A REPORT ON KRISHNA BOOK STORE (BOOK STORE BUSINESS)

SUBJECT: NEW ENTERPRISE MANAGEMENT PREPARED BY: RASIK BHANDERI (09034) BHAGWATI CHAUDHARY (09007) BHARAT KOTADIYA (09008) AMIT LUVANA (09047) (SEMESTER-III) PROJECT GUIDED BY: Dr. (PROF.) H. J. JANI SWATI MEHTA SUBMITTED TO G. H. PATEL P.G. INSTITUTE OF BUSINESS MANAGEMENT MBA DEPARTMENT SARDAR PATEL UNIVERSITY VALLABH VIDYANAGAR- 388120. ANAND

PREFACE

As a part of the curriculum activities, every student has to undergo various practical aspects of the subjects to get an edge on the subject. In the similar context, the college has assigned to prepare a business plan to attract investors to invest in your business. This report contains brief about the activities we performed for the preparation of this plan.

This report aims to provide entire information regarding opening of a Book store, the market feasibility, financial feasibility, technical feasibility and other parameters regarding to it.

The following page also contains the various reasons attracting why investors should invest into our organization.

ACKNOWLEDGMENTS

We would like to thank all the people who helped us for making this research possible.

Firstly, we would like to express our sincere gratitude towards the Professor H. J. Jani for allowing us to conduct this study.

We would also like to appreciate the tradition of our Institute, G.H.P.I.B.M., which encourages such activities. We gratefully acknowledge the value guidance and useful suggestion offered by faculties of my college.

We would like to thank the entire GHPIBM Team, who during the study helped us with their valuable thoughts and inputs.

INDEX SR. NO. 1 2 3 4 5 6 7 8 9 10 11 12 PARTICULARS Introduction Personal Information Present Status and Market Potential Types of unit and site selection Cost of Project Means of Finance Preliminary and Preoperative expenses Manpower Requirement Infrastructural Facilities Administrative Expenses Break Even Calculation Project Implementation Schedule PAGE NO.

SR. NO. 1. 2. 3. 4. 5. 6. 7. 8.

PARTICULARS Requirement of plant and machinary Requirement of Raw Material Working Capital Requirement Depriciation Calculation Interest Calculation Cost of Production and Profitability Cash Flow Statement IRR

PAGES NO.

1. INTRODUCTION

An entrepreneur is one of the important segments of economic growth. Basically he is a person responsible for setting up a business or an enterprise. An entrepreneur is the person who does not follow the ordinary course. The word comes from a French word, which means an undertaker. In the ancient times the people who collected the taxes were called entrepreneur. But in the modern times economist like Joseph Schumpeter called entrepreneurs the corner stone of economic development and prosperity in an economy. Modern day America is a live example right from the Rock Fellers to Henry Ford. In the study of New Enterprise management we study the various aspects of how to become a successful entrepreneur. Preparing a business plan is one of key factors of attracting investors to invest in your business venture. Without a proper business plan it would be very hard for a systematic procedure to organize the entire firm. So studying this subject with a pragmatic approach is very necessary. So here in our report we are presenting a business plan of opening up a Book store to attract investors to invest in our store. The name of our organization is Krishna Book Store. Krishna Books is a start-up used bookstore in the Vallabh Vidyanagar, Mota bazaar area. It is the goal of the company management to acquire local market share in the used bookstore industry through low price, a dominant selection of products, a competitive variety of services including a buyback/trade program and hard to find book search, plus a relaxing, friendly environment that encourages browsing and reading.

2. PERSONAL INFORMATION ABOUT PROMOTERS NAME: Telephone No: Date of Birth: Educational Qualification: ADDRESS: YOUR STRENGTH THE FIELD: RASIK J. BHANDERI 09726129697 12/09/1983 B.B.A.(MARKETING), MBA (Finance) S-8, Param Appartment, B/H Isckon Temple, Vallabh Vidyanagar-388120. IN Experience to the market of more than five years

NAME: Telephone No: Date of Birth: Educational Qualification: ADDRESS: YOUR STRENGTH THE FIELD: NAME: Telephone No: Date of Birth: Educational Qualification: ADDRESS: YOUR STRENGTH THE FIELD:

BHAGWATI PRASAD CHAUDHARY 09537918192 08/04/1984 B.E. (E.C.), MBA(MARKETING) D-45, University Staff Colony, V.V. Nagar-388120. IN

IN

NAME: Telephone No: Date of Birth: Educational Qualification: ADDRESS: YOUR STRENGTH THE FIELD:

