Feasibility Analysis for

“Dhivehi Lonumirus”
Munch Pvt Ltd

Mariyam Shahudha
TABLE OF CONTENTS
Table of Contents.............................................................................................................................1

Executive Summary.........................................................................................................................2

Introduction.....................................................................................................................................3

SWOT Analysis.................................................................................................................................4

Strength.......................................................................................................................................4

Weakness.....................................................................................................................................4

Opportunities...............................................................................................................................4

Threats.........................................................................................................................................4

Cash Flow Analysis...........................................................................................................................5

Financing..........................................................................................................................................6

Investment Analysis.........................................................................................................................7

Evaluation of Feasibility...................................................................................................................8

Conclusion........................................................................................................................................9

References.....................................................................................................................................10
EXECUTIVE SUMMARY
This feasibility study explores the potential to introduce a new product called “Dhivehi
lonumirus” to the local market of Maldives. The following detailed study of the costs involved in
setting up such a business product along with expected sales and overheads shows the
potential for such a product in Maldivian market.

Further, the Net Present Value and Payback Period of the business model is explored to arrive
at an conclusion on the feasibility of the product.
INTRODUCTION
Majority people of Maldives use ‘lonumirus’ on their traditional meal. As well as they use it for
grilling fish. We are going to introduce new product called “Dhivehi lonumirus” to the local
market. We are going to sell this product through local retail stores all over the country to chefs
of restaurants, local chefs and resorts and general households. We are going to make ‘Dhivehi
lonumirus’ by using onion, chilies, coconut pulp, cumin, pepper and curry leaves.

This report will include how we can proceed with this proposal. How we will be getting budget
required to proceed with this project. Financial details will be included where we will know the
cash flow and from that we can identify which year we will be able to recover what we have
invested to this business. Also, from payback period calculation we will know the length of time
it takes to recover the initial cash outlay of a project. Also, ARR (accounting rate of return) will
be calculated using the formula. This value will represent the percentage rate of return
expected on an investment.

Net Present Value (NPV) will be calculated which will give the feasibility of this business. So, we
will know if this is feasible to carry on or if this business is a bad business to stop.

A SWOT analysis is carried out to identify the impact or the opportunities which will be very
helpful to carry out this project.

Overall conclusion incudes overall business ideas and how this will help to sell the product
through local retail stores all over the country.
SWOT ANALYSIS
SWOT (strengths, weaknesses, opportunities, and threats) analysis is a framework used to
evaluate a company's competitive position and to develop strategic planning (David, 1993). A
SWOT analysis is intended to assist a realistic, fact-based, data-driven examination of an
organization's, initiative's, or industry's strengths and weaknesses.

Below is comprehensive SWOT analysis for “Dhivehi lonumirus” which is planned to introduce
to local market. There are lots of strength and opportunities in this proposed business.

Strength
 Well established company with other food product lines
 Local employees with knowledge of local food
 Good online presence with social media activity

Weakness
 Less experience in making “lonumirus”
 High supplier costs
 Limited access to funds

Opportunities
 Establish industry standards of such products
 Become industry benchmark
 Establish ecommerce website
 Free delivery with B2B connection with REDBOX

Threats
 Many big competitors in the market with better financing options available to them
 Other similar products in market
CASH FLOW ANALYSIS
The projected cash flows for the four-year period shows positive growth throughout. The
detailed cash flows for the four-year period are attached as appendix 1.

Below are the initial startup costs associated with the business;

# Details Amount (MVR)

1 Industrial Electric Mixer 22,000
2 Mixing Cups 3,400
3 Packing Machine 5,200
4 Labelling Machine 2,800
5 Chiller (Storage) 16,000
6 Computers (Laptop + Monitor) for Office (2 Systems) 24,000
7 Office Furniture 24,000
8 Rent (Rent + Advance + Security Deposit) 60,000
TOTAL 157,400
FINANCING
Based on the previously discussed startup costs and running costs associated with start of this
new product the best option for financing is a low interest loan from SME Development Finance
Corporation (SDFC). Specifically, their new startup loan named “‘Fashaa Viyafaari’’ loan. This
loan has the lowest interest rate, grace period and extended loan repayment options (SDFC,
2023).
INVESTMENT ANALYSIS
As the below summary of projected cash flow shows the closing cash and cash equivalents at
the end of 4th year is MVR 457,612.22, and the Net Present Value (NPV) with a discount rate of
7% for the projected cash flows is MVR 366,573.30

The discount rate is set at 7% based on the published interest rate by Maldives Monetary
Authority (MMA) (Trading Economics, 2023). This assumption is made due to lack on industry
data in Maldives.

The Payback Period is calculated by dividing cost of investment by the average annual cash
flow. The total investment required is MVR 157,400 and the average annual cash flow is MVR
114,403.06, thus the Payback Period is 1.38 years.
EVALUATION OF FEASIBILITY
A feasibility study is conducted to confirm the probability of completing the project
successfully. It considers all the aspects of the project, including economic, legal, operational,
and technical. To determine the feasibility of the project, there are several factors are taken
into consideration, such as the cost of the project and the return on investment (revenue, sales,
and more). But a feasibility study isn’t just confined to measuring and forecasting financial gains
from a project. It entirely depends on the industry.

As discussed above and shown by the projected cash flows, this new product would be a great
success. Based on the data available and the expected market conditions it has a very high
probability of success with a quick return on investment.

The finance required for this project is MVR 157,400 for the setup costs and this can be
financed with the initial working capital needs with a loan of MVR 200,000 from SDFC. The loan
can be taken with a grace period of 10 months and a repayment period of 4 years, during which
the repayment would be estimated at MVR 5,792 per month. This is assuming that the interest
rate would be 6%, which is low compared to other banks.
CONCLUSION
The product we are going to introduce is “Dhivehi lonumirus”. This can be a very successful
product for the local market of Maldives. The exacted distribution channels are via retail and
wholesale channels to households, restaurants, resorts, etc. The cash flow forecasts show
positive growth along with a strong NPV. The expected payback period is 1.38 years, which is
quite good for a business. This would be a good business to invest in with low risk factors.
REFERENCES
CFI Team. (2023, March 23). Feasibility Study. Retrieved from Corporate Finance Institute:
https://corporatefinanceinstitute.com/resources/management/feasibility-study/

David, F. (1993). Strategic Management (4th ed.). New York: Macmillan Publishing Company.

Eldring, J. (2009). Porter's (1980) Generic Strategies, Performance and Risk. Diplomica Verlag.

Gerdeman, D. (2022, September 1). Types of Business Risks and Ideas for Managing Them.
Retrieved from American Express:
https://www.americanexpress.com/en-us/business/trends-and-insights/articles/7-
business-risks-every-business-should-plan-for/

Hill, C. W., & Jones, G. R. (2011). Essentials of Strategic Management. Cengage Learning.

Porter, M. E. (1980). Competitive Strategy. The Free Press.

SDFC. (2023). Financing Options. Retrieved from SME Development Finance Corporation:
https://sdfc.mv/Home/En

Sherman, F. (2019, February 4). Risks of Starting a New Business. Retrieved from CHRON:
https://smallbusiness.chron.com/risks-starting-new-business-4195.html

Trading Economics. (2023, March). Maldives Interest Rate. Retrieved from Trading Economics:
https://tradingeconomics.com/maldives/interest-rate