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Pre-Feasibility Study

(Footwear Retail Outlet Ladies & Children)




Small and Medium Enterprises Development Authority
Ministry of Industries & Production
Government of Pakistan
www.smeda.org.pk
HEAD OFFICE
4th Floor, Building No. 3, Aiwan-e-Iqbal Complex, Egerton Road,
Lahore
Tel: (92 42) 111 111 456, Fax: (92 42) 36304926-7
helpdesk@smeda.org.pk

REGIONAL OFFICE
Punjab
REGIONAL OFFICE
Sindh
REGIONAL OFFICE
Khyber Pakhtunkhwa
REGIONAL OFFICE
Balochistan
3
rd
Floor, Building No. 3,
Aiwan-e-Iqbal Complex,
Egerton Road Lahore,
Tel: (042) 111-111-456
Fax: (042) 36304926-7
helpdesk.punjab@smeda.org.pk
5
th
Floor, Bahria
Complex II, M.T. Khan Road,
Karachi.
Tel: (021) 111-111-456
Fax: (021) 35610572
helpdesk-khi@smeda.org.pk
Ground Floor
State Life Building
The Mall, Peshawar.
Tel: (091) 111-111-456
Fax: (091) 5286908
helpdesk-pew@smeda.org.pk
Bungalow No. 15-A
Chaman Housing Scheme
Airport Road, Quetta.
Tel: (081) 2831623, 2831702
Fax: (081) 2831922
helpdesk-qta@smeda.org.pk


Note: All SMEDA Services / information related to PM's Youth Business Loan are Free of Cost
May, 2014


Pre-Feasibility Study Footwear Retail Outlet - Ladies and Children (Rs. 1.31 Million)
TABLE OF CONTENTS

1 DISCLAIMER ......................................................................................................................................... 2
2 PURPOSE OF THE DOCUMENT ........................................................................................................ 3
3 INTRODUCTION TO SMEDA ............................................................................................................. 3
4 INTRODUCTION TO SCHEME .......................................................................................................... 4
5 EXECUTIVE SUMMARY ..................................................................................................................... 4
6 BRIEF DESCRITION OF PROJECT & PRODUCT .......................................................................... 5
7 CRITICAL FACTORS ........................................................................................................................... 5
8 INSTALLED & OPERATIONAL CAPACITIES ................................................................................ 5
9 GEOGRAPHICAL POTENTIAL FOR INVESTMENT .................................................................... 5
10 POTENTIAL TARGET MARKETS / CITIES .................................................................................... 6
11 PROJECT COST SUMMARY .............................................................................................................. 6
11.1 PROJ ECT ECONOMICS ...................................................................................................................... 6
11.2 PROJ ECT FINANCING ........................................................................................................................ 6
11.3 PROJ ECT COST ................................................................................................................................. 7
11.4 SPACE REQUIREMENT ...................................................................................................................... 7
11.5 FURNITURE & FIXTURE ................................................................................................................... 8
11.6 OFFICE EQUIPMENT ......................................................................................................................... 8
11.7 RAW MATERIAL REQUIREMENTS .................................................................................................... 9
11.8 HUMAN RESOURCE REQUIREMENT .................................................................................................. 9
11.9 REVENUE GENERATION ..................................................................................................................10
11.10 OTHER COSTS ...............................................................................................................................10
12 CONTACT DETAILS OF GOVERNMENT INSTITUTIONS ........................................................ 11
13 ANNEXURE .......................................................................................................................................... 12
13.1 INCOME STATEMENT ......................................................................................................................12
13.2 BALANCE SHEET.............................................................................................................................13
13.3 CASH FLOW STATEMENT ................................................................................................................14
13.4 USEFUL PROJ ECT MANAGEMENT TIPS ............................................................................................15
13.5 USEFUL LINKS ................................................................................................................................15
14 KEY ASSUMPTIONS ........................................................................................................................... 17


