SMEDA Departmental Store

8/6/2019 SMEDA Departmental Store

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Pre-Feasibility Study Departmental Store

DISCLAIMER

The purpose and scope of this information memorandum is to introduce the subject

matter and provide a general idea and information on the said area. All the material

included in this document 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 document, 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. SMEDA does not assume any liability for any

financial or other loss resulting from this memorandum in consequence of

undertaking this activity. The prospective user of this memorandum is encouraged to

carry out additional diligence and gather any information he/she feels necessary for

making an informed decision.

For more information on services offered by SMEDA, please contact our website:

www.smeda.org.pk

DOCUMENT CONTROL

Document No. PREF-76

Prepared by SMEDA-Punjab

Revision 2

Revision Date January 2010

Issued by SMEDA-Punjab

PREF-76/ Jan, 2010/Rev2 2
http://www.smeda.org.pk/http://www.smeda.org.pk/


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1 EXECTIVE SUMMARY ................................................................................... 5

2 INTRODUCTION .............................................................................................. 6

2.1 PROJECT BRIEF................................................................................................ 62.2 OPPORTUNITY RATIONALE.............................................................................. 6

2.3 PROJECT CAPACITY AND COST........................................................................ 6

2.4 PROJECT INVESTMENT ..................................................................................... 7

3 SECTOR AND INDUSTRY ANALYSIS ......................................................... 7

3.1 NATIONAL ANALYSIS...................................................................................... 7

3.2 LEGAL ISSUES REGARDING INDUSTRY ............................................................. 9

4 CRUCIAL FACTORS & STEPS IN DECISION MAKING FOR

INVESTMENT........................................................................................................ 10

4.1 SWOTANALYSIS ......................................................................................... 10

4.1.1 Strengths and opportunities................................................................... 10

4.1.2 Weaknesses and threats......................................................................... 10

5 PROJECT PROFILE....................................................................................... 10

5.1 PROPOSED BUSINESS LEGAL STATUS............................................................ 10

5.2 PRODUCT MIX............................................................................................... 11

5.3 PROPOSED LOCATION.................................................................................... 115.4 KEY SUCCESS FACTORS/PRACTICAL TIPS FOR SUCCESS................................. 12

6 STRATEGIC RECOMMENDATIONS......................................................... 13

6.1 MARKETING .................................................................................................. 13

6.2 PRICING......................................................................................................... 13

6.3 STORE LAYOUT AND PRESENTATION ............................................................. 13

6.4 USE OF COMPUTER ........................................................................................ 14

7 MARKET INFORMATION............................................................................ 14

7.1 MARKET POTENTIAL ..................................................................................... 14

7.2 TARGET CUSTOMERS .................................................................................... 14

7.3 RESOURCE MERCHANDISE ............................................................................ 14

8 ELECTRIC AND OTHER EQUIPMENT REQUIREMENT ..................... 15

PREF-76/ January, 2010/Rev2 3


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9 LAND AND BUILDING REQUIREMENT .................................................. 16

9.1 LAND REQUIREMENT .................................................................................... 16

9.2 RENT COST .................................................................................................... 16

9.3 UTILITIES REQUIREMENT............................................................................... 16

10 HUMAN RESOURCE REQUIREMENT................................................... 17

11 PROJECT DETAIL...................................................................................... 18

12 FINANCIAL ANALYSIS ............................................................................. 19

12.1 PROJECTED INCOME STATEMENT............................................................... 19

12.2 PROJECTED BALANCE SHEET ..................................................................... 20

12.3 PROJECTED CASH FLOW STATEMENT......................................................... 21

12.4 REVENUE CALCULATION ........................................................................... 22

12.5 PURCHASES &STOCK CALCULATION ........................................................ 23

12.6 ADMINISTRATIVE EXPENSES...................................................................... 24

13 KEY ASSUMPTIONS................................................................................... 25

13.1 OPERATING ASSUMPTIONS ........................................................................ 25

13.2 ECONOMY RELATED ASSUMPTIONS........................................................... 25

13.3 CASH FLOW ASSUMPTIONS........................................................................ 25

13.4 EXPENSE ASSUMPTIONS............................................................................. 25

13.5 FINANCIALS ASSUMPTIONS........................................................................ 26

14 ANNEXURES ................................................................................................ 27



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1 EXECTIVE SUMMARYDepartmental stores business is emerging as one of the good business ventures inPakistan as it provides all the basic merchandise under one roof. The structure of

Pakistans economy has changed from a mainly agricultural base to a service base.

