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CHAPTER – 1

PROJECT AT A GLANCE

1.1 PROJECT BRIEF

This objective of this document is to provide information regarding investment


opportunity for setting up an Internet Café, with focus on product differentiation
i.e., providing some unique services (Video/Audio Chat, Web Developing) which
are not offered by a typical Internet Café. The business can be established in any
of the major cities of the country.

1.2 OBJECTIVES

For operating and establishing “SunShine Internet Café”, we are having some
objectives.

 To earn profit at less investments.


 To satisfy our customers providing best quality service at effective price.
 Providing the service at low cost by providing the best quality at affordable
price.
 To know a fair return on the capital invested by the owner

1.3 MISSION STATEMENT

 To achieve the economies of scale to minimize costs while maximizing


value to Customers.
 To achieve leadership, core and functional competencies internet cafe
business.

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1.4 PROJECT RATIONALE

As the Internet spins a web of interconnectivity around the globe, as it grows


literally by the hour, India is struggling, not to catch up but to keep from falling
further and further behind. There has been a great increase in Indian content on
the Internet. Many net entrepreneurs have been quick to realize the huge
potential of the global market. Initially, most sites targeted the global Diaspora of
Overseas Indians who had more access to the Internet, not to mention the credit
cards that drive Net commerce. But there is a growing realization that the Net
can reach the large and wealthy Indian Middle class. This group is rapidly
plugging into the Net (still out of range for most people here) and there is
increased use of credit cards. The Internet represents so much potential for
India, and the demand for efficient Internet infrastructure is growing rapidly. This
is where India has been failing. The demand has not yet been met efficiently and
this represents an enormous barrier to business and societal development. the
government, which has monopolized infrastructure development until recently,
has recognized it must not hold back this development. They have opened the
industry to private entrants and promised support. In practice, though, the vast
bureaucracies that implement (theoretically) the government programs have
moved sluggishly and ineffectively. For instance, the private ISPs that were
allowed were initially required to acquire their bandwidth from VSNL which
wanted a country wide monopoly on this lucrative sector. The result, new users
signing up competed for increasingly limited bandwidth. Now the ISPs have
been allowed to establish their own gateways but the effect has not yet been felt
extensively. The DOT, responsible for providing phone lines to ISPs lagged way
behind and the new providers are often left with far too few lines to service the
increased demand. Lease lines are reduced, though still very expensive -
approximately $1000 per month for a 64 Kpbs line. Businesses are relying more
and more on aspects of the Internet. Email, for instance, is a huge asset to
companies. And more and more companies are entering into web related
business activities, like web site creation, software development, and various
service oriented businesses that utilize the Net, like medical transcription or data
processing for overseas companies. As the internet demographic becomes more
mainstream India is going to a prime battleground for internet business over the
next five years. the Internet Service Providers Association of India (ISPAI) was
set up in 1998 with a mission to 'Promote Internet for the benefit of all'. ISPAI is
the collective voice of the ISP fraternity and by extension the entire Internet
community. Over the years ISPAI has helped influence, shape and mould the
telecom policies, so that ISPs and entrepreneurs in the business of Internet can
setup and grow their services in an environment that is supportive and enabling.

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Here in India there is 32.1 million peoples are internet users. So there is a great
opportunity for India. India's Internet population stands at 32.1 million and is all
set to grow to a 100 million by 2007-08. Internet Users in last few years in India:

Internet Users

70000000 60000000
60000000
60000000
50000000 60000000
Intrenet Users

40000000
30000000 18481000
20000000
7000000 18481000
10000000 4500000
7000000
0
2001 2002 2003 2004 2005 2006 2007 2008
Years
.

Source : http://www.indexmundi.com/g/g.aspx

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1.5 PROPOSED CAPACITY

The proposed project is based on 20 computer systems.

1.6 TOTAL PROJECT COST

The total cost of the project is approximately Rs.1.110 million.

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CHAPTER – 2
ORGANIZATIONAL STRUCTURE

2.1 PROPOSED FORM OF ORGANIZATION

There are various forms of organizations such as sole proprietorship,


Partnership, Pvt. Ltd. Co., co-operative societies etc. Out of these the most
suitable form of organization for this Internet Cafe can be partnership firm.

