1

CHAPTER I
INTRODUCTION

1.1 Background
Sisneri is a place located in Makawanpur district where most of the people of Nepal are unaware
of. It is located 55 km from Balkhu, Kathmandu and 20 km from Hetauda. Basically, it is the
route for the travelers connecting Kathmandu and Hetauda on the way to Dakshinkali. It is a
location where thousands of people travel from the route where the route is one of the shortest
routes connecting Hetauda and Kathmandu. The place is surrounded by the hills and it is mainly
preferred by the tourists as they are very fond of trekking and hiking.
Kulekhani Hotel and Resort shall be located at Sisneri offering lodging for vacations, weekends,
and over-night trips along with fooding for the travelers who travel on the route. The guests will
find the resort very peaceful along with the easily noticeable facilities that provide a comfortable
and valuable time for the customers that simply lasts in their memory. The Resort will be well
equipped with solar; every room will be well furnished and ventilated. Around the Resort there
will be attractive garden and the rooms will have outdoor terrace. The Resort also provides
rooms for the travelers in the form of cottage. The Resort provides comfortable rooms,
considerate and friendly environment to the travelers who may be single or with family and
friends.
The Resort will be focusing on middle class family, youth couple and youngsters within most of
the major cities of the country who rarely have time for holidays which they want to spend in a
precious manner and also the travelers outside the country who wants to visit places within
limited budget. The Resort will be located near the Kulekhani Dam that will also help to attract
the customers for the location. As the Resort is located near to the River bank, the guests can
easily walk up to the river and have a pleasant time and beautiful scenario as well.

1.2 Location
The Resort will be located at Sisneri V. D. C. Ward no. 8, Makawanpur district. This place is one
of the major place connecting Hetauda and Kathmandu. The place is also significant on from the
2

future perspective that sooner in the future the Fast Track is going to be opened. It is also one of
the places that highlights tourism that attracts the tourists as a destination for trekking and hiking.
The resort also provides the transportation facilities for the customers when they are in need. The
Location of the Resort is also said to have a sacred connection and the local people are religious
and traditional.

1.3 Mission
Mission statement of Kulekhani Hotel and Resort is to exceed customers expectations in every
sense by turning moments and to provide an exceptional hospitality experience, in spectacular
surroundings, by delivering quality service in an atmosphere of comfort, openness and
friendliness.

1.4 Objectives
Kulekhani Hotel and Resort will provide accommodation and fooding to both internal and
external tourists in affordable price. For this, certain objectives are to be achieved:
To provide healthy and safe stay for the guests.
To provide quality food and beverages.
To help guests get various other facilities available at Sisneri in terms of
trekking, hiking, conference meetings, cycling, etc.
To achieve customer satisfaction and get the repeated customers in our Resort.
To make profit and to maximize the owners equity.

1.5 Keys to Success
Key to success of Kulekhani Resort and Hotels will be to make effective implementation of the
business plan. The concept of the Resort is to provide safe stay, quality food and valuable service
which eventually will grab attention of most of the tourists and the travelers. This ultimately will
help the owner to establish its brand image and to earn profit to lead the business success.
Location of the Resort will also be appealing to the travelers with peaceful environment and at
the same time proximity to the Kulekhani Dam and Dakshinkali Temple. Also the key to success
for the Resort is undoubtedly the revenue generated by providing quality service to the customers
3

by optimum utilization of the capacity available. We excellence in what we promise and we have
enthusiasm in whatever we do.
4

CHAPTER II
MANAGEMENT AND ORGANIZATION STRUCTURE

2.1 Business Ownership
Kulekhani Resort and Hotel is a partnership firm owned by four persons who shall be investing
31.88% and remaining 68.12% will be on debt. This will help the partners to utilize and properly
allocate the resources accordingly. Although all the partners are from different fields, they are
well experienced and are working in the field of legal and business aspect.

2.2 Organization structure
Kulekhani Hotel and Resort will be established by a four partners and will have a hotel manager
for its operation. The organization structure for the Resort can be illustrated as

Proprietors

Manager


Administration Marketing Operation Kitchen/Restaurant

-Accountant -Marketing -Cleaner -Head cook
-Store keeper Manager -Gardener -Cook helper
-Receptionist -Room boy -Waiter
-Peon
-Security guard



5

2.3 Human Resource
The Resort will be well staffed with 1 manager, 2 marketing manager, 1 accountant, 2
receptionists, 3 room boy, 2 peon, 2 security guard, 2 gardener in administrative, marketing and
operation department and on the side of Kitchen and Restaurant department there will be 2 head
chef, 3 cook helper, 4 cleaner and 10 waiter. These staffs would be sufficient for the operation
and management of the Resort.

