Pre-Feasibility Study

BOUTIQUE
(Women Designer Wear)

Small and Medium Enterprises Development Authority
Government of Pakistan
www.smeda.org.pk
HEAD OFFICE 6th Floor LDA Plaza Egerton Road, Lahore Tel (042)111 111 456, Fax: 36304926-7 helpdesk@smeda.org.pk
REGIONAL OFFICE PUNJAB 8th Floor LDA Plaza, Egerton Road, Lahore. Tel: (042) 111 111 456, Fax: (042) 36370474 helpdesk.punjab@smeda.org.pk REGIONAL OFFICE SINDH 5th Floor, Bahria Complex II, M.T. Khan Road, Karachi. Tel: (021) 111-111-456 Fax: (021) 5610572 helpdesk.sindh@smeda.org.pk REGIONAL OFFICE KHYBER PAKTUNKHWA Ground Floor State Life Building The Mall, Peshawar. Tel: (091)111 111 456, 9213046-7 Fax: (091) 286908 helpdesk.NWFP@smeda.org.pk REGIONAL OFFICE BALOCHISTAN Bungalow No. 15-A Chamn Housing Scheme Airport Road, Quetta. Tel: (081) 2831623, 2831702 Fax: (081) 2831922 helpdesk.balochistan@smeda.org.pk

December, 2011

Pre-Feasibility Study

Boutique (Women Designer Wear)

DISCLAIMER
The purpose and scope of this information memorandum is to introduce the subject matter and provide a general idea and information on the said area. All the material included in this document is based on data/information gathered from various sources and is based on certain assumptions. Although, due care and diligence has been taken to compile this document, the contained information may vary due to any change in any of the concerned factors, and the actual results may differ substantially from the presented information. SMEDA does not assume any liability for any financial or other loss resulting from this memorandum in consequence of undertaking this activity. Therefore, the content of this memorandum should not be relied upon for making any decision, investment or otherwise. The prospective user of this memorandum is encouraged to carry out his/ her own due diligence and gather any information he/she considers necessary for making an informed decision. The content of the information memorandum does not bind SMEDA in any legal or other form.

DOCUMENT CONTROL
Document No. Revision Prepared by Revision Date Issued by PREF-57 3 SMEDA-Punjab December, 2011 Library Officer

2 PREF-57/Dec, 2011/ Rev 03

........... 14 THREATS FOR THE BUSINESS......... 16 FINANCIAL ANALYSIS ................... 11 7..................................................................... 14 INFRASTRUCTURE REQUIREMENTS .............................................. 5 INTRODUCTION .............................................1 RAW MATERIAL ............. 6 PROPOSED CAPACITY ...........................................................................................................................................1..............................................................................................3 12...........................................1 Ethnic Wear.............................................................. 11 8 9 10 HUMAN RESOURCE REQUIREMENTS..... 9 PRODUCTION PROCESS FLOW ....................................................................................................... 9 5........................................ 11 7................................................... 7 3 4 5 6 7 CURRENT INDUSTRY STRUCTURE ................ 9 PRODUCTION PROCESS FLOW........... 11 7................2 COSTS OF GOODS SOLD AND OTHER EXPENSES:.......................................... 17 3 12....... 2011/ Rev 03 .................................Pre-Feasibility Study Boutique (Women Designer Wear) 1 2 EXECUTIVE SUMMARY ............................2 Contemporary Wear ...........3 Western Wear ..................................1......................... 8 RAW MATERIAL..................................................................... 7 MARKETING....................................2 2...............4 PROJECT BRIEF...................... 15 SELECTION OF THE WRONG VENUE..1................................................ 15 TAX ............................................ 12 MACHINERY/EQUIPMENT DETAILS .........................................................1 10..........2 12..................................... 17 PREF-57/Dec.................................................................................. 9 PRODUCTS .............5 12......................................................................................................................3 2............4 12............................................... FINANCING PLAN AND PROJECT RETURNS:.................................................................................... 6 2........................ 12 PREMISES FOR SHOP AND STITCHING UNIT................................ 7 TOTAL PROJECT COST:........... 14 RECOMMENDED MODE FOR RENTING A SHOP ...................................................................................................................................... 15 PROJECT COST......1 6............................................... 15 PILFERAGE IN THE DESIGNS..................................................... 16 PROJECTED INCOME STATEMENT:..........................................................1 2...........................................................2 11 12 KEY SUCCESS FACTORS .......................................... 10 7............ 6 OPPORTUNITY RATIONALE...........................1 PROJECT ECONOMICS ........................1 12................................................................................................................. 14 10.......................................6 13 14 13.................................................................... 10 7.................................................. 15 SELECTION OF THE WRONG DESIGN ....1 14....... 15 ECONOMIC RECESSION ..........................1 PRODUCT MIX ................. 15 COMPETITIVE STRUCTURE OF THE MARKET ......................................................