A partnership firm can be registered by two or more persons but not exceeding
20 persons. There are some advantages of this form of organization such as:-

In sole proprietorship only limited funds, which an individual holds, can be


invested while shares of a partner ship firm can be distributed among friends,
relatives & considerably large organization with more investment can be set up.

Partnership firms have a legal entity. It has perpetual succession & a common
seal. The profits of a partner ship firm are distributed in the form of profit all its
members, which reduces tax liability of a person. Had he been sole owner of the
Firm, he would have to pay tax on the entire profit.

2.2 ABOUT THE MAIN PROMOTERS:

The company is being promoted by Mr. Priyank Shah, Mr. Umang Shah & Miss
Parmar Jignasha

Mr. Priyank Shah has done B.com in Accounting & Financing. Then he
has done M.B.A. from one of the premier institute in North Gujarat i.e.
SVIM, MBA collage Ahmedabad. These competencies help him in
knowing the intricacies in Finance as in Administration Department &
Head of the Plant. He has extensive knowledge of the real business as
well as computer field. He knows computer software such as Capitaline,
Prowess, SPSS, Foxpro, DOS, Tally, Newsclips, Capitastocks, Adobe
software and many others software. He is the cogent and enthusiastic
personality

Mr. Umang Shah has done B.Com. After completing his graduation, he
has done M.C.A. from one of the premier institute. These competencies
help him in knowing the intricacies of this business in operator. He Knows
computer software and languages like C, C++, VB, Java, Oracle etc. . He
is the cogent and enthusiastic personality.

Miss Parmar Jignasha is good at financially aspect & the project is

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financed by her also. She has done B.Com. after completing graduation,
she has done M.B.A with specialization of Marketing. She has been
responsible for successfully coordinating the activities.

2.3 STEPS IN FORMING A PARTNERSHIP FIRM

The first step is to be taken for forming a partnership firm is to select a


few names of the proposed firm & put them in order of preference which
will be finalized.

The second step is to propose. The documents should be signed by all


the three members of the proposed partnership firm & stamp by notary.

2.4 NAME OF THE ORGANIZATION

Name of our organization would be SunShine Cyber Cafe, which would


be located at Opp. Mother Dairy, Near C.U.Shah College, Surendrangar-
363001, Gujarat.

2.5 PROPOSED LOCATION

For the Proposed project following premises should be considered.

 Proximity to the majority of people living are from middle income group
 Proximity to Private hostels setup in different areas of cities.
 Low cost rent Rs. 4000/- per Marla
 High visibility.

2.6 SERVICES

Proposed internet café will provide full access to the resources of internet and
other online services, printing, composing, scanning, fax. However or the sake of
innovation and differentiation there would be a unique services of Video/Audio
Chat. Just being a net café will not serve the purpose as business need to be
more than a value addition process rather than a traditional net café, that is why
after being operational for first two years there will be a facility added to the cart
i.e. Web developing. It will not only be the value addition but also a business
expansion tool.

2.7 DATE OF INCORPORATION:


The Company will be incorporated on 1st April, 2009, with registration
number___________.

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CHAPTER - 3
PROJECT BACKGROUND

3.1 PROJECT CONCEPT:

Sunshine Internet Cafe is being promoted by a cohesive team of three


enthusiastic— Mr. Priyank Shah, Mr. Umang Shah & Miss Parmar Jignasha. The
promoters of the company are well educated and command experience of the
diversified areas in their projects.

The company will be incorporate to provide internet service, printing, faxing, net
to call etc.. The promoters have a considerable knowledge in this field. Besides
having technical and marketing set up, the promoters are financially sound to set
up a project of this scale. All these factors combined together resulted into
making this organization a reality.

3.2 SCHEDULE OF IMPLEMENTATION:

Particulars of Activity Apr May June July Aug


1. Incorporation of Company ⇒⇒
2. Acquisition of Land ⇒⇒
3. Computer & other Equipments ⇒⇒⇒ ⇒⇒⇒ ⇒⇒
4.Furniture & Fixtures ⇒⇒
5. Arrangement for Power ⇒⇒⇒ ⇒⇒
6. Internet Connections ⇒⇒⇒ ⇒⇒
9. Trial runs ⇒⇒

CHAPTER - 4

7
CRUCIAL FACTORS & STEPS IN DECISION MAKING FOR
INVESTMENT

4.1 KEY SUCCESS FACTORS

The common viability of this Internet café depends on the following factors:

 Location of the project: Location of the project is of prime importance. If the


project is set up in a location with high income group, the amount of traffic on the
café will be less because majority of the people will have personal computers at
their home. A project like this can really do well in places, where the majority of
people living are from middle income group, who cannot afford a personal
computer. Another location can be near private hostels setup in different areas of
cities.

