ASSINGNMENT

Program: M.Com

Semester: 3rd Regular

Submitted To: Professor Khurram

Submitted By: Kanza Tanveer

Roll NO: MCOF19M009

Submission Date: 11 January, 2021

Session: 2019-2021

TOPIC: FEASIBILITY PLAN

 ‘‘AUTOMATIC WATER MAKING MACHINE’’
FEASIBILITY PLAN

1. EXECUTIVE SUMMARY:
Following are components of Executive Summary:
 Venture Defined:
The corporation was formed in 1980 by Mr. Ali for
manufacturing electronic products. Name of the business is Ali
Electronic Corporation. The purpose of the venture is to
provide customers high quality and standardized products with
aim of minimum rejects.
 Product:
The product that will be sold in market and it will be
patented under Patent Ordinance (2000) the product is now in
engineering stage. The distinguishing feature that will provide
competitive advantage to corporation is its unique feature that
produces water from air. Yes it is true.. This is the device which
will extract water from particles present in air 25 liters at one
time when we put the device in open air.
 Market Characteristics:
If we try to define market size then the market is
not very large. It particularly focuses on those areas in which
water is not available and even some people are deprived off
water. Now a day, when population is increasing day by day
and resources are limited, there is severe need of these things.
 Entrepreneurial Team:
In this team, all the people who are involved in
producing the product will be included. This team consists of
owner, a researcher and engineer who will design the product.
 Financial Summary:
The estimated cost will be Rs. 45000 per machine
and estimated sale price per machine will be Rs. 70,000.
2. BUSINESS DESCRIPTION:
The corporation was formed in 1980 by Mr.
Ali for manufacturing electronic products. Name of the business
is Ali Electronic Corporation. The purpose of the venture is to
provide customers high quality and standardized products with
aim of minimum rejects. The steps that lead to formation of
product are emerging needs of today that resources are limited
and population is increasing rapidly and water is most
important source of living. Without water even life cannot be
imagined. So in order to save resources we should derive
resources to increase these natural resources.
The firm is currently operating in
established market as it is producing routine electronic
products, but now, as it has launched new product that is
totally different so it has now tested new market.
The purpose of Ali Corporation is to
introduce that machine which will filter air particles and then
produce water from humid air. The nature of firm is to produce
filtered water at lower cost to provide it to those who are
deprived off water.
3. PRODUCTS:
It is a device that extracts water from humid air. It
extracts water particles through condensation and then it
pressurizes the air by absorbing humidity of air. Sicilia gel,
zeolite and some desiccant substances like lithium will be used
to extract water. Cost of per machine that will extract water 25
liter is Rs.25000.
4. MARKET RESEARCH AND ANALYSIS:
This section of feasibility plan summarizes
following points.
  Potential Customers:
The potential customers of the device are people
of upper middle and elite class, whose occupation is mainly
Satellite town, Faisalabad road etc. where the water is not able
to use and they have to buy water that is costly. The estimated
average income of potential customers is Rs.60, 000. The age of
customers for the product lies between 30 to 60 years.
 Markets:
As the firm manufactures electronic products, so the
market for device is electronic market. And as far as window of
opportunity is concerned, so obviously it exists because there is
severe need of these types of devices now days.
 Competitors:
The existing competitors in the market are some
electronic companies like Samsung, Haier, and Dawlance etc.
each competitor has its own strengths and weaknesses. For
example if we take Samsung Electronics, it dominates in
Smartphone market. And its weakness is that it is dependent on
American markets. And number of competitors can increase
when the innovated product will be launched in market.
 Market Niche:
 The product is geographically positioned. The market
is segmented for those areas where water is not available or if
available then not able to use for cooking or other purposes.
 Pricing System:
Low prices with frequent sales offering discounts will
be offered to promote sales. Method of distribution of product
will be such that product will be sold through retail outlets to
customers and wholesalers will buy from company.
 Methods of Distribution:
Product will be sold to customers through factory
and retail outlets. Wholesalers will buy product from company
and sell to retailers whereas in factory outlet product will be
directly sold from factory to customers at comparatively low
prices.
 Sales Forecast:
The product that will lead in market is Automatic
Water Generator. The estimated sales for one month after
launch of product are 10 machines. It is estimated that sale will
increase after 1st month due to increase in awareness of
product.
5. MARKET PLAN:
 Following points are addressed in market plan described
as follows:
 Prices:
The retail price per machine will be Rs.45000. Cash
discounts will be offered to those who purchase on credit.
Moreover, for those who will buy through lease or monthly
installments, a markup of 12% will be received.
 Promotions:
In this step, all those efforts are included to aware
people about product. So the product will be advertised
through banners, billboards, newspaper, adds on mobile and TV
 Service and Warranty Considerations:
Maintenance service will be provided to customers free
of cost for 2 months after sale and afterwards, the service will
charge Rs.1000 per machine. Moreover, warranty for 2 years
will be provided that in case if the device doesn’t work
properly, and it is proved that company is at fault then
company will replace that with new one.
 Market Leadership:
The way through which company will lead the market
is the launch of its new product just mentioned above. It is the
first product ever entered in market and at its initial stage, the
product will be priced a little high and when the competitors
will introduce the product in market then the price will low to
lead the market.
6. OPERATIONS PLAN:
Following points are included in it:
 Facilities:
Initially company will lease the manufacturing plant but
the land of factory will be purchased. Equipments that will
extract water include a compressor which circulate refrigerant
with the help of condenser, evaporating coil which will cool the
surrounding air, desiccant substances include Sicilia gel and
zeolite etc. cost for installation of equipment per machine is
Rs.15000.
 Inventory Management:
Before the launch of product in market, company
will manufacture 20 machines. If company remains successful
to attract customers then it will manufacture more machines
according to demand. The technique to manage production will
be Just in Time inventory management system in which units
will be produced according to demand just at time.
 Human Resource Requirement:
 Different types of employees will be needed
according to work needs. It includes engineer, research
scientist, and all those personnel who will purchase
equipments, materials, install those material and finally make
the device.
 Insurance Issues:
The manufacturing plant will be insured as well as the
building of factory will also be insured. As far as the employees
and personnel are concerned, their lives will also insure.
7. ENTERPRENEURIAL TERM:
In this team, all the people who are involved in
producing the product will be included. This team consists of
owner, a researcher and engineer who will design the product.
8. FINANCIAL DOCUMENTATION:
Following is the projected Income Statement for
next three years.

Income Statement:

YEAR 1 YEAR 2 YEAR 3

Revenue 10800000 18900000 27000000
Cost of Goods Sold 4800000 7200000 12000000
Gross Profit 6000000 11700000 15000000
Office Expenses 120000 1440000 120000
Utility expenses 240000 360000 600000
Depreciation 600000 600000 600000
expenses
Total OPERATING 960000 1104000 1440000
EXPENSES
OPERATING INCOME 141156 721968 267048
EBIT 581156 11317968 13827048
Interest Expenses 343692 315660 295920
Tax 280092 493116 737436
NET INCOME 54688464 10509192 12793692