Pre-Feasibility Study

BOUTIQUE
(Women Designer Wear)

Small and Medium Enterprise Development Authority

Government of Pakistan
www.smeda.org.pk
HEAD OFFICE
st
Waheed Trade Complex, 1 Floor , 36-Commercial Zone, Phase III, Sector XX, Khayaban-e-Iqbal, DHA Lahore
Tel: (042) 111-111-456, Fax: (042) 5896619, 5899756
helpdesk@smeda.org.pk

REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE

PUNJAB
Waheed Trade Complex,
1st Floor, 36-Commercial Zone,
Phase III, Sector XX,
Khayaban-e-Iqbal, DHA Lahore.
Tel: (042) 111-111-456
Fax: (042) 5896619, 5899756
helpdesk@smeda.org.pk
SINDH NWFP BALOCHISTAN
5TH Floor, Bahria Ground Floor Bungalow No. 15-A
Complex II, M.T. Khan Road, State Life Building Chaman Housing Scheme
Karachi. The Mall, Peshawar. Airport Road, Quetta.
Tel: (021) 111-111-456 Tel: (091) 9213046-47 Tel: (081) 831623, 831702
Fax: (021) 5610572 Fax: (091) 286908 Fax: (081) 831922
helpdesk-khi@smeda.org.pk helpdesk-pew@smeda.org.pk helpdesk-qta@smeda.org.pk

July, 2002
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. PREF-57
Revision 1
Prepared by SMEDA-Punjab
Approved by GM Punjab
Issue Date July 31, 2002
Issued by Library Officer

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Pre-Feasibility Study Boutique (Women Designer Wear)

1 INTRODUCTION

1.1 Project Brief

The pre-feasibility study focuses on the establishment of women designer wear

Boutique including the operations of apparel designing, manufacturing, selling and
marketing. The study has been designed to capture the dynamics of the Boutique
industry, with its many components and possible strategic opportunities.

1.2 Opportunity Rationale

Clothing is a beautiful visual demonstration of the social and emotional needs of

people wearing it. It also portrays in a clearly understood visual manner, what people
of different cultures and styles want socially. Fashion, through times, has gone
through so many rapid changes and bizarre extremes that it has examples of nearly
every kind of clothing function.
However, in a boutique business, the specifications and descriptions of the designs
and clothes are so general that they can fit more than one costume, which actually
are quite different in nature from each other and this is solely dependent on the taste
of the people.
The range of Pakistani dresses is remarkably wide, according to the vast cultures,
geographical differences, purchasing capacities, influence of the western culture, and
bewildering diversities of the ethnic groups. One has, therefore, to sift and isolate,
and then relate and bring together, the ideas for creating various designs, which can
fit in the context of the fashion in vogue and the culture in practice.
In reference to Pakistan, the Boutique business is quite in vogue but has yet to be
formalized. The market of this enterprise is quite scattered and unorganized. 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.
However, there is a massive potential in this field, 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.
Furthermore, there is massive export potential in this sector, as the demand of
Pakistani dresses, especially in countries like UAE, USA, and UK, is massive due to
a high number of Pakistani expatriates who have settled in these countries. The
Boutique business can also be expanded into a more profitable venture by providing
stitching facilities to other boutiques, which do not own a stitching unit or are
lacking this facility.

1.3 Proposed Capacity

The Boutique business capacity is greatly dependent on the market size and the
number of potential clientele one can attract. Furthermore, the women fashion wear
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garments will be designed through a contracted designer and then stitched through
in-house stitching unit. On average, a designer can supply forty designs per month
from which nearly twenty designs are selected on average. Approximately, total
capacity of the defined unit with 5 stitching machines (basis on 8-10 hours shift) will
be about 5001 dresses. 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.

1.4 Total Project Cost

The Boutique shop needs a total investment of about Rs. 1.45 million. This includes
a capital investment of Rs.881,920 and a sum of Rs.569,600 as working capital.

