Prefeasibility ReportSubmitted to: Sir Asif Tanveer

Submitted by : Rashid Javed, Rabia Bukhari, Mudasra Amjad, Sajjad Hussain, Tehreem Ilyas, Abd-ul-latif, Mubashir Asghar, Muhammad Hassan, Hina Gulzar, Qurat-ul-ain and Malka Yasmeen From MBA (m1)4th semester (2011-2015)

[ ] “To satisfy our stake holders and customers as a guiding principle in our principle be a benchmark for

quality, creativity, local and ethical values”

CONTEXT

1: EXECUTIVE SUMMARY…………………………………………………………………………..……………….4

2: PROJECT PROFILE …………………………………………………………………………………………………..5

2.1 PROJECT BRIEF…………………………………………………………………….…….5

2.2 PROPOSED CAPACITY……………………………………………………………..…5

2.3 OPPORTUNITY RATIONAL………………………………………………………….5

2.4 TARGET CUSTOMER…………………………………………………………………..5

2.5 PROPOSED BUSINESS LEGAL STATUS………………………………………...5

2.6 PRODUCT MIX…………………………………………………………………………….6

2.7 PROPOSED LOCATION………………………………………………………………..6

3: KEY SUCCESS FACTORS…………………………………………………………………………………………..7

4: SWOT ANALYSIS…………………………………………………………………………………………………….7

4.1 STRENGTHS………………………………………………………………………………….7

4.2 WEAKNESSES……………………………………………………………………………….7

4.3 OPPORTUNITIES…………………………………………………………………….7

4.4 THREATS……………………………………………………………………………………….8

5: INDUSTRY ANALYSIS……………………………………………………………………………………………….8

6: MARKET ANALYSIS………………………………………………………………………………………………….10

6.1 MARKET DEMAND……………………………………………………………………….10

6.2 MARKET SUPPLY………………………………………………………………………….10

7: PRODUCTION PROCESS FLOW………………………………………………………………………………11

7.1 CUTTING SECTION………………………………………………………………….…….11

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7.2 COOKING SECTION…………………………………………………………………….…12

7.3 FILLING SECTION ………………………………………………………………………..…12

7.4 ASSEMBLING SECTION…………………………………………………………………..12

7.5 DECORATING SECTION……………………………………………………………….….13

7.6 BLENDING SECTION………………………………………………………………………..13

7.7 PRESENTING SECTION……………………………………………………………………..14

8: RAW MATERIAL REQUIREMENTS……………………………………………………………………………14

9: HUMAN RESOURCE REQUIREMENT………………………………………………………………………..16

10: LAND, BUILDING AND EQUIPMENT ………………………………………………………………………..17

11: MACHINERY & EQUIPMENT…………………………………………………………………………………….17

12: PROJECT ECONOMICS……………………………………………………………………………………………..18

13: FINANCIAL ANALYSIS…………………………………………………………………………………………......19

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1 EXECUTIVE SUMMARY

This pre-feasibility study is for setting up of an innovative food items in different product line. These products process according to the judgment of customer taste development. Delight food organization cover whole society of Pakistan and these kinds of outlets will be opened near public places especially near colleges, universities, restaurants and markets.

This firm categorized in three sectors, delight macaronis golgapy, delight chocolate milk shake and delight design salad plates. This work not required highly mechanized work only efficient labor is required to do this work. Golgapy required only making and filling department only good cock and labor who work with hand for filling is required. Chocolate juice required a person who can do work on machine and salad is also a work of hand art.

The total project cost for setting up this workshop is estimated at Rs. 10000/Rs. The project is financed through 100% equity. The project NPV is around Rs. 13310/Rs, with an IRR of 56% and payback period of 2 days. The legal business status of this project is proposed as ‘Sole Proprietorship’.

The unit is proposed to operate 8 hours every day. The proposed maximum capacity of the firm is to deal with 400 customers per day. During the first day 40% capacity is assumed, which increases at a rate of 10% 2nd day and assumes maximum capacity of 95% in 3rd and last day of operations.

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2 PROJECT PROFILE

2.1 PROJECT BRIEF

This document contains detail of delight foods. This contains three products macaronis golgapy, chocolate milk shake and design plates of salad. It has Capacity to deal with 400 customers per day. It’s containing clean and customer oriented staff.

2.2 PROPOSED CAPACITY

This delight food having a capacity to produce daily 6 to 7 hundred golgapy and 2 to 3 hundred chocolate milk shake glasses and they are able to deal with 400 customers daily and they may be other food shops.