Pre-Feasibility Study Footwear Retail Outlet - Ladies and Children (Rs. 1.31 Million)
1 DISCLAIMER
This information memorandum is to introduce the subject matter and provide a
general idea and information on the said subject. Although, the material included
in this document is based on data/information gathered from various reliable
sources; however, it is based upon certain assumptions, which may differ from
case to case. The information has been provided on as is where is basis
without any warranties or assertions as to the correctness or soundness thereof.
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, its employees or agents do not assume any liability for any
financial or other loss resulting from this memorandum in consequence of
undertaking this activity. The contained information does not preclude any further
professional advice. The prospective user of this memorandum is encouraged to
carry out additional diligence and gather any information which is necessary for
making an informed decision including taking professional advice from a qualified
consultant/technical expert before taking any decision to act upon the
information.
For more information on services offered by SMEDA, please contact our website:
www.smeda.org.pk

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Pre-Feasibility Study Footwear Retail Outlet - Ladies and Children (Rs. 1.31 Million)
2 PURPOSE OF THE DOCUMENT
The objective of the pre-feasibility study is primarily to facilitate potential
entrepreneurs in project identification for investment. The project pre-feasibility
may form the basis of an important investment decision and in order to serve this
objective, the document/study covers various aspects of project concept
development, start-up, production, marketing, finance and business
management.
The purpose of this document is to facilitate potential investors in Footwear
Retail Outlet (Ladies and Children) by providing them a general understanding
of the business with the intention of supporting potential investors in crucial
investment decisions.
The need to come up with pre-feasibility reports for undocumented or minimally
documented sectors attains greater imminence as the research that precedes
such reports reveal certain thumb rules; best practices developed by existing
enterprises by trial and error, and certain industrial norms that become a guiding
source regarding various aspects of business set-up and its successful
management.
Apart from carefully studying the whole document one must consider critical
aspects provided later on, which form basis of any investment decision.

3 INTRODUCTION TO SMEDA
The Small and Medium Enterprises Development Authority (SMEDA) was
established in October 1998 with an objective to provide fresh impetus to the
economy through development of Small and Medium Enterprises (SMEs).
With a mission "to assist in employment generation and value addition to the
national income, through development of the SME sector, by helping increase
the number, scale and competitiveness of SMEs, SMEDA has carried out
sectoral research to identify policy, access to finance, business development
services, strategic initiatives and institutional collaboration and networking
initiatives.
Preparation and dissemination of prefeasibility studies in key areas of investment
has been a hallmark of SME facilitation by SMEDA.
Concurrent to the prefeasibility studies, a broad spectrum of business
development services is also offered to the SMEs by SMEDA. These services
include identification of experts and consultants and delivery of need based
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Pre-Feasibility Study Footwear Retail Outlet - Ladies and Children (Rs. 1.31 Million)
capacity building programs of different types in addition to business guidance
through help desk services.

4 INTRODUCTION TO SCHEME
Prime Ministers Youth Business Loan scheme, for young entrepreneurs, with an
allocated budget of Rs. 5.0 Billion for the year 2013-14, is designed to provide
subsidised financing at 8% mark-up per annum for one hundred thousand
(100,000) beneficiaries, through designated financial institutions, initially by the
National Bank of Pakistan (NBP) and the First Women Bank Ltd. (FWBL).
Small business loans up to Rs. 2 million with tenure up to 8 years, inclusive of
grace period of 1 year and a debt : equity of 90 : 10 will be disbursed to SME
beneficiaries across Pakistan, covering; Punjab, Sindh, Khyber Pakhtunkhwa,
Balochistan, Gilgit Baltistan, Azad J ammu &Kashmir and Federally Administered
Tribal Areas (FATA).