2.4 Legal Framework
Kulekhani Hotel and Resort is a partnership firm registered at Gharelu Tatha Sana Udyog Office,
Hetauda. It will also be registered at Inland Revenue office with PAN number.

6

CHAPTER III
PRODUCT AND SERVICES

In this competitive environment there are many hotels and resorts providing best services to their
customers. The Kulekhani Hotel and Resort will also differentiate itself through the cutting edge
facilities and services provided. The Resort will expertise on Market research related to the
travelers category, competitors and services preferred by the customers. The Resort will also
make the marketing and business plan and also conduct Cash flow analysis on a timely basis.
Regarding the service to the travelers the Resort will maintain the relationship with travel
agencies in Kathmandu and Hetauda and various major cities of Nepal so that it can provide
early booking facilities to the travelers from various places.

3.1 Product description
Keeping in mind about the internal and external travelers who prefer to travel on budget for a
short period of holidays, the Resort will be providing AC and non AC rooms at reasonable price.
There will be 20 AC rooms and 20 non AC rooms. The rooms will be spacious and luxurious as
well along with outdoor terrace. The Resort will have its own restaurant for the guests located
inside with various tastes of food and beverages which will be hygienic and tasty as well. Food
will contain veg and non-veg items with dishes like Nepalese, Chinese, American and
Continental. Along with this the special dish of the Resort will be Kulekhani special Thali,
served with whole fish.

3.2 Service description
Keeping the increasing trend of internet accessibility and users, there will be free Wifi, internet
and e-mail facilities for the customers. The next best facility for the customers is that the Resort
will be providing halls for conferences and fishing facilities are incorporated where customers
are free to fish and can have them at various costs. Similarly, the Resort also has a facility for
trekking, hiking and cycling as the route is a perfect location for the same. It will also make the
customers available with useful books, newspaper and novels for alternative time pass. The
Resort has also a cafeteria that encourages couples and youngsters to pass by and spend some
7

time. The staffs will also be trained in such a way that they will be very polite and friendly with
the customers.

3.3 Technology
The Resort will be equipped by e-mail and internet facilities. In the long run it is planning to
have its own websites for its advertisement and online booking system. Free wifi, internet
facilities is its current program for the customers.

3.4 Future plan
For the expansion of the Resort and thinking about the changing preference and tastes of the
travelers, the Resort will be diversifying its facilities in near future. There will be a website of
the Resort so that travelers can study about it and make online bookings and payments from any
place, any time they wish. On long run, the Resort will not only book the events for travelers but
also organize those events and schedule the plan for the customers accordingly. The Resort will
also purchase its own tourists buses for to provide better transportation facilities to and from
various major cities to the.

8

CHAPTER IV
MARKET ANALYSIS SUMMARY

Market for a Lodging and Fooding industry at Sisneri is not competitive. There are no any
resorts located at Sisneri which will be one of the greatest advantage for the business and deliver
superior services to its customers. As there is no any resort nearby, there is a most probable
chance that a customer if satisfied will visit the resort again and again. So, the resort focuses on
targeting those potential customers who are repetitive customers and could be retained.
Similarly, we focus and target both the internal and external tourists who could be one of the
major sources of income. Since. Similarly, the Resort can target the business persons who
frequently travel through the route.

4.1 Market Segmentation
The market for lodging industry in Makawanpur is limited only to Hetauda. Kulekhani Hotel and
Resort could be another best place for internal and external tourists. People of any ages can be
attracted towards the resort for their small visit. There is no certainty that which age group
travelers will be visiting the Resort but basically it will attract the youth and middle class
families. Since the Resort is new entrant for the market it cannot be the market leader. Also the
trend of the area where the Resort will be set up is not known as Kulekhani Hotel and Resort will
be the first Resort being established in the area. It will be the follower with some of the distinct
facilities and services in short run and in long run it will try and be the market leader. Thus at the
beginning the Resort will work on average level.

4.1.1 Demographic Segmentation
Changing nature and trend of demography has been acting in favor of the hotel industries in
Nepal. Kulekhani Hotel and Resort identifies the spending nature of youths and their desire for
experimental travel. Also the increasing number of middle class families in Nepal, India and
China has also changed the pattern of travel. So, the Resort will be chiefly focusing on the
demographic segmentation.
9

4.1.2 Geographic Segmentation
Geographic segmentation consists of climate, region, population and size. The population of
travelers travelling in the route is increasing day by day. Sisneri can also be one of the next best
destination for travelers who travel for fun on lower budget for short period of holidays. Since
the climate of the Sisneri is good and pleasant and the market growth opportunity is higher, it is
best place for business.

