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PROJECT APPRAISAL

Project appraisal means the assessment of a project in terms of its economic, social and financial
liability. This makes it necessary to recognize the interrelationship of various aspects of a
project. This exercise is critical as it calls for a multidimensional analysis of the project.
Financial institutions carry out project appraisal to assess its creditworthiness before giving
finance to a project.

Methods of project appraisal

Project is appraisal under the following contexts:

• Economic analysis

• Financial analysis

• Technical feasibility

• Managerial competence and

• Market analysis.

On the basis of these factors I am going for the project appraisal of my Business plan of ‘Rented
Bridal Wear’.

ECONOMIC ANALYSIS

I have analyzed the various factors such as Sales Forecast, monthly and yearly Profits which
goes with the promising Business.

Sales forecast

Particulars 1st year 2nd year 3rd year 4th year 5th year
Gross receipt 144 216 312 420 600
Cost of sales 120 180 260 350 500
Gross profit 24 36 52 70 100
Expenses
Salaries and wages 3 3 5 7 10
Utilities 0.6 0.7 1 1.4 2
Rent/lease 3.6 3.6 4.5 4.5 6
Office supplies 0.2 0.4 0.8 1.2 2
Telephone 0.4 0.6 1 1.4 2.5
Printing/photocopy 0.2 0.3 0.7 1 2
Misc. exp. 0.2 0.4 0.9 1.3 2
Advertising 3 4 6 9 13
Insurance 1.2 1.8 2.6 3.5 5
Transportation 1 2 3 4 6
Packaging 0.6 1 2 3 5
Bank charges 0.1 0.2 0.5 0.8 1.5
Interest on loan 3 3 3 3 3
Decoration 1 1.5 3 4 6
Total expenses 16.1 22.8 34 43.1 66
Net profit 5.9 13.2 18 26.9 34

• As mention above sales and the profit return as per the plan support my Business Plan.

• As my Business Plan is Garment related so procurement of the raw materials is not a


tough task. Apparel segment is vast.

• We targeted our sales volume in such that comparing with it the profit return it will be
achievable.

• Today the customer are more aware of the product which is more customized.

• As our store will be located in the Mumbai so it acquire huge market. Awareness
diminished the risk to operate this business.

OPERATIONS

LOCATION : NAVI MUMBAI

MANUFACTURERS AND SUPPLIERS:

S R Brothers

Product Category :

Advertising And Accessories, Travel Pouches, Travel Wallets, Conference Folders,


Promotional Products, Brief...
Documentation File,
Folders, Sportswear,
Sportswear And
Access...Products :

Address : 204 / 205, Balarama Bandra - Kurla Complex, Bandra (e), Mumbai -
400051.
Maharashtra
India
Tel. No. : 91-22-26590267

Spice Islands Apparels Ltd.

Product Category : Apparels And Clothing, Sportswear, Sportswear And Accessories

Products : Mens Shirts, Ladies Blouses And Tops, Childrenswear, Pyjamas, Boxer
Sh...

Address : 125 - A Wing, Mittal Towers, Nariman Point,, Mumbai - 400021.


Maharashtra
India
Tel. No. : 91-22-2823128

Welspun India Ltd.

Product Category : Bedspreads & Coverlets, Dyes And Pigment, Fabrics, Fabrics, Woven,
Sportswear, Sportswear And Acces...

Products : Home Textiles - Terry Towels, Bed Sheets

Address : B/9 Trade World Premises Kamala Mills Compound, Lower Parel,
Mumbai - 400013.
Maharashtra
India
Tel. No. : 91-22-66136000

Regalia Apparels Pvt. Ltd.

Product Category : Sportswear, Sportswear And Accessories

Address : Gala No. 2, Hitex Industrial Estate S. V. Road, Dahisar (e), Mumbai -
400068.
Maharashtra
India
Tel. No. : 91-22-28954880

Samit International Inc.