 Unique Services: Majority of the internet cafes are operating on a similar kind of
services. If the proposed setup is opened with a strategy of differentiation, it can
be more successful i.e. video/Audio chat facility, for value addition, web
development should also be started in the up coming years. In this feasibility web
development services are initiated after two years of operations of net café.

 Quality of Service: The most important factor for the success of the project is
the quality of service provided to the customer, which includes customer’s
privacy, speed of internet and the atmosphere in the café.

4.2 OT ANALYSIS

OPPORTUNITIES

Growing population of daily Internet users. The importance of the Internet almost
equals that of the telephone. As the population of daily Internet users increases,
so will the need for the services of internet café.

THREATS

 Rapidly falling cost of Internet access. The cost of access to the Internet for
home users is dropping rapidly. Internet access may become so cheap and
affordable that nobody will be willing to pay for access to it.

 Emerging local competitors. Additional competitors are on the horizon, and we


need to be prepared for their entry into the market.

 A dependence on quickly changing technology. Internet Café is a place for


people to experience the technology of the Internet. The technology that is the
Internet changes rapidly.

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 Cost factor associated with keeping state-of-the-art hardware. Keeping up
with the technology of the Internet is an expensive undertaking. Internet café
needs to balance technology needs with the other needs of the business. One
aspect of the business can't be sacrificed for the other.

4.3 KEY SUCCESS FACTORS

The commercial viability of this proposed Internet Café depends on the following
factors:

 Location of the project is of prime importance. If the project is set up in a


location with high income group, the amount of traffic on the café will be less
because majority of the people will have personal computers at their home. A
project like this can really do well in places, where the majority of people living
are from middle income group, who cannot afford a personal computer. Another
location can be near private hostels setup in different areas of cities.

 Majority of the Internet cafés are operating on a similar kind of services. If the
proposed setup is opened with a strategy of differentiation, it can be more
successful i.e. video chat facility, or a small snack café along with the Internet
service. With more services provided under the same roof, more traffic can be
generated in the Internet café.

 The most important factor for the success of the project is the quality of service
provided to the customer, which includes customer’s privacy, speed of Internet
and the atmosphere in the café.

4.4 TARGET CUSTOMERS

The proposed project intends to cater to students and middle income group
people Furthermore will be a magnet for local and traveling professionals who
desire to work or
check their e-mail massages in friendly environment.

 Students
 Business people
 Middle Income Groups
 Private Hostels

The large student population will become an important part of the Net Café
customer base. The student population continues to grow with the success of the
educational institutes. Evening entertainment, access to the Internet, and the up-
scale ambiance will attract the students. Business community is growing rapidly
with the addition of new companies day by day. Internet café will provide an

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opportunity to local and traveling professionals to check their e-mails
communications, this will be an attracting entity for the Middle income group and
for the residents of private hostels as they do not have ccess to the internet at
their living places.

4.5 MARKET NEED

As the popularity of internet continues to grow at an exponential rate, easy and


affordable access is quickly becoming a necessity of life. Public wants access to
the methods of communication and volumes of information now available on the
internet, and access at a cost they can afford and in such a way that they are not
socially, economically and politically isolated.

4.6 MARKET TRENDS

More than 90 percent of visitors of these cafes and clubs are youngsters and
their sole objective to get to these is to get enjoyment.

4.7 KNOWLEDGEABLE AND FRIENDLY STAFF

Internet café is a service business. The success of the business depends upon
the quality of the service offer and delivering the service consistently. So a
knowledgeable friendly and eager to please staff, state-of-art computer hardware
and a clear vision of the market need will help it succeed.

4.8 INTERNET CONNECTION

The major cost of an Internet café is the Internet connection. For providing better
service,
the proposed project will use a High Band width connection for better speed as
the project is going to provide service of video chat. It is recommended that the
Internet connection should be taken from the best Internet service provider.