4.2 Target Market
The target market for the Kulekhani Hotel and Resort will eventually be the middle class
families around the Kathmandu valley, Hetauda and other people travelling on the way. The
target group of the Resort is the travelers travelling on budget, middle class families, and also
internal and external tourists travelling for short period holidays on limited budget, youth couple
and group of friends. Identification of the target group and their needs are important for the
Resort as these target groups are the basic source of revenue generation.

10

CHAPTER V
MARKETING STRATEGY AND IMPLEMENTATION

The fundamental key to success for the Kulekhani Hotel and Resort is the strategy and
implementation program. To break the status quo and think out of the box to provide distinct
facilities and services will be its strategy to attract travelers and generate good word of mouth
among those who are planning for the visit. Since the objective of the Resort is to provide
valuable service and generate maximum profit, it focuses on the strategic issues faced by it. The
Resort will examine the competitive and growth strategies for the sustainability and growth in
the future. This kind of business is prone to unpredictable shocks like less number of guests in
off season. The Resort will develop a strategy to manage the crisis by organizing the risk
management program.

5.1 SWOT analysis
Understanding the level of predictability and controllability of the Resorts internal and external
environment, it has made its strength, weakness, threats and opportunity analysis.

5.1.1 Strengths
The Kulekhani Hotel and Resort will be the new entrant for the market of Sisneri. Thus, will
provide the travelers with the new tastes of the facilities and services. It can analyze the market
environment and grab the opportunities of the market. The Resort will provide rooms with well-
furnished and AC and also hot water system. The food will be tasty and hygienic identifying the
needs and wishes of customers. The room will also consists outdoor terrace and the Resort will
have a beautiful garden. Trained staff are also the strength of the Resort. As there are no any
resort in the place, it will be the competitive advantage for the Resort.

5.1.2 Weaknesses
Since the Resort is newly established in the market it may not hold the strong connection with
the travelers, travel agencies and the local people. The Resort will not also have website at the
beginning so it may be problematic for the customers also since the infrastructure and technology
11

will not be fully developed at the starting phase. For this, the Resort has to spend more effort and
time on marketing.

5.1.3 Opportunities
There are lots of opportunities for the Resort for expansion based on volume of its business. The
Resort can attract international tourists by contacting with the travel agencies of Kathmandu and
Hetauda. It can also provide new packages of services and differentiate its business. Expansion
of the service line is possible since the market for the Hotel and Resort industries in Nepal is
vast. Since the Resort will only be the resort in the area, there is a huge opportunity to attract the
customers as well as the travelers.

5.1.4 Threats
Since Nepal has been facing a fluctuating political situation it may be possible that the situation
may be worse and eventually hamper the growth and sustainability of the Resort. Another threat
for the resort will be from the new entrants as new Resorts will be established in the area. Due to
this cut throat competition in the future, it may be difficult for the Resort to sustain at the
beginning.

5.2 Macro Environment
Kulekhani Hotel and Resort also will focus in its macro environment. Macro environment
consists of external environment which the Resort cannot control but predict it and act
accordingly in order to grab the opportunities and eliminate the hurdles of the business.

5.2.1 Political Environment
Political ups and downs affect the business of Resorts. When there is smash up situation in the
politics, the Resort will definitely be injured because political situation is somehow the cause for
fluctuating number of internal and external tourists.

5.2.2 Economical Environment
The Resort will contribute to the economic growth of the Makawanpur district and ultimately to
the country as a whole. Since the revenue earned by the Resort will contribute certain portion as
12

the tax revenue for the government and also increase the national income of the country, it will
ultimately help for the economic growth of our country. Similarly, as the Resort will be new in
the area, it also helps in creating employment opportunity for the local people.

5.2.3 Socio-cultural Environment
Sisneri is also regarded as a sacred place with various religious and traditional people live there.
As the people are of different religions and culture, the attitude of the local people matters a lot
in the business.

5.2.4 Technological Environment
Technological advancement is taking place in this era. Since the Resort will be equipped with
Email, Internet and Wifi facilities, it will be able to increase the level of satisfaction of the
customers. The lab will also have its own website in near future for online booking and payment
system.