2 CURRENT INDUSTRY STRUCTURE

Currently, the boutique industry is relatively unorganized and is scattered in and
around the posh areas of the metropolitan cities of Pakistan i.e. Lahore, Islamabad,
Karachi, Peshawar, and Quetta. The boutiques in Peshawar and Quetta, mostly sell
the traditional dresses having indigenous/local designs, whereas the ones in Lahore,
Islamabad, and Karachi deal in fashion wear greatly influenced by the west and the
local trends in vogue. As such, there is no exact detail available of the number of
boutiques, especially in women wear, because there is no association or link between
these enterprises. The reason being the business rivalries and the competitive
structure of this industry. However, one can name a few major players in the
business such as Indifference, Generation, Parahan, Nee Punhal, Bossini, Kapre
Waghera, Maria B, Nina’s, and some individual designer players like Beegee’s,
Nilofar Shahid, Nadia Mistri, Amir Adnan, Shayan Malik, and Sahar Saigol.

3 MARKETING
The marketing of boutique follows the conventional marketing pattern which is
dependent on selection of venue of the outlet/s and the product mix (designs and
sizes), as well as the promotional strategy. Furthermore, the boutique owner has to
marketing techniques like:
• Usage of print media i.e. printing of posters and pamphlets as well as displaying
it and distributing it at proper places
• Advertisement in print media i.e. newspapers and fashion magazines, etc.

1
This production also includes additional suits that will be prepared on orders/outsourcing/CMT
(Cutting, Manufacturing and Trimming) per month in order to utilize the maximum capacity of the
stitching unit.
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• Usage of electronic media i.e. projection of the boutique in fashion programs,

advertisement on television, and provision of dresses to various television plays
and films.
• Event arrangement like fashion shows and photo-shoots.
• Usage of e-commerce i.e. launching of website and advertising on web.
Moreover, in order to keep abreast with the emerging trends and client tastes,
surveys regarding customer satisfaction/needs should be a regular feature of this
project.
As this project of Boutique deals in designer women wear, therefore the product mix
will comprise of different styles of the female dresses in different sizes. Whereas, the
styles will be Shalwar Kameez, Q-lots, Pajama Kameez, Frocks, Kurta, Peeshwaz,
Party dresses, Casual Dresses and other prevalent dresses based on the market
trends. The average sale price per dress is assumed to be Rs.2,100.
Apart from this, there is a vast export potential in this industry, which is evident
from the export figures of 1998-99 (available from the data of Federal Bureau of
Statistics-FBS).
SITC2 Code Product Classification 2000 – 2001
Value (Rs. “000”)
8422102 Suit women cotton not knitted 1,415,124
8422103 Suit women synthetic not knitted 501,917
8422104 Suit women (other textile material not knitted) 46,861
8422202 Ensembles women cotton not knitted 2,107
8424002 Dresses women not knitted 463,346
8424003 Dresses women man made fiber not knitted 63,438
8424004 Dress women other textile not knitted 17,723
8424006 Shisha embroided dresses of cotton 286
8427006 Baluchi Kameez of Silk 27
Total 2,510,826
Source: Federal Bureau of Statistics
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. Most of the women dresses prepared in Pakistan are exported to
USA, UK, Germany, UAE, Saudi Arabia, France, Belgium, Netherlands, and South
Africa.
The end users of these dresses in foreign countries are mostly Pakistani and Indian
women who have immigrated to these countries.

2
Standard International Trade Classification
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4 RAW MATERIAL

4.1 Raw Material

The raw-material required for such sort of projects, would be as follows:

• Fabric: The fabric, which is the basic raw material requirement for a boutique
and a major component of the cost, can be obtained from wholesale markets or
from markets specializing in designer cloth at Faisalabad, Karachi, and Lahore.
• Accessories: Accessories such as buttons, laces, zippers, elastics, threads,
needles, embroidery threads, glasses, etc. will be procured from the local market
at competitive rates.
• Labels, tags and packaging: Labels and tags can be obtained on order, as these
serve as an identity for the boutique and are useful for promotion.

