GAMING IMPORT AND DISTRIBUTION Project Feasibility Report Submitted in partial fulfillment of the requirements for the award

of the degree of BACHELOR OF BUSINESS ADMINISTRATION By GARIMA (BBA 4566/08) AND KSHITIJ KAPOOR (BBA 4586/08) Department of Management Birla Institute of Technology Noida Campus

BIRLA INSTITUTE OF TECHNOLOGY,

(Deemed University U/S of UGC Act, 1956)

MESRA, RANCHI, JHARKHAND

DECLARATION CERTIFICATE This is to certify that the work presented in the project entitled Gaming import and distribution in partial fulfillment of the requirement of the award of the degree of Bachelor of Business Administration Birla Institute of Technology, Mesra, Ranchi, is an authentic work out under my supervision and guidance. To the best of my knowledge, the content of this project does not form a basis fir the award of any previous degree to anyone else.

Date :

Ms.Meenakshi Sharma (Guides name & signature)

Department of Management Birla Institute of Technology Noida (U.P.)

CERTIFICATE OF APPROVAL The foregoing thesis entitled Gaming import and distribution, is hereby approved as a creditable study of research topic and has been presented in satisfactory manner to warrant its acceptance as prerequisite to the degree for which it has been submitted. It is understood that by its approval, the undersigned do not necessarily endorse any conclusion drawn or opinion expressed therein, but approve the project for the purpose for which it is submitted.

Co-ordinator BBA

Academic Co-ordinator

Director BIT-Noida

ACKNOWLEDGEMENT We are extremely thankful to our mentor Ms. Meenakshi Sharma who guided us throughout in the making of this project. She listened to all our queries with a great deal of patience and helped us understand our topic better. This project would not have been possible without the support and encouragement received from her. We would also like to express our heart felt thanks to Mr. Varun Kapoor for providing us guidance and useful information on the gaming industry. It was an inspiring project and we owe a genuine thanks to Ms. Meenakshi Sharma, Dr. S.L. Gupta for assigning us this project.

Garima BBA-4566/08 Kshitij Kapoor BBA-4586/08

INTRODUCTION Objective of the project

1. To introduce touch screen gaming machines in India. 2. To expand the gaming industry in India from teenagers to adult money spending sector. 3. Be the Pioneer in gaming in the Indian Leisure Entertainment Market.

Rationale and scope of the project

The demographics of those video game players and related studies usually reveal that video games and playing them are adult-oriented forms of entertainment. Based on the studies conducted, video games are extensively played by men and women alike and nearly 60% of Indians are playing them. Studying the demographics of video game players also include the various demographic variables like how many people in the population are actually playing them, what the average age of players is, the gender of video game players, what video games they play and what the effects these video games have on the population. Recent studies have shown that many people consider video games to be a very important entertainment medium. Based on video game demographics, women make up a significant 39% of those who play video games in the population. Also, a surprising 40% of online gamers are women. 35% are below eighteen years old. And based on studies, the people who regularly play video games are in the 18 to 34 year old age group. The Gaming industry in India will touch Rs.3,100 crores by 2014 according to various business spearheads of the country. It is expected to grow at a compound annual growth rate(CAGR) of 32% with factors such as young population, rising disposable incomes

For a third year running, Delhiites have been found to have one of the highest per capita incomes in the country. The Delhi Economic Survey 2007-8, which was tabled in the Delhi Assembly, has indicated a 16 per cent increase in Delhis per capita income over last year. In the 2006-7 survey, Delhiites were some of the richest people in the country with a per capita income of Rs 58,655 (for the year 2005-6). This years survey results, based on 2006-7 data, show that Delhiites earned Rs 66,728, an increase of Rs 8,074 over the previous financial year.

TECHNICAL FEASABILITY Product description

Megatouch Merit touch screen games are the most advanced touch screen games available today. Available in counter top and upright models, these mega touch games offer mulitiple game capability (140+ games). Merit Mega Touch touch screen games are the next generation in touch screen entertainment, and are available in both countertop and upright cabinets. These powerful new touch screen games offer great profit returns and will handle software updates well into the future. Merit Mega Touch countertop & upright touch screen games offer easy accessibility as well as improved security! The Merit Mega Touch games feature an exclusive joystick and a brand new, high level hardware system and the software is truly the next industry standard in touch screen entertainment! These new generation touchscreen machines offer "head to head simultaneous play"! Now Players can actually compete as they touch the screen at the same time!

