This objective of this document is to provide information regarding investment opportunity for setting up an Internet Café, with focus on product differentiation i.e., providing some unique services (Video/Audio Chat, Web Developing) which are not offered by a typical Internet Café. The business can be established in any of the major cities of the country. 1.2 OBJECTIVES For operating and establishing “SunShine Internet Café”, we are having some objectives.  To earn profit at less investments.  To satisfy our customers providing best quality service at effective price.

Providing the service at low cost by providing the best quality at affordable price.

 To know a fair return on the capital invested by the owner 1.3 MISSION STATEMENT  To achieve the economies of scale to minimize costs while maximizing value to Customers.

To achieve leadership, core and functional competencies internet cafe business.




As the Internet spins a web of interconnectivity around the globe, as it grows literally by the hour, India is struggling, not to catch up but to keep from falling further and further behind. There has been a great increase in Indian content on the Internet. Many net entrepreneurs have been quick to realize the huge potential of the global market. Initially, most sites targeted the global Diaspora of Overseas Indians who had more access to the Internet, not to mention the credit cards that drive Net commerce. But there is a growing realization that the Net can reach the large and wealthy Indian Middle class. This group is rapidly plugging into the Net (still out of range for most people here) and there is increased use of credit cards. The Internet represents so much potential for India, and the demand for efficient Internet infrastructure is growing rapidly. This is where India has been failing. The demand has not yet been met efficiently and this represents an enormous barrier to business and societal development. the government, which has monopolized infrastructure development until recently, has recognized it must not hold back this development. They have opened the industry to private entrants and promised support. In practice, though, the vast bureaucracies that implement (theoretically) the government programs have moved sluggishly and ineffectively. For instance, the private ISPs that were allowed were initially required to acquire their bandwidth from VSNL which wanted a country wide monopoly on this lucrative sector. The result, new users signing up competed for increasingly limited bandwidth. Now the ISPs have been allowed to establish their own gateways but the effect has not yet been felt extensively. The DOT, responsible for providing phone lines to ISPs lagged way behind and the new providers are often left with far too few lines to service the increased demand. Lease lines are reduced, though still very expensive approximately $1000 per month for a 64 Kpbs line. Businesses are relying more and more on aspects of the Internet. Email, for instance, is a huge asset to companies. And more and more companies are entering into web related business activities, like web site creation, software development, and various service oriented businesses that utilize the Net, like medical transcription or data processing for overseas companies. As the internet demographic becomes more mainstream India is going to a prime battleground for internet business over the next five years. the Internet Service Providers Association of India (ISPAI) was set up in 1998 with a mission to 'Promote Internet for the benefit of all'. ISPAI is the collective voice of the ISP fraternity and by extension the entire Internet community. Over the years ISPAI has helped influence, shape and mould the telecom policies, so that ISPs and entrepreneurs in the business of Internet can setup and grow their services in an environment that is supportive and enabling.


Here in India there is 32.1 million peoples are internet users. So there is a great opportunity for India. India's Internet population stands at 32.1 million and is all set to grow to a 100 million by 2007-08. Internet Users in last few years in India:
Internet Users 70000000 60000000 Intrenet Users 50000000 40000000 30000000 20000000 10000000 0 2001 2002 4500000 7000000 7000000 2003 2004 2005 2006 2007 2008 18481000 18481000 60000000 60000000 60000000


. Source :




The proposed project is based on 20 computer systems.


The total cost of the project is approximately Rs.1.110 million.