5 PRODUCTION PROCESS FLOW

5.1 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. Various patterns of
clothing and the fashions in vogue, which also relate to the tastes of the
concerned clientele, are designed. 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. On average, a designer is supposed to provide 40
designs per month or 100-120 designs per season i.e. three months. From these
designs, approximately 50% of the designs are selected for further development
of clothes.
• Pattern Making/Cutting: Based on the designs selected, patterns for cutting are
developed and based on these patterns, fabric is cut, embroided, block printed,
and processed accordingly3.
• Stitching: The cutting is then followed by stitching, which can either be done by
the in-house stitching unit or by outsourcing it4. Labels are also attached to the
apparels in this process.
• Finishing: The final phase is that of finishing, in which the garment will be
checked for quality control and will cleaned (if required) for final presentation at
the outlet. The garments will also be tagged for identification of sizes, prices,
addresses, handling instructions, etc.

3
After cutting, the fabric is embroided and this is normally outsourced to any locally available
commercial embroidery unit.
4
In case of over-lock stitching, it will be done in-house. The stitching of buttonholes as well as elastic
embedding will be outsourced. This will cost approximately @Rs.5 per dress.
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• Presentation/Market: Once the designer wear garment is ready after going

through the above-mentioned process, it is presented at the outlet/shop for sale to
the clientele.
Pattern
Stitching
Designing Making/Cutting

Market/Clientele Presentation Finishing

6 HUMAN RESOURCE REQUIREMENTS

The project of Boutique requires the following Human Resources/Staff:
Positions Required Salary per Salary per
Month Annum
Chief Executive/Owner 1 30,000 360,000
Designer 1 15,000 180,000
Sales Girls 2 5,000 120,000
Production Supervisor/Cutting Master 1 8,000 96,000
Stitchers/Tailors5 5 6,000 360,000
Press/Iron Man/Finishing man 1 3,000 36,000
Office Boy 1 2,000 24,000
Total 12 1,176,000

7 MACHINERY/EQUIPMENT DETAILS
The boutique will require a small in-house stitching unit. The cost of the stitching
machinery will be as follows:
Stitching Machinery 6 No. Rs/Unit Rs
Single needle lock-stitch machine (Juki China) 4 20,000 80,000
Over-lock stitch machine (Juki China) 1 50,000 50,000
Accessories (Scissors, Cutting Board, Table, 50,000 50,000
stools, carpet, etc.)
Total 180,000

5
6
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.
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Furthermore, the following will also be required to setup a Boutique:

Other Equipment No. Rs/Unit Rs
Air-conditioner 1 30,000 30,000
Stereo System 1 23,000 23,000
Computer and Printer 1 35,000 35,000
Telephone & Fax 1 10,000 10,000
Credit Card Machine7 1
Total 98,000

8 PREMISES FOR SHOP AND STITCHING UNIT

8.1 Recommended mode for renting a Shop

It is recommended that the proposed location for the said enterprise be a posh area,
where people have the buying capacity for women fashion wear. The size of the
shop should be at least 800 Sq.ft i.e. 20 feet front and 40 feet depth. Furthermore, a
small building will be required to establishing the stitching unit. One viable option is
to rent a small house for this purpose.
The shop will be obtained on rental basis, and the rent estimation for such a shop is
Rs 30,000/month. According to the prevailing practice, six months rent as advance
and three months rent as security would be required for renting the shop. It is
assumed that security is a one-time expenditure, whereas pre-paid rent will only be
given at the beginning, while establishing the boutique. After first six months, rent
will be paid on monthly basis.
The cost estimates for setting up the Boutique are as follows:

Rs
Security for renting shop/outlet (Rent @ Rs.30,000 90,000
per month. 3 months rent as security)
Interior decoration (installing lighting, mannequins, 300,000
hanging racks, mirrors, glass panes, cash counter, and
other décor, etc.)
Security for renting a house for installing the stitching 9,000
unit (Rent @ Rs.6,000 per month)

7
Credit card machines are installed free of cost by the Bank on fulfilling the Bank requirements like
having a Bank account, copy of registry or lease agreement of shop, etc. However, these requirements
may vary from Bank to Bank.
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8.2 Infrastructure requirements

The project will have the following infrastructure components:

Infrastructure Requirements Sq.ft
Main shop 600
Try Room 36
Small Store 100
Kitchen 64
Building for Stitching Unit 10 Marla House

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9 PROJECT ECONOMICS

9.1 Project Cost

Description Cost (Rs.)