4.9 RECOMMENDED CONNECTION

If the project is set up in area, where DSL Internet connection is available, it is


recommended to use DSL Internet connection instead of a any other Internet
connection.
This will improve the speed of Internet, which will improve the performance of
video chat and will also reduce the telephone expense.

4.10 MARKETING

Marketing will play an important role in success of the project, as majority of the

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players in the industry are following the strategy of low price with no
differentiation, i.e., they are providing similar services and competing with each
other on the basis of lower prices. It is recommended to follow a different strategy
for the proposed project, which is the product differentiation. For this purpose, a
special service of video chat facility is going to be offered by the proposed
project. To build an image of a reliable and excellent Internet service, extensive
promotion in the locality near the project will be done by use of print media and
billboards.

CHAPTER – 5

TECHNICAL ANALYSIS

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5.1 EQUIPMENT REQUIREMENT

The proposed project is going to be of 20 computer systems and the details of


the. Equipment required for the project is given below:

EQUIPMENT REQUIREMENT DETAILS

Description No. Cost Per Total Cost(Rs.)


Unit(Rs.)
Computer 21 25000 525000
System(P-4)
Hub 1 6000 6000
Computer Camera 21 1000 21000
UPS 1 60000 60000
Printer 1 28000 28000
Scanner 1 4000 4000
Modem DSL 1 8000 8000
Other Equipment
Networking Cable 720 ft 10 per ft 7200
Total Equipment 659200
Cost

FURNITURE & FIXTURE DETAILS

Description No. Rate (Rs.) Total Cost(Rs.)


Computer Table & 21 5000 105000
Cabins
Computer Chairs 21 2000 42000
Air Conditioner 2 25000 50000
Telephone Sets 2 1000 2000
Fax Machine 1 5000 5000
Carpet 900 sq ft 30 per sq ft 27000
Total Furniture & 231000
Fixtures

The project is based on Pentium-4 computer systems. Second hand systems are
also available in the market at much lower prices. The reason for using the latest
system is the new software coming in the market that requires more powerful
systems which will provide better service to the customer. The prices of computer

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systems vary with the introduction of new technology in the market.

5.2 HUMAN RESOURCE REQUIREMENT

The details of human resource requirement for the project are given in the
following table:

Human Resource Requirement

Description No. Monthly Annual Salary


Salary(Rs) (Rs)
Network 1 8000 96000
Administrator
Security Guard 1 4000 48000
Total Cost 144000

5.3 LAND & BUILDING REQUIREMENT

The details of the area required for the proposed project is given in the below
table:

Covered Area requirement Details

Description Area Required (sq ft)


Computer Cabins 600
Sitting Area 100
Administrator Office 100
Free Space 100
Total Area Required 900

Recommended Mode

It is recommended that this project should be started in a rented building, as this


will reduce the initial capital cost. The approximate area required is almost 4-
marla space. The details of monthly rent are given below:

Rental Cost Details:


Description Monthly Rent (Rs) Annual Rent (Rs)
Approximate Rent @ Rs. 16000 192000
4000 per marla

5.4 UTILITIES REQUIREMENTS

Mainly two utility are required to operate the cafe.

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 Electricity
 Telephone

CHAPTER - 6

14
FINANCIAL PROJECTIONS

6.1 CAPITAL OUTLAY


Cost of Project

The total outlay on the project works out to Rs. 918200 and the margin money for
working capital required to be brought in is Rs. 192000. Thus, the total cost of
project works out to Rs.1110200, the details of which are given as under: -

Capital Expenditure Total Cost (Rs)


Equipment 659200
Furniture & Fixtures 231000
Pre – Operational Expense 28000
Total Capital Expenditure (A) 918200
Working Capital
Up Front Insurance Payment 0
Up Front Building Rent 192000
Total Working Capital (B) 192000
Total Investment in Project (A + B) 1110200

The working of the various major components of the cost estimates are based
upon quotations and estimates obtained from suppliers. The preliminary and pre-
operative expenses are taken on estimated basis.

Project Returns

Internal Rate Of Return 35%


NPV (Rs) 360258
Pay Back Period (Years) 2.36

6.2 MEANS OF FINANCE

For the purpose of this pre-feasibility study, it has been assumed that all the
funding required for this project would be provided by the investor himself.