Agriculture and industry sector now account for about 22% and 24% of GDPrespectively, while the services sector accounts for 54% of the GDP. A department

store is a retail establishment which specializes in satisfying a wide range of the

consumer's personal and residential durable products needs; and at the same time

offering the consumer a choice multiple merchandise lines, at variable price points,in all product categories.

Departmental store is a large retail store organized into departments offering a

variety of merchandize, commonly part of retail chain under one roof. In Pakistan

concept of departmental store has gained popularity in late eighties after theemergence of Utility Stores by the government. The same concept has been used by

Canteen Department Store (CSD). Keeping in view on consumers needs and

requirements, large investment has been made in super store by few multinationalcompanies. i.e. Metro, Macro, Cosmo Cash & Carry etc and thousands of

departmental stores in almost all cities of Pakistan.

The proposed departmental store requires an area of approx 3,000 sq. ft. it is

recommended that departmental store should be started at owned place rather onrented premises. Location of stores is important factor with any retail organization.

Spending time and money wisely in the process of site selection is of primary

importance. In this pre feasibility study it has been assumed that the proposeddepartmental store is opened in that area where there are 3,000 house hold are

present and their monthly spending on an average is Rs. 4,000. The total cost of

establishing a departmental store in developing areas is estimated at Rs. 15.38million including Rs. 12.14 Million capital cost and Rs. 3.24 million is required for

working capital. Projected IRR, Net Present Value and pay back period for proposed

departmental store are 49%, Rs. 23,148,555 and 3.65 years respectively.



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2 INTRODUCTION2.1 Project BriefThe proposed departmental store will provide variety of goods ranges from groceryto garments and alike to customers under one roof. The proposed project is a single

floor departmental store on an area of approximately 3,000 sq. ft. The project will

offer following broad categories of goods to its customers:

Groceries and food items Baby garments and baby products Crockery and plastic items Soaps detergents and chemicals Cosmetics and artificial Jewellery Ice-cream and beverages Stationery, greeting cards and gifts Watches and clocks Electronics/electrical products General items Bakery Items2.2 Opportunity RationaleIn Pakistan concept of departmental store has gained popularity in late eighties afterthe emergence of Utility Stores by the government. The same concept has been used

by Canteen Department Store (CSD). Currently there is new trend and large

investment has been made in super store by few multinational companies i.e. Metro,Macro, Cosmo Cash & Carry, etc. However in small size departmental stores,private sector made it one of the successful businesses in Pakistan. Public has liked

this concept due to the availability of all basic utilities under one roof which saves

their time about which people are more conscious these days. The factors that makethis project viable in Pakistan are:

Easy access to wholesale markets Plentiful availability of resources/salesman No process/transformation involve Variety of goods under one roof

Margin for innovation Easy diversification towards new product mix2.3 Project Capacity and CostThe proposed departmental store will have an area of 3,000 sq. ft. having

covered/indoor shopping facilities. The store will operate for 12 to 16 hours frommorning to midnight. Operating time depend on localities requirements.



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2.4 Project investmentSr.# Description Rs.

1. Capital Cost 12,143,600

2. Working capital/Cash in Hand 3,244,858

Total 15,388,458

3 SECTOR AND INDUSTRY ANALYSIS3.1 National AnalysisDepartmental stores business is emerging as one of the good business ventures inPakistan as it provides all the basic merchandise under one roof.

In late eighties a paradigm shift in grocery store science occurred. The concept of the

"Self-Serving Store" was started. Customers entered the revolutionary store and

walked through a narrow maze of shelves containing groceries. They selected theirgoods as they continued through the maze to a cashier.

This phenomenon grew rapidly; and today thousands of stores exist in the big cities.

