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INTRODUCTION TO BUSINESS

FINANCE
FEASIBILITY REPORT TO ESTABLISH FOOTWEAR FACTORY.

MADE UNDER THE GUIDANCE OF SIR. ARSALAN


HASHMI.
MADE BY:

Vision:

Our Vision is to be among the list of major footwear manufacturers


in the coming five years.

Mission:

Our mission is to diversify the trend and make tremendous


advancements in footwear industry, and to make every product
which is healthy for each consumer even medicated.

Location:
The company will be located in Sindh Industrial Trade Estate.
Target Market:
Both the genders above the age of 14.
Capacity
Company will have the capacity to produce 600 pcs per day.


STRENGTH

Countrys geographic location as by the most demanded sea ports.


Excess to the finest quality of leather at the cheapest prices.
Availability of gap in the industry, and low entrance barriers.

WEAKNESS

Imports started coming in especially from China.


Traditional method of production.
High Competition in local and international market.

OPPORTUNITY

Availability of high quality products at low prices.


Availability of skilled labor.
Excess to raw material on easy payment terms.

THREAT

Overseas importers are smart enough to change their sourcing


country.
Technology can impose a major threat unless it is changed/
modernized.

Market Analysis.
The leather footwear industry is
concentrated in and around the cities of
Lahore, Kasur and Charsadda. Other
footwear centres are Lahore, Karachi,
Faisalabad, Hyderabad, Sahiwal,
Gujranwala and Rawalpindi.

Market Demand.

Year

Consumption (Million Pairs)

Percentage Increase

2007

190.0

2008

197.0

3.68%

2009

218.5

10.91%

2010

232.5

6.41%

2011

234.0

0.65%

Market Supply

Year

Production (Million pairs)

Percentage Increase

2007

197.0

2008

205.0

4.1%

2009

226.8

10.6%

2010

240.4

6.0%

2011

241.0

0.2%

Total Cost of Project

Account Head

Total Cost (Rs)

Total Capital Cost

3,904,247

Total Working Capital

3,897,270

Total Project Cost (Rs)

7,801,517

Financial Planning

Financing

Ratio

Rs

Equity

50%

3,900,759

Debt

50%

3,900,759

Project Returns

Project
IRR
NPV (Rs)
Payback Period (Years)

56%
56,885,908
3.60

Initial Investment

Capital Investment

Rs. in actuals

Machinery & equipment


Furniture & fixtures
Office equipment
Pre-operating costs
Training costs

2,887,000
323,700
123,500
520,047
50,000

Total Capital Costs

3,904,247

Working Capital

Rs. in actuals

Equipment spare part


inventory
Raw material inventory
Upfront building rent
Upfront insurance
payment
Cash
Total Working Capital

2,977,920
675,000
144,350
100,000

3,897,270

Total Investment

Initial Financing

Debt Equity

7,801,517

Rs. in actuals
50% 50%

3,900,759
3,900,759

Project Returns

EQUITY

PROJECT

Net Present Value (Rs.)


41,998,408
Internal Rate of Return
Payback Period (Yrs)

56,885,908
85%
3.04

56%
3.60

Maximum capacity utilization

95%

First year capacity utilization

40%

Capacity utilization growth rate

10%

Maximum number of pairs per day at 100% capacity


Maximum number of pairs per year

600
180,000

Percentage of A pair shoes

95%

Percentage of B pair shoes

5%

Hours operational per day

Days operational per year

300

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