2.3 OPPORTUNITY RATIONAL

Pakistan is the 6th most populous country in the World and according to an estimate with an average population growth of approximately 1.6 %.The population of Pakistan is estimated

about 187 million in the year 20111. Around 45% of the total population comprises of females. And they like golgapy and salad due to diet consciousness. And children like golgapy most. Pakistan contain long duration of summer so milk shake is very popular and chocolate is favorite to near about 80% people.

2.4 TARGET CUSTOMER

The target customer for the proposed project will be

Delight Macaronis golgapy Boys and girls between the age of 12 to 35

Delight chocolate milk shake Children, males and females

Delight design salad pates Females, restaurants and hotels

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2.5 PROPOSED BUSINESS LEGAL STATUS

Legal status is recommended to be a sole proprietorship 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.

2.6 PRODUCT MIX

The store will offer the following broad categories of goods to its customer:

Category of items Proportion Gross margin

Delight macaronis golgapy 50% 70%

Delight chocolate milkshake 40% 20%

Salad design plates 10% 10%

100%

2.7 PROPOSED LOCATION

Location of delight store products will be at public places near parks, school and colleges, university, sport grounds, official places and markets. Salad design plates will be offered to hotels and restaurants. Delight chocolate milk shake will be offered to hotels, juice corners and to offices. Delight macaronis will be offered to schools, colleges, universities, bazaar, parks, play grounds, restaurants and food corners.

SUGGESTED LOCATIONS

COMMERCIAL AREA Madre millat Fatima park

D.C CHOCK University chock

MARKETS Shahi bazaar, Shazad market, Baksho market, bobby plaza, Bahawalpur trade center, near ace center, myle wali gali,

INSTITUTION Sadiq degree college, higher secondary school, un, government offices,

HOTELS AND RESTAURANTS Vasiab, 4season, lataska, Libra,

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OTHER PLACES Fawara chock, millad chock, saraiky chock, one unit, faride gate, welcome chock, university chock, hamaitian road, sadiq public school, medical colleges,

3 KEY SUCCESS FACTORS The key to success of this project is to produce neat and clean products. Strong presence in the domestic market. Tools & equipments locally available at low price. Raw materials are available in sufficient quantity. Vast pool of skilled labor. Stable business environment till today and growing day by day. To obtain a good average of profits it is necessary to provide state of art facilities to

customers. The staff hired should be well mannered and well trained in dealing with the customers. Customer discount like buy 1 get 1 free and package increase. Cover a lot of hotels, restaurants and food corners.

4 SWOT ANALYSIS

4.1 STRENGTHS Local availability of raw materials, machinery and parts. Easy availability of low cost skilled and unskilled labour Easy starting in different areas with new ideas Low cast is enough for this business Golgapy is famous in Pakistan so some changes are customer will like Chocolaty milk shake in not available in every market Loss is not big deal in this business, easily afford. Customer oriented. New taste will be introduced easily

4.2 WEAKNESSES

Low level of technological up-gradation. Used in 1 or 2 days only Every day fresh raw material is used Large deal is not instantly made After customer requirement it can made

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4.3 OPPORTUNITIES

Growing in domestic markets easily with new tastes Competition is going to make availability of inputs cheaper and sufficient. Exposure to newer markets through Fairs/Exhibitions. In which services department can expand and take more profit

4.4 THREATS

Competition is going to increase because of setting up modern units elsewhere in theCountry.

Everyone can copy easily, no specific formula used for this Innovation is required in every phase of business operation.

5 INDUSTRY ANALYSIS

Pakistan fast-food industry has shown good progress in terms of production and meeting customer demands. This industry has been increased over a decade especially in last two years. Pakistan is one of the most populous countries in the World and according to an estimate with an average population growth of approximately 1.6 %.The population of Pakistan is estimated about 187 million in the year 2011. Keeping in view the growth in population, especially growth in middle class and growth in incomes, the demand of fast-food is also very anticipated. Though fast-food industry has shown growth but it is a general view that it is not up to the mark as compare international industries. It has a great and stiff competition in the world and required lot of improvements and efforts to match international standards. This sector has pivotal importance in terms of providing and creating jobs, earning of foreign exchange with the help of exports and fulfilling the local consumption requirements. Yet according to the market sources no big fast-food company established in last two years especially in little cities like Bahawalpur. Due to the increase in urbanization in Bahawalpur the demands for fast-food products has also been increased.