These stores also began to offer products beyond the normal scope of the dry-good

grocery store. They added meat, dairy, fruit and vegetables, and breads to theirofferings (which had formerly been offered by individual stores such as butchers,

bakeries, and the "milk man").

Over the decades, the departmental stores have evolved even further. Now, one seesthat offer greeting cards, flowers, video rental, fast food, childcare, and much more.

Departmental stores business falls under retail sector. This sector has shown a

significant growth over the last few years. In 2005-2006 this sector showed a growth

of 3.1%.1

This sectors contribution towards GDP in the year 2008-2009 is 17.5%2

.The following table shows the contribution of retail and wholesale sector towards

GDP for the last 5 years at constant factor cost.

TTaabbllee 3311:: CCoonnttrriibbuuttiioonn ooffrreettaaiill aanndd wwhhoollee ssaallee sseeccttoorr ttoowwaarrddss GGDDPP33

Year Share%age

Growth%age

2004-2005 18.7 12.0

2005-2006 17.2 -2.4

2006-2007 17.1 5.8

2007-2008 17.3 5.32008-2009 17.5 3.1

1

Source: Economic Survey of Pakistan 2008-092





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Gross fixed capital formation (Investment in fixed assets) in this industry by private

sector has also shown a progressive trend. In year 2005-2006 growth in gross fixed

capital formation by private sector has shown an increase of 17.2%. The followingtable shows gross fixed capital formation by the private sector for the last five years:

TTaabbllee 3322:: GGrroossss ffiixxeedd ccaappiittaall ffoorrmmaattiioonn bbyy pprriivvaattee sseeccttoorr iinn wwhhoolleessaallee aanndd

rreettaaiill sseeccttoorr aatt ccoonnssttaanntt pprriicceess ((RRuuppeeeess iinn MMiilllliioonn))Year Retail and wholesale sector Rs. M

2004-2005 15,165

2005-2006 18,123

2006-2007 22,578

2007-2008 23,816

2008-2009 23,059

There are thousands of departmental stores in Lahore, Rawalpindi, Faisalabad,

Multan, Gujranwala and this number is increasing day by day. Some of these stores

are:

TTaabbllee 3333:: MMaajjoorr IInndduussttrryy PPllaayyeerrss

Name Locations

Lahore

PACE Gulberg, Model Town, M.M.Alam Road

Value Mart Gulberg, Allama Iqbal Town etc

Decent Wahdat Rd., Johar Town

Akbari store Allama Iqbal Town, Jain Mandar

H Karim Bukhsh Gulberg, The Mall, DHA

Pot Pouri Fortress, DHA etc

Metro Thokar Niaz Baig

Macro Ravi Road, Model Town Link Road

Best Mart Shadman

Al Fatah Liberty Gulberg

Naimat Khana The Mall

CSD Stores Cavalry Ground

Raheem Store Allama Iqbal Town

Rawalpindi/Islamabad

Macro IslamabadCSD Chaklala Cantt, Lalkurti

Heralds Behria Town Rwp

City Mart Satellite Town Rwp, Islamabad

D. Watson Sadder, Gulraiz Colony, Commercial

Market



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W Wilson Sadder, Gulraiz Colony, Commercial

Market

Sargodha

Al-Rehman Trade Center University Road

Taj Mehal Departmental Store Shaheen Park

Taj Mehal Departmental Store Umer PakistanFaisalabad

Bambino Super Store D Ground

City Mega Mart D Ground

S&B Super Market People Colony

Family Mart D Ground

E Mart Susan Road

Although in Pakistan the retail business is not providing employment at a large scale

directly, but indirectly it is contributing in the employment growth. As more and

more retail outlets are opening and consumer buying has shifted towardspackaged/branded products. Companies are coming with top quality products andwith the increase in production level the employment also increases.

3.2 Legal issues regarding industry4In order to fulfill its liabilities under Income Tax Ordinance, 2001 and Sales TaxAct, 1990, a sole proprietor, firm or company doing only retail business as

departmental store shall obtain NTN and Sales tax registration number from

concerned departments.

Under Sales Tax Act, 1990, a retailer whose annual turnover from supplies,

whatsoever taxable or otherwise, made in any tax period during the last twelvemonths ending any tax period if exceeds rupees five million are required to register

with sales tax department.