........................Pre-Feasibility Study Boutique (Women Designer Wear) 14..........................................................................................................5 16 PROJECTED CASH FLOW STATEMENT: ............................................. 20 ANNEXURE: ...... 20 CASH FLOW ASSUMPTIONS .............................2 15..........................3 15................. 20 FINANCIAL ASSUMPTIONS ......................................................................... 18 PROJECTED BALANCE SHEET STATEMENT:...........................................1 15.... 2011/ Rev 03 ................................................... 20 KEY ASSUMPTIONS ...................................................................4 15.................... 20 OPERATING ASSUMPTIONS ....................................3 15 15..............................................2 14............... 21 4 PREF-57/Dec.................................. 20 EXPENSE ASSUMPTIONS.. 19 PRODUCTION ASSUMPTIONS ...........

983 million and 4. One needs to come up with innovative ideas of dress designing and marketing in order to grab market share in Pakistan. and bewildering diversities of the ethnic groups.007 million and a sum of Rs. But now the scenario is totally changed as a lot of business enterprises have entered in to this industry rapidly and still many more are expected. has gone through so many rapid changes and bizarre extremes that it has examples of nearly every kind of clothing function. This includes a capital investment of Rs. It also portrays in a clearly understood visual manner. geographical differences. 2011/ Rev 03 . marketing and selling. therefore.072 million. Many people now prefer to purchase readymade designers outfits instead of measure to make clothing. NPV and Payback period of the proposed project are 39%. Beside local market. The Boutique shop needs a total investment of about Rs. manufacturing. Few years back Boutique industry of Pakistan was totally unorganized and only few players were working. 5 PREF-57/Dec. The pre-feasibility study is prepared by SMEDA and is intended on the establishment of women designer wear Boutique including the operations of apparel designing.Pre-Feasibility Study Boutique (Women Designer Wear) 1 EXECUTIVE SUMMARY Clothing is a beautiful visual demonstration of the social and emotional needs of people wearing it. One has. The range of Pakistani dresses is remarkably wide.11 years respectively. Projected IRR. 4. through times. purchasing capacities. and then relate and bring together. 9. influence of the western culture.2. So one can also export his designer wear dresses. The reason behind this change is the shift in demand of people of Pakistan in recent years. The study has been designed to capture the dynamics of the Boutique industry with its many components and possible strategic opportunities.2. Rs. to sift and isolate. what people of different cultures and styles want socially. there is a huge demand of Pakistan Cultural dresses and bridle ware in international market especially in United Kingdom and United Arab Emirates. which can fit in the context of the fashion in vogue and the culture in practice. Fashion. according to the vast cultures. So now we can say that the Boutique Industry of Pakistan is much Organized and Competitive as well. the ideas for creating various designs.064 million as working capital.

now the scenario is totally changed in Boutique industry of Pakistan and there is an intense competition in this industry. Furthermore. There were a few major players in Boutique business and those entrepreneurs have also taken an initiative based on their caprice and experience in the field of fashion design. according to the vast cultures. if one has the ability to design and market his/her products through introducing innovative designs both in stitching as well as the fabric sector.2 Opportunity Rationale Clothing is a beautiful visual demonstration of the social and emotional needs of people wearing it. In reference to Pakistan. has gone through so many rapid changes and bizarre extremes that it has examples of nearly every kind of clothing function. So one need to market its products through innovative. However. One has. which actually are quite different in nature from each other and this is solely dependent on the taste of the people.Pre-Feasibility Study Boutique (Women Designer Wear) 2 2. The range of Pakistani dresses is remarkably wide. and UK. which do not own a stitching unit or are lacking this facility. The Boutique business can also be expanded into a more profitable venture by providing stitching facilities to other boutiques. there is massive export potential in this sector. to sift and isolate. which can fit in the context of the fashion in vogue and the culture in practice. geographical differences. and bewildering diversities of the ethnic groups. But still there is a massive potential in this field. It also portrays in a clearly understood visual manner. USA. Few years back the market of this enterprise was quite scattered and unorganized. eye catching designs and massive advertisement. what people of different cultures and styles want socially. through times. the Boutique business is quite in vogue and very much organized now. the ideas for creating various designs. Fashion. A Lot of organizations enter in this market as wearing trend changes with the passage of time. in a boutique business. The study has been designed to capture the dynamics of the Boutique industry with its many components and possible strategic opportunities. is massive due to a high number of Pakistani expatriates who have settled in these countries. 2. and then relate and bring together. 2011/ Rev 03 . purchasing capacities. influence of the western culture. as the demand of Pakistani dresses. therefore. selling and marketing. However. especially in countries like UAE. 6 PREF-57/Dec.1 INTRODUCTION Project Brief The pre-feasibility study focuses on the establishment of women designer wear Boutique including the operations of apparel designing. stitching. the specifications and descriptions of the designs and clothes are so general that they can fit more than one costume.