2.1 PROPOSED FORM OF ORGANIZATION There are various forms of organizations such as sole proprietorship, Partnership, Pvt. Ltd. Co., co-operative societies etc. Out of these the most suitable form of organization for this Internet Cafe can be partnership firm. A partnership firm can be registered by two or more persons but not exceeding 20 persons. There are some advantages of this form of organization such as:In sole proprietorship only limited funds, which an individual holds, can be invested while shares of a partner ship firm can be distributed among friends, relatives & considerably large organization with more investment can be set up. Partnership firms have a legal entity. It has perpetual succession & a common seal. The profits of a partner ship firm are distributed in the form of profit all its members, which reduces tax liability of a person. Had he been sole owner of the Firm, he would have to pay tax on the entire profit. 2.2 ABOUT THE MAIN PROMOTERS: The company is being promoted by Mr. Priyank Shah, Mr. Umang Shah & Miss Parmar Jignasha Mr. Priyank Shah has done in Accounting & Financing. Then he has done M.B.A. from one of the premier institute in North Gujarat i.e. SVIM, MBA collage Ahmedabad. These competencies help him in knowing the intricacies in Finance as in Administration Department & Head of the Plant. He has extensive knowledge of the real business as well as computer field. He knows computer software such as Capitaline, Prowess, SPSS, Foxpro, DOS, Tally, Newsclips, Capitastocks, Adobe software and many others software. He is the cogent and enthusiastic personality Mr. Umang Shah has done B.Com. After completing his graduation, he has done M.C.A. from one of the premier institute. These competencies help him in knowing the intricacies of this business in operator. He Knows computer software and languages like C, C++, VB, Java, Oracle etc. . He is the cogent and enthusiastic personality. Miss Parmar Jignasha is good at financially aspect & the project is


financed by her also. She has done B.Com. after completing graduation, she has done M.B.A with specialization of Marketing. She has been responsible for successfully coordinating the activities. 2.3 STEPS IN FORMING A PARTNERSHIP FIRM The first step is to be taken for forming a partnership firm is to select a few names of the proposed firm & put them in order of preference which will be finalized. The second step is to propose. The documents should be signed by all the three members of the proposed partnership firm & stamp by notary. 2.4 NAME OF THE ORGANIZATION Name of our organization would be SunShine Cyber Cafe, which would be located at Opp. Mother Dairy, Near C.U.Shah College, Surendrangar363001, Gujarat. 2.5 PROPOSED LOCATION For the Proposed project following premises should be considered.     Proximity to the majority of people living are from middle income group Proximity to Private hostels setup in different areas of cities. Low cost rent Rs. 4000/- per Marla High visibility.

2.6 SERVICES Proposed internet café will provide full access to the resources of internet and other online services, printing, composing, scanning, fax. However or the sake of innovation and differentiation there would be a unique services of Video/Audio Chat. Just being a net café will not serve the purpose as business need to be more than a value addition process rather than a traditional net café, that is why after being operational for first two years there will be a facility added to the cart i.e. Web developing. It will not only be the value addition but also a business expansion tool. 2.7 DATE OF INCORPORATION: The Company will be incorporated on 1st April, 2009, with registration number___________.


3.1 PROJECT CONCEPT: Sunshine Internet Cafe is being promoted by a cohesive team of three enthusiastic— Mr. Priyank Shah, Mr. Umang Shah & Miss Parmar Jignasha. The promoters of the company are well educated and command experience of the diversified areas in their projects. The company will be incorporate to provide internet service, printing, faxing, net to call etc.. The promoters have a considerable knowledge in this field. Besides having technical and marketing set up, the promoters are financially sound to set up a project of this scale. All these factors combined together resulted into making this organization a reality.


Particulars of Activity 1. Incorporation of Company 2. Acquisition of Land 3. Computer & other Equipments 4.Furniture & Fixtures 5. Arrangement for Power 6. Internet Connections 9. Trial runs

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4.1 KEY SUCCESS FACTORS The common viability of this Internet café depends on the following factors:

Location of the project: Location of the project is of prime importance. If the project is set up in a location with high income group, the amount of traffic on the café will be less because majority of the people will have personal computers at their home. A project like this can really do well in places, where the majority of people living are from middle income group, who cannot afford a personal computer. Another location can be near private hostels setup in different areas of cities. Unique Services: Majority of the internet cafes are operating on a similar kind of services. If the proposed setup is opened with a strategy of differentiation, it can be more successful i.e. video/Audio chat facility, for value addition, web development should also be started in the up coming years. In this feasibility web development services are initiated after two years of operations of net café. Quality of Service: The most important factor for the success of the project is the quality of service provided to the customer, which includes customer’s privacy, speed of internet and the atmosphere in the café. 4.2 OT ANALYSIS OPPORTUNITIES Growing population of daily Internet users. The importance of the Internet almost equals that of the telephone. As the population of daily Internet users increases, so will the need for the services of internet café. THREATS

Rapidly falling cost of Internet access. The cost of access to the Internet for home users is dropping rapidly. Internet access may become so cheap and affordable that nobody will be willing to pay for access to it. Emerging local competitors. Additional competitors are on the horizon, and we need to be prepared for their entry into the market. A dependence on quickly changing technology. Internet Café is a place for people to experience the technology of the Internet. The technology that is the Internet changes rapidly.