5.3 Competitive Edge
The potentiality of the tourist arrival and the charm of the local people will added value to the
promoters of the Resort. Competition for the Hotel and Resort does not existing as the Resort
will be the first resort in the area. The resort will be facilitating various auxiliary services like
fishing, hiking, trekking and various other services.

5.4 Marketing Strategy
Marketing plays an important role for the success of the business. The Resort will definitely
recognize the importance of social media which is being popular among people throughout the
world. Social media provides both opportunities and threats to the Resort. Word of mouth is
another essential thing that the Resort will consider by providing best service, quality food and
homely stay. The Resort unquestionably knows that once unsatisfied, customer not only speaks
badly about the Resort but also prevents ten more customers from staying at the Resort. So,
customer satisfaction would be the main focus as a marketing strategy of the Resort. After
customer satisfaction, the Resort will focus on reasonable pricing, staff training and retention and
also will indulge in promotion strategies.
13


5.4.1 Pricing
Reasonable pricing strategy is used to attract more travelers and ensure repeated visit. The price
is set in such a way that middle class families and travelers travelling on limited budget can
afford easily. The AC room will cost Rs 1500 and non AC room will cost Rs 1200 per day of
stay.

5.4.2 People
There will be altogether 34 staffs in the Resort. Staff training and retention will be another
strategy of the Resort. Staff turnover hampers as most percent of the revenue goes on staff salary
and training. Once trained staff is an asset for the business. Not only have this familiar faces
created friendly environment for the repeated visitors. So the strategy would be to retain the
staffs.

5.4.3 Promotion
Hoarding boards will be kept on the main way of Dakshinkali and entrance of Hetauda
connecting Sisneri. There will be business cards and brochures. The brochures will also be kept
at agencies in Kathmandu and Hetauda which will attract travelers attention. For attracting more
travelers the Resort will also provide free Wifi, internet and also provide free of charge booking
facilities for various events and adventures. Very soon, the Resort will also be equipped with
websites for online advertisement and online booking and payment facilities. The Resort will
also be having contract with various business colleges of Kathmandu where it has a direct
contact for the orientation program utilizing the conference hall.

14

CHAPTER VI
FINANCIAL PLAN
6.1 Basic Financial Assumptions
There will be 40 rooms, 20 normal rooms and 20 AC rooms.
Food revenue is expected at 50% of room sales and beverage sales are expected at 50%
of food sales.
It is assumed that 60% capacity will be utilized in average for 7 years and rate of sales
revenue is expected to grow at 10% per annum.
Cost of material for restaurant is expected to be at 60% of the revenue generated from
food sales.
Administrative staff salary is increased by 20% each year and office overhead, utilities,
material consumed and operating salary/wages is expected to increase by 10%.
The interest rate for loan is assumed to be 13%.
A normal working day is 365 days as the Resort will be operated throughout the year.
Stock of goods is expected at 90 days, receivables and creditors are expected at 15 days
each.
Insurance of fixed assets is expected to be 0.5% of the fixed asset cost.
Depreciation is calculated on diminishing method with following rates
Building and civil construction 5%
Machinery and kitchen equipment 15%
Hotel furniture and office equipment 25%
Vehicle 15%
6.2 Fixed Assets Investment
Kulekhani Hotel and Resort is to purchase land to construct a building of its own. This is a
project scheme where everything is constructed after the land is purchased. The total investment
in fixed assets is Rs. 58,030,000 and shown in Annex 1.

15

6.3 Operating Variable Cost
60% of the revenue goes to the purchase of raw material for the restaurant. The variable cost for
operation of the Resort is Rs. 8,741,700 and shown in Annex 2 in detail.
6.4 Annual Fixed Cost
The annual fixed costs includes the cost associated with raw materials, salaries, insurance
premium etc. The total annual fixed costs is Rs. 13,145,150 and shown in Annex 3.
6.5 Revenue
The revenue of the Resort is collected from the sales of Ac and non Ac rooms and also the sales
of food and beverages. The annual sales revenue is Rs. 20,695,500 and the details is shown in
Annex 3.
6.6 Estimation of Working Capital
The net working capital requirement is Rs. 3,625,550 and the details is shown in Annex 4.
6.7 Capital Structure
The total capital structure consists of Rs. 61,655,550 will be raised from debt and equity with the
proportion of 68.12% and 31.88% respectively. The details is shown in Annex 4.
6.8 Net Present Value
The Net Present Value (NPV) is Rs. 1,871,837 and details is shown in Annex 5.
6.9 Break Even Point
The breakeven point for the Resort is the point where there is neither profit nor loss. The Resort
reaches this point at Rs. 22,758,072 and the BEP in occupancy rate is 65.98%. The details is
shown in Annex 5.
6.10 Financial Ratios
The major financial ratios of the Resort includes current ratios, quick asset ratio, net profit ratio,
Gross profit ration, debt to equity ratio, interest coverage ratio, debt to equity ratio, inventory
turnover ratio, debtors turnover ratio and sales growth rate. The details of this calculation are
shown in the Annex 6.
16