072 million. The reason being the business rivalries and the competitive structure of this industry.2. Nee Punhal. Bossini. and Sahar Saigol. Beside these. Islamabad. Nilofar Shahid. total capacity of the defined unit with 6 stitching machines (basis on 8-10 hours shift) will be about 1. there are many other Brands who entered in Boutique industry in last few years which make this industry very much competitive. Beech Tree. Chinyor. there is no exact detail available of the number of boutiques. 3 CURRENT INDUSTRY STRUCTURE Currently. because there is no association or link between these enterprises.3 Proposed Capacity The Boutique business capacity is greatly dependent on the market size and the number of potential clientele one can attract. Total No. Generation.4 Total Project Cost: The proposed Boutique shop would need a total investment of about Rs. The boutiques in Peshawar and Quetta. Karachi. Mohagni. 2011/ Rev 03 .007 million and a sum of Rs. a designer can supply 3. 4. Shayan Malik. and some individual designer players like Beejee’s. The breakup of the total number of dresses will be as follows: Table 2-1: Proposed Capacity Total designs selected by designer Number of dresses in each design Number of dresses in each size Total Number of Ready Made Dresses Made to Order as percentage of Ready Made Dresses @ 40%. of Dresses 120 4 4 1. Quetta. Nadia Mistri. The Working Women.064 million as working capital. especially in women wear. whereas the ones in Lahore. Kapre Waghera.920 768 2. Nina’s. Islamabad. Approximately.2.Pre-Feasibility Study Boutique (Women Designer Wear) 2.e. As such. Faisalabad.688 This production and sales capacity is estimated to be economically viable and justifies the capital as well as operational costs of the project. mostly sell the traditional dresses having indigenous/local designs. 2. Parahan. Maria B.920 dresses. On average. Lahore. This includes a capital investment of Rs. the women fashion wear garments will be designed through two in-house designers and then stitched through in-house stitching unit. the boutique industry is relatively organized and is working in and around the posh areas of the metropolitan cities of Pakistan i. one can name a few major players in the business such as Indifference. Sialkot and Multan. Amir Adnan. 7 PREF-57/Dec. Furthermore. However.000 designs per annum from which nearly 100 designs are selected on average. and Karachi deal in fashion wear greatly influenced by the west and the local trends in vogue. Peshawar.

Apart from this. • Outdoor Advertisement i. http://www. etc. This will provide the required mileage in very low cost. surveys regarding customer satisfaction/needs should be a regular feature of this project.91 millions for Ready Made Garments available at Federal Bureau of Statistics website. • Usage of electronic media i.492. Furthermore. This figure is taken from following link. Casual Dresses and other prevalent dresses based on the market trends.e.pdf 8 PREF-57/Dec. Catalogs and Pamphlets can be sent to loyal customers at their homes to provide New Arrival Information. launching of website and advertising on web. As this project of Boutique deals in designer women wear.statpak. Figure represents over all Export of Ready made Garment from Pakistan. • Usage of e-commerce i. develop own business pages on face book and twitter may that more people could see the designs on line by using internet and can grab all the information regarding new arrivals and promotions going on. Peeshwaz.e.e.gov. which is evident from the export figures of Rs. Beside this Boutique will also deal in Bridal Dresses in readymade category as well as on made to measure basses. printing of boutique Catalog and Pamphlets which will comprise on own designs and different promotional and business information to attract customers. Whereas the styles will be Shalwar Kameez.e. Moreover. • Cable Advertisement i. and provision of dresses to various television plays and films. should launch a complete outdoor marketing campaign with Hoarding and Streamers in target area to spread information regarding Boutique Opening.e. Party dresses. 161.pk/fbs/sites/default/files/other/yearbook2011/Foreign%20Tr ade/9-7. should advertise the boutique through a TVC on cable networks of Targeted Area. • Advertisement in print media i.e. advertisement on television. the boutique owner has to use marketing techniques like: • Usage of print media i. Q-lots. there is a huge export potential in this industry for Pakistan. newspapers and fashion magazines. Kurta. therefore the product mix will comprise of different styles of the female dresses in different sizes.Pre-Feasibility Study Boutique (Women Designer Wear) 4 MARKETING The marketing of boutique follows the conventional marketing pattern which is dependent on selection of venue of the outlets and the product mix (designs and sizes). projection of the boutique in fashion programs. 2011/ Rev 03 1 . Pajama Kameez. in order to keep abreast with the emerging trends and client tastes. Frocks. therefore it is suggested to advertise on City 42 channel only to cut cost of advertisement. • Event arrangement like fashion shows and photo-shoots. As initially the proposed target market is Lahore. • Membership Cards can also be issued to the regular customer of the boutique through which they can get 10% to 15% discount on purchases.e. as well as the promotional strategy. • Social Media Networks i.