IN

3. PRESENT STATUS AND MARKET POTENTIAL 4. TYPES OF UNIT AND SITE SELECTION OBJECTIVES 1. To provide books and magazines for all age groups. 2. To provide better services to the customers. 3. To provide better sitting facility to the customers for reading. 4. To provide silent and cozy environment to the customers. 5. To provide customers a friendly and homely environment for reading. 6. Earn approximately Rs. 85, 00,000 in sales by Year. 7. Pay owners a reasonable salary while running at a profit. MARKET ANALYSIS We believe that education is a key element for the growth of the country. Government are providing budget in manufacturing educational institution in different discipline in towns and villages. So, the business of book store will never decline as the people needs books in order to complete there education as well as to face different competition to get their job in their respective field. So according to the previous market record the business of book store are growing every year and there will be increase in the market share of books in future too.

Our market is facing a decline in growth over the past two years. This is attributed to the overall weak economy. Book store industry sales rose only 3.6% for 2002 whereas overall Indian retail sales grew by 4.3%. Management believes that the economic slump may be an advantage to the used bookstore industry. As customers cut back on purchasing, used bookstores will look more attractive to customers who still wish to purchase books. Therefore, management believes this may be a good time to get into the industry and gain market share. Used bookstores serve the entire purchasing population of its geographical area but focuses on the customer who desire to purchase books/music at a discount price and, with regards to books, often do not see a long-term attachment to the product. Our main competitors are: Barnes & Noble (which holds approximately 22% nationwide market share), Borders (which holds approximately 15%), and other local new and used bookstores.

5. COST OF PROJECTS

The cost of project has been estimated at total Rs. 80, 00,000. PARTICULARS Furniture Air conditioner C.C. Camera Computer printer Other fixed expenses Preliminary & Preoperative Expenses Working capital margin : Inventories(Books and Stationary) Total
AMOUNT RS.

10,00,000 1,60,000 50,000 50,000 5,000 30,000 2,00,000 14,54,600 50,50,400 80,00,000

6. MEANS OF FINANCE
SR. NO. PARTICULARS 1 PROMOTERS CONTRIBUTION 2 LONG TERM LOAN Total AMOUNT RS. 60,00,000 20,00,000 80,00,000

CAPITAL STRUCTURE

MR. RASIK BHANDERI MR. BHAGWATI CHAUDHARY MR. BHARAT KOTADIYA MR. AMIT LUVANA BORROWED CAPITAL

15,00,000 15,00,000 15,00,000 15,00,000 20,00,000

7. PRELIMINARY AND PREOPERATIVE EXPENSES PARTICULARS Legal Expenses and security Fees (Deed) Project Report Preparation Establishment Expenses Electrification and Deposit Inauguration Expenses and other Expenses Total AMOUNT RS. Rs. 1,50,000 Rs. 11,500 Rs. 1,500 Rs. 12,000 Rs. 25,000 2,00,000

8. MAN POWER REQUIREMENTS SR. NO. 1. 2. 3. PARTICULARS NOS. SALARY PER MONTH RS. 10,000 3000 800 YEARLY RS. 2,40,000 72,000 9,600 3,21,600

Partner Cum Officer 2 Peon 2 Swiper 1 Total

9. INFRASTRUCTURE FACILITY: (UTILITIES AND OVERHEAD) SR. NO. 1. 2. PARTICULARS Electricity Transportation Total 10. ADMINISTRATIVE EXPENSES MONTHLY RS. 1,500 2000 YEARLY RS. 18,000 24,000 42,000

SR. NO. 1. 2. 3. 4. 5. 6.

PARTICULARS Stationary and Printing Postage Telephone/Telegram/Fax Travelling Office Rent Miscellaneous Total Rs.

MONTHLY RS. 1,000 500 1,000 1,000 15,000 500 19,000

YEARLY RS. 12,000 6,000 12,000 12,000 1,80,000 6,000 2,28,000

11. ANALYSIS OF BREAK EVEN POINT:

SR. NO.
A. B.

PARTICULARS
Sales Realisation Variable Costs - Books, Magazine, etc - Stationeries -sweepers Total Variable cost Fixed Costs -Repair and maintenance -Rent -Taxes -Insurance -Salary and Wages -Administration Expenses -Interest on Term Loan -Depreciation Total Fixed Cost Contribution (A-B) Contribution Margin Break even point (BEP) (in %) = Fixed Cost/Contribution BEP in Rs. = Sales X BEP IN %

AMOUNT RS.
45,00,400 15,50,000 9,600

TOTAL AMOUNT RS.

