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PRESENTED TO, MR SAJJAD SIRAJ PRESENTED BY, RAZIA NASRUDDIN 2002-1-8-2791
COLLEGE OF BUSINESS MANAGEMENT KORANGI CREEK KARACHI
Sajjad Siraj Institute Of Business Management Korangi Creek. I have tried my level best to meet your level of requirement. people working in the fashion industry. and then summarized in the form of this report.September 6. 2003 Mr. describes the complete feasibility report about the Boutique The research on this report is mainly done by visiting different top ranking boutique in the market. Razia Nasruddin DESIGNER’S BOTIQUE .) to meet the requirement of the course. a lot more information were gathered form the internet. I would be pleased to discuss this report and its conclusions with you at your request. Karachi – 75190 Pakistan Dear Sir: The attached report authorized by you in the beginning of the term of summer 2002 of MBA (Exec. Yours sincerely. I thank you for your guidance to prepare this comprehensive report.
energy and effort.ACKNOWLEDGEMENTS Completing any report requires a lot of time. However. we must acknowledge the sincerity and help that MISS NADIA MISTRY. AND MR ADNAN KAISAR AND MISS NADIA DR AHMAD extended to us. which has brought us to this wonderfully complied project. DESIGNER’S BOTIQUE . Not to forget the efforts of our teacher MR SAJJAD SIRAJ who helped me throughout the project.
TABLE OF CONTENTS Letter of Transmittal Acknowledgement Project Brief Key Assumptions Depreciation and Amortization Schedule Income Statement Balance Sheet Cash Flow Reference DESIGNER’S BOTIQUE .
which actually are quite different in nature from each other and this is solely dependent on the taste of the people. DESIGNER’S BOTIQUE . influence of the western culture. It also portrays in a clearly understood visual manner. and bewildering diversities of the ethnic groups. purchasing capacities. through times. However. which can fit in the context of the fashion in vogue and the culture in practice. has gone through so many rapid changes and bizarre extremes that it has examples of nearly every kind of clothing function. geographical differences. One has.PROJECT BRIEF Clothing is a beautiful visual demonstration of the social and emotional needs of people wearing it. and then relate and bring together. therefore. the ideas for creating various designs. Fashion. in a boutique business. to sift and isolate. The range of Pakistani dresses is remarkably wide. what people of different cultures and styles want socially. the specifications and descriptions of the designs and clothes are so general that they can fit more than one costume. according to the vast cultures.
As such. Lahore. Nadia Mistri. there is a massive potential in this field. and Karachi deal in fashion wear greatly influenced by the west and the local trends in vogue. especially in countries like UAE.e. Karachi. Parahan. the Boutique business is quite in vogue but has yet to be formalized. total capacity of the defined unit with 5 stitching machines (basis on 8-10 hours shift) will be about 500 1 dresses. and Quetta. On average. The breakup of the total number of dresses will be as follows: Total designs selected by designer 20 Number of dresses in each design 5 Number of dresses in each size 5 Total Number of dresses 500 This production and sales capacity is estimated to be economically viable and justifies the capital as well as operational costs of the project. the women fashion wear garments will be designed through a contracted designer and then stitched through in-house stitching unit. Approximately. there is massive export potential in this sector. a designer can supply forty designs per month from which nearly twenty designs are selected on average. and some individual designer players like Beegee’s. The reason being the business rivalries and the competitive structure of this industry. DESIGNER’S BOTIQUE . USA. There are a few major players in Boutique business and these entrepreneurs have also taken an initiative based on their caprice and experience in the field of fashion design. as the demand of Pakistani dresses. because there is no association or link between these enterprises. is massive due to a high number of Pakistani expatriates who have settled in these countries. Nina’s. The boutiques in Peshawar and Quetta.In reference to Pakistan. However. The market of this enterprise is quite scattered and unorganized. Shayan Malik. Generation. Maria B. 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. Kapre Waghera. CURRENT INDUSTRY STRUCTURE Currently. However. there is no exact detail available of the number of boutiques. the boutique industry is relatively unorganized and is scattered in and around the posh areas of the metropolitan cities of Pakistan i. and UK. Islamabad. whereas the ones in Lahore. 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. Bossini. especially in women wear. Nee Punhal. and Sahar Saigol. Amir Adnan. Furthermore. Peshawar. Furthermore. one can name a few major players in the business such as Indifference. PROPOSED CAPACITY The Boutique business capacity is greatly dependent on the market size and the number of potential clientele one can attract. mostly sell the traditional dresses having indigenous/local designs. Nilofar Shahid. Islamabad.