laces. threads. • Pattern Making/Cutting: Based on the designs selected. and South Africa. glasses. Germany. three months. Belgium. and Lahore. 9 PREF-57/Dec. which is the basic raw material requirement for a boutique and a major component of the cost. block printed. France. as these serve as an identity for the boutique and are useful for promotion. patterns for cutting are developed and based on these patterns. Netherlands. 5 5.Pre-Feasibility Study Boutique (Women Designer Wear) Most of the women dresses prepared in Pakistan are exported to USA. would be as follows: • Fabric: The fabric. can be obtained from wholesale markets or from markets specializing in designer cloth at Faisalabad. zippers. embroidery threads.e. tags and packaging: Labels and tags can be obtained on order. will be procured from the local market at competitive rates. • Accessories: Accessories such as buttons.1 RAW MATERIAL Raw Material The raw-material required for such sort of projects. Purchasing of Raw Material is done in the beginning because every year textile industry uses to introduce new designs in fabric and also change the quality of fabric. needles. elastics. As boutique industry is dependent on the textile industry therefore they use to purchase raw material in the beginning may that they well aware of the latest designs and could design their garments according to the newly introduced trends by Textile industry. fabric is cut. 2011/ Rev 03 .1 PRODUCTION PROCESS FLOW Production Process Flow The process for converting fabric in designer wear garments follows the below mentioned sequence: • Purchasing of Material: The first process of designer wear suits is the purchasing of Raw Material such as Fabric and Accessories. etc. which also relate to the tastes of the concerned clientele. embroided. UK. Various patterns of clothing and the fashions in vogue. UAE. are designed. On average. Saudi Arabia. From these designs. This is done by the contracted designer as he/she will provide the basic designs of which the fabric will be converted into the designer wear garment. and processed accordingly. • Labels. The end users of these dresses in foreign countries are mostly Pakistani and Indian women who have immigrated to these countries. Karachi. a designer is supposed to provide more than 250 designs per month or 750-800 designs per season i. 6 6. approximately 10% of the designs are selected for further development of clothes. • Design: The second step starts from the designing phase.

it will be done in-house. addresses. Chamose Silk etc will be used. Chinese Raw Silk.5 per dress. This boutique will offer following product categories of women wears: Casual Wear Semi Formal Wear In case of over-lock stitching. The stitching of buttonholes as well as elastic embedding will be outsourced.1 Product Mix Products will be priced at the high end to reflect the quality and exclusiveness associated with the brand. in which the garment will be checked for quality control and will cleaned (if required) for final presentation at the outlet. prices. Figure 6-1: Production Process Follow Purchasing of Raw Material Designing Pattern Making Stitching Cutting Embroidery Finishing Presentation Market/Clientele 7 PRODUCTS 7. Labels are also attached to the apparels in this process. Medium Silk. High-end materials such as Crinkle Chiffon. Presentation/Market: Once the designer wear garment is ready after going through the above-mentioned process. 2011/ Rev 03 2 . it is presented at the outlet/shop for sale to the clientele. etc. which can either be done by In-house stitching unit or by Outsourcing it2. Finishing: The final phase is that of finishing. Georjot Chiffon.Pre-Feasibility Study Boutique (Women Designer Wear) • • • Stitching: The cutting is then followed by stitching. The garments will be ironed and also be tagged for identification of sizes. Leafy Print Jamawar. This will cost approximately @Rs. handling instructions. 10 PREF-57/Dec.

2 Costs of Goods Sold and other Expenses: Avg.1 Ethnic Wear Formal Wear – Party dresses and special occasion dresses 7.500 16.1. Pants and various other styles The combination of outfits for the proposed outlet will be as follows Table 7-1 Product Mix Category Casual Wear Semi Formal Wear Formal Wear Table 7-2 Average Sale Price Category Casual Wear Semi Formal Wear Formal Wear 7. which is 20% of sale price of a product is estimated as Material cost of that particular product. 7.1.200 6.500 % Of Total Outfits 60% 30% 10% The cost of goods sold has been taken as a percentage of sale price. 11 PREF-57/Dec. Price per outfit 3.1.Pre-Feasibility Study Boutique (Women Designer Wear) Formal Wear Each product category will include the following product lines: 7.2 Contemporary Wear Fusion Wear – Combination of eastern and western wear. suitable for the international market as well. 2011/ Rev 03 .3 Western Wear Tops.

