONS

PrincipalGovt. Institute of LeatherTechnology, Gujranwala

P.O Anwar Industry G.T.Road,GujranwalaPhone, 055 9230056

PrincipalFootwear Training InstitutePlot # 24, Phase 5, Hayatabad,Peshawar091 9217244

PrincipalNational College of Arts4- Shahrah-E-Qaid-E-Azam, LahoreTel: +92 42 99210599, 99210601

PrincipalPakistan School of Fashion Design51-J/3, Johar Town, LahoreTEL: +92 42 3531 5401 08



13/18


13 ANNEXURE

13.1 Income Statement

Income StatementYear 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Revenue 7,355,400 8,395,984 9,569,225 10,893,802 12,386,396 14,067,724 15,964,909 17,916,992 19,708,691 21,679,561

Cost of salesCost of purchasing shoes 5,116,800 5,840,560 6,656,815 7,577,849 8,616,595 9,785,781 11,105,916 12,463,995 13,710,394 15,081,433 Direct labor 504,000 554,400 609,840 670,824 737,906 811,697 892,867 982,153 1,080,369 1,188,406 Fixing and repair material 36,777 41,980 47,846 54,469 61,932 70,339 79,825 89,585 98,543 108,398

Direct Electricity 257,040 282,744 311,018 342,120 376,332 413,965 455,362 500,898 550,988 606,087 Transport rental expense 102,336 116,811 133,136 151,557 172,332 195,716 222,118 249,280 274,208 301,629 Generator expense 148,500 163,350 179,685 197,654 217,419 239,161 263,077 289,384 318,323 350,155

Total cost of sales 6,165,453 6,999,845 7,938,341 8,994,473 10,182,516 11,516,658 13,019,164 14,575,296 16,032,825 17,636,108 Gross Profit 1,189,947 1,396,139 1,630,884 1,899,330 2,203,880 2,551,066 2,945,745 3,341,697 3,675,866 4,043,453

General administration & selling expensesAdministration expense 180,000 198,000 217,800 239,580 263,538 289,892 318,881 350,769 385,846 424,431 Sales commission 147,108 167,920 191,384 217,876 247,728 281,354 319,298 358,340 394,174 433,591 Building rental expense 360,000 396,000 435,600 479,160 527,076 579,784 637,762 701,538 771,692 848,861 Co mmu nic at io ns e xp en se (p ho ne , fa x, ma il, in te rn et , e tc .) 24,000 26,400 29,040 31,944 35,138 38,652 42,517 46,769 51,446 56,591 Office expenses (stationary, entertainment, janitorial services, etc. 42,000 46,200 50,820 55,902 61,492 67,641 74,406 81,846 90,031 99,034 Promotional expense 120,000 108,000 97,200 87,480 78,732 70,859 63,773 57,396 51,656 46,490 Depreciation expense 71,383 71,383 71,383 73,800 73,800 73,800 76,598 76,598 76,598 79,837 Amortization of pre-operating costs 3,654 3,654 3,654 3,654 3,654 - - - - -

Subtotal 948,145 1,017,557 1,096,882 1,189,396 1,291,159 1,401,983 1,533,235 1,673,256 1,821,443 1,988,835 Operating Income 241,802 378,582 534,002 709,934 912,721 1,149,083 1,412,510 1,668,440 1,854,423 2,054,618

Gain / (loss) on sale of office equipment - - 27,600 - - 45,750 - - 59,862 Earnings Before Interest & Taxes 241,802 378,582 561,602 709,934 912,721 1,194,834 1,412,510 1,668,440 1,914,285 2,054,618

Interest expense on long term debt (Project Loan) 97,896 89,625 78,754 66,980 54,230 40,421 25,466 9,269 - -

In teres t expens e on long term debt (Working Capital Loan) - - - - - - - - - - Subtotal 97,896 89,625 78,754 66,980 54,230 40,421 25,466 9,269 - - Earnings Before Tax 143,906 288,957 482,848 642,953 858,492 1,154,413 1,387,044 1,659,171 1,914,285 2,054,618