5 EXECUTIVE SUMMARY
Footwear Retail Outlet is proposed to be set up in urban areas. The outlet would
cater to the demand for ladies and children footwear, belonging to middle and
upper middle income groups.
The demand for footwear is constantly rising and there are a number of local
manufacturers producing good quality footwear. The consumers are becoming
increasingly quality conscious and seek products offering value for money. This
trend has led to strong growth in retail footwear outlets all across Pakistan.
The focus of the business would be to provide casual, semi-formal and formal,
quality footwear at affordable prices. Shoes are assumed to be purchased from
different subcontracted manufacturers and sold at the retail outlet.
The total project cost for setting up a footwear retail outlet is estimated at Rs.
1.31 million out of which Rs. 0.62 million is capital cost and Rs. 0.69 million is
working capital. The project NPV is calculated to be around Rs 4.23 million, with
an IRR of 37% and payback period of 3.85 years. This business will provide
employment opportunity to 5 individuals including the owner/manager. The outlet
will remain operational for 12 hours per day, and with estimated sales of 9,200
pairs of shoes in the first year. The legal business status of this project is
proposed as Sole Proprietorship.


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Pre-Feasibility Study Footwear Retail Outlet - Ladies and Children (Rs. 1.31 Million)
6 BRIEF DESCRITION OF PROJECT & PRODUCT
This document provides information for setting up a Footwear Retail Outlet for
ladies and children. It involves purchase of ladies and children shoes from any
local manufacturer and selling it through a retail outlet established in a rented
premise under a brand name, in any of the urban cities of Pakistan. The retail
outlet will have a covered area of 600 sq. ft. Shoes of the required quality and
quantity will be sourced from wholesale markets and small shoe manufacturers.
The product mix would include ladies and children shoes in all sizes. This
product mix is divided into further categories; casual, semi-formal and formal
footwear which includes pumps, heels, coat shoes, sandals, slippers, etc. made
of leather and other materials. The three categories among ladies and children
shoes are further classified by proposed selling prices, ranging between Rs. 700
Rs. 1,100 for ladies shoes and Rs. 325 Rs. 650 for children shoes.

7 CRITICAL FACTORS
Following factors are critical for the success of footwear retail business:
Develop strong linkages with suppliers for sourcing good quality products at
competitive prices.
Efficient management of stock to keep inventory cost at the minimum.
Selection of a central location keeping in mind the target market.
Knowledge about the latest market trends.
Induction of trained sales personnel for efficient customer handling.
Strong competition with similar shops in the same commercial area.

8 INSTALLED & OPERATIONAL CAPACITIES
Since the proposed venture is a trading business, there are no installed
capacities per se. The turnover will depend on seasonal sales and ability of the
venture to attract customers through quality and price incentives. Experienced
and efficient sales staff also plays a critical role in determining the sales revenue
of the business. The business is expected to have a capacity to sell 12,000
shoes in a year.
The proposed project assumes to have a stock of 9,600 pairs at 80% capacity,
out of which 400 pairs would be kept in inventory while remaining 9,200 pairs will
be sold during first year of operation. The outlet will operate for 12 hours daily.
9 GEOGRAPHICAL POTENTIAL FOR INVESTMENT
There is significant domestic demand for footwear in all the urban and semi-
urban areas, year round. Thus, the outlet can be opened in any urban location in
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Pre-Feasibility Study Footwear Retail Outlet - Ladies and Children (Rs. 1.31 Million)
the country, where customers have an easy access to the outlet, like shopping
malls, busy markets or similar high traffic.

10 POTENTIAL TARGET MARKETS / CITIES
Most of the shoe manufacturing units and a number of shoe stores are present in
cities like Lahore, Karachi, Faisalabad, Quetta, Hyderabad, Peshawar, Sahiwal,
Gujranwala and Rawalpindi. Hence, these cities and other comparable cities in
the country are considered as a suitable option for setting up a footwear retail
outlet.

11 PROJECT COST SUMMARY
A detailed financial model has been developed to analyze the commercial
viability of Footwear Retail Outlet under the Prime Ministers Youth Business
Loan scheme. Various cost and revenue related assumptions along with results
of the analysis are outlined in this section.