000 96.000 25.000 701.000 17.000 180.000 333.000 350.000 300.000 9.000 65.000 288.000 3.000 204.000 8.000 Salary per Annum 600. The cost of the stitching machinery will be as follows: Table 9-1: Machinery Detail Stitching Machinery 3 Single needle lock stitching machine Over lock Machine Embroidery Generator for Workshop of 1200 KW UPS of 2200 Watts for Outlet Total No.000 12. 2011/ Rev 03 3 .000 65. 6 2 2 1 1 Rs/Unit 19.000 350.000 92.000 648.000 13.000 168.000 7.Pre-Feasibility Study Boutique (Women Designer Wear) 8 HUMAN RESOURCE REQUIREMENTS The project of Boutique requires the following Human Resources/Staff: Table 8-1 Staff Salaries Positions Required CEO/ Marketing Manager 1 Design Manager 1 Asst Design Manager & 1 Purchase Officer Master Tailor 2 Tailors 6 Embroidery Workers 4 Press/iron man/finishing 1 Dyer 1 Cashier/ Head Sales Girl 1 Sales Girls 2 Accountant 1 Office Boy 2 Guard 2 25 Total Salary per Month 50.000 15. 117.500 38.000 8.500 46.996.000 8.000 480. 000 Though the prices here are given of the new machines but second hand machines are also widely available which can function properly and can reduce the project cost too.000 192.000 9.000 Rs.000 312.000 77.000 9 MACHINERY/EQUIPMENT DETAILS The boutique will require a small in-house stitching unit. 12 PREF-57/Dec.000 40.000 432.000 96.

500 6.400 14.500 3. the following will also be required to setup a Boutique: Table 9-2-Office Equipment Other Equipment Computers Computer printer Telephones Total Table 9-3-Furniture and Fixtures detail: Furniture Description Air Conditioner 1.000 6.500 160 2.000 9.000 16.000 638.400 14. 000 13 PREF-57/Dec.000 19.500 25.350 No.000 4.5x4 Office Chairs Visitors Chairs Work Shop Chairs Hanging Units and Storage Cabinets Cutting Tables at Work shop Iron Table Energy Savers Fans Electric Iron Scissors Statues Embroidery Frame Set Chalks (Pack) Cutting Scales Measuring scales Wood Flooring Roof Sealing Wall Mirror Wall Papers for Outlet Main door Shop Fascia Decoration Pieces Lighting for Outlet Total Quantity 4 1 1 4 4 8 14 7 2 1 30 11 2 12 5 1 3 5 10 450 450 2 450 1 1 8 1 Cost / Rate 40.000 2.800 1.000 105.000 Rs.000 Rs 200.000 1.000 2. 2011/ Rev 03 .000 50 25.750 22.000 300 750 250 51.000 16. 160.000 2.500 20.000 20.000 40.600 1.5 ton split Office Table 6x3 with Box Grace Office Chair Office Tables 2.000 238.000 500 3.000 15.200 10.000 8.000 5.500 10.000 30.800 2.000 40.000 100 150 25 115 50 10.500 10.000 8.000 20.800 27.000 9.500 4.000 22.500 2.000 17.Pre-Feasibility Study Boutique (Women Designer Wear) Furthermore. 5 2 4 Rs/Unit 40.000 15.

Furthermore. some of the Key Success Factors are as follows: 14 PREF-57/Dec. whereas the rent is paid quarterly in advance.500 / month. which contribute towards the success of a project. glass panes.ft.e. 82.000 11 KEY SUCCESS FACTORS There are a number of factors.ft i. 20 feet front and 27. 3 months rent as security) Interior decoration (installing lighting. The shop will be obtained on rental basis. etc. The cost estimates for setting up the Boutique are as follows: Table 10-1 Rent Cost Detail Rs.750 45. cash counter. 450 36 64 10 Marla House 247. and the rent estimation for such a shop is Rs. and other décor. Security for renting shop/outlet (Rent @ Rs. One viable option is to rent a small house for this purpose. hanging racks. According to the prevailing practice. where people have the buying capacity for women fashion wear. mannequins.500 209.2 Infrastructure requirements The project will have the following infrastructure components: Table 10-2-Infrastructure Requirement Description Main shop Try Room Small Store Building for Stitching Unit Sq. 000 per month) 10. Plus Wapda town is very much economical as compared to Defense and Gulberg with low competition as well. 500 per month. three months’ rent as security would be required for renting the shop.) Security for renting a house for installing the stitching unit (Rent @ Rs15. 2011/ Rev 03 .82. a small building will be required to establishing the stitching unit.Pre-Feasibility Study Boutique (Women Designer Wear) 10 PREMISES FOR SHOP AND STITCHING UNIT 10. for example a boutique can be opened in W town. mirrors. In case of the project of Boutique. It is assumed that security is a onetime expenditure. The size of the shop should be at least 550 Sq.5 feet depth. as it is newly developed area and people of Wapda Town also have the purchasing power of Designer wear clothes.1 Recommended Mode for Renting a Shop It is recommended that the proposed location for the said enterprise be a posh area.