Machinery & equipment 278,000
Furniture & Fixture (Interior Decoration) 300,000
Security Deposits for Premises8 108,000
Pre-operating expenses
Salaries9 98,000
Promotional Expenses 97,920
Total Capital Cost 881,920
Working Capital
Raw material (Fabric & Accessories) 28,800
Accounts Receivable 108,800
Prepaid Rent (Boutique and Stitching Unit) 432,000
Total Working capital 569,600
Project Cost 1,451,520

9.2 Project Returns

Internal Rate of Return (IRR) 40.18%

Payback Period (Years) 3.87
Net Present Value (NPV) 2,267,714

9.3 Financing Plan

Financing Rs.
Equity 50% 725,760
Debt 50% 725,760

8
Security Deposit for Boutique Rs.90,000 (@Rs.30,000 per month for three months), and for
Stitching Unit Rs.18,000 (@Rs.6,000 per month for three months).
9
One month salary of staff
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10 KEY SUCCESS FACTORS

There are a number of factors, which contribute towards the success of a project. In
case of the project of Boutique, some of the Key Success Factors are as follows:
• Proper care while producing dresses should be adopted
• Proper Inventory management i.e. keeping minimum inventory as per past sales
trends.
• The dress designs should be according to the emerging trends and fashions.
• Designing of dresses according to the consumer tastes/preferences gathered
through consumer surveys.
• The location of the outlet should be properly selected and attractively decorated
so as to target the clientele effectively.
• The customer satisfaction should be given due importance, because it is the
customer satisfaction, which can increase the sales. Hence, excellent customer
service should be provided.

11 THREATS FOR THE BUSINESS

• Competitive Structure of the market
The market of the boutiques is highly competitive, 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.
• 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.
• Selection of the wrong venue
Selection of the wrong venue can be a major hurdle in achieving the desired business
objectives.
• 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, so the clientele taste should be properly tracked.
• Tax
Improper documentation of the sales receipt record may lead to problems with Tax
department.

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12 FINANCIAL ANALYSIS

12.1 Projected Income Statement

P R O JE C T E D IN C O M E S T A T E M E N T
Y ea r 1 Y ea r 2 Y ea r 3 Y ea r 4 Y ea r 5 Y ea r 6 Y ea r 7 Y ea r 8 Y ea r 9 Y ea r 1 0

S ales 3 ,2 6 4 ,0 0 0 3 ,6 9 8 ,1 1 2 4 ,1 8 9 ,9 6 1 4 ,7 4 7 ,2 2 6 5 ,3 7 8 ,6 0 7 6 ,0 9 3 ,9 6 1 6 ,9 0 4 ,4 5 8 7 ,8 2 2 ,7 5 1 8 ,8 6 3 ,1 7 7 1 0 ,0 4 1 ,9 8 0