The projected Income Statement, Cash Flow Statement and Balance Sheet are
attached as appendix.
11.1 Project Economics
A target sale of 9,200 shoe pairs would be achieved by footwear retail outlet in
the first year. The following table shows internal rate of return, payback period
and NPV:
Table 1: Project Economics
Description Details
Internal Rate of Return (IRR) 37%
Payback Period (yrs) 3.85
Net Present Value (NPV) Rs. 4,231,339

Returns on the investment and its profitability are highly dependent on the
efficiency of the entrepreneur in selecting the appropriate business location,
hiring trained sales persons and maintaining good quality, in terms of shoe
designs and customer services.


11.2 Project Financing
Following table provides details of the equity required and variables related to
bank loan:
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Pre-Feasibility Study Footwear Retail Outlet - Ladies and Children (Rs. 1.31 Million)
Table 2: Project Financing
Description Details
Total Equity (10%) Rs. 131,053
Bank Loan (90%) Rs.1,179,476
Markup to the Borrower (%age/annum) 8%
Tenure of the Loan (Years) 8
Grace Period (Years) 1
11.3 Project Cost
Following requirements have been identified for operations of the proposed
business.
Furniture and fixture is required for display of shoes and storing of stock. Office
equipment such as computer, printer and air conditioner are essential for routine
business operations and for giving a professional outlook to attract customers
and achieve customer satisfaction.
Table 3: Capital Investment for the Project
Capital Investment Rs.
Furniture & fixtures 560,500
Office equipment 46,000
Pre-operating costs 18,270
Total Capital Costs 624,770
Working Capital
Equipment / Spare part inventory 3,065
Opening inventory 426,400
Upfront building rent 120,000
Cash 136,295
Total Working Capital 685,760
Total Investment 1,310,529

11.4 Space Requirement
The area for the outlet has been calculated on the basis of space required for
display area, store, management space and washroom. Following table shows
calculations for project space requirement.

Table 4: Space Requirement
Space Requirement (in ft.) Rs/Sq. Ft.
Area (Sq.
Ft.)
Amount (Rs.)
Shop 50 600 30,000
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Pre-Feasibility Study Footwear Retail Outlet - Ladies and Children (Rs. 1.31 Million)

11.5 Furniture & Fixture
Following table shows costs such as furniture, interior designing and electrical
equipment etc.
Table 5: Furniture & Equipment Requirements
Description
Quantity /
Area
Cost /
Rate
Amount / Other
Furniture

Executive Chairs 1 5,000 5,000
Counter 1 20,000 20,000
Seating for customers 5 3,000 15,000
Floor equipment (baskets, mirrors
etc.)
1 15,000 15,000
Interior Designing

Shoe Racks with glass material 300 500 150,000
False ceiling, front door & paint 300 400 120,000
Flooring 300 sq ft @ 175 300 175 52,500
Electrical equipment

Air conditioner (1.5 ton split) 1 50,000 50,000
Generator (3 KVA) 1 40,000 40,000
Electric wiring & lighting

30,000
Bracket fans 4 2,500 10,000
Shoe store

Shoe Racks with iron & Wood 150 200 30,000
Lighting & Wiring

5,000
Wooden Stools 2 1,500 3,000
Admin Office

Desks and Chairs 1 15,000 15,000
Total Furniture & Equipment

560,500
11.6 Office Equipment
Computer and printer are required for routine office operations and record
maintenance. Similarly, barcode reader and inventory management software is
necessary for keeping track of inventory and for ease of reference for both
customer and owner.