Tax - - 8,285 24,295 51,274 95,662 130,556 179,334 230,357 258,423 NET PROFIT/(LOSS) AFTER TAX 143,906 288,957 474,563 618,658 807,218 1,058,751 1,256,487 1,479,837 1,683,928 1,796,195



14/18


13.2 Balance Sheet

Balance Shee tYear 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Current assetsCash & Bank 136,295 199,526 282,067 451,882 767,502 1,207,138 1,754,732 2,490,514 3,391,638 4,548,318 9,549,433 Closing stock 268,063 304,341 345,145 391,064 442,718 500,724 566,051 633,709 697,079 766,787 Equipment spare part inventory 3,065 3,673 4,396 5,255 6,273 7,481 8,914 10,505 12,133 14,013 - Opening inventory 426,400 535,385 671,229 840,510 1,051,296 1,313,341 1,639,567 2,024,067 2,449,121 2,963,436 - Pre-paid building rent 120,000 132,000 145,200 159,720 175,692 193,261 212,587 233,846 257,231 282,954 -

Total Current Assets 685,760 1,138,647 1,407,232 1,802,511 2,391,828 3,163,940 4,116,525 5,324,982 6,743,831 8,505,800 10,316,220

Fixed assetsFurniture & fixtures 560,500 504,450 448,400 392,350 336,300 280,250 224,200 168,150 112,100 56,050 - Office equipment 46,000 30,667 15,333 53,251 35,501 17,750 61,644 41,096 20,548 71,361 47,574

Total Fixed Assets 606,500 535,117 463,733 445,601 371,801 298,000 285,844 209,246 132,648 127,411 47,574

Intangib le assetsPre-operation costs 18,270 14,616 10,962 7,308 3,654 - - - - - -

Total Intangible Assets 18,270 14,616 10,962 7,308 3,654 - - - - - - TOTAL ASSETS 1,310,529 1,688,379 1,881,928 2,255,420 2,767,282 3,461,940 4,402,369 5,534,228 6,876,479 8,633,211 10,363,794

Current liabilitiesAccounts payable 233,944 269,514 310,291 357,119 410,932 472,792 543,300 617,048 689,852 624,240

Total Current Liabilities - 233,944 269,514 310,291 357,119 410,932 472,792 543,300 617,048 689,852 624,240

Other liabilitiesDeferred tax - - - - - - - - - - Long term debt (Project Loan) 1,179,476 1,179,476 1,048,498 906,649 753,026 586,653 406,471 211,334 - - - Long term debt (Working Capital Loan) - - - - - - - - - - -

Total Long Term Liabilities 1,179,476 1,179,476 1,048,498 906,649 753,026 586,653 406,471 211,334 - - -

Shareholders' equityPaid-up capital 131,053 131,053 131,053 131,053 131,053 131,053 131,053 131,053 131,053 131,053 131,053 Retained earnings 143,906 432,863 907,426 1,526,084 2,333,302 3,392,054 4,648,541 6,128,378 7,812,307 9,608,501

Total Equity 131,053 274,959 563,916 1,038,479 1,657,137 2,464,355 3,523,107 4,779,594 6,259,431 7,943,360 9,739,554 TOTAL CAPITAL AND LIABILITIES 1 ,3 10 ,5 29 1,688,379 1,881,928 2,255,420 2,767,282 3,461,940 4,402,369 5,534,228 6,876,479 8,633,211 10,363,794

Liabilities & Shareholders' Equity

Assets



15/18


13.3 Cash Flow Statement

Cash Flow StatementYear 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Operating activities Net profit 143,906 288,957 474,563 618,658 807,218 1,058,751 1,256,487 1,479,837 1,683,928 1,796,195 Add: depreciation expense 71,383 71,383 71,383 73,800 73,800 73,800 76,598 76,598 76,598 79,837

amortization of pre-operating costs 3,654 3,654 3,654 3,654 3,654 - - - - - Closing stock (268,063) (36,278) (40,804) (45,919) (51,654) (58,006) (65,326) (67,658) (63,371) (69,708) Equipment inventory (3,065) (608) (723) (859) (1,019) (1,208) (1,433) (1,590) (1,628) (1,881) 14,013 Opening inventory (426,400) (108,985) (135,844) (169,281) (210,787) (262,045) (326,226) (384,499) (425,054) (514,315) 2,963,436 Pre-paid building rent (120,000) (12,000) (13,200) (14,520) (15,972) (17,569) (19,326) (21,259) (23,385) (25,723) 282,954 Accounts payable 233,944 35,570 40,778 46,827 53,813 61,860 70,509 73,747 72,804 (65,612)