C o st o f G o o d s S o ld
R a w M ate rial 5 7 6 ,0 0 0 6 3 9 ,9 3 6 7 1 0 ,9 6 9 7 8 9 ,8 8 6 8 7 7 ,5 6 4 9 7 4 ,9 7 3 1 ,0 8 3 ,1 9 5 1 ,2 0 3 ,4 3 0 1 ,3 3 7 ,0 1 1 1 ,4 8 5 ,4 1 9
P ayro ll P ro d uctio n S taff 6 7 2 ,0 0 0 7 1 9 ,0 4 0 7 6 9 ,3 7 3 8 2 3 ,2 2 9 8 8 0 ,8 5 5 9 4 2 ,5 1 5 1 ,0 0 8 ,4 9 1 1 ,0 7 9 ,0 8 5 1 ,1 5 4 ,6 2 1 1 ,2 3 5 ,4 4 5
M a chine M a inten ance 1 0 ,0 0 0 1 0 ,2 0 0 1 0 ,4 0 4 1 0 ,6 1 2 1 0 ,8 2 4 1 1 ,0 4 1 1 1 ,2 6 2 1 1 ,4 8 7 1 1 ,7 1 7 1 1 ,9 5 1
E m b ro id e ry & A cce sso ries co sts 3 0 0 ,0 0 0 3 3 3 ,3 0 0 3 7 0 ,2 9 6 4 1 1 ,3 9 9 4 5 7 ,0 6 4 5 0 9 ,8 3 0 5 6 4 ,1 6 4 6 2 6 ,7 8 7 6 9 6 ,3 6 0 7 7 3 ,6 5 6
D irect E lectric ity 4 8 ,0 0 0 5 2 ,8 0 0 5 8 ,0 8 0 6 3 ,8 8 8 7 0 ,2 7 7 7 7 ,3 0 4 8 5 ,0 3 5 9 3 ,5 3 8 1 0 2 ,8 9 2 1 1 3 ,1 8 1
T o ta l 1 ,6 0 6 ,0 0 0 1 ,7 5 5 ,2 7 6 1 ,9 1 9 ,1 2 2 2 ,0 9 9 ,0 1 5 2 ,2 9 6 ,5 8 4 2 ,5 1 5 ,6 6 3 2 ,7 5 2 ,1 4 7 3 ,0 1 4 ,3 2 7 3 ,3 0 2 ,6 0 1 3 ,6 1 9 ,6 5 2

G r o ss P ro fit 1 ,6 5 8 ,0 0 0 1 ,9 4 2 ,8 3 6 2 ,2 7 0 ,8 3 9 2 ,6 4 8 ,2 1 1 3 ,0 8 2 ,0 2 2 3 ,5 7 8 ,2 9 8 4 ,1 5 2 ,3 1 1 4 ,8 0 8 ,4 2 4 5 ,5 6 0 ,5 7 6 6 ,4 2 2 ,3 2 8

O p era tin g E x p en ses

F ix ed E lectric ity 7 2 ,0 0 0 7 9 ,2 0 0 8 7 ,1 2 0 9 5 ,8 3 2 1 0 5 ,4 1 5 1 1 5 ,9 5 7 1 2 7 ,5 5 2 1 4 0 ,3 0 8 1 5 4 ,3 3 8 1 6 9 ,7 7 2
P ayro ll A d m inistratio n 5 0 4 ,0 0 0 5 3 9 ,2 8 0 5 7 7 ,0 3 0 6 1 7 ,4 2 2 6 6 0 ,6 4 1 7 0 6 ,8 8 6 7 5 6 ,3 6 8 8 0 9 ,3 1 4 8 6 5 ,9 6 6 9 2 6 ,5 8 3
S h o p & stic hing ho use rent 4 3 2 ,0 0 0 4 5 3 ,6 0 0 4 7 6 ,2 8 0 5 0 0 ,0 9 4 5 2 5 ,0 9 9 5 5 1 ,3 5 4 5 7 8 ,9 2 1 6 0 7 ,8 6 7 6 3 8 ,2 6 1 6 7 0 ,1 7 4
A m o rtizatio n p re O p s. E xp . 1 9 ,5 9 2 1 9 ,5 9 2 1 9 ,5 9 2 1 9 ,5 9 2 1 9 ,5 9 2 1 9 ,5 9 2 1 9 ,5 9 2 1 9 ,5 9 2 1 9 ,5 9 2 1 9 ,5 9 2
T elep ho ne, Intern et C harg es 3 6 ,0 0 0 3 7 ,8 0 0 3 9 ,6 9 0 4 1 ,6 7 5 4 3 ,7 5 8 4 5 ,9 4 6 4 8 ,2 4 3 5 0 ,6 5 6 5 3 ,1 8 8 5 5 ,8 4 8
P ro m o tio n al E xp en ses 9 7 ,9 2 0 5 5 ,4 7 2 6 2 ,8 4 9 7 1 ,2 0 8 8 0 ,6 7 9 9 1 ,4 0 9 1 0 3 ,5 6 7 1 1 7 ,3 4 1 1 3 2 ,9 4 8 1 5 0 ,6 3 0
D ep reciatio n 5 7 ,8 0 0 5 7 ,8 0 0 5 7 ,8 0 0 5 7 ,8 0 0 5 7 ,8 0 0 5 7 ,8 0 0 5 7 ,8 0 0 5 7 ,8 0 0 5 7 ,8 0 0 5 7 ,8 0 0
T o ta l 1 ,2 1 9 ,3 1 2 1 ,2 4 2 ,7 4 4 1 ,3 2 0 ,3 6 1 1 ,4 0 3 ,6 2 3 1 ,4 9 2 ,9 8 4 1 ,5 8 8 ,9 4 4 1 ,6 9 2 ,0 4 4 1 ,8 0 2 ,8 7 8 1 ,9 2 2 ,0 9 3 2 ,0 5 0 ,3 9 9