5 Selection of the wrong design If the designs are not selected according to the tastes of the clientele then it can be detrimental for the business. Therefore one needs to take proactive actions according the economic instigators for survival in business. 12. 12. so the clientele taste should be properly tracked. Designing of dresses according to the consumer tastes/preferences gathered through consumer surveys. The dress designs should be according to the emerging trends and fashions. 2011/ Rev 03 . therefore if the entrepreneur is not well responsive to the tastes and response of the clientele as well as the fashions in vogue he/she may not be able to capitalize the opportunity properly.1 Competitive Structure of the market The market of the boutiques is highly competitive.4 Selection of the wrong venue Selection of the wrong venue can be a major hurdle in achieving the desired business objectives. A well designed Marketing campaign is very important while Launching the business and at the time of promotions to get success. keeping minimum inventory as per past sales trends.3 Pilferage in the designs The designs which a designer produce can be sold by the staff even before that design is launched and that can pose serious threat to the business because in the fashion industry it is the uniqueness of the design which matters. The location of the outlet should be properly selected and attractively decorated so as to target the clientele effectively.Pre-Feasibility Study Boutique (Women Designer Wear) • • • • • • • Proper care while producing dresses should be adopted Proper Inventory management i. 12.2 Economic Recession World wide intense economic recession is a largest threat for any business activity now days. which can increase the sales. because it is the customer satisfaction. excellent customer service should be provided. 15 PREF-57/Dec.6 Tax Improper documentation of the sales receipt record may lead to problems with Tax department. 12 THREATS FOR THE BUSINESS 12. 12. Hence. The customer satisfaction should be given due importance.e. 12.

121 Rs.061 Equity 56% 3.000 2.1 Project Cost.061 2.982.195 1.170. 2011/ Rev 03 .493.158 Project 39% 4.000 638. in actuals 2.036.958 50% 50% Internal Rate of Return (IRR) Payback Period (yrs) Net Present Value (NPV) 16 PREF-57/Dec.072.007.40 6. in actuals 701.350 238.Pre-Feasibility Study Boutique (Women Designer Wear) 13 PROJECT ECONOMICS 13.064.000 750.000 430.771 4. Financing Plan and Project Returns: Capital Investment Machinery & equipment Furniture & fixtures Office equipment Pre-operating costs Total Capital Costs Working Capital Equipment spare part inventory Raw material inventory Upfront building rent Cash Total Working Capital Total Investment Initial Financing Debt Equity Rs.036.000 2.350 Rs.576 142.11 9. in actuals 2.

638 2.024 9.890 157.988.471 2.803.560 1.000 503.000 4.279.984 542.157 23.279 3.024 6.069 2.292 3.505 9.060.413.769 Year 10 33.137 2. entertainment.160.171 79.070.862 36.348 1.907 Year 9 30.799 1.086. fax.712 1.996.883 2.773 4.822 3.865 27.140.623 4.352 2.959 18.712.541 19.735 9.213 3.767 1.240 7.712 4.883 19.000 6.077.104.000 5.248 9.759 52.072.052.942 5.773) 88.228 16.045 Year 3 14.Pre-Feasibility Study Boutique (Women Designer Wear) 14 FINANCIAL ANALYSIS 14.434.708.076 3.212.635.375 205.534 5.379 99.848 157.993.766 21.467 2.148 4.373.208.093 7.639 319.531.225.254.748.966.168.821.625.800 33.456 240.377 1.1 Projected Income Statement: Calculations Income Statement Year 1 8. janitorial Promotional expense Depreciation expense Amortization of pre-operating costs Subtotal Operating Income Other income (interest on cash) Earnings Before Interest & Taxes Interest expense on long term debt (Project Loan) Interest expense on long term debt (Working Capital Lo Subtotal Earnings Before Tax Tax NET PROFIT/(LOSS) AFTER TAX 1.517 1.736.762.419.314. 2011/ Rev 03 .548 131.186 9.280.292 13.552.681.194 11.253 22.649 1.144 1.738 2.259.241. mail.920.362.283.717 109.555 10.736) 1.168.000 7.608 2.005.999 891.185 157.631 3.865 3.736.048.817.615 935.416 43.804 6.630 262.370 72.680 1.401.691.072 90.188.000 6.507.997 7.419 28.000 457.932 773.601.476 Year 4 17.115 60.898 159.297 736.370.209 3.664 63.204.758.735 8.735 86.275 916.066 131.994.297.131 8.425 38.202 144.173.591 638.447 4.735 86.735 10.435.045 156.338 82.917 2.768 70.288.159 59.479 157.039 (405.735 86.508 8.604 157.145 2.559 8.076 SMEDA Revenue Cost of sales Cost of goods sold 1 Operation costs 1 (direct labor) Operating costs 2 (machinery maintenance) Operating costs 3 (direct electricity) Total cost of sales Gross Profit General administration & selling expenses Administration expense Administration benefits expense Building rental expense Electricity expense Travelling expense Communications expense (phone.123.749 2.752 2.508 2.379 191.823 9.060 3.374.455 103.861 4.896 Year 6 22.587 57.315.708 39.024 157.720 (317.557.096 102.208.671 Year 5 20.000 49.963 4.483.577 157.327.887 2.714.522 2.986.470 Year 8 27.302.205 4.278.268 114.465 5.382.023.284 Year 7 24.999 980.264 33.014 2.357.480 725.568 59.676 5.632 7.751.645 34.733.455.172 1.876 497.489.237.877 6.706.700 553.954 389.897 8.611 32.735 86.997 669.010.908 2.980 35.536 3.077.264 157.799 30.399.329 4.385.242.430 5.054) 155.735 86.231 54.372 9.063 76.176.728 850.845.247.537.682 (628.427.471 68.743 8.592. Office expenses (stationary.540 131.618 39.061.068 48.345 18.984 20.637 311.328.735 11.264.724.233 104.972 2.296.781 883.696 653.152 138.137.735 86.803.093 7.000 10.112 69.832.675.017.270 608.703 26.468.971.229 3.078.342 2.471.415.482. internet.971 579.383 32.466 31.027 24.120 16.221 702.777.589 120.726 810.736) (628.283.742.656.415.307.070.701.723.733 3.697 3.077 555.870 4.961.867 3.508 3.313 65.972 11.345 174.289 2.719 1.041 1.179 5.719 7.315.165.259 14.835 28.973.147.500 15.850 1.603.735 12.123.215.055 1.805 157.612 13.753 4.372 2.469 17 PREF-57/Dec.429 5.884.942 1.546 37.382.891.413.051.669 8.005.986 6.265 Year 2 11.216 13.598.626.223 158.278 95.246 1.198 2.825 1.467 3.287.147 34.844 98.101 157.168 2.585 402.170.450 11.543 3.