Moreover. Apart from this.861 Dresses women not knitted Dresses women man made fiber not knitted Dress women other textile not knitted Shisha embroided dresses of cotton 463346 63438 17723 286 8424002 8424003 8424004 8424006 DESIGNER’S BOTIQUE .MARKETING The marketing of boutique follows the conventional marketing pattern. the boutique owner has to marketing techniques like: Usage of print media i. Party dresses. The average sale price per dress is assumed to be Rs. in order to keep abreast with the emerging trends and client tastes. Q-lots. printing of posters and pamphlets as well as displaying it and distributing it at proper places Advertisement in print media i. Casual Dresses and other prevalent dresses based on the market trends. As this project of Boutique deals in designer women wear. Usage of electronic media i. the styles will be Shalwar Kameez. Pajama Kameez. launching of website and advertising on web. surveys regarding customer satisfaction/needs should be a regular feature of this project. Event arrangement like fashion shows and photo-shoots. projection of the boutique in fashion programs. Kurta.e. etc.e. Furthermore. Peeshwaz.2100. advertisement on television. Usage of e-commerce i. newspapers and fashion magazines. Whereas.e. as well as the promotional strategy. Frocks. which is dependent on selection of venue of the outlet/s and the product mix (designs and sizes). there is a vast export potential in this industry. therefore the product mix will comprise of different styles of the female dresses in different sizes. and provision of dresses to various television plays and films. which is evident from the export figures of 1998-99 (available from the data of Federal Bureau of Statistics-FBS) SITC 2 Code 8422102 8422103 8422104 8422202 Product Classification 2000 – 2001 Value (Rs. “000”) Suit women cotton not 1415124 knitted Suit women synthetic not 501917 knitted Suit women (other textile 46861 material not knitted) Suit women (other textile 2107 material not knitted) 46.e.
etc. and processed accordingly 3 . Saudi Arabia. The garments will also be tagged for identification of sizes. and Lahore. in which the garment will be checked for quality control and will cleaned (if required) for final presentation at the outlet. Most of the women dresses prepared in Pakistan are exported to USA. Finishing: The final phase is that of finishing. which can either be done by the in-house stitching unit or by outsourcing it 4 . Stitching: The cutting is then followed by stitching. Accessories: Accessories such as buttons. as these serve as an identity for the boutique and are useful for promotion. and South Africa. On average. Various patterns of clothing and the fashions in vogue.e. would be as follows: Fabric: The fabric. France. Karachi. Labels are also attached to the apparels in this process. The end users of these dresses in foreign countries are mostly Pakistani and Indian women who have immigrated to these countries. PRODUCTION PROCESS FLOW: The process for converting fabric in designer wear garments follows the below mentioned sequence: Design: The initial process starts from the designing phase. Pattern Making/Cutting: Based on the designs selected. will be procured from the local market at competitive rates. prices. laces. approximately 50% of the designs are selected for further development of clothes. elastics. handling instructions. The contracted designer as does this he/she will provide the basic designs of which the fabric will be converted into the designer wear garment. can be obtained from wholesale markets or from markets specializing in designer cloth at Faisalabad. etc. embroidery threads. patterns for cutting are developed and based on these patterns. Germany. Labels. From these designs. RAW MATERIAL The raw material required for such sort of projects.8427006 Baluchi Kameez of Silk Total (Source: Federal Bureau of Statistics) 27 2510826 Even these figures represent the formal export patterns of women dresses from Pakistan and are not representative of the export of these dresses taking place on informal level. tags and packaging: Labels and tags can be obtained on order. UK. are designed. glasses. needles. block printed. fabric is cut. Belgium. embroided. UAE. three months. which is the basic raw material requirement for a boutique and a major component of the cost. DESIGNER’S BOTIQUE . zippers. which also relate to the tastes of the concerned clientele. threads. addresses. a designer is supposed to provide 40 designs per month or 100-120 designs per season i. Netherlands.
rent will be paid on monthly basis.) Security for renting a house for installing the stitching unit (Rent @ 6000 Rs. cash counter. According to the prevailing practice. 20 feet front and 40 feet depth. a small building will be required to establishing the stitching unit. glass panes. as security would be required for renting the shop. hanging racks. it is presented at the outlet/shop for sale to the clientele. six months rent as advance and three months rent. 000per month. The cost estimates for setting up the Boutique are as follows: Security for renting shop/outlet (Rent @ Rs. whereas pre-paid rent will only be given at the beginning.Presentation/Market: Once the designer wears garment is ready after going through the above-mentioned process. One viable option is to rent a small house for this purpose. It is assumed that security is a one-time expenditure.ft i. 300000 mirrors.6. and the rent estimation for such a shop is Rs 30. and other furnitures. 000 per month) INFRASTRUCTURE REQUIREMENTS The project will have the following infrastructure components: INFRASTRUCTURE REQUIREMENTS Main shop Try room Small store DESIGNER’S BOTIQUE Sq .e. Designing Pattern making / cutting Stitching Market / Clientele Presentation Finishing PREMISES FO R SHOP AND STITCHING UNIT Recommended mode for renting a Shop It is recommended that the proposed location for the said enterprise be a posh area.fts 600 36 100 . The shop will be obtained on rental basis. 3 90000 months rent as security) Interior decoration (installing lighting. where people have the buying capacity for women fashion wear.30. while establishing the boutique. After first six months. etc. The size of the shop should be at least 800 Sq. mannequins.000/month. Furthermore.