The Future of the Industry

The Pakistani economy is becoming increasingly service-oriented, and over the past several decades, the foodservice industries that offer the highest levels of convenience have been rewarded with strong sales growth. In the face of rising population, incomes and increasingly hectic work schedules, a nearly insatiable demand for convenience will continue to drive fast food sales. Fast Food Outlets will strive to find ways to make their products even more accessible. Even if incomes stagnate or attitudes change, consumers are unlikely to return to meal preparation at home on a large scale. This suggests that even if consumers choose to spend more time at home, for family or other reasons, much of the meal preparation will still occur elsewhere. Many more table service restaurants, which traditionally focus on full-service in house dining, will likely try to capture part of this market by offering take-out, and possibly experimenting with home delivery. The value of consumer time, as well as the demand for

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consistent, high-quality food products, will continue to shape the fast food industry. Fast food, once considered a novelty, has become an increasingly significant part of the young generation’s diet. The role of convenience in this dietary shift cannot be over-emphasized, and the future growth of the rest of the foodservice industry will be driven in large part by its ability to find new ways to save consumers’ time.

Increasing Market for Fast Food – The Population Boom

Pakistan, currently ranked as 6th in terms of total population, is characterized by a high population growth rate of 1.9% (Pakistan Economic Survey 2005) and is set to take the top three positions in terms of total population with already 153.4 Million people registered in 2005.1 With this, the per capita income has increased to US$ 736 while the productive age group (15 to 64) years is said to take the major chunk of population (67% of total population) by 2020. The growth rate in food consumption is also augmented by the rapid increase in the employment rate for males / female population aging between 20 to 29 years (fast food goers) hence the greater income contribution to the overall income generated is expected to be higher.

Population Pyramid 1998 & 2020*

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6 Market Analysis

The fast-food industry is popular in Pakistan, the source of most of its innovation, and many major international chains are based there. The rapid rate at which the fast food industry continues to add outlets is as much a reflection of consumer demand for convenience as it is a reflection of demand for fast food itself. Expanding the number of outlets increases accessibility, thus making it more convenient for consumers to purchase fast food. The presence of multinational fast food chains like McDonalds, KFC, Pizza Express, Pizza Hut, Subway etc. have somewhat catered to the high income segment therefore developing a niche as upscale fast-food restaurants. Multinational corporations such as these typically modify their menus to cater to local Pakistan tastes and most overseas outlets are owned by native franchisees to ensure that cultural, ethnic, and community values are taken care of. The fast-food industry in Pakistan is concentrated in large cities like Islamabad, Karachi, Lahore, Faisalabad and Rawalpindi. If we talk about the demand of fast-food products and the amount of total demands of that products are not exactly available. But looking Alameda, Zanzibar and other market players they have packed houses all the time and it can rightly be assumed that fast-food products have significant demand, and there is an opportunity to introduce a very

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new and unique product in the market. Tasty golgapy with chocolate shake is a very good idea and unique.

6.1 MARKET DEMAND

Consumer expenditures for fast food in Bahawalpur rose during the end of the year 2000. The increasing number of new establishments such as fast food franchises, fancy restaurants and gourmet bakeries in Pakistan has shown a significant growth in this sector. Food spending is around 56% of total consumer expenditures in Pakistan, and consumer spending on leisure and recreation made up of 13% of total consumer spending.A much broader appeal exists for weekend slots because those are the days when most of our core target market enjoys the mall going activities.

Age - Youngsters, single, currently enrolled in college and high school. Family unit - We will also appeal to families (young families) with children. Gender - We will target both sexes, with a slight skew for males due to their lower attention to

dietary concerns. Income - We will appeal to the medium income individuals and to all in the lower medium

income bracket.

6.2 MARKET SUPPLYIslamia University is our target market. We have great opportunity to earn a lot of profit in this market because there is not too much competition. Our competitor is only University canteen. We are going to present our products with totally new ideas, so it’s 99% sure that we will compete our competitor easily. We are going to present 3 different kinds of products.

1. Delight Golgapy with macaronis2. Delight Chocolaty milkshake3. Delight design Salad

Before we target males and females of the university we analyzed our market and find out that there is great opportunity for these products. We are going to give a new taste to the students of university with economic prices. Promotion:Promotion should be local base for this purpose we use local channels advertisement, billboards, banners and pamphlets for school/colleges.