Cost factor associated with keeping state-of-the-art hardware. Keeping up with the technology of the Internet is an expensive undertaking. Internet café needs to balance technology needs with the other needs of the business. One aspect of the business can't be sacrificed for the other. 4.3 KEY SUCCESS FACTORS The commercial viability of this proposed Internet Café depends on the following factors:

Location of the project is of prime importance. If the project is set up in a location with high income group, the amount of traffic on the café will be less because majority of the people will have personal computers at their home. A project like this can really do well in places, where the majority of people living are from middle income group, who cannot afford a personal computer. Another location can be near private hostels setup in different areas of cities. Majority of the Internet cafés are operating on a similar kind of services. If the proposed setup is opened with a strategy of differentiation, it can be more successful i.e. video chat facility, or a small snack café along with the Internet service. With more services provided under the same roof, more traffic can be generated in the Internet café. The most important factor for the success of the project is the quality of service provided to the customer, which includes customer’s privacy, speed of Internet and the atmosphere in the café. 4.4 TARGET CUSTOMERS The proposed project intends to cater to students and middle income group people Furthermore will be a magnet for local and traveling professionals who desire to work or check their e-mail massages in friendly environment.     Students Business people Middle Income Groups Private Hostels

The large student population will become an important part of the Net Café customer base. The student population continues to grow with the success of the educational institutes. Evening entertainment, access to the Internet, and the upscale ambiance will attract the students. Business community is growing rapidly with the addition of new companies day by day. Internet café will provide an


opportunity to local and traveling professionals to check their e-mails communications, this will be an attracting entity for the Middle income group and for the residents of private hostels as they do not have ccess to the internet at their living places. 4.5 MARKET NEED As the popularity of internet continues to grow at an exponential rate, easy and affordable access is quickly becoming a necessity of life. Public wants access to the methods of communication and volumes of information now available on the internet, and access at a cost they can afford and in such a way that they are not socially, economically and politically isolated. 4.6 MARKET TRENDS More than 90 percent of visitors of these cafes and clubs are youngsters and their sole objective to get to these is to get enjoyment. 4.7 KNOWLEDGEABLE AND FRIENDLY STAFF Internet café is a service business. The success of the business depends upon the quality of the service offer and delivering the service consistently. So a knowledgeable friendly and eager to please staff, state-of-art computer hardware and a clear vision of the market need will help it succeed. 4.8 INTERNET CONNECTION The major cost of an Internet café is the Internet connection. For providing better service, the proposed project will use a High Band width connection for better speed as the project is going to provide service of video chat. It is recommended that the Internet connection should be taken from the best Internet service provider. 4.9 RECOMMENDED CONNECTION If the project is set up in area, where DSL Internet connection is available, it is recommended to use DSL Internet connection instead of a any other Internet connection. This will improve the speed of Internet, which will improve the performance of video chat and will also reduce the telephone expense.

4.10 MARKETING Marketing will play an important role in success of the project, as majority of the


players in the industry are following the strategy of low price with no differentiation, i.e., they are providing similar services and competing with each other on the basis of lower prices. It is recommended to follow a different strategy for the proposed project, which is the product differentiation. For this purpose, a special service of video chat facility is going to be offered by the proposed project. To build an image of a reliable and excellent Internet service, extensive promotion in the locality near the project will be done by use of print media and billboards.