O p e rating P ro fit 4 3 8 ,6 8 8 7 0 0 ,0 9 2 9 5 0 ,4 7 8 1 ,2 4 4 ,5 8 9 1 ,5 8 9 ,0 3 8 1 ,9 8 9 ,3 5 4 2 ,4 6 0 ,2 6 7 3 ,0 0 5 ,5 4 6 3 ,6 3 8 ,4 8 3 4 ,3 7 1 ,9 2 9

N o n O p era tin g E xp en ses

F in ancia l C harge s 1 3 0 ,6 3 7 1 1 2 ,3 7 7 9 0 ,8 3 0 6 5 ,4 0 4 3 5 ,4 0 2 - - - - -
R u nnin g F inan ce - - - - - - - - - -
T o ta l 1 3 0 ,6 3 7 1 1 2 ,3 7 7 9 0 ,8 3 0 6 5 ,4 0 4 3 5 ,4 0 2 - - - - -
P ro fit b efo re T a x 3 0 8 ,0 5 1 5 8 7 ,7 1 6 8 5 9 ,6 4 8 1 ,1 7 9 ,1 8 4 1 ,5 5 3 ,6 3 6 1 ,9 8 9 ,3 5 4 2 ,4 6 0 ,2 6 7 3 ,0 0 5 ,5 4 6 3 ,6 3 8 ,4 8 3 4 ,3 7 1 ,9 2 9

Tax 1 0 7 ,8 1 8 2 0 5 ,7 0 0 3 0 0 ,8 7 7 4 1 2 ,7 1 4 5 4 3 ,7 7 2 6 9 6 ,2 7 4 8 6 1 ,0 9 3 1 ,0 5 1 ,9 4 1 1 ,2 7 3 ,4 6 9 1 ,5 3 0 ,1 7 5

P ro fit a fter T a x 2 0 0 ,2 3 3 3 8 2 ,0 1 5 5 5 8 ,7 7 1 7 6 6 ,4 7 0 1 ,0 0 9 ,8 6 3 1 ,2 9 3 ,0 8 0 1 ,5 9 9 ,1 7 4 1 ,9 5 3 ,6 0 5 2 ,3 6 5 ,0 1 4 2 ,8 4 1 ,7 5 4

O p e ning R etaine d ea rning s - 2 0 0 ,2 3 3 5 8 2 ,2 4 8 1 ,1 4 1 ,0 2 0 1 ,9 0 7 ,4 9 0 2 ,9 1 7 ,3 5 3 4 ,2 1 0 ,4 3 3 5 ,8 0 9 ,6 0 6 7 ,7 6 3 ,2 1 1 1 0 ,1 2 8 ,2 2 6

R e tained earn ing b eg innin g o f year 2 0 0 ,2 3 3 5 8 2 ,2 4 8 1 ,1 4 1 ,0 2 0 1 ,9 0 7 ,4 9 0 2 ,9 1 7 ,3 5 3 4 ,2 1 0 ,4 3 3 5 ,8 0 9 ,6 0 6 7 ,7 6 3 ,2 1 1 1 0 ,1 2 8 ,2 2 6 1 2 ,9 6 9 ,9 7 9

