Financial details of Tatva

9.1 Cost Capital investment included

1. Customization of stores, which includes complete furnishing like furniture, electrical equipments etc, of all sales stores in different cities. (Cost of customization of one store is expected to be Rs. 6,00,000 . cost of customization of ten stores is 10*6,00,000 = Rs. 60,00,000) 2. Electrical equipments of different offices, which include air conditioners, computers, printers, fax machine etc. (cost incurred = Rs 3,35,000) (See Exhibit no. 8) 3. Office furniture and Central warehouse furniture.( cost incurred = Rs 8,00,000) 4. Investment in Community Owned Company: In partnership with COCs in 40:60 ratio, where our company invested Rs. 6666666.67 as 40 % equity shares.
9.1.1 Fixed costs

These are those costs which are to be paid by company irrespective of sales volume or any other variable factors. Fixed cost included: 1. Salaries to employees (Total salaries = Rs 31, 81,000 per month Salaries per annum = Rs 31, 81,000 *12 = 3, 81, 72,000 per annum) 2. Office rent and retail store rent (Rent of one store = Rs 3, 00,000 per month Rent of hundred stores = Rs 3, 00,000*100 = Rs 3, 00, 00,000 Rent of stores per annum = Rs 3, 00, 00,000*12 = Rs 30, 60, 00,000 per annum) (Rent of offices = Rs 50,000 per month Rent per annum = Rs 50,000*12 = Rs 6, 00,000 per annum) (Total rent paid by organisation per annum = Rs 30, 60, 00,000 + Rs 6, 00,000 = Rs 30, 66, 00,000) (See Exhibit 9)

Total fixed costs per annum = Rs 54,81,37,920

9.1.2 Variable costs

These are those costs which generally vary with the scale of operation of company and are generally directly proportional to scale of operation. This cost includes: 1. Electricity expenses at various stores, Central warehouse and offices. 2. Miscellaneous expenses which include expenses like stationary expenses, telephonic expenses, travelling expense etc. 3. Marketing expenses added at rate of 1% of sales value in Indian market, as export marketing expenses will be borne by external channel. (Total Variable expenses per month = Rs 15, 37, 160 [expected]) Total Variable cost per annum = Rs 1, 84, 45,920 [expected] (See Exhibit 10)

9.2 Cost of goods sold (COGS)

COGS includes the cost of raw material, cost of manufacturing and any other cost which are incurred in the process of producing the finished goods which are ready to be sold in market. As our company is procuring 60% of its total goods to be sold from community owned company and procuring 40% from various other third party sites, so that variety of goods can be offered to customers. Cost which is incurred in procuring of goods from all sites is taken in form of final cost which is incurred by our company.
Cost details (See exhibit 11)

Cost Procurement from COC Procurement from third party Total cost of goods

Amount in Rs
46320000 37600000

83920000

9.3 Revenue
Our revenue generation sources are Indian market and export market. Revenue generated form hundred Indian stores amount to be Rs. 7,36,00,000/- and export market sale is Rs. 12,10,00,000/- per month. This number arrives from the average expected sales of all stores and then average price taken into consideration. The average sales is considered after taking various peaks and off seasons i.e. considering seasonality of sales which generally comes from various festive seasons, marriage seasons and change in weather etc. Market Indian Export Total sales Sales per month ( Rs ) 7,36,00,000 12,10,00,000 19,46,00,000 Sales per annum ( Rs ) 88,32,00,000 1,45,20,00,000 2,33,52,00,000

Further financial analysis: Profit after tax = 523408173(per annum) Contribution margin = 2316754080( per annum) Contribution margin per unit = 1177.21244 Breakeven point (Sales units) = Fixed costs/ Contribution per unit = 38801.96852 units Breakeven point (Sales value) = Fixed costs/ Contribution % = Rs 46041848.01 As our business is high margin, so we are easily able to reach breakeven point. From cash flow analysis we can infer that we are able get a payback period of 1.5 years.(exhibit ) Debt equity ratio = 2 (exhibit ) Average cost per unit for Tatva Average revenue per unit for Tatva Average contribution per unit for Tatva 511.7073171 1186.585366 674.8780488

(For interest calculation see exhibit 13)

Financial details of Community owned company

Number of community owned companies: 8 Per community owned company details No. of artisans Equity capital from each artisan Total equity from artisans(60% ) Equity from company (40%) Total equity generated

500 2500 1250000 833333.3333 2083333.333

Further financials: Number of shares per COC = 50000 Earning per artisan per annum = 94710.16089 Dividend given per share by COC = 407.0920432 Average cost per unit for COC Average earning per unit for COC Average Contribution per unit for COC 279.0243902 573.1707317 294.1463415

Exhibit