5.1 EQUIPMENT REQUIREMENT The proposed project is going to be of 20 computer systems and the details of the. Equipment required for the project is given below: EQUIPMENT REQUIREMENT DETAILS Description Computer System(P-4) Hub Computer Camera UPS Printer Scanner Modem DSL Other Equipment Networking Cable Total Equipment Cost No. 21 1 21 1 1 1 1 720 ft Cost Per Unit(Rs.) 25000 6000 1000 60000 28000 4000 8000 10 per ft Total Cost(Rs.) 525000 6000 21000 60000 28000 4000 8000 7200 659200

FURNITURE & FIXTURE DETAILS Description Computer Table & Cabins Computer Chairs Air Conditioner Telephone Sets Fax Machine Carpet Total Furniture & Fixtures No. 21 21 2 2 1 900 sq ft Rate (Rs.) 5000 2000 25000 1000 5000 30 per sq ft Total Cost(Rs.) 105000 42000 50000 2000 5000 27000 231000

The project is based on Pentium-4 computer systems. Second hand systems are also available in the market at much lower prices. The reason for using the latest system is the new software coming in the market that requires more powerful systems which will provide better service to the customer. The prices of computer

systems vary with the introduction of new technology in the market. 5.2 HUMAN RESOURCE REQUIREMENT The details of human resource requirement for the project are given in the following table: Human Resource Requirement Description Network Administrator Security Guard Total Cost No. 1 1 Monthly Salary(Rs) 8000 4000 Annual (Rs) 96000 48000 144000 Salary

5.3 LAND & BUILDING REQUIREMENT The details of the area required for the proposed project is given in the below table: Covered Area requirement Details Description Computer Cabins Sitting Area Administrator Office Free Space Total Area Required Recommended Mode It is recommended that this project should be started in a rented building, as this will reduce the initial capital cost. The approximate area required is almost 4marla space. The details of monthly rent are given below: Rental Cost Details: Description Monthly Rent (Rs) Approximate Rent @ Rs. 16000 4000 per marla Annual Rent (Rs) 192000 Area Required (sq ft) 600 100 100 100 900

5.4 UTILITIES REQUIREMENTS Mainly two utility are required to operate the cafe.


 Electricity  Telephone



6.1 CAPITAL OUTLAY Cost of Project The total outlay on the project works out to Rs. 918200 and the margin money for working capital required to be brought in is Rs. 192000. Thus, the total cost of project works out to Rs.1110200, the details of which are given as under: Capital Expenditure Equipment Furniture & Fixtures Pre – Operational Expense Total Capital Expenditure (A) Working Capital Up Front Insurance Payment Up Front Building Rent Total Working Capital (B) Total Investment in Project (A + B) Total Cost (Rs) 659200 231000 28000 918200 0 192000 192000 1110200

The working of the various major components of the cost estimates are based upon quotations and estimates obtained from suppliers. The preliminary and preoperative expenses are taken on estimated basis. Project Returns Internal Rate Of Return NPV (Rs) Pay Back Period (Years) 35% 360258 2.36



For the purpose of this pre-feasibility study, it has been assumed that all the funding required for this project would be provided by the investor himself.

PARTICULAR Equity Shareholder Fund Priyank Umang Jignasha 6.3 KEY ASSUMPTIONS FINANCIAL ASSUMPTIONS: Project Life(Years) Equity Discount Rate PRODUCTION ASSUMPTIONS : NO. Of Computers Total capacity per day(Hours) Maximum Capacity Per Year Capacity Utilization (Year 1) % Capacity Utilization (Year 1) hours Capacity Growth Rate Per Year % Maximum capacity Composing/pages/day First year capacity Increase in composing capacity First year capacity Web Developing /web/year Increase in W.D.per Year OPERATING ASSUMPTIONS: Shift per day Hours Operational Per Shift Days Operational Per Month Days Operational Per Year Pre-Operational Period ECONOMY RELATED ASSUMPTIONS Electricity charges per month/year

RATIO AMOUNT 1/3 1/3 1/3 370067 370067 370067

5 100% 20%

21 240 86400 70% 60480 5% 100 20% 5% 5 2

1 12 30 360 1



Electricity Growth Rate Wages Growth rate Equipment Maintenance Growth Rate

10% 10% 2%

DEPRECIATION EXPENSE ASSUMPTIONS Computer Equipment Furniture-FIxtures Pre-Operation EXPENSE ASSUMPTIONS Internet Connection Charges Year 1 Connection Type Connection Charges Per Month Composing Charges (%of Composing sales) Web Development Charges(%of Web sales) Internet connection charges(Decrease Rate) Equipment maintenance(%of internet sales) Prepaid Building Rate(Months) Rent Rate Per Marla Sq. ft in per marla Rent Growth rate Insurance Rate(%of net fixed Assets) Marketing &selling Expense(% of sales) Taxes Printing expense(%of Printing Price) Fax(%Price of per Fax) 300000 512 KB 25000 50% 50% 1% 2% 12 4000 225 10% 2% 2% 20% 50% 50% 20% 20% 20%