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PARTICULAR RATIO AMOUNT
Equity Shareholder
Fund
Priyank 1/3 370067
Umang 1/3 370067
Jignasha 1/3 370067

6.3 KEY ASSUMPTIONS

FINANCIAL ASSUMPTIONS:

Project Life(Years) 5
Equity 100%
Discount Rate 20%

PRODUCTION ASSUMPTIONS :

NO. Of Computers 21
Total capacity per day(Hours) 240
Maximum Capacity Per Year 86400
Capacity Utilization (Year 1) % 70%
Capacity Utilization (Year 1) hours 60480
Capacity Growth Rate Per Year % 5%
Maximum capacity 100
Composing/pages/day
First year capacity 20%
Increase in composing capacity 5%
First year capacity Web Developing 5
/web/year
Increase in W.D.per Year 2

OPERATING ASSUMPTIONS:

Shift per day 1


Hours Operational Per Shift 12
Days Operational Per Month 30
Days Operational Per Year 360
Pre-Operational Period 1

ECONOMY RELATED ASSUMPTIONS

Electricity charges per month/year 25,212

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Electricity Growth Rate 10%
Wages Growth rate 10%
Equipment Maintenance Growth Rate 2%

DEPRECIATION EXPENSE ASSUMPTIONS

Computer Equipment 20%


Furniture-FIxtures 20%
Pre-Operation 20%

EXPENSE ASSUMPTIONS

Internet Connection Charges Year 1 300000


Connection Type 512 KB
Connection Charges Per Month 25000
Composing Charges (%of Composing 50%
sales)
Web Development Charges(%of Web 50%
sales)
Internet connection charges(Decrease 1%
Rate)
Equipment maintenance(%of internet 2%
sales)
Prepaid Building Rate(Months) 12
Rent Rate Per Marla 4000
Sq. ft in per marla 225
Rent Growth rate 10%
Insurance Rate(%of net fixed Assets) 2%
Marketing &selling Expense(% of 2%
sales)
Taxes 20%
Printing expense(%of Printing Price) 50%
Fax(%Price of per Fax) 50%

REVENUE ASSUMPTIONS

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Video / Audio Chat Price/hour 2
Internet Plain price/Hour 20
Plain internet Usage 60%
Video/Audio Usage 40%
Internet sales price decrease rate 0%
W.A sales price per hour 22
Printing revenue(%of internet sales) 10%
Fax revenue (% of internet sales) 3%
Composing price 20
Web price 10000

6.4 FINANCIAL ANALYSIS

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6.4.1 PROJECTED INCOME STATEMENT

Particular 2010 2011 2012 2013 2014


Sales
133056 142560 152064 161568
Internet Sales 0 0 0 0 1710720
Printing Revenue 133056 142560 152064 161568 171072
Fax Revenue 39917 42768 45619 48470 51322
Composing Revenue 144000 180000 216000 252000 288000
Web development
Revenue 50000 70000 90000
164753 179092 198432 214771
Total Revenue 3 8 3 8 2311114

Cost Of Goods Sold


Internet Connection
Charges 300000 297000 294030 291090 288179
Printing Charges 66528 71280 76032 80784 85536
composing charges 72000 90000 108000 126000 144000
Web Development 25000 35000 45000
Fax Charges 19958 21384 22810 24235 25661
Machine Maintenance 26612 28512 30413 32314 34214
Direct Electricity 237553 219766 229217 238668 248118
Total COGS 722651 727942 785502 828091 870708

106298 131962
Gross Profit/Loss 924882 6 1198821 7 1440406
Operating Expenses
Payroll Admin 144000 158400 174240 191664 210830
Marketing&selling 26611 28512 30413 32314 34214
Amortization (Pre-
Operation) 5600 5600 5600 5600 5600
Depreciation 178040 178040 178040 178040 178040

Total 354251 370552 388293 407618 428684


Operating Profit/loss 570631 692434 810528 912009 1011722

Non Operating Expenses


Financial Charges(Short
Term) 26880 32341 34800 37554 40633
Financial Charges(long
Term) 35291 29952 23866 16927 9017
Building rent 192000 211200 232320 255552 281107

Total 254171 273493 290986 310033 330757

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Profit Before Tax 316460 418941 519542 601976 680965
Tax 63292 83788 103909 120396 136193
Profit After Tax 253168 335153 415633 481580 544772