A registered retailer shall issue invoice and charge and collect sales tax at the rate ofthree percent (two percent sales tax and one percent income tax) of the value of

taxable supplies at the time of supplies thereof, which shall be paid on monthly basis

with return by the 15th

day of the month following the tax period in which suppliesare made.

Retailers shall not be entitled to adjustment of any input tax or claim refund of sales

tax or income tax. However, one third of tax paid by the company shall be adjustable

against the final income tax liability.For the year 2008-09 rate of tax for a small company is 20% of taxable income,while 35% income tax rate shall be applicable on all other companies. For the year

2008-2009, income up to Rs100, 000/- of a retailer (sole proprietor and firm whose

4All information only relates to retail business under departmental store



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supplies are exempt from sales tax) in a year is exempt from income tax. Income

exceeding Rs.100,000/- shall be charged to tax in various slabs ranging from 0.50%

to 25%.

4 CRUCIAL FACTORS & STEPS IN DECISION MAKING FORINVESTMENT

4.1 SWOT AnalysisA SWOT Analysis is a strategic planning tool used to evaluate the Strengths,

Weaknesses, Opportunities, and Threats involved in a project or business venture.Strengths and weaknesses are internal to the company. Opportunities and threats

originate from outside the company. A SWOT analysis is usually performed early inthe project development process, and helps organizations evaluate the environmental

factors and internal situation facing a project.

4.1.1 Strengths and opportunities Easy availability of resources(manpower/salesmen) Growing population Expanding cities Status symbol to shop from big stores Popularity of variety shopping under single roof No specialized/technical knowledge required for entrepreneur4.1.2 Weaknesses and threats Heavy taxes in the form of sales tax and income tax on retail business High competition Credibility factor in the initial phase, as suppliers do not give credit to newly

entrants

Opening of large scale chain stores like Metro, Macro, Cosmo Cash & Carry etc.5 PROJECT PROFILE5.1 Proposed Business Legal StatusLegal status is recommended to be a sole proprietorship/partnership because it

requires less legal requirement to start with than a company. Similarly a lower

income tax rate of tax is applicable to sole proprietorship than that of companies.



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5.2 Product MixThe store will offer the following broad categories of goods to its customer:

TTaabbllee 5511Category of item Proportion Avg. Gross Margin

Groceries and food items 55% 15%

Baby garments and baby products 5% 35%

Crockery and plastic items 4% 30%

Soaps detergents and chemicals 15% 10%

Cosmetics and artificial Jewellery 5% 30%

Ice cream and Beverages 5% 10%

Stationery and greeting cards/gifts 1% 20%

Watches and Clocks 1% 30%

Electronic and electrical appliances 2% 30%

General items 2% 15%

Bakery Items 5% 20%Total 100%

5.3 Proposed LocationLocation of stores is of primary concern with any retail organization. Spending timeand money wisely in the process of site selection is of primary importance. Some

retailers open shop in a location simply because it is the only vacant space within a

stones throw of their home or office. Knowledgeable retailers make a thoroughexamination of possible locations before investing their money and dreams.

The departmental store should be centrally and conveniently located within a

developing or a newly developed residential town in any of the big cities like LahoreIslamabad/Rawalpindi, Faisalabad, and Sargodha etc.

TTaabbllee 5522:: LLooccaattiioonn

City Areas

Lahore Mustafa Town

Johar Town

Wapda Town

Nespak

PIA Colony

Islamabad/Rawalpindi

Chacklala Scheme III

Saddar

Commercial Market

DHA

Bahria Town



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F-10

G-9

G-8

Abpara Market

Faisalabad

D GroundPeoples Colony

Batala Colony

Muslim Town

Sargodha

University Road

Shaheen Park

Umer Park

The proposed departmental store is feasible in any area where there are 3,000houses/family units.

5.4 Key success factors/Practical Tips for success Retail/departmental store is full of opportunities for success, but that success is

reserved for those who are prepared to commit themselves to everlasting

changes.

Customer card system can be one of the best strategies for the retention ofexisting customer and developing new customers. Card System maintains data

base of customer which can be later on used for permanent promotional and

marketing activities. Customer Card System is one of the best CRM practices

used globally.