Video / Audio Chat Price/hour Internet Plain price/Hour Plain internet Usage Video/Audio Usage Internet sales price decrease rate W.A sales price per hour Printing revenue(%of internet sales) Fax revenue (% of internet sales) Composing price Web price

2 20 60% 40% 0% 22 10% 3% 20 10000



6.4.1 PROJECTED INCOME STATEMENT Particular Sales Internet Sales Printing Revenue Fax Revenue Composing Revenue Web development Revenue Total Revenue Cost Of Goods Sold Internet Connection Charges Printing Charges composing charges Web Development Fax Charges Machine Maintenance Direct Electricity Total COGS Gross Profit/Loss Operating Expenses Payroll Admin Marketing&selling Amortization (PreOperation) Depreciation Total Operating Profit/loss Non Operating Expenses Financial Charges(Short Term) Financial Charges(long Term) Building rent Total 2010 133056 0 133056 39917 144000 164753 3 2011 142560 0 142560 42768 180000 179092 8 2012 152064 0 152064 45619 216000 50000 198432 3 2013 161568 0 161568 48470 252000 70000 214771 8 2014 1710720 171072 51322 288000 90000 2311114

300000 66528 72000 19958 26612 237553 722651 924882 144000 26611 5600 178040 354251 570631

297000 71280 90000 21384 28512 219766 727942 106298 6 158400 28512 5600 178040 370552 692434

294030 76032 108000 25000 22810 30413 229217 785502 1198821 174240 30413 5600 178040 388293 810528

291090 80784 126000 35000 24235 32314 238668 828091 131962 7 191664 32314 5600 178040 407618 912009

288179 85536 144000 45000 25661 34214 248118 870708 1440406 210830 34214 5600 178040 428684 1011722

26880 35291 192000 254171

32341 29952 211200 273493

34800 23866 232320 290986

37554 16927 255552 310033

40633 9017 281107 330757


Profit Before Tax Tax Profit After Tax Retained Earning(Year Beginning) Retained Earning(year Ending)

316460 63292 253168

418941 83788 335153 253168

519542 103909 415633 588321 100395 4

601976 120396 481580 100395 5 148553 5

680965 136193 544772 1485537 2030309





Particular Assets Cash upfront Insurance Upfront Building Rent Total Current Assets Gross Fixed Assets Less:Accumulated Depreciation Net Fixed Assets Pre - Operational Total Intangible Assets Total Assets Liabilities Running Finance Long Term Loan Total Liabilities Equity Paid up Capital Retained Earning Total Total Liabilities & Equity

Year 0

2010 400678 17804 211200 629682 890200 178040

2011 875997 14243 232320




192000 192000 890200

1425712 2034436 2698437 10682 7122 3561 255552 281107 309218

1122560 1691946 2322665 3011216 890200 356080 534120 16800 16800 890200 534120 356080 11200 11200 890200 712160 178040 5600 5600 890200 890200 0 0 0

890200 28000 28000 1110200

712160 22400 22400

1364242 1673480 2059226 2506305 3011216

192000 252080 444080 666120 0 666120 1110200

231010 213944 444954 666120 253168 919288

248570 170470 419040 666120 588320

268242 120909 389151

290238 64409 354647

314789 0 314789

666120 666120 666120 1003955 1485537 2030307

1254440 1670075 2151657 2696427

1364242 1673480 2059226 2506304 3011216



Year O Operating Activities Net Profit Depriciation Insurance amortization Upfront Insurance Payment Cash Provided By Operations Financing Activities Long term Debt principle Payment Building Rent Payment 0