90,00,000

60,60,000 50,000 1,80,000 1,50,000 25,000 3,12,000 2,28,000 1,80,000 2,03,000 13,28,000 29,40,000 32.67% 45.17% 40,65,300

C.

D. E. F. G.

12. PROJECT IMPLEMENTATION SCHEDULE: SR. NO. PARTICULARS ON WEEK/DAY DATE

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12.

Product Selection & Completion of market survey Project Report Preparation Site Selection Loan Application for Fixed Assets Furniture ordered to be placed Installation of furniture and fixtures Power connection Recruitment of manpower Electrification and Erection Purchase books and stationary Sales Arrangement Marketing

12 days 5 days 10 days

1/8/2010 to 12/08/2010 13/08/2010 to 18/08/2010 19/08/2010 to 29/08/2010

ANNEXURE-1 COST OF FURNITURE AND OTHER FIXED ASSETS: SR. NO. 1. 2. 3. 4. 5. 6. PARTICULARS WITH SPECIFICATION Furniture Air cooler (split) C.C. T.V. camera computer Printers Other fixed Expenses Total fixed Assets Name Address of fixed Assets: 1. Furniture: 2. Air cooler: 3. C.C.T.V. Camera: 4. Computer, Printer: NOS. REQUIRED 2 2 2 1 COST PER ASSETS 80,000 25,000 25,000 5,000 TOTAL VALUE 10,00,000 1,60,000 50,000 50,000 5,000 30,000 12,50,000

ANNEXURE-2 FINISHED MATERIALS (BOOKS AND STATIONERY)

SR. NO. 1.

NAME OF MATERIAL REQUIRED

QUANTITY

VALUE RS.

Name and Address of material Supplier: 1. 2. 3. 4.

ANNEXURE-3 WORKING CAPITAL REQUIREMENT: CALCULATION OF WORKING CAPITAL PARTICULARS AMOUNT Rs. TOTAL Amount Rs. cash 5,40,000 Account Receivable 5,00,000 Inventories 10,00,000 Less: Account Payable 6,00,000 Net Working Capital 14,40,000 Margin for Working Capital @40% of net working capital 5,76,000

PARTICULARS Goods Stock for _________ Days stock Receivable for ___________ Days Working Expenses for one month (Utilities-5000, Wages-800 and Salaries-26000) Total: Less: Credit Against Purchase Net Working Capital Margin for Working Capital @25% of net working capital

AMOUNT RS. 31,800

ANNEXURE-4 DEPRECIATION CALCULATION: SR. NO. PARTICULARS PERCENTAGE OF YEARLY DEPRECIATION DEPRECIATION

1. 2. 3. 4. 5. 6.

Furniture Computers Printer C.C.T.V. Camera Air Cooler Other fixed Assets Total Depreciation

15% 20% 20% 20% 20% 10%

RS. 1,50,000 10,000 1,000 10,000 32,000 3,000 2,06,000

ANNEXURE-5 INTEREST CALCULATION: SR. NO. 1. 2. 3. PARTICULARS Interest on Term loan Interest on W/C loan Interest on other Deposits, If any Total interest PERCENTAGE OF INTEREST 9% YEARLY INTEREST RS. 1,80,000 1,80,000

ANNEXURE-6 COST OF PRODUCTION & PROFITABILITY: SR. NO. A) 1. 2. 3. 4. 5. 6. 7. 8. B) 1. 2. C) D) 1. 2. 3. E) F) PARTICULARS Cost Of Production Material purchase or inventories purchase Utilities Repairs and maintenance Rent, Taxes and Insurance Salary and Wages Administration Expenses Interest on Term loan Depreciation Total Cost of Production Income Total Sales income Scrape Value and other Total Income Gross Profit (B-A) Income Tax Flat Rate @30% Education Cess @2% (% of Flat Value) Secondary and higher secondary education cess (% of flat value) Total Income tax Net Profit YEARLY 60,50,400 12,000 50,000 3,55,000 3,21,600 2,28,000 1,80,000 2,06,000 74,03,000 90,00,000 10,000 90,10,000 16,07,000 4,82,100 9,642 4,821 4,96,563 11,10,437

G) H)