excellent customer service should be provided. THREATS FOR THE BUSINESS Competitive Structure of the market The market of the boutiques is highly competitive. Designing of dresses according to the consumer tastes/preferences gathered through consumer surveys. Selection of the wrong venue DESIGNER’S BOTIQUE . which can increase the sales. The location of the outlet should be properly selected and attractively decorated so as to target the clientele effectively.000 50. Pilferage in the designs The designs. In case of the project of Boutique. 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. Hence. because it is the customer satisfaction. keeping minimum inventory as per past sales trends. The dress designs should be according to the emerging trends and fashions.Building for stitching unit MACHINERY AND EQUIPMENTS Single needle lock-stitch machine 4 Over-lock stitch machine 1 Accessories (Scissors. stools. Table.000 50. Proper Inventory management i. The customer satisfaction should be given due importance.000 50.000 50. 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. carpet.e.000 30000 23000 35000 10000 KEY SUCCESS FACTORS: There are a number of factors. Cutting Board. which contribute towards the success of a project. etc.) Air-conditioner 1 Stereo System 1 Computer and Printer 1 Telephone & Fax 1 10 Marla house 20. some of the Key Success Factors are as follows: Proper care while producing dresses should be adopted.000 30000 23000 35000 10000 80.
Selection of the wrong venue can be a major hurdle in achieving the desired business objectives. of dresses per month) Capacity Utilization for the first year (No. of dresses per month) Self Production (% of total production) Dresses manufactured on CMT basis (% of total production) Monthly self production (Year 1) Monthly Dresses manufactured on CMT basis (Year 1) 5 500 200 60% 40% 120 80 COST ASSUMPTIONS Material & Fabrics Accessories Embroidery Cost Direct Labor Cost Direct Electricity Cost Machine Maintenance Cost Admin & Rent expenses & promotional expenses Fixed electricity Average unit cost per dress (Rs. KEY ASSUMPTIONS PRODUCTION ASSUMPTIONS Number of Stitching Machines Production Capacity (No. 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.) 400 25 100 280 20 4 446 30 1305 DESIGNER’S BOTIQUE . Tax Improper documentation of the sales receipt record may lead to problems with Tax department. so the clientele taste should be properly tracked.
) Total Average Monthly Sales (Year 1) (Rs. CMT manufacturers are garments manufacturer.) Average Monthly Sales through outsourcing (Rs.) Average Monthly Sales through retail outlet (Rs.) Sale growth rate (Units) Sale growth rate (price) 120 2100 252000 80 250 20000 272000 10% 13. they are like the out source for the company.5% 10000 4000 6000 3000 11% 7% 2% 10% 10% 10 10 15 8 25 25 . of dresses sold per month (Year 1) Average unit price per dress (Rs.) No. Of dresses sold on CMT basis per month (Year).SALES ASSUMPTIONS: No. Average unit price per dress on CMT basis (Rs. In boutiques such garments are also available.33% OPERATING ASSUMPTIONS Hours operational per day Days operational per month (Production) Days operational per month (Boutique) CASH FLOW ASSUMPTIONS Account Payable Cycle (Days) Account Receivable Cycle (Days) Raw Material Inventory (Days) EXPENSE ASSUMPTIONS Initial Promotional Expenses (Year 1) (%age of expected sales) Promotion Expenses after Year 1 (% of expected sales) Machine Maintenance per annum Direct Electricity per month (Year 1) Fixed Electricity per month (Year 1) Telephone and Internet charges (Year 1) Raw Material Price Growth rate Payroll growth rate Machine Maintenance growth rate Direct electricity growth rate Fixed electricity growth rate DESIGNER’S BOTIQUE 3% 1.
Rent growth rate Telephone and Internet charges growth rate Depreciation Method FINANCIAL ASSUMPTIONS PROJECT LIFE DEBT: EQUITY INTEREST RATE ON LONGTERM DEBT DEBT TENURE TAX RATE 5% 5% STRAIGHT LINE 10 YEARS 50:50 18% 5 YEARS 40% PROJECT COST DECRIPTION Machinery & equipment Furniture & Fixture (Interior Decoration) Security Deposits for Premises Pre-operating expenses Salaries Promotional Expenses Total Capital Cost Working Capital Raw material (Fabric & Accessories) Accounts Receivable Prepaid Rent (Boutique and Stitching Unit) Total Working capital Project Cost SOURCES DEBTS EQUITY DESIGNER’S BOTIQUE 725760 725760 COST (RS) 278000 300000 108000 98000 97920 881920 28800 108800 432000 569600 1451520 .
DESIGNER’S BOTIQUE .
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