Table 6: Office Equipment Costs
Description Quantity / Area Cost / Rate Amount / Other
Computers 1 25,000 25,000
UPS 1 10,000 10,000
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Pre-Feasibility Study Footwear Retail Outlet - Ladies and Children (Rs. 1.31 Million)
Computer printer (s) 1 10,000 10,000
Telephones 1 1,000 1,000
Total Office Equipment

46,000

Rental vehicle is proposed as a mode of transportation of goods.
11.7 Raw Material Requirements
Shoes will be purchased from manufacturers and wholesalers. Purchase price
per unit is depicted in the following below:

Table 7: Cost of Material
Purchase price per unit year 1 - Ladies
shoes
Qty %age Price (Rs)
Pair A 20% 725
Pair B 50% 600
Pair C 30% 475
Purchase price per unit in year 1 - Children
shoe

Pair A 20% 425
Pair B 50% 325
Pair C 30% 225
11.8 Human Resource Requirement

Table 8: Human Resource Requirement
Description No. of Employees
Salary / Employee
/ Month
Store manager/ Owner 1 15,000
Salesmen 2 11,000
Helper 2 10,000
Total 5

The above table provides details of human resource required in the 1
st
year to
run this project. Salaries of all employees are estimated to increase at 10%
annually.




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Pre-Feasibility Study Footwear Retail Outlet - Ladies and Children (Rs. 1.31 Million)
11.9 Revenue Generation
Table 9: Revenue Generation in 1
st
Year of Operation*
Product Unit Qty
Sales
Price
(Rs./Unit)
First Year
Sales
Revenue
(Rs)
Ladies Shoes
Pair A No. 1,472 1,088 1,600,800
Pair B No. 3,680 900 3,312,000
Pair C No. 2,208 713 1,573,200
Sub-Total 6,486,000
Children Shoes
Pair A No. 368 638 234,600
Pair B No. 920 488 448,500
Pair C No. 552 338 186,300
Sub-Total 869,400
Total 7,355,400
* Figures are rounded off at zero decimal place.
11.10 Other Costs
Other costs include fixing and repairing material which is estimated at 0.50% of
sales revenue, transportation expenses 2.0% of cost of shoes purchased, sales
commission is estimated at 2.0% of revenue and lump sum monthly provision of
Rs. 10,000 for promotional expenses.

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Pre-Feasibility Study Footwear Retail Outlet - Ladies and Children (Rs. 1.31 Million)
12 CONTACT DETAILS OF GOVERNMENT INSTITUTIONS

Principal
Govt. Institute of Leather
Technology, Gujranwala
P.O Anwar Industry G.T.Road,
Gujranwala
Phone, 055 9230056

Principal
Footwear Training Institute
Plot #24, Phase 5, Hayatabad,
Peshawar
091 9217244
Principal
National College of Arts
4- Shahrah-E-Qaid-E-Azam, Lahore
Tel: +92 42 99210599, 99210601

Principal
Pakistan School of Fashion Design
51-J /3, J ohar Town, Lahore
TEL: +92 42 3531 5401 08

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Pre-Feasibility Study Footwear Retail Outlet - Ladies and Children (Rs. 1.31 Million)
13 ANNEXURE
13.1 Income Statement