Owners' compensation provision Profit Retain in Business

5,55,218.5 5,55,218.5

CASH FLOW STATEMENT CASH FLOW STATEMENT FOR THE EAR ENDED 31ST MARCH, 2010 SR. NO. PARTICULARS AMOUNT Rs. TOTAL 1. CASH FROM OPERATING ACTIVITY Net profit Before tax 16,07,000 Add: Depreciation 2,06,000 Less: Tax paid 4,96,563 Add: Account Payable 6,00,000 Less: Account Receivable 5,00,000 Cash From Operating Activity 14,16,437 2. Cash From Investment Activity Less: Investment in fixed Assets 12,50,000 Less: Preliminary Expenses 2,00,000 Cash From Investing Activity 14,50,000 3. Cash From Financing Activity Add: Proceed From Owners equity 60,00,000 60,00,000 Cash From Financing Activity 60,00,000 CASH AND CASH EQUIVALENTS AT THE 59,66,437
END OF THE YEAR

FINANCIAL POSITION OF FIRM:

LIABILITIES BALANCE SHEET AS ON 31ST MARCH 2010 AMT TOTAL ASSETS AMT TOTAL

Owners Contribution: Rasik

15,00,000

Bhagwati 15,00,000 Bharat 15,00,000 Amit 15,00 000 60,00,000 Current Assets: Profit Retain in Business 5,55,218.5 Account receivables Owners' compensation 5,55,218.5 Cash provision Inventories Current liability: Account payable 6,00,000 6,00,000 Preliminary Expenses 71,10,437

Fixed Assets: Furniture and other fixed Assets Less: Depreciation

12,50,000 2,06,000 15,05,000 5,40,437 38,21,000 58,66,437 2,00,000 71,10,437 10,44,000

Strategy and Implementation Summary Krishna's competitive edge will be the lower prices we will charge our customers and the dominant selection above what our used bookstore rivals can offer. This is based on management's industry knowledge, greater capitalization and excellent location. One of the most critical element of Krishna's success will be its marketing and advertising. In order to capture attention and sales our company will use prominent signs at the store locations, billboards, media bites on local news, and radio advertisements to capture customers. We expect an average 4.5% increase in sales during the first three years as we establish ourselves in the community. After that we assume a much higher average growth of between 10%-15% growth over the next five years with growth then tapering off to the industry average of 2.5% from year to year. These figures may seem very high, but considering the level of initial sales and the growth possibilities, management actually considers this to be conservative.

Future Expansion 1. Open our chain stores in various cities of Gujarat like Vadodara, Surat and Ahmedabad. 2. To conduct various promotional schemes in these cities. 3. Diversification through theme lounges. We plan to open our chain stores in various cities of Gujarat like Vadodara, Surat and Ahmedabad. For this we will be conducting various promotional schemes in these cities to make our presence feel among the people. Also in our prevalent store in Anand we will be opening cafe coffee day centre and a separate section of kids so they can make themselves comfortable and play and study there.

CONCLUSION Looking at the present scenario of the current market position everyone including youth and fall age people are interested in getting updated through books and music. Our theme book store Krishna would be a very rare combination that provides books along with good ambience to sit and read. From our financial analysis it is clear that we are making huge profit and it is increasing year on year. Accordingly, we are planning our future expansion by capturing new markets which will enhance our market performance.

Finding the Initial Inventory When you are looking to start a bookstore business, the first thing you must look for is where your initial inventory will come from. Getting your initial inventory for a used bookstore can be both fun and inexpensive and it doesn't have to eat away at your cash flow.

First you should check with your local library; libraries are always looking to get rid of extra or outdated stock. Make a deal to give a percentage of your profits to the library as a donation and you can guarantee yourself a supply of stock. Another place to find initial inventory is your home; this is especially true if you have a huge collection or duplicates. Family members can also help with this. You can also hit the garage sales and flea markets. These people are always looking to get rid of items, and if you wait until near the end of the day and make an offer for the entire lot, usually you can get it. You dont need lots of books to start; try aiming for 250 and spending under $1 per book. Finding the Fixtures The next large expense, before finding the location, is the fixtures. These do not need to be bookshelves to start. You can start a bookstore business with shelves, tables, crates or counters. Get creative in this area and it will help make your store both inexpensive and creative. Find fixtures the same way you look for books. Libraries and stores often look to replace displays. Tables and crates can be found at yard sales and flea markets. Paint and decorative items can always make everything match. Imagination is free and can go a long way in making the store inviting. Finding the Fixtures The next large expense, before finding the location, is the fixtures. These do not need to be bookshelves to start. You can start a bookstore business with shelves, tables, crates or counters. Get creative in this area and it will help make your store both inexpensive and creative. Find fixtures the same way you look for books. Libraries and stores often look to replace displays. Tables and crates can be found at yard sales and flea markets. Paint and decorative items can always make everything match. Imagination is free and can go a long way in making the store inviting. Storage Issues When starting a used bookstore, one of the biggest concerns when first starting out will be storage. Do not rent storage. Use basements, attics, garages, and spare patios. Stack everything in boxes. Have the books organized by category if possible. This will help you with setting up and selling later. Another issue you will have when you open the store is where to put the piles of books you will be getting from people bringing in their used books. This will be not only your biggest method of gathering inventory, but your biggest use of space. If not done properly, storage can become a nightmare. Finding the Site This will be the largest initial startup cost for your bookstore. Go for the smallest space you can start with. If you find a space under 1000 square feet take it. Consider the possibilities of expansion later; especially if you find space in a strip center or mall. Small spaces which are too small for other types of stores are excellent for a bookstore. Look for landlords which have long standing unused small spaces; make a deal to do renovations in exchange for security or first month's rent. Offer a percent of the income for lower rates if you think it would work. Shop around before settling, and you can still find a place for $500. If you live in a commercial area, consider rezoning your garage or porch. Marketing When you start a bookstore business, marketing is important, but doesnt need to be expensive. You can get much of it for free if you look and use your brain. Remember the library you made a book deal with? Use them for marketing and getting the word out. Use huge window-sized signs in your new store to announce yourself.