6.11 Income Statement
This Income statement shows the performance of the Resort within the seven years of its
operation. Kulekhani Hotel and Resort will be earning profit for the beginning year of its
operation. The loss on the 1
st
year will be Rs. 893,512 and there will be profit from second year
of Rs. 772,766 and on the 7
th
year will be Rs. 8,389,214. The details of income statement is
shown in Annex 7.
6.12 Cash Flow Statement
Cash flow statement shows the details of the sources and uses of the fund for the Resort. The
Resort will go on cash surplus throughout the seven years of operation. Further details of Cash
flows are shown in Annex 8.
6.13 Balance Sheet
Balance sheet is prepared to the position of the Kulekhani Hotel and Resort. The details of the
Assets and Liabilities/equities are shown in this balance sheet. The details of balance sheet are
shown in Annex 9.
6.14 Payback Period
The payback period is 5.13 years. The details is shown in Annex 10.



17

ANNEX
Annex 1
Fixed Capital Requirement

Fixed Capital Total
1 Site Development and Landscaping

Land 10,000,000.00


Total 10,000,000.00
2 Building & Civil Construction 12000 sq. ft. @ 2500 30,000,000.00

Total 30,000,000.00

Water Supply and Sanitation 1% of civil work
300,000.00

Electrification 5% of civil work
1,500,000.00
Total of Building & civil Construction 31,800,000.00
3 Machinery & Kitchen Equipment 3,280,000.00
4 Hotel Furniture & Office Equipment 10,000,000.00
5 Vehicle
a Tata Sumo-1 2,000,000.00
b Motor Cycle-3 450,000.00
Total 2,450,000.00
8 Pre-Operating Expenses :- 500,000.00

TOTAL FIXED CAPITAL REQUIREMENT 58,030,000.00





18


Annex 2
Variable Cost

Description Unit Rate Amount
A Requirement of Raw material for restaurant
60% of
revenue 5,321,700.00

B Utilities
Electricity 360,000.00
Water Supply 120,000.00
Fuel like petrol, diesel & lubricants etc. 600,000.00
1,080,000.00
C Direct Salary/Labor

Head Chef 2 17500.00 420,000.00
Cook Helper 3 12000.00 432,000.00
Cleaner 4 8000.00 384,000.00
Gardener 2 6000.00 144,000.00
Waiter 10 8000.00 960,000.00
Total 2,340,000.00
Total Variable Cost 8,741,700.00









19

Annex 3
Annual Fixed Cost Calculation Sheet

1) Depreciation Amount
Particulars of Assets
A
Building & Civil Construction 12000 sq.
ft. @ 2500

1,590,000.00
B Machinery & Kitchen Equipment

492,000.00
C Hotel Furniture & Office Equipment

2,500,000.00
D Vehicles

367,500.00
Total

4,949,500.00
2) Insurance of Fixed assets @ .5%

237,650.00
3) Indirect Salary/Labor expenses
A Manager

1

15,000.00

180,000.00
B Marketing Manager

2

12,000.00

288,000.00
C Accountant/ Store-Keeper

1

70,000.00

840,000.00
D Receptionist

2

5,500.00

132,000.00
E Room-Boy

3

5,000.00

180,000.00
F Peon

2

5,000.00

120,000.00
G Security guard

2

4,500.00

108,000.00


1,848,000.00
4) Office Overheads
A Stationary & Printing

15,000.00
B Postage, phone, fax, e-mail etc.

30,000.00
C Travelling Allowances

50,000.00
D Donation, guest, relationships
20

expenditures 30,000.00
E Advertisement & Sales Promotion

500,000.00
F Auditing / Consultancies

50,000.00
G Training/Development & Miscellaneous

200,000.00
Total

875,000.00
6) Amortization of pre-expenditures

100,000.00
7) Interest on long term loan @ 13%

5,135,000.00
Total

13,145,150.00


Particulars of Revenue Annual Revenue
No of room Occupancy %
A Room Charge
Non AC Room 1200 20 60%