189.631 157.000) 19.007.245) (51.658 5.032.393 (1.303.111) (29.378) (896) (49.537.724 937.319 SMEDA Year 10 9.850.500) (437.060) (32.480.504.339) (42.744) (542.738 157.045) (57.608) 371.818) 18.188) (237.279 157.733.116 3.707) (464.042 Year 3 1.504.350) 1.203) (1.386 2.254.627.354.445 712.243 565.626.289 157.089) (172.735 (1.003.566) (32.986.000 98.733.548 Year 5 4.083) (29.987 (2.204 Year 9 8.Pre-Feasibility Study Boutique (Women Designer Wear) 14.137 157.307.204 6.735 (1.735 86.700 (30.751) (952) (52.917) (27.036.767 157.483) (397.480) - - - - - (2.109) (147.102) (179.072.735 86.678) (57.735 86.principal repayment Working Capital Loan .735 (1.229 157.222) (291.987 18 PREF-57/Dec.950.608 157.950.427 2.000 (701.735 (2.225) (47.752.121 (144.158 2.334) (35.302.294.848 6.967) (25.159.061 4.505) (32.388 1.561) (195.175 4.030 3.542) (228.447) (864) (47.000 (213.261) 10.318) (196.565) (62.223) (260.077 (116.675 1.237) (182.985) (658) (36.059) (201.271) 1.877) (23.350) (2.930 Year 4 3.658 Year 8 7.040) 8.735 86.736) (275.656 5.660) (35.212.735 86.576) (142.393) 40.2 Projected Cash Flow Statement: Calculations Cash Flow Statement Year 0 Operating activities Net profit Add: depreciation expense amortization of pre-operating costs amortization of training costs Deferred income tax Accounts receivable Finished goods inventory Equipment inventory Raw material inventory Pre-paid building rent Accounts payable Cash provided by operations Financing activities Project Loan .277) Year 2 555.007.384 3.390) (711) (39.932) 43.principal repayment Additions to Project Loan Additions to Working Capital Loan Issuance of shares Purchase of (treasury) shares Cash provided by / (used for) financing activities Investing activities Capital expenditure Acquisitions Cash (used for) / provided by investing activities NET CASH Year 1 (628.390) (266.825) 31.509) (29.736) 157.052.469 157.656) (205.017) (215.149.295) (897) (49.175) 42.390 689.331) (168.175 Year 7 6.107) 18.802) (861) (47.195) (292.229) (340.539 4.700) 20.856) (259.319 8.950 1. 2011/ Rev 03 .000 (651.964.627) (236.735 (1.509 Year 6 5.250) 157.839.964.334.519) (29.564.564.000 (918.500 (1.683) (235.460) (38.332) (783) (43.586.