7 Production Process Flow

As the Delight Food is dealing with three products i.e., the salad, macaroni golgappay and the chocolate shake, the production process will include the following steps;

For salad and the macaroni golgapy

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Production of salad Macaroni golgappay

Cutting of vegetablesCooking of macaroni

Filling ingolgappasAssembling

Decoration

7.1 Cutting section

In this section all the vegetables required for the salad and macaroni would be cut down. This section requires at least two persons. For the salad vegetables would be cut down in the artistic way. For example as shown below

7.2 Cooking section

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In this section macaroni will be cooked together with the required ingredients so as to make the delightful filling with in the Gol Gappa. That filling will looked like as show

7.3 Filling section

In the filling section the deliciously cooked macaroni will be filled in the gol gappas properly. This section will not require more than one person.

7.4 Assembling section

It the most important section for the delight food. Because in this section the food items i.e, the salad and the macaroni filled golgapy would be assembled in such a way so as to make the best assembled dish in one platter in the accurate proportion.

7.5 Decorating section

This is also the most important section because the better the decoration the more costumers will be attracted. This will require the creative person to decorate the platter in the interesting way. This would also be the specialty of the delight full as they would offer the different and unique things. Some examples of interestingly decorated platters are:

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For the chocolate shake

7.6 Blending section

While preparing the chocolate shake the first step would be the blending of all ingredients which include milk, coco powder, sugar etc. in an electric blender in already fixed proportions to get a delightful and soothing shake.

7.7 Presenting section

Again in the production process this is an important step to get a well presented drink so that more people will be willing to buy it.

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Blending section

Presenting section

8 RAW MATERIAL REQUIREMENTS

All the raw material used for “delight foods” required on daily basis and fresh items will be selected.

FOR MACARONI GOL GAPPA

Macaroni Potato Onion Oil Water Chilies Chicken Spices Gol Gappa cores

FOR SALAD

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Onion Chili Green leaves Boiled eggs Cucumbers Carrots Tomato Cabbage

FOR CHOCOLATE SHAKE

Milk Coco powder Chocolate for topping Ice Sugar

9 Human Resource Requirement

The owner of the project should himself be a professional and be able to perform all purchasing duties. Skilled salesmen are easily available at competitive wage rates. Hierarchy f employees are given below:

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10 LAND, BUILDING AND EQUIPMENT

As per business event land and premises provided by the DMS but equipment arranged by proprietor.

11 MACHINERY & EQUIPMENT

Majority of the machinery required for grinding and mixing which can be purchased by local market. As per the nature of business disposable crockery has been use.

Crockery and working pots details for 100 customers

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Name of item(Disposable)

Quantity Unit price (Rs.) Total cost (Rs.)

Plates 100 2.5 250

Glass 100 2 200

Spoons and straws 100 1.5 150

Shoppers and tissues 150 .85 127.5

Chairs 10 250 2500

Benches and tables 2 5500 11000

Working table large 1 4500 4500

Juicer and power Machinery Details

Machinery name Quantity Unit price (Rs.) Total cost (Rs.)

Juicer 2 liter 2 2150 4300

Power generator 1 15000 1500

Stabilizer 1 4500 4500

Machinery visual are under as

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12 PROJECT ECONOMICS

The total project cost is estimated around Rs. 10000. The capital cost is estimated around Rs. 1950/ and working capital of Rs. 8050/. The total cost, project returns and financial plan are given in the tables below:

Table 1 project cost:

Account Head Total cost (Rs.)Total capital cost 1950Total Working capital cost 8050Total project cost 10,000

The proposed pre-feasibility is based on the assumption of 50% debt and 50% equity. However, this composition of debt and equity can be changed as per the requirement of the investor

Table 2 financial planning:

Financing Ratio RsEquity 100% 10000Debt 0% 00000

Table 3 Project returns

ProjectPayback period(Days) 2.0NPV (Rs...) 13310IRR 56%

13 FINANCIAL ANALYSIS

PROJECT DETAILS

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Delicious food offers two products Golgapy with macaroni’s, Chocolaty milkshake and salad. Total investment of these projects is Rs. 10,000.

Delicious food offer 25 plates of Golgapy with macaroni’s to Rs. 30 each and 3 golgapy in each plate. Different types of salad also make which they attract to the customers. These salads are different beautiful designs Rs.25 per plate. Another product is chocolate milkshake which very new in Bahawalpur area. This kind of product is very useful in summer season. Delicious food offers the chocolate milkshake Rs. 40 per glass.

Initial investment

Products Rs. In actual

Salad 500

Golgapy 400

Macaroni’s 700

Chocolate powder 900

Milk 750

Total 3,250

Capital investment

Machinery & equipment 1,800

Operating cost 2,000

Designing cost 1,000

Total capital investment 4,800

Total investment 8,050

Profit 1,950

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