5,256,000.00
AC room 1500 20 60%

6,570,000.00


11,826,000.00
E Restaurant & Bar Sales
Food Sales
At 50% of
Net Room

5,913,000.00
Beverages Sales
At 50% of
Food Sales

2,956,500.00
Total

8,869,500.00
Total Annual Revenue

20,695,500.00




21

Annex 4
Estimation of Working Capital Requirements

Description
Annual
Requirement
Coverage-
Days
Working
Capital
1 Raw Material

5,321,700.00 90 days

1,312,200.00
2 Receivables

20,695,500.00 15 days

850,500.00
3 Advances for expenses

3,000,000.00 60 days

493,150.68
5 Utilities

1,080,000.00 3 month

270,000.00
6 Indirect Salary/Labor expenses

1,848,000.00 3 month

462,000.00
7 Office Overheads

875,000.00 3 month

218,750.00
8 Insurance of Fixed assets @ .5%

237,650.00 1 year

237,650.00
TOTAL

33,057,850.00 Round off

3,844,250.68

Less: Current Liabilities &
provisions

5,321,700.00 15 days

218,700.00
Net working Capital

27,736,150.00


3,625,550.68

Summary of Capital Structure

Particulars
Total Fund
Required
To be financed by
loan
To be financed by
the company
Fixed Capital

58,030,000.00

40,000,000.00

18,030,000.00
Working Capital

3,625,550.68

2,000,000.00

1,625,550.68
Total

61,655,550.68

42,000,000.00

19,655,550.68
Debts Equity
Ratio 100.00% 68.12% 31.88%



22

Annex 5

Year CFAT PVIF @10%
Present
Value
1 8,360,450 0.9091 7,600,485.095
2 9,681,250 0.8264 8,000,585
3 11,138,650 0.7513 8,368,467.745
4 12,728,518.38 0.683 8,693,578.05
5 14,449,405.26 0.6209 8,971,635.727
6 16,398,695.23 0.5645 9,257,063.456
7 18,628,259.64 0.5132 9,560,022.849


Total PV 60,451,837.92
Less: NCO 58,580,000
NPV 1,871,837.923

Computation of Break Even Point
(Taking Base at 60% Capacity Utilization)
Particulars Amount
Revenue from Sales 20,695,500.00
Less-Variable Cost 8,741,700.00
Contribution margin 57.76%
Fixed Cost 13,145,150.00
BEP in Rs 22,758,072.90
BEP in Capacity Utilization % 65.98%








23

Annex 6
Financial Ratios over seven years



Years 1 2 3 4 5 6 7
Particulars
Current Ratio 17.78 17.72 21.81 25.74 33.38 32.99 36.77
Quick Asset
Ratio 11.78 11.72 15.81 19.74 27.38 26.99 30.77
Net Profit -4.32% 3.39% 9.31% 13.84% 17.28% 20.43% 22.88%
Gross Profit 57.76% 57.76% 57.76% 57.76% 57.76% 57.76% 57.76%
Debt to Equity
Ratio

2.15

1.88

1.57

1.19

0.86

0.57

0.27
Interest
Coverage Ratio

1.73

2.15

2.71

3.52

4.75

7.55

18.56
Debt Service
Ratio( Times)

0.88

1.02

1.18

1.37

1.60

1.41

1.68
Inventory
Turnover Ratio 15.77 17.35 19.08 20.99 23.09 25.40 27.94
Debtors
Turnover Ratio 24.33 26.77 29.44 32.39 35.63 39.19 43.11
Sales Growth
Rate 0 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%











24

Annex 7
Income Statement
Years 1 2 3 4 5 6 7
Particulars
Sales Revenue 20,695,500 22,765,050 25,041,555 27,545,711 30,300,282 33,330,310 36,663,341
Less : Cost of Sales
& Services
Material Consumed 5,321,700 5,853,870 6,439,257 7,083,183 7,791,501 8,570,651 9,427,716
Operation
Salary/wages 2,340,000 2,574,000 2,831,400 3,114,540 3,425,994 3,768,593 4,145,453
Utilities 1,080,000 1,188,000 1,306,800 1,437,480 1,581,228 1,739,351 1,913,286
Total 8,741,700 9,615,870 10,577,457 11,635,203 12,798,723 14,078,595 15,486,455