Income Statement
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Revenue 7,355,400 8,395,984 9,569,225 10,893,802 12,386,396 14,067,724 15,964,909 17,916,992 19,708,691 21,679,561
Cost of sales
Cost of purchasing shoes 5,116,800 5,840,560 6,656,815 7,577,849 8,616,595 9,785,781 11,105,916 12,463,995 13,710,394 15,081,433
Direct labor 504,000 554,400 609,840 670,824 737,906 811,697 892,867 982,153 1,080,369 1,188,406
Fixing and repair material 36,777 41,980 47,846 54,469 61,932 70,339 79,825 89,585 98,543 108,398
Direct Electricity 257,040 282,744 311,018 342,120 376,332 413,965 455,362 500,898 550,988 606,087
Transport rental expense 102,336 116,811 133,136 151,557 172,332 195,716 222,118 249,280 274,208 301,629
Generator expense 148,500 163,350 179,685 197,654 217,419 239,161 263,077 289,384 318,323 350,155
Total cost of sales 6,165,453 6,999,845 7,938,341 8,994,473 10,182,516 11,516,658 13,019,164 14,575,296 16,032,825 17,636,108
Gross Profit 1,189,947 1,396,139 1,630,884 1,899,330 2,203,880 2,551,066 2,945,745 3,341,697 3,675,866 4,043,453
General administration & selling expenses
Administration expense 180,000 198,000 217,800 239,580 263,538 289,892 318,881 350,769 385,846 424,431
Sales commission 147,108 167,920 191,384 217,876 247,728 281,354 319,298 358,340 394,174 433,591
Building rental expense 360,000 396,000 435,600 479,160 527,076 579,784 637,762 701,538 771,692 848,861
Communications expense(phone, fax, mail, internet, etc.) 24,000 26,400 29,040 31,944 35,138 38,652 42,517 46,769 51,446 56,591
Officeexpenses (stationary, entertainment, janitorial services, etc. 42,000 46,200 50,820 55,902 61,492 67,641 74,406 81,846 90,031 99,034
Promotional expense 120,000 108,000 97,200 87,480 78,732 70,859 63,773 57,396 51,656 46,490
Depreciation expense 71,383 71,383 71,383 73,800 73,800 73,800 76,598 76,598 76,598 79,837
Amortization of pre-operating costs 3,654 3,654 3,654 3,654 3,654 - - - - -
Subtotal 948,145 1,017,557 1,096,882 1,189,396 1,291,159 1,401,983 1,533,235 1,673,256 1,821,443 1,988,835
Operating Income 241,802 378,582 534,002 709,934 912,721 1,149,083 1,412,510 1,668,440 1,854,423 2,054,618
Gain / (loss) on saleof officeequipment - - 27,600 - - 45,750 - - 59,862
Earnings BeforeInterest & Taxes 241,802 378,582 561,602 709,934 912,721 1,194,834 1,412,510 1,668,440 1,914,285 2,054,618
Interest expenseon long termdebt (Project Loan) 97,896 89,625 78,754 66,980 54,230 40,421 25,466 9,269 - -
Interest expenseon long termdebt (Working Capital Loan) - - - - - - - - - -
Subtotal 97,896 89,625 78,754 66,980 54,230 40,421 25,466 9,269 - -
Earnings BeforeTax 143,906 288,957 482,848 642,953 858,492 1,154,413 1,387,044 1,659,171 1,914,285 2,054,618
Tax - - 8,285 24,295 51,274 95,662 130,556 179,334 230,357 258,423
NET PROFIT/(LOSS) AFTER TAX 143,906 288,957 474,563 618,658 807,218 1,058,751 1,256,487 1,479,837 1,683,928 1,796,195
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Pre-Feasibility Study Footwear Retail Outlet - Ladies and Children (Rs. 1.31 Million)