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12.2 Projected Cash Flow Statement

PROJECTED CASH FLOW STATEMENT
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Operating Activities
Net Profit 200,233 382,015 558,771 766,470 1,009,863 1,293,080 1,599,174 1,953,605 2,365,014 2,841,754
Amortization of preoperational expenses - 19,592 19,592 19,592 19,592 19,592 19,592 19,592 19,592 19,592 19,592
Security Deposit (108,000)
Building Rent Expense 432,000 453,600 476,280 500,094 525,099 551,354 578,921 607,867 638,261 670,174
Building Rent Repayment (432,000) (453,600) (476,280) (500,094) (525,099) (551,354) (578,921) (607,867) (638,261) (670,174) -
Depreciation - 57,800 57,800 57,800 57,800 57,800 57,800 57,800 57,800 57,800 57,800
Stock and inventory (28,800) (3,197) (3,552) (3,946) (4,384) (4,870) (5,411) (6,012) (6,679) (7,420) 74,271
Account Receivable (108,800) (14,470) (16,395) (18,575) (21,046) (23,845) (27,017) (30,610) (34,681) (39,293) 334,733
Account Payable - 19,200 2,131 2,368 2,631 2,923 3,247 3,607 4,008 4,453 4,947
Cash provided by operations (677,600) 257,558 418,912 592,196 796,058 1,035,207 1,313,724 1,614,605 1,963,252 2,368,232 4,003,270

Financing Activities
Share capital 725,760 - - - - - - - - - -
Addition to Long Term Debt 725,760
Long Term Loan Repayment (101,445) (119,705) (141,252) (166,678) (196,680) - - - - -
Short Term Loan Repayment - - - - - - - - -
Cash Provided/Used for Financing Activities 1,451,520 (101,445) (119,705) (141,252) (166,678) (196,680) - - - - -

Investing Activities
Capital Expenditure (773,920) - - - - - - - - - -
Cash Used Provided by Investing Activities (773,920) - - - - - - - - - -

Net Cash inflow/(outflow) - 156,113 299,206 450,943 629,380 838,528 1,313,724 1,614,605 1,963,252 2,368,232 4,003,270
Cash Balance Brought forward - - 156,113 455,319 906,263 1,535,643 2,374,170 3,687,894 5,302,500 7,265,751 9,633,983
Cash Balance - 156,113 455,319 906,263 1,535,643 2,374,170 3,687,894 5,302,500 7,265,751 9,633,983 13,637,253
Running Finance - - - - - - - - - -
Cash Carried Forward 156,113 455,319 906,263 1,535,643 2,374,170 3,687,894 5,302,500 7,265,751 9,633,983 13,637,253

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12.3 Projected Balance Sheet

PROJECTED BALANCE SHEET

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Current Assets
Cash - 156,113 455,319 906,263 1,535,643 2,374,170 3,687,894 5,302,500 7,265,751 9,633,983 13,637,253
Security Deposit 108,000 108,000 108,000 108,000 108,000 108,000 108,000 108,000 108,000 108,000 108,000
Stocks and Inventory 28,800 31,997 35,548 39,494 43,878 48,749 54,160 60,172 66,851 74,271
Prepaid Rent 432,000 453,600 476,280 500,094 525,099 551,354 578,921 607,867 638,261 670,174
Accounts Receivables 108,800 123,270 139,665 158,241 179,287 203,132 230,149 260,758 295,439 334,733 -
Total 677,600 872,980 1,214,813 1,712,092 2,391,907 3,285,405 4,659,124 6,339,297 8,374,302 10,821,161 13,745,253

Gross Fixed Assets

Machinery & Equipment 578,000 578,000 578,000 578,000 578,000 578,000 578,000 578,000 578,000 578,000 578,000
Less: Accumalated Depriciation - 57,800 115,600 173,400 231,200 289,000 346,800 404,600 462,400 520,200 578,000
Net Fixed Assets 578,000 520,200 462,400 404,600 346,800 289,000 231,200 173,400 115,600 57,800 -