Gross Profit 11,953,800 13,149,180 14,464,098 15,910,508 17,501,559 19,251,714 21,176,886
Expenditure
Administrative
Staff Salary 1,848,000 2,217,600 2,661,120 3,193,344 3,832,013 4,598,415 5,518,098
Office Overhead
expenses 875,000 962,500 1,058,750 1,164,625 1,281,088 1,409,196 1,550,116
Insurance expenses 237,650 237,650 237,650 237,650 237,650 237,650 237,650
Amortization 100,000 100,000 100,000 100,000 100,000 0 0
Total expenditure 3,060,650 3,517,750 4,057,520 4,695,619 5,450,750 6,245,262 7,305,864
Net Profit before
int.& Dep. 8,893,150 9,631,430 10,406,578 11,214,889 12,050,808 13,006,453 13,871,022
Interest on loan 5,135,000 4,485,000 3,835,000 3,185,000 2,535,000 1,722,500 747,500
Depreciation 4,949,500 4,116,075 3,462,214 2,945,754 2,534,745 2,204,938 1,937,902
Total 10,084,500 8,601,075 7,297,214 6,130,754 5,069,745 3,927,438 2,685,402
25



Net Profit before
Tax -1,191,350 1,030,355 3,109,364 5,084,135 6,981,063 9,079,015 11,185,619
Less I. Tax @
25.0% -297,838 257,589 777,341 1,271,034 1,745,266 2,269,754 2,796,405
Net Profit after tax -893,513 772,766 2,332,023 3,813,101 5,235,798 6,809,261 8,389,214
Opening Balance of
Profit 0 -893,513 -120,746 2,211,277 5,024,378 9,060,175 14,269,436
Less Dividend 0 0 0 1,000,000 1,200,000 1,600,000 2,000,000
Cumulative Profit
tr. Balance Sheet -893,513 -120,746 2,211,277 5,024,378 9,060,175 14,269,436 20,658,651
26

Annex 8
PROJECTED CASH
FLOW STATEMENT Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7

I. Sources of Funds

1. Cash generated
from operation
a) Operating Profit
(BIT) 3,943,650 5,515,355 6,944,364 8,269,135 9,516,063 10,801,515 11,933,119
b) Depreciation 4,949,500 4,116,075 3,462,214 2,945,754 2,534,745 2,204,938 1,937,902
c) Amortization 100000 100000 100000 100000 100000 0 0
T O T A L : 8,993,150 9,731,430 10,506,578 11,314,889 12,150,808 13,006,453 13,871,022

2. Share Capital 1,962,800 0 0 0 0 0 0
4. Loans -3,000,000 -5,000,000 -5,000,000 -5,000,000 -5,000,000 -7,500,000 -7,500,000

T O T A L : -1,037,200 -5,000,000 -5,000,000 -5,000,000 -5,000,000 -7,500,000 -7,500,000

II. Application of
Funds

1. Fixed Assets
Investment
2. Increase in current
asset 2,162,700 0 0 0 0 0 0
(Other than cash)
3. Current Liabilities -218,700 0 0 0 0 0 0
4. Pre Operating
Expenses

4. Financial Charges 5,135,000 4,485,000 3,835,000 3,185,000 2,535,000 1,722,500 747,500

5. Dividend 0 0 0 1,000,000 1,200,000 1,600,000 2,000,000
6. Corporate Tax -297,838 257,589 777,341 1,271,034 1,745,266 2,269,754 2,796,405

T O T A L : 6,781,163 4,742,589 4,612,341 5,456,034 5,480,266 5,592,254 5,543,905

III. Cash Surplus 1,174,788 -11,159 894,237 858,855 1,670,542 -85,801 827,117
Opening Cash
Balance 550,000 1,724,788 1,713,629 2,607,866 3,466,721 5,137,263 5,051,462
Closing Cash
Balance 1,724,788 1,713,629 2,607,866 3,466,721 5,137,263 5,051,462 5,878,579





27

Annex 9
Balance Sheet
Years 1 2 3 4 5 6 7
Particulars
Sources of
Funds

Share Capital 20,542,800 20,542,800 20,542,800 20,542,800 20,542,800 20,542,800 20,542,800
Reserve &
Surplus
-893,513 -120,746 211,277 5,024,378 9,060,175 14,269,436 20,658,651
Loan 37,000,000 32,000,000 27,000,000 22,000,000 17,000,000 9,500,000 2,000,000
Total 56,649,288 52,422,054 49,754,077 47,567,178 46,602,975 44,312,236 43,201,451
Application
of Funds

Fixed Assets 52,580,500 48,464,425 45,002,211 42,056,457 39,521,712 37,316,774 35,378,872
Current
Assets