To obtain a good average of profits it is necessary to provide state of art facilitiesto customers. There should be regular and sustained marketing through fliers distribution and

Cable TV.

The store should have an ample space for customer car parking. It is advisable tomaintain a parking space whereby around 15-20 cars can be parked

The staff hired should be well mannered and well trained in dealing with thecustomers.

Customers free gift schemes and surprise gift, valuable customer dinner can beadditional success factors.



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6 STRATEGIC RECOMMENDATIONS6.1 MarketingRegular and sustained marketing is required for a successful business ofdepartmental store. The important marketing channels would be flyer distribution,

billboards, banners, Cable TV, etc. Regular advertisement expense should be at least

0.5% to 1% of sales in the departmental store business.

Some marketing and promotional tips are as under:

Existing customers are best referrals. Know customers needs. Introduce home delivery services free of cost for shopping of more then Rs.

2,000/-.

Frequent clearance sales6.2 PricingEvery retailer has a basic philosophy towards pricing their product. What is

important is that they create and stick to a strategy for pricing so as to convey a clear

message to the consumer. The market has certainly created the need for all retailers,

even those at the higher end, to become more value oriented. That is not to suggestthat you necessarily need to compete on price, only that you be aware of providing

consumer perceived value.

Some value pricing strategies are as follows:

Provides the consumer with an incentive to become a repeat customer byoffering a future discount.

Frequent clearance sales Include a gift with purchase, buy one get one free. Feature your discounted prices predominantly.6.3 Store layout and presentationTodays successful retailer is the one making the most profitable use of every square

foot of space in the store and in the warehouse. Because space is costly, retailers

need to take a strategic approach to its use. Floor patterns, location of merchandise,amounts of merchandise and the appropriate displays are critical in determining

space. Misuse of space can be as detrimental to success as poor buying. It is very

important for every store to create a suitable atmosphere and appealing presentations

in order to trigger the consumers buying decision. In a world where one can findidentical merchandise in more than one store, layout and presentation becomes a

key-differentiating factor.

The proposed store should be air-conditioned. Goods should be properly arranged in

shelves categorically having ample passage between the shelves for service trolleys

and customers. There should be proper arrangement of lightening.



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6.4 Use of computerThe computer is an invaluable aid in processing the large number of transactions and

vast amounts of information involved in managing a retail operation. The amount of

data needed for merchandise planning would require hundreds of man-hours toproduce, whereas a well-designed computer system can perform the task in seconds.

Software for inventory and sales recording and management should be used to haveupdated data at all the times. This software not only records each and every sales

transaction but also updates stock and cash position after every transaction. Thesoftware for a departmental store management is easily available from different

companies and cost around Rs. 20,000/-

7 MARKET INFORMATION7.1 Market PotentialThe market for departmental stores industry in Pakistan has been developing steadily

over the last decade and a mushroom growth of large stores observed in all big cities.Still a good potential is available for new stores as population of big cities increasingday by day and new societies are being developed. New residential towns are being

developed. Location and amenities are some of the most vital factors in the success

of a store.

7.2 Target CustomersThe target customer for departmental stores is the population/family units of big

cities. Population of urban areas of Pakistan is 33% of total population. Total

estimated current population of Pakistan is 169,665,000 5(169 million).

7.3 Resource MerchandisePakistan is one of those countries where abundance of grocery merchandise isavailable in wholesale markets of every city. Suppliers normally hesitate to supply

goods on credit to new stores but after confidence building process a reasonable

credit period of 15 days to one month is available to purchasers. The major

wholesale markets Lahore and Rawalpindi are:

Shahalam Market/Rang Mahal , Lahore Akbari Mandi, Lahore Hall Road , Lahore Urdu Bazar, Lahore Abid Market Temple Road, Lahore Moochi Gate, Lahore Anwari Gate Rawalpindi

5Source: FBS



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Raja Bazaar, Rawalpindi Nankari Bazar, RawalpindiMore over most of the multi-national and national companies supply their products

along with other equipments like refrigerators directly to the departmental stores.