Make your own flyers, and pass them out to all of the schools; this is especially useful when you work with colleges and college bookstores. Students always look for cheap textbooks. Dont buy advertising when opportunities are all around you.

2010 SOURCES OF FUNDS Shareholders' Funds a) Share capital rasik bhanderi- 15,00,000 bhagwati chaudhary- 15,00,000 amit luvana- 15,00,000 bharat kotadiya- 15,00,000 b)Reserves and Surplus Loan Funds a) Secured Loan b) Unsecured loan Current Liabilities a) Accounts Payable Total Application of Funds

2011

2012

2013

2014

60,00,000 7,86,726 10,00,000

60,00,000 11,50,850 16,80,000

60,00,000 1726261 15,43,200

60,00,00 0 26,37,935 13,87,24 8

60,00,000 3881334 12,09,463

5,07,500 62,94,226

6,34,375 74,65,225

7,30,415 79,99,876

8,35,835 8758403

10,22,595 10113392

Fixed Assets Telephone connection Interior Decoration a) Gross Block Less: depreciation Net Block Investments Current Assets : a) Inventories b) Cash and Bank Balances c) Loans and Advances i) Rent

1,500 140,000 299000 29,900 2,69,100

1500 140000 269100 26910 242190

1500 140000 242190 24219 217971

3000 140000 217971 21797 196174

3000 140000 196174 19617 176557

37,17,900 21,27,226

36,94,500 33,48,535

31,84,788 4,417,117

28,82,256 5,499,97 3 1,80,000

20,17,668 7,739,167

1,80,000

1,80,000

1,80,000

1,80,000

TOTAL ASSETS

62,94,226

74,65,225

79,99,876

8758403

10113392

Particulars Revenues Books Music Cold Drink Coffee Membership clients Total Cost of Sales Payroll Telephone Books Music Coffee Cold drink

2010

2011

2012

2013

2014

4992000 2640000 102000 24000 150000 7908000

6240000 3300000 165600 30000 185000 9920600

7800000 4123200 201000 37500 224000 12385700

10531200 5566800 248400 48720 281000 16676120

14217600 7516800 264000 63360 360000 22421760

300000 25000 3432000 1560000 4800 20400

540000 30000 4290000 1950000 6000 32700

604800 36000 5362500 2436000 7500 39450

708000 36000 7240200 3288600 9744 49050

708000 36000 9774600 4440000 12672 52500

Repair Maintenance Electricity Rent Miscellaneous Total Gross Profit Marketing Expenses Pamphlet Newspapers Promotional Scheme Banners Total Administrative Depreciation Operating Income Interest on loan PBT Taxes (33.66%) Net Profit

10000 180000 720000 24000 6276200 1631800

8000 189000 720000 26400 7792100 2128500

8000 189000 720000 29040 9432290 2953410

8000 198450 720000 30492 12288536 4387584

8000 198450 720000 32016 15982238 6439522

24000 72000 0 48000 144000 20000 29900 1437900 252000 1185900 399174 786726

12000 57600 0 36000 105600 25000 26910 1970990 235200 1735790 584940 1150850

9000 43200 0 27000 79200 30000 24219 2819991 216048 2603943 877682 1726261

7000 28800 200000 27000 262800 35000 21797 4067987 194215 3873772 1338452 2535320

6000 14400 250000 20000 290400 40000 19617 6089505 169325 5920180 2038846 3881334