Closing Stock 1,312,200 1,312,200 1,312,200 1,312,200 1,312,200 1,312,200 1,312,200
Advances &
Receivables
850,500 850,500 850,500 850,500 850,500 850,500 850,500
Cash & Bank
Balance
1,724,788 1,713,629 2,607,866 3,466,721 5,137,263 5,051,462 5,878,579
Total
Current
Assets
3,887,488 3,876,329 4,770,566 5,629,421 7,299,963 7,214,162 8,041,279
Less :
Current
Liabilities &
Others
Provisions
218,700 218,700 218,700 218,700 218,700 218,700 218,700
Net Current
Assets
3,668,788 3,657,629 4,551,866 5,410,721 7,081,263 6,995,462 7,822,579
Pre-
operative
Expenses
400,000 300,000 200,000 100,000 0 0 0
Total 56,649,288 52,422,054 49,754,077 47,567,178 46,602,975 44,312,236 43,201,451


28

Annex 10

Computation of Simple Pay-Back Period

Particulars Amount
Total Capital
Investment

(58,030,000.00)
Net Profit after tax
but before dep. &
Pre. Exp.
1

4,155,987.50

(53,874,012.50)
2

4,988,841.25

(48,885,171.25)
3

5,894,236.94

(42,990,934.31)
4

6,858,855.15

(36,132,079.17)
5

7,870,542.44

(28,261,536.72)
6

9,014,199.15

(19,247,337.57)
7

10,327,116.78

(8,920,220.79)



Pay Back
Period 5.13 years


29

Table of Contents

CHAPTER I INTRODUCTION ................................................................................................................1
1.1 Background ......................................................................................................................................... 1
1.2 Location ............................................................................................................................................... 1
1.3 Mission ................................................................................................................................................ 2
1.4 Objectives............................................................................................................................................ 2
1.5 Keys to Success ................................................................................................................................... 2
CHAPTER II MANAGEMENT AND ORGANIZATION STRUCTURE .............................................................4
2.1 Business Ownership ............................................................................................................................ 4
2.2 Organization structure ........................................................................................................................ 4
2.3 Human Resource ................................................................................................................................. 5
2.4 Legal Framework ................................................................................................................................. 5
CHAPTER III PRODUCT AND SERVICES .................................................................................................6
3.1 Product description ............................................................................................................................. 6
3.2 Service description .............................................................................................................................. 6
3.3 Technology .......................................................................................................................................... 7
3.4 Future plan .......................................................................................................................................... 7
CHAPTER IV MARKET ANALYSIS SUMMARY .........................................................................................8
4.1 Market Segmentation ......................................................................................................................... 8
4.1.1 Demographic Segmentation ........................................................................................................ 8
4.1.2 Geographic Segmentation ........................................................................................................... 9
4.2 Target Market ..................................................................................................................................... 9
CHAPTER V MARKETING STRATEGY AND IMPLEMENTATION ............................................................. 10
5.1 SWOT analysis ................................................................................................................................... 10
5.1.1 Strengths .................................................................................................................................... 10
5.1.2 Weaknesses................................................................................................................................ 10
5.1.3 Opportunities ............................................................................................................................. 11
5.1.4 Threats ....................................................................................................................................... 11
5.2 Macro Environment .......................................................................................................................... 11
5.2.1 Political Environment ................................................................................................................. 11
30

5.2.2 Economical Environment ........................................................................................................... 11
5.2.3 Socio-cultural Environment ....................................................................................................... 12
5.2.4 Technological Environment ....................................................................................................... 12
5.3 Competitive Edge .............................................................................................................................. 12
5.4 Marketing Strategy ........................................................................................................................... 12
5.4.1 Pricing ......................................................................................................................................... 13
5.4.2 People ........................................................................................................................................ 13
5.4.3 Promotion .................................................................................................................................. 13
CHAPTER VI FINANCIAL PLAN ........................................................................................................... 14
6.1 Basic Financial Assumptions ............................................................................................................. 14
6.2 Fixed Assets Investment ................................................................................................................... 14
6.3 Operating Variable Cost .................................................................................................................... 15
6.4 Annual Fixed Cost .............................................................................................................................. 15
6.5 Revenue ............................................................................................................................................ 15
6.6 Estimation of Working Capital .......................................................................................................... 15
6.7 Capital Structure ............................................................................................................................... 15
6.8 Net Present Value ............................................................................................................................. 15
6.9 Break Even Point ............................................................................................................................... 15
6.10 Financial Ratios ............................................................................................................................... 15
6.11 Income Statement........................................................................................................................... 16
6.12 Cash Flow Statement ...................................................................................................................... 16
6.13 Balance Sheet .................................................................................................................................. 16
6.14 Payback Period ................................................................................................................................ 16
ANNEX