8 ELECTRIC AND OTHER EQUIPMENT REQUIREMENTFollowing is the detail of equipment required for this project.

TTaabbllee 8811:: DDeettaaiill ooffEEqquuiippmmeenntt

Sr.

No.Description

No.

of

Units

Cost per unit

Rs.

Total Cost

Rs.

1 Split Air Conditioners 6 35,000 210,000

2 Cash Drawer and Bar Code

Readers

2 15,800 31,600

3 Computers + Barcode Readers 2 30,000 60,0004 Software (sales and stock

management)

1 20,000 20,000

5 Printer 1 15,000 15,000

6 Fax machine, Telephoneconnections

1 16,000 16,000

7 Signboard 1 60,000 60,000

8 Motor cycle with delivery cabin 1 60,000 60,000

9 Electric Fittings and installation 150,000

10 Generator 15 KW 1 325,000 325,000

11 Service Trolleys 15 5,000 75,00012 UPS 2 5,000 10,000

Total 1,032,600



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9 LAND AND BUILDING REQUIREMENT9.1 Land RequirementThe proposed departmental store requires an area of approx 3,000 sq. ft. It is

recommended that departmental store should be started at owned place rather onrented premises. The main investment in this business is of land and building, which

is very high due to very expensive land in the proposed locations and high

construction cost. The cost of commercial land situated in a well populated housingsociety will be ranging from Rs. 4 Million to Rs. 6 Million. In this pre feasibility the

cost of 3,000 sq. ft. land is taken Rs. 6 million. Following table shows the covered

area requirement for a departmental store:

TTaabbllee 9911:: AArreeaa UUttiilliizzaattiioonn

Description Area

Owners Office 120Accounts & Admin. Office 120

Warehouse 225

Display/shopping area/Till 2,535

Total 3,000

TTaabbllee 9922:: CCoonnssttrruuccttiioonn ccoosstt

Area (sq. ft.) Cost (Rs/Sq. ft.) Total Cost Rs.

3,000 1,300 3,900,000

9.2 Rent costIf the required land acquired on rent, it will cost around Rs. 100,000 to Rs. 250,000

per month depending upon the location of store in different proposed areas of Lahoreand Rawalpindi.

9.3 Utilities requirementThe necessary utilities are Electricity, telephone and water. A three-phase

commercial electricity connection is required. Current rate of electricity for theseconnections is Rs 14 per kilowatt-hour. At least two telephone connections are

required; one solely used for home delivery service calls.



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10 HUMAN RESOURCE REQUIREMENTSkilled salesmen are easily available at competitive wage rates. Number of workersrequired for each department is given below:

TTaabbllee 110011:: HHuummaann rreessoouurrccee rreeqquuiirreedd

Positions NumberSalary/month

(Rs.)

Annual salary

(Rs.)

Store manager 1 25,000 300,000

Salesmen 12 10,000 1,440,000

Purchase Officer 1 20,000 240,000

Asst. Purchase Officer 1 12,000 144,000

Cashiers* 4 10,000 480,000

Helpers/cleaners* 4 7,000 336,000Accounts Officer 1 20,000 240,000

Asst. Account Officer 1 12,000 144,000

Security Guards* 2 8,000 192,000

Total 27 293,000 3,516,000

These people will work in two shifts: 5 Salesmen work in the morning, 7 will work in the evening; 2Cashier & Helpers/Cleaners in morning, 2 in evening; 1 security guard in morning and 1 in evening

shift will work.



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11 PROJECT DETAILTTaabbllee 111111:: PPrroojjeecctt EEccoonnoommiiccss

Capital Investment Rs.

Land 6,000,000Building/Infrastructure 3,900,000

Equipments 1,032,600

Pre-Operating Cost 461,000

Shelves & Counters 750,000

Total Capital Investment 12,143,600

Working Capital

Initial Stock 1,596,400

Cash in hand needed for three month expenses (Admin, etc.) 1,648,458

Total Working Capital 3,244,858

Total Investment 15,388,458

Initial Financing Rs.