253,168 178,040 5,600 -17,804 419,004

335,152 178,040 5,600 3,561 522,353

415,635 481,582 544,770 178,040 178,040 178,040 5,600 5,600 5,600 3,561 3,561 3,561 602,836 668,783 731,971

-38,136 -192,000 -211,200 192,000 39,010 -18,326

-43,475 -232,320 211,200 17,560 -47,034


-56,500 -64,409

Building Rent Expense Addition to Long term debt 252,080 Addition to Short Term Debt 192,000 Paid up Capital 666,120 Casfh Flow By Financing Activities Investing Activities Capital expenditure Cash Flow by Investing Activities Net Cash Cash Balance brought Forward Cash Balance Cash carried Forward -918,200 -918,200 0 0 0 0 918,200

-255,552 -281,10 -309,21 7 8 232,320 255,552 281,107 19,672 -53,121 21,995 24,551

-60,059 -67,969

400,678 0 400,678 400,678

475,319 400,678 875,997 875,997

549,715 608,724 664,002 875,997 1,425,7 2,034,4 12 36 1,425,712 2,034,4 2,698,4 36 37 1,425,712 2,034,4 2,698,4 36 37


6.4.4 RATIO ANALYSIS 1. GROSS PROFIT RATIO = Gross Profit / Net sales Year Gross Profit Sales Gross Profit Ratio(%) 2010 924882 1647533 56.14 2011 1062986 1790928 59.35 2012 1198821 1984323 60.41 2013 1319627 2147718 61.44 2014 1440406 2311114 62.33

Gross Profit Ratio(%) 64 62 Percentage 60 58 56 54 52 2010 2011 2012 Years 2013 2014 56.14 59.35 60.41 61.44 62.33


NET PROFIT RATIO = Net Profit / Sales 2010 253168 1647533 15.37 2011 335153 1790928 18.71 2012 415633 1984323 20.95 2013 481580 2147718 22.42 2014 544772 2311114 23.57

Year Net Profit Sales Net Profit Ratio(%)


Net Profit Ratio(% )
25 20 Percentage 15.37 15 10 5 0 2010 2011 2012 Years 2013 2014 18.71 22.42 23.57


3. ASSETS TURNOVER RATIO = Sales / Total Assets Year Total Assets Sales Assets Turnover(times) 2010 1364242 1647533 0.83 2011 1673480 1790928 0.93 2012 2059226 1984323 1.04 2013 2506305 2147718 1.17 2014 3011216 2311114 1.30

Total Assets Turnover(times) 1.4 1.2 Percentage 1 0.8 0.6 0.4 0.2 0 2010 2011 2012 Years 2013 2014 0.83 0.93 1.17 1.04 1.3

4. RETURN ON OWNER’S EQUITY = PAT / Owner’s Equity X 100


Year PAT Owner’s Equity Return on Equity (%)

2010 253168 919288 27.54

2011 335153 1254440 26.72

2012 415633 1670075 24.89

2013 481580 2151657 22.38

2014 544772 2696427 20.20

Return on Owner's Equity
30 25 Percentage 20 15 10 5 0 2010 2011 2012 Years 2013 2014 27.54 26.72




5. CASH RATIO = Cash / Current Liabilities X 100 Year Cash Current Liabilities Cash Ratio(%) 2010 400678 231010 173.45 2011 875997 248570 352.41 2012 1425712 268242 531.50 2013 2034436 290238 700.95 2014 2698437 314789 857.22


Cash Ratio(%) 1000 900 800 700 600 500 400 300 200 100 0

857.22 700.95 531.5 352.41 173.45




2012 Years




After making this report we have faced real environment stress in real business. This research work has enabled us to gather a lot of information about the café business and we have been able to apply our classroom knowledge to the practical life very effectively. In conclusion, from the above Projected Balance Sheet, Projected Income, Projected Cash Flow and other major financial ratio calculation it can be said that the project is very much feasible, having good profitability, conceived by the people already experienced in the similar field. Promoters are having expertise in marketing for decades. Individually each promoter is having a sound financial background. The group concerns are also in profitable existence for a number of years. The financial and economic feasibility of the project is well established on the basis of estimates and projections. All the assumptions and basis of estimation are on the principle of conservatism and prudence. Therefore, it can be concluded that the business has a high potential.


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