MARKET FEASABILITY Market description

Video Games have been a popular pastime across the world since the 1970s. The popularity of video games has grown with the advancements in digital technology, mobile communications and the Internet in the 1990s. Gaming can be classified into PC gaming, Console gaming, Wireless gaming, Multiplayer gaming and Massive Multiplayer Online Role playing Games (MMORPG). In India, mobile gaming and console gaming are the most popular forms of games followed by PC gaming and MMORPG. The Indian gaming market is very small when compared to other developed countries such as the US. This is because the awareness for gaming has been primarily limited to urban areas. The Gaming industry in India is more inclined towards console games and arcade games. It is taken for granted that games are meant for kids only. Whereas our product is aiming the age group of 20-40.Since the product is a niche product, it will cater to a certain class of people (preferably adults). The locations chosen will be such, that people who are experementive i.e who are willing to pay for entertainment come more often and a certain target market is achieved.

Methods of transportation
Since the product is delicate and expensive, packaging and logistics are two most important factors in any business. Transportation will be carried out for two purposes i.e Importing and local transport. The import will take place by two of the following means: 1. Air Transport: If the number of units to be imported is equal to or less than 100 air transport might be used. 2. Sea freight: If the number of units to be imported are significantly over the aforementioned number, sea freight shall work out as a more affordable and feasible option.

Channels of Distribution
The parent company (i.e. Merit-AMI Entertainment Inc.) shall appoint a distributor (i.e. Kooperzane Pvt. Ltd) in the region (Delhi NCR), where the distributor is the POC (Point of Contact) for the sale of this product in the region. The customers could either be a commercial location, an Individual buyer (or a prospective operator) or other customers (e.g. Domestic gamers)

MERIT-AMI Entertainment Inc.

Kooperzane Pvt. Ltd

Commercial Location

Individual Buyers/ Operators

Other Customers

The product is being imported and then placed in the various locations by our organisation. Therefore, there will be no other channel of distribution.

General trade practices

For the commencement of the project, the following clearances and NOCs have to be taken: 1. 2. 3. 4. Import export license number (IEC Number). Central board of excise customs (CBEC) approval. Excise duty of 8% to be charged. Entertainment tax of 25% will be levied.

Major consumers of the product

As mentioned earlier, the major consumers of the product will be people of the age group 20 to 40. They consist of young people to middle aged people who want to experiment and spend some money on luxurious entertainment.

Analysis of past and present demand

As gaming is at its initial stages in the Indian market, it is imperative that we make full use of our First Movers Advantage. This is a niche product and therefore it is not widely distributed as compared to a mass product. There are various other gaming hardware options/substitutes present in the market. These are predominantly present as Console or Arcade Games. The gaming software which is more available to the general masses, since the distribution cost and the cost of contact per customer are very low, are present in the form of Online Games, PC games and Mobile Games. The console gaming industry in India is expected to grow at a CAGR of 19 percent from INR 5.8 billion (575 crores approx.) in 2009 to INR 11.6 billion by 2014 on the back of increasing disposable income and favourable demographics.

Analysis of past and present supply

The product is yet to be introduced in the Indian market, therefore there is no current supply of the product in India. Though there are other substitutes/alternatives of the product. Following is the process of importing the product from the parent company:

1 Seller (MeritAMI) and Buyer (KKG Pvt. Ltd.) conclude a sales contract, with method of payment usually by letter of credit (documentary credit). 2 Buyer applies to his issuing bank, usually in Buyer's country, for letter of credit in favor

of Seller (beneficiary). 3 Issuing bank requests another bank, usually a correspondent bank in Seller's country, to advise, and usually to confirm, the credit. 4 Advising bank, usually in Seller's country, forwards letter of credit to Seller informing about the terms and conditions of credit. 5 If credit terms and conditions conform to sales contract, Seller prepares goods and documentation, and arranges delivery of goods to carrier. 6 Seller presents documents evidencing the shipment and draft (bill of exchange) to paying, accepting or negotiating bank named in the credit (the advising bank usually), or any bank willing to negotiate under the terms of credit. 7 Bank examines the documents and draft for compliance with credit terms. If complied with, bank will pay, accept or negotiate. 8 Bank, if other than the issuing bank, sends the documents and draft to the issuing bank. 9 Bank examines the documents and draft for compliance with credit terms. If complied with, Seller's draft is honored. 10 Documents release to Buyer after payment, or on other terms agreed between the bank and Buyer. 11 Buyer surrenders bill of lading to carrier (in case of ocean freight) in exchange for the goods or the delivery order.

FINANCIAL FEASABILITY

CASH FLOW
(as on 31st march 2010)
CASH RECEIPTS
Cash Sales Gaming revenue(Pay per play) Loan/ other cash inj. TOTAL CASH RECEIPTS Total Cash Available (before cash out) 5,15,000 5,15,000 5,15,000

CASH PAID OUT

Purchases (merchandise) Purchases (specify) Purchases (specify) Gross wages (exact w ithdraw al) Payroll expenses (taxes, etc.) Outside services Supplies (office & oper.) Repairs & maintenance Advertising Car, delivery & travel Accounting & legal Rent Telephone Utilities Insurance Taxes (real estate, etc.) Interest Other expenses (specify) Other (specify) Other (specify) Miscellaneous SUBTOTAL Loan principal payment Capital purchase (specify) Other startup costs Reserve and/or Escrow Ow ners' Withdraw al TOTAL CASH PAID OUT Cash Position (end of month) 5,37,000 -22,000 5,37,000 10,000 1,80,000 72,000 2,75,000

KKG GAMING PVT. LTD.

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED ON 31ST MARCH, 2010 FOR THE YEAR ENDED ON 31ST MARCH, 2010 INCOME Sales and Other Income Closing Stock SCHEDULE 12 6 Total EXPENDITURE Opening Stock Manufacturing & Operating Expenses Personnel Expenses Administration & Selling Expenses Finance Charges Depreciation Excise Duty paid Total Profit before Tax Less: Provision for Tax Less: Fringe Benefit Tax Add/(Less) Provision for Deferred Tax Profit/(Loss) after Tax Add/(Less):Tax for earlier year Add/(Less):Balance as per last Balance Sheet Balance carried over to Balance Sheet 69,68,100 69,68,100 1,28,750 13 14 15 16 17 5 1,75,000 25,000 60,000 7,18,150 6,40,000 16,18,150 70,96,850 RUPEES 5,15,000 82,00,000 87,15,000 FOR THE YEAR ENDED ON 31ST MARCH, 2009 RUPEES -

Purchase of Raw Material & Consumable Stores

KKG GAMING PVT LTD. BALANCE SHEET AS AT 31ST MARCH, 2008

SCHEDULE SOURCES OF FUNDS SHAREHOLDERS' FUNDS Share Capital Reserve & Surplus LOAN FUNDS Secured Loans Unsecured Loans Deferred tax liability Total APPLICATION OF FUNDS FIXED ASSETS Machine Less:Depreciation Net Block CURRENT ASSETS, LOANS AND ADVANCES a) Inventories b) Sundry Debtors c) Cash & Bank Balances d) Loans & Advances Less : CURRENT LIABILITIES & PROVISIONS NET CURRENT ASSETS MISCELLANEOUS EXPENDITURE (To the extent not written off or adjusted) PROFIT & LOSS ACCOUNT Total (69,68,100) 1,06,17,913 11 10 1,02,71,613 6 7 8 9 82,00,000 18,40,000 2,31,613 1,02,71,613 5 80,00,000 6,85,600 73,14,400 90,00,000 3 4 50,00,000 1 2 40,00,000 AS AT 31ST MARCH, 2010 RUPEES AS AT 31ST MARCH, 2009 RUPEES