13.2 Balance Sheet


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 & Bank 136,295 199,526 282,067 451,882 767,502 1,207,138 1,754,732 2,490,514 3,391,638 4,548,318 9,549,433
Closing stock 268,063 304,341 345,145 391,064 442,718 500,724 566,051 633,709 697,079 766,787
Equipment sparepart inventory 3,065 3,673 4,396 5,255 6,273 7,481 8,914 10,505 12,133 14,013 -
Opening inventory 426,400 535,385 671,229 840,510 1,051,296 1,313,341 1,639,567 2,024,067 2,449,121 2,963,436 -
Pre-paid building rent 120,000 132,000 145,200 159,720 175,692 193,261 212,587 233,846 257,231 282,954 -
Total Current Assets 685,760 1,138,647 1,407,232 1,802,511 2,391,828 3,163,940 4,116,525 5,324,982 6,743,831 8,505,800 10,316,220
Fixed assets
Furniture& fixtures 560,500 504,450 448,400 392,350 336,300 280,250 224,200 168,150 112,100 56,050 -
Officeequipment 46,000 30,667 15,333 53,251 35,501 17,750 61,644 41,096 20,548 71,361 47,574
Total Fixed Assets 606,500 535,117 463,733 445,601 371,801 298,000 285,844 209,246 132,648 127,411 47,574
Intangible assets
Pre-operation costs 18,270 14,616 10,962 7,308 3,654 - - - - - -
Total IntangibleAssets 18,270 14,616 10,962 7,308 3,654 - - - - - -
TOTAL ASSETS 1,310,529 1,688,379 1,881,928 2,255,420 2,767,282 3,461,940 4,402,369 5,534,228 6,876,479 8,633,211 10,363,794
Current liabilities
Accounts payable 233,944 269,514 310,291 357,119 410,932 472,792 543,300 617,048 689,852 624,240
Total Current Liabilities - 233,944 269,514 310,291 357,119 410,932 472,792 543,300 617,048 689,852 624,240
Other liabilities
Deferred tax - - - - - - - - - -
Long termdebt (Project Loan) 1,179,476 1,179,476 1,048,498 906,649 753,026 586,653 406,471 211,334 - - -
Long termdebt (Working Capital Loan) - - - - - - - - - - -
Total Long TermLiabilities 1,179,476 1,179,476 1,048,498 906,649 753,026 586,653 406,471 211,334 - - -
Shareholders' equity
Paid-up capital 131,053 131,053 131,053 131,053 131,053 131,053 131,053 131,053 131,053 131,053 131,053
Retained earnings 143,906 432,863 907,426 1,526,084 2,333,302 3,392,054 4,648,541 6,128,378 7,812,307 9,608,501
Total Equity 131,053 274,959 563,916 1,038,479 1,657,137 2,464,355 3,523,107 4,779,594 6,259,431 7,943,360 9,739,554
TOTAL CAPITAL AND LIABILITIES 1,310,529 1,688,379 1,881,928 2,255,420 2,767,282 3,461,940 4,402,369 5,534,228 6,876,479 8,633,211 10,363,794
Liabilities & Shareholders' Equity
Assets
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Pre-Feasibility Study Footwear Retail Outlet - Ladies and Children (Rs. 1.31 Million)
13.3 Cash Flow Statement



Cash FlowStatement
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 143,906 288,957 474,563 618,658 807,218 1,058,751 1,256,487 1,479,837 1,683,928 1,796,195
Add: depreciation expense 71,383 71,383 71,383 73,800 73,800 73,800 76,598 76,598 76,598 79,837
amortization of pre-operating costs 3,654 3,654 3,654 3,654 3,654 - - - - -
Closing stock (268,063) (36,278) (40,804) (45,919) (51,654) (58,006) (65,326) (67,658) (63,371) (69,708)
Equipment inventory (3,065) (608) (723) (859) (1,019) (1,208) (1,433) (1,590) (1,628) (1,881) 14,013
Opening inventory (426,400) (108,985) (135,844) (169,281) (210,787) (262,045) (326,226) (384,499) (425,054) (514,315) 2,963,436
Pre-paid building rent (120,000) (12,000) (13,200) (14,520) (15,972) (17,569) (19,326) (21,259) (23,385) (25,723) 282,954
Accounts payable 233,944 35,570 40,778 46,827 53,813 61,860 70,509 73,747 72,804 (65,612)
Cash provided by operations (549,465) 63,231 213,519 364,915 469,243 606,010 789,420 930,920 1,112,458 1,228,040 5,001,115
Financing activities
Project Loan - principal repayment - (130,978) (141,849) (153,623) (166,373) (180,182) (195,137) (211,334) - -
Additions to Project Loan 1,179,476 - - - - - - - - - -
Issuanceof shares 131,053 - - - - - - - - - -
Cash provided by / (used for) financing activities 1,310,529 - (130,978) (141,849) (153,623) (166,373) (180,182) (195,137) (211,334) - -
Investing activities
Capital expenditure (624,770) - - (53,251) - - (61,644) - - (71,361) -
Acquisitions
Cash (used for) / provided by investing activities (624,770) - - (53,251) - - (61,644) - - (71,361) -
NET CASH 136,295 63,231 82,541 169,815 315,621 439,636 547,593 735,782 901,124 1,156,679 5,001,115
SMEDA Services / Information related to PMs Youth Business Loan are FREE OF COST - 14