Debt 50% 7,694,229

Equity 50% 7,694,229

Project Returns

Internal Rate of Return (IRR) 49%

Payback Period (yrs) 3.65

Net Present Value (Rs.) 23,148,555


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Pre-Feasibility Study

12.3 Projected Cash flow Statement

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7

Profit before Financial

Charges & Taxation - 4,332 5,747 7,340 9,226 11,457 14,033 16,835

Amortization 92 92 92 92 92 - -

Depreciation - 373 346 320 297 276 256 238

- 4,797 6,185 7,753 9,616 11,825 14,290 17,073

Working Capital Change - 1,990 65 76 89 103 121 141

Cash form other Sources

Owners 7,694 - - - - - - -

Bank Finance 7,694 - - - - - - -

15,388 - - - - - - -

Total Sources 15,388 6,787 6,251 7,829 9,704 11,928 14,410 17,214

Applications:

Fixed Assets 11,683 - - - - - - -

Preoperational Expenses 461 -

Working Capital 3,245 -

Re -Payment of Loan - 1,092 1,280 1,501 1,759 2,062 - -

Tax - - - - - - - -

15,388 1,092 1,280 1,501 1,759 2,062 - -

Cash Increase/(Decrease) - 5,695 4,970 6,328 7,945 9,866 14,410 17,214

Opening Balance 1,648 1,648 7,343 12,314 18,642 26,587 36,453 50,864

Closing Balance 1,648 7,343 12,314 18,642 26,587 36,453 50,864 68,077

PREF-76/ January, 2010/Rev2

21


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13 KEY ASSUMPTIONS13.1 Operating AssumptionsHours operational per day 16 hours

Days operational per year 360 days

Stock inventory remain in store

Category of itemNo. of days

Groceries and food items 7

Baby garments and baby products 30

Crockery and plastic items 30

Soaps detergents and chemicals 15

Cosmetics and artificial jewellery 30

Ice cream and Beverages 7

Stationery and greeting cards/gifts 30

Watches and Clocks 30

Electronic and electrical appliances 30

General items 30

Bakery Items 3

13.2 Economy Related AssumptionsElectricity/Fuel cost growth rate 10%

Salaries growth rate 10%

Tax rates 35%

13.3 Cash Flow AssumptionsAccounts receivable (average) 0 days

Accounts payable (average) 15 days

13.4 Expense AssumptionsTelephone Expenses (% of Revenue) 0.3%

Repair and maintenance (% of Equipment & Building) 1%

Entertainment Expenses (% of Revenue) 0.5%

Insurance of stocks (% of stock) 4%Capacity Utilization Growth Rate 10%

Amortization of Pre-operating cost 20%

Advertisement (% of Revenue) 1%

Electricity growth rate 10%

Traveling and conveyance (% of Revenue) 0.2%


25


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26

Motorcycle Delivery Expenses (% of Revenue) 0.18%

Printing and stationery (% of Revenue) 0.1%

Proportion of sales tax taxable sales and purchases 70%

Revenue price growth rate 6%

Purchase price growth rate 6%

13.5 Financials AssumptionsProject life (Years) 10

Debt 50%

Equity 50%

Interest rate on long-term debt 16%

Debt tenure (Years) 5

Debt payments per year 12



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14 ANNEXURES1. For Machinery & Equipment (Cash Counter, Drawers, Bar Code

readers etc)

Rahman Business Systems Pakistan

E-425 Main Boulevard

D.H.A Cantt Lahore Pakistan

Phone: 0092-42-6612139, 0092-42-6621458, 0092-3004487931,

0092-3334234931, 0092-321-4499185

www.rahmansgroup.com, www.rcobsy.com

[email protected]

2. For Wracks and ShelvesMr. Javaid Sheikh

Rax Manufecturing

Sheikhpur Noon Road, Behind Koh Noor Mill

Rawalpindi

0300-5145266

3. For Computer Software (POS)SMEDA SMAP Software available free of Cost downloadable at link

http://smap.smeda.org/

4. Rashid JamilAl-Khalid Consultants

Contacts: 051-5857225, 0321-5517275

27
http://www.rahmansgroup.com/http://www.rcobsy.com/http://smap.smeda.org/http://smap.smeda.org/http://www.rcobsy.com/http://www.rahmansgroup.com/

Documents

SMEDA Departmental Store