Intangible Assets
Pre-operational Expenses 195,920 176,328 156,736 137,144 117,552 97,960 78,368 58,776 39,184 19,592 -
Total 195,920 176,328 156,736 137,144 117,552 97,960 78,368 58,776 39,184 19,592 -

Total Assets 1,451,520 1,569,508 1,833,949 2,253,836 2,856,259 3,672,365 4,968,692 6,571,473 8,529,086 10,898,553 13,745,253

Liabilities
Long Term Debt 725,760 624,315 504,610 363,357 196,680 (0) - - - - -
Short Term Debt - - - - - - - - - -
Accounts Payable - 19,200 21,331 23,699 26,330 29,252 32,499 36,107 40,114 44,567 49,514
Total 725,760 643,515 525,941 387,056 223,009 29,252 32,499 36,107 40,114 44,567 49,514

Equity
Paid -up Capital 725,760 725,760 725,760 725,760 725,760 725,760 725,760 725,760 725,760 725,760 725,760
Retained Earnings - 200,233 582,248 1,141,020 1,907,490 2,917,353 4,210,433 5,809,606 7,763,211 10,128,226 12,969,979
Total 725,760 925,993 1,308,008 1,866,780 2,633,250 3,643,113 4,936,193 6,535,366 8,488,971 10,853,986 13,695,739

Total Liabilities And Equity 1,451,520 1,569,508 1,833,949 2,253,836 2,856,259 3,672,365 4,968,692 6,571,473 8,529,086 10,898,553 13,745,253

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13 KEY ASSUMPTIONS

13.1 Production Assumptions

Number of Stitching Machines 5

Production Capacity (No. of dresses per month) 500
Capacity Utilization for the first year (No. of dresses per month) 200
Self Production (% of total production) 60%
Dresses manufactured on CMT basis (% of total production) 40%
Monthly self production (Year 1) 120
Monthly Dresses manufactured on CMT basis (Year 1) 80

13.2 Cost Assumptions

Initial (Year 1) Average cost per dress (Rs.)

Material & Fabrics 400
Accessories 25
Embroidery Cost 100
Direct Labor Cost 280
Direct Electricity Cost 20
Machine Maintenance Cost 4
Admin & Rent expenses & promotional expenses 446
Fixed electricity 30
Average unit cost per dress (Rs.) 1,305

13.3 Sales Assumptions

No. of dresses sold per month(Year 1) 120

Average unit price per dress (Rs.) 2,100
Average Monthly Sales through retail outlet (Rs.) 252,000
No. of dresses sold on CMT basis per month(Year 1) 80
Average unit price per dress on CMT basis (Rs.) 250
Average Monthly Sales through outsourcing(Rs.) 20,000
Total Average Monthly Sales (Year 1) (Rs.) 272,000
Sale growth rate (Units) 10%
Sale growth rate (price) 3%

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13.4 Operating Assumptions

Hours operational per day 8

Days operational per month (Production) 25
Days operational per month (Boutique) 25

13.5 Cash flow Assumptions

Account Payable Cycle (Days) 10

Account Receivable Cycle (Days) 10
Raw Material Inventory (Days) 15

13.6 Expense Assumptions

Initial Promotional Expenses (Year 1) (%age of expected sales) 3%

Promotion Expenses after Year 1 (% of expected sales) 1.5%
Machine Maintenance per annum Rs.10,000
Direct Electricity per month (Year 1) 4,000
Fixed Electricity per month (Year 1) 6,000
Telephone and Internet charges (Year 1) 3,000
Raw Material Price Growth rate 1%
Payroll growth rate 7%
Machine Maintenance growth rate 2%
Direct electricity growth rate 10%
Fixed electricity growth rate 10%
Rent growth rate 5%
Telephone and Internet charges growth rate 5%
Depreciation Method Straight Line

13.7 Financial Assumptions

Project Life 10 Years

Debt: Equity 50:50
Interest Rate on Long Term Debt 18%
Interest Rate on Short Term Debt 18%
Debt Tenure 5 Years
Debt Payment per year 1
Discount Rate 18%

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