Product Category : Apparels And Clothing, Knitwear, Leather Goods, Sportswear,


Sportswear And Accessories, Yarns

Address : 112, Amir Industrial Estate Sun Mill Compound, Lower Parel, Mumbai
- 400013.
Maharashtra
India
Tel. No. : 91-22-24949060

Budget and finance

Capital required 50 lacs

SecurityDeposit for office space 10 lacs

Rent in advance 3.6 lacs (Rs.30,000x12 months)


Furniture n fittings 5 lacs

Purchase of inventory 30 lacs

Misc exp. 1.4 lacs

Total capital required 50 lacs

Source of finance

Owners capital 12.5 lacs

Bank loan 37.5 lacs

Total 50 lacs

• Above mention are the basic financial details which will be going for the investment.

• All the Assets, Capital working capitals has been planned to operate the business
smoothly.

• Adequate amount is allocated in different departments to start and proper execution of


the Business plan.

• Analyzing the above details it is concluded that it is fruitful to the business as faras
Benefits are concern.

TECHNICAL FEASIBILITY

• For the proper execution of this business we require a list of items that I mention above.
That is minimum requirement in Financial analysis.

• From the computers to the software, websites etc.

• All this facilities are easily available in hands.

• We have selected the location for the store in Mumbai where customer can easily access
there.
• The product is a fashion symbol and lots of advanced Technology has been used for the
up gradation.

MANAGERIAL COMPETENCE

• As I am holding the degree of the Master in Fashion Management so I am capable of


manage the things. All the managerial skills I have developed through the courses offered
by my institution.

• The working staff and the employed that I am going to employed should have the
minimum criteria to understand and work in the place.

• Plan for the time to time training will has been executed.

• A proper action plan is followed and executed with the concern of respective team
members.

• Best use of human resource we are going to utilized.

• Employment is based on stage for selection so that we can get the best employee to work
with.

MARKET ANALYSIS

Target Market: Middle to Upper Middle class customers

The business is supposed to operate in the selected part of the Mumbai in the beginning. As
Mumbai is a Metropolitan city as well as economic capital and Fashion city of India, the interest
and knowledge of the people about the brands and trends is very high. The disposable income of
the people is also good which is a good sign and opportunity for starting new stores in that
locality. A result of market research done by me shows that the average customer of the target
segment spends 25-30 thousand rupees annually on kids apparel and accessories. And also the
frequency of visiting the stores is 6 times annually which is comparatively higher. The market of
Mumbai is very attractive that’s why every companies are entering into this city.

Age group : 5-16 years old kids

Gender : Unisex
S to re fo rm at p referen ce

E O B 'S (s tand alone)


17%
Dept. S tores E O B 'S (s tand alone)
12%
Dept. S tores
M alls M alls
71%

Frequency of visiting stores

6 month or
more
3 month Every month
3% Every month
24% 31%
2 month
3 month
2 month 6 month or more
42%
Mediumof brand awareness

Internet
3% Instore display
Instore display
television 11% Word of mouth
1% Word of mouth
13% Attractive shop window
display
Print Media
44% Print Media

Attractive shop television


windowdisplay
28% Internet

Attributes preference while purchasing

Fabric/quality
Design/Pattern 17% Fabric/quality
26% Fit/size
Price

Brand Fit/size Colors


5% 24% Convenience
Convenience
6% Brand
Colors Price Design/Pattern
15% 7%
Monthly Income

45 39
40 36
No. of respondants
35
30
25
20 Series1
15 12 11
10
5 2
0
<15000 15-30000 30-50000 50-100000 100000>
Income(in Rs.)

Annual spending on Kids wear

30
24
25
%age of response

19 20
20
15
15 Series1
11
10 6 5
5
0
<15 15-20 20-25 25-30 30-35 35-40 40>
Value in Rs.'000
Projected Cash Flow

Our projected cash flow is outlined in the following chart and table. The table lists sales tax
collected and paid out, as well as repayment of the loan we are seeking.

Important Assumptions

I assume that the economic conditions will improve in the next two to three years. Therefore,
business will be good in year one, but years two and years three. One, Two, Step! will be very
successful.

The table below outlines the projected balance sheet. While, as a retail store, we have no plans
for long-term assets, we will have a healthy cash balance, growing over the next five years. We
plan to pay off our loan within six years.

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