Cash provided by operations (549,465) 63,231 213,519 364,915 469,243 606,010 789,420 930,920 1,112,458 1,228,040 5,001,115

Financing activitiesProject Loan - principal repayment - (130,978) (141,849) (153,623) (166,373) (180,182) (195,137) (211,334) - - Additions to Project Loan 1,179,476 - - - - - - - - - - Issuance of shares 131,053 - - - - - - - - - -

Cash provided by / (used for) financing activities 1,310,529 - (130,978) (141,849) (153,623) (166,373) (180,182) (195,137) (211,334) - -

Investing a ctivit iesCapital expenditure (624,770) - - (53,251) - - (61,644) - - (71,361) - Acquisitions

Cash (used for) / provided by investing activities (624,770) - - (53,251) - - (61,644) - - (71,361) -

NET CASH 136,295 63,231 82,541 169,815 315,621 439,636 547,593 735,782 901,124 1,156,679 5,001,115



16/18


13.4 Useful Project Management Tips

Marketing

Adverti sement & Promotion: Business promotion and dissemination throughbanners and launch events is highly recommended. Product brochures shouldbe developed from good quality service providers.

Sales & Distribution Network: Expert's advise and distribution agreementsare required with shoes manufacturers.

Price - Bulk Discounts, Cost plus Introductory Discounts: Price shouldnever be allowed to compromise quality. Price during introductory phase maybe kept lower and used as a promotional tool. Product cost estimates shouldbe carefully documented before price setting

Human Resources

Adequacy & Competencies: Skilled and experienced staff should be hired.

Performance Based Remuneration: Efforts to manage human resource costshould be focused through performance measurement and performance basedcompensation.

Training and Skills Development: Training to staff should be provided inareas of customer services and sales.

13.5 Useful Links Prime Ministers Office, www.pmo.gov.pk Small and Medium Enterprise Development Authority, www.smeda.org.pk National Bank of Pakistan (NBP), www.nbp.com.pk First Women Bank Limited (FWBL), www.fwbl.com.pk Government of Pakistan, www.pakistan.gov.pk Ministry of Industries & Production, www.moip.gov.pk Ministry of Education, Training & Standards in Higher Education,

http://moptt.gov.pk

Government of Punjab, www.punjab.gov.pk Government of Sindh, www.sindh.gov.pk Government of Khyber Pakhtunkhwa, www.khyberpakhtunkhwa.gov.pk Government of Balochistan, www.balochistan.gov.pk Government of Gilgit Baltistan, www.gilgitbaltistan.gov.pk Government of Azad Jammu Kashmir, www.ajk.gov.pk



17/18


Trade Development Authority of Pakistan (TDAP), www.tdap.gov.pk Securities & Exchange Commission of Pakistan (SECP), www.secp.gov.pk Federation of Pakistan Chambers of Commerce and Industry (FPCCI),

www.fpcci.com.pk State Bank of Pakistan (SBP), www.sbp.org.pk



18/18


14 KEY ASSUMPTIONS

Table 10:Capacity Util ization Assumpt ions

Starting Capacity Utilization 80%

Annual Growth Rate 3%Maximum Capacity Utilization for the project 100%

Table 11: Economy-Related Assumptions

Electricity price growth rate 10%Wage growth rate 10%

Table 12: Cash Flow Assumptions

Accounts payable cycle 15 (Days)

Table 13: Financial Assumptions

Project life (Years) 10Debt 90%Equity 10%Interest rate on long-term debt 8%Debt tenure (Years) 8

Grace Period (Years) 1

Table 14: Revenue Related Assumptions

Sale price growth rate 10%Purchase price growth rate 10%Percentage of Ladies shoes 80%Percentage of children shoes 20%


Documents

Footwear Retail Outlet (Rs. 1.31 Million)