Pre-Feasibility Study Footwear Retail Outlet - Ladies and Children (Rs. 1.31 Million)
13.4 Useful Project Management Tips
Marketing
Advertisement & Promotion: Business promotion and dissemination through
banners and launch events is highly recommended. Product brochures should
be developed from good quality service providers.
Sales & Distribution Network: Expert's advise and distribution agreements
are required with shoes manufacturers.
Price - Bulk Discounts, Cost plus Introductory Discounts: Price should
never be allowed to compromise quality. Price during introductory phase may
be kept lower and used as a promotional tool. Product cost estimates should
be carefully documented before price setting
Human Resources
Adequacy & Competencies: Skilled and experienced staff should be hired.
Performance Based Remuneration: Efforts to manage human resource cost
should be focused through performance measurement and performance based
compensation.
Training and Skills Development: Training to staff should be provided in
areas of customer services and sales.
13.5 Useful Links
Prime Ministers Office, www.pmo.gov.pk
Small and Medium Enterprise Development Authority, www.smeda.org.pk
National Bank of Pakistan (NBP), www.nbp.com.pk
First Women Bank Limited (FWBL), www.fwbl.com.pk
Government of Pakistan, www.pakistan.gov.pk
Ministry of Industries & Production, www.moip.gov.pk
Ministry of Education, Training & Standards in Higher Education,
http://moptt.gov.pk
Government of Punjab, www.punjab.gov.pk
Government of Sindh, www.sindh.gov.pk
Government of Khyber Pakhtunkhwa, www.khyberpakhtunkhwa.gov.pk
Government of Balochistan, www.balochistan.gov.pk
Government of Gilgit Baltistan, www.gilgitbaltistan.gov.pk
Government of Azad J ammu Kashmir, www.ajk.gov.pk
SMEDA Services / Information related to PMs Youth Business Loan are FREE OF COST - 15


Pre-Feasibility Study Footwear Retail Outlet - Ladies and Children (Rs. 1.31 Million)
Trade Development Authority of Pakistan (TDAP), www.tdap.gov.pk
Securities & Exchange Commission of Pakistan (SECP), www.secp.gov.pk
Federation of Pakistan Chambers of Commerce and Industry (FPCCI),
www.fpcci.com.pk
State Bank of Pakistan (SBP), www.sbp.org.pk

SMEDA Services / Information related to PMs Youth Business Loan are FREE OF COST - 16


Pre-Feasibility Study Footwear Retail Outlet - Ladies and Children (Rs. 1.31 Million)
14 KEY ASSUMPTIONS

Table 10:Capacity Uti lization Assumptions
Starting Capacity Utilization 80%
Annual Growth Rate 3%
Maximum Capacity Utilization for the project 100%

Table 11: Economy-Related Assumptions
Electricity price growth rate 10%
Wage growth rate 10%


Table 12: Cash Flow Assumptions
Accounts payable cycle 15 (Days)


Table 13: Financial Assumptions
Project life (Years) 10
Debt 90%
Equity 10%
Interest rate on long-term debt 8%
Debt tenure (Years) 8
Grace Period (Years) 1


Table 14: Revenue Related Assumptions
Sale price growth rate 10%
Purchase price growth rate 10%
Percentage of Ladies shoes 80%
Percentage of children shoes 20%


SMEDA Services / Information related to PMs Youth Business Loan are FREE OF COST - 17