515 214. 2011/ Rev 03 .551 21.390.066 5.064.000 430.910 371.963.061 4.072.243 565.663 6.407. & training costs Total Intangible Assets TOTAL ASSETS Liabilities & Shareholders' Equity Current liabilities Accounts payable Total Current Liabilities Other liabilities Deferred tax Long term debt (Project Loan) Long term debt (Working Capital Loan) Total Long Term Liabilities Shareholders' equity Paid-up capital Retained earnings Total Equity TOTAL CAPITAL AND LIABILITIES 1.061 (72.104.300 5.3 Projected Balance Sheet Statement: Calculations Balance Sheet Year 0 Assets Current assets Cash & Bank Accounts receivable Finished goods inventory Equipment spare part inventory Raw material inventory Pre-paid building rent Total Current Assets Fixed assets Machinery & equipment Furniture & fixtures Office equipment Total Fixed Assets Intangible assets Pre-operation costs Legal.273 19.788 284.477 712.773) 266.053 2.675 280.759 392.700 30.639.650 2.200 630.920 15.835.200 1.036.968.400 1.663 2.036.670 47.465.933 382.845 166.830 28.172.675 1.100 63.000 86.393 157.661 2.802.832 9.274 346.061 13.036.914 38.775.625.893.832 518.680 190.903 518.735 - 430.576 142.136.779.410 2.245.270.293) (1.000 3.155.200 127.400 473.661 12.061 35.419.261.892 701.179 34.603.715 352.386 2.318 2.344 2.003.249 4.537.800 510.518.216 315.925.812.838 199.478 2.715 321.077 691.730 98.668.941.308 1.545.948) (5.148 570.838 240.476 2.853 30.000 172.036.600 383.489 (115.059 37.500 146.500 319.043.000 344.072.825 627.447 258.554 5.234.419 511.000 5.300 191.844 38.715 333.254 371.189.145 420.278 1.478 23.036.759 362.427 465.885 2.616 817.969) 1.986 9.528 47.532.665.853 2.479.865.119 30.925.785.599 333.802.945 3.601 415.607.290 512.447 2.426.216 284.121 344.387) (5.000 3.600 315.247 279.152) 2.625.182 12.736 275.965) (9.913 244.000 17.418 172.685.429.036.036.155 - 157.208 333.987.965) (7.325 3.309.890 23.599 315.443.061 (628.945.908 2.164 1.410 350.013.700 446.155 19 PREF-57/Dec.802 3. licensing.630 10.615 560.948) (7.000 23.378 296.088.036.334 239.800 946.061 19.370.285) (4.410 17.600 1.588 38.222.061 45.505 71.493 5.350 630.053 86.476 8.905.140 1.418 2.750 1.719 362.538 679.383 26.340 95.155 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 SMEDA 2.145.835 23.643 421.829.925.350 238.061 26.329.036.629) (1.940 210.061 776.691 8.502.685.036.550) 495.330 309.925 2.629) (2.036.678 6.900 574.387) (4.245.390 689.437 189.052 7.744.205 140.000 4.451 891.393 199.880 490.736) 1.189.775.744 (224.000 3.800 157.061 859.120 1.254 352.043.661 447.061 8.910 392.802.195 292.566 885.074 8.914 2.032.036.175 119.043.719 1.092 3.309.Pre-Feasibility Study Boutique (Women Designer Wear) 14.053.470 70.500 2.152) (9.061 2.294.092 385.945.010 142.000 1.347 212.611 17.000 258.097 4.879 389.121 2.174 358.237 182.036.980 12.573.785.678 471.959.000 638.470 13.627.000 788.314.835.802.537.583 10.384 8.577.320 (766.061 3.339 428.788 240.771 701.285) (2.219 353.925.482 1.036.665.400 255.935 1.

1 Production Assumptions Number of Stitching Machines Production Capacity (No.Pre-Feasibility Study Boutique (Women Designer Wear) 15 KEY ASSUMPTIONS 15. of dresses per Annum) Capacity Utilization for the first year Ready Made Dresses (% of total production) Dresses manufactured on CMT basis (% of total production) 15. 2011/ Rev 03 .5 Financial Assumptions Project Life Debt: Equity Interest Rate on Long Term Debt Debt Tenure Debt Payment per year 10 Years 50:50 16% 5 Years 4 20 PREF-57/Dec.688 60% 60% 40% Raw Material Price Growth rate Payroll growth rate Machine Maintenance growth rate Rent growth rate 15.2 Operating Assumptions Hours operational per day Days operational per month (Production) Days operational per month (Boutique) 15.4 Expense Assumptions Promotion Expenses after Year 1 (% of expected sales) Machine Maintenance 12% 1% of machinery cost 5% 10% 5% 10% 10 15 (of 30% of sales) 8 25 30 6 2.3 Cash flow Assumptions Account Payable Cycle (Days) Account Receivable Cycle (Days) 15.

Near Boharwala Chowk.69962 Rex Machinery (PVT) Ltd.) 92-B McLeod Road. 2011/ Rev 03 . Lahore Phone: +92-42-37223762 Furniture Suppliers Farrukh and Shabbir Office Furniture Shop # 6. Al-Mustafa Center. Ground floor. Lahore Phone: +92-42-363. 6-Allama Iqbal Road. Gulberg. Near Boharwala Chowk. Taj Mehal Street # 22. Abid Market. Rex Market. 6-Allama Iqbal Road. Lahore Phone: +92-42-36313170 Al-Mustafa Machinery Company Showroom 3-A1. Lahore Phone: +92-42-36375524 M. Temple Road. Sharif Complex. Main Market. Ramazan (Industrial Sewing Machine Co.Pre-Feasibility Study Boutique (Women Designer Wear) 16 ANNEXURE: Machinery Suppliers AA Appliances Shop # 1. Lahore Phone: +92-42-35873347 21 PREF-57/Dec.

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