Retained Earning(Year 100395


Beginning) 253168 588321 5 1485537
Retained Earning(year 100395 148553
Ending) 253168 588321 4 5 2030309

6.4.2 PROJECTED BALANCE SHEET

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Particular Year 0 2010 2011 2012 2013 2014
Assets
Cash 400678 875997 1425712 2034436 2698437
upfront Insurance 17804 14243 10682 7122 3561
Upfront Building Rent 192000 211200 232320 255552 281107 309218

Total Current
Assets 192000 629682 1122560 1691946 2322665 3011216

Gross Fixed Assets 890200 890200 890200 890200 890200 890200


Less:Accumulated
Depreciation 178040 356080 534120 712160 890200

Net Fixed Assets 890200 712160 534120 356080 178040 0

Pre - Operational 28000 22400 16800 11200 5600 0

Total Intangible
Assets 28000 22400 16800 11200 5600 0

Total Assets 1110200 1364242 1673480 2059226 2506305 3011216

Liabilities

Running Finance 192000 231010 248570 268242 290238 314789


Long Term Loan 252080 213944 170470 120909 64409 0

Total Liabilities 444080 444954 419040 389151 354647 314789


Equity

Paid up Capital 666120 666120 666120 666120 666120 666120


Retained Earning 0 253168 588320 1003955 1485537 2030307

Total 666120 919288 1254440 1670075 2151657 2696427

Total Liabilities &


Equity 1110200 1364242 1673480 2059226 2506304 3011216

6.4.3 PROJECT CASH FLOW

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Year O 2010 2011 2012 2013 2014

Operating Activities

Net Profit 253,168 335,152 415,635 481,582 544,770


Depriciation 178,040 178,040 178,040 178,040 178,040
Insurance amortization 5,600 5,600 5,600 5,600 5,600
Upfront Insurance Payment -17,804 3,561 3,561 3,561 3,561

Cash Provided By 0 419,004 522,353 602,836 668,783 731,971


Operations

Financing Activities

Long term Debt principle -38,136 -43,475 -49,561 -56,500 -64,409


Payment
Building Rent Payment -192,000 -211,200 -232,320 -255,552 -281,10 -309,21
7 8
Building Rent Expense 192,000 211,200 232,320 255,552 281,107
Addition to Long term debt 252,080
Addition to Short Term Debt 192,000 39,010 17,560 19,672 21,995 24,551
Paid up Capital 666,120

Casfh Flow By Financing 918,200 -18,326 -47,034 -53,121 -60,059 -67,969


Activities

Investing Activities

Capital expenditure -918,200

Cash Flow by Investing -918,200


Activities

Net Cash 0 400,678 475,319 549,715 608,724 664,002


Cash Balance brought 0 0 400,678 875,997 1,425,7 2,034,4
Forward 12 36
Cash Balance 0 400,678 875,997 1,425,712 2,034,4 2,698,4
36 37

Cash carried Forward 0 400,678 875,997 1,425,712 2,034,4 2,698,4


36 37

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6.4.4 RATIO ANALYSIS

1. GROSS PROFIT RATIO = Gross Profit / Net sales

Year 2010 2011 2012 2013 2014


Gross Profit 924882 1062986 1198821 1319627 1440406
Sales 1647533 1790928 1984323 2147718 2311114
Gross Profit 56.14 59.35 60.41 61.44 62.33
Ratio(%)

Gross Profit Ratio(%)


64 62.33
61.44
62 60.41
59.35
Percentage

60
58
56.14
56
54
52
2010 2011 2012 2013 2014
Years

2. NET PROFIT RATIO = Net Profit / Sales

Year 2010 2011 2012 2013 2014


Net Profit 253168 335153 415633 481580 544772
Sales 1647533 1790928 1984323 2147718 2311114
Net Profit 15.37 18.71 20.95 22.42 23.57
Ratio(%)

23
Net Profit Ratio(% )

25 23.57
22.42
20.95
20 18.71
Percentage
15.37
15

10

0
2010 2011 2012 2013 2014
Years

3. ASSETS TURNOVER RATIO = Sales / Total Assets

Year 2010 2011 2012 2013 2014


Total Assets 1364242 1673480 2059226 2506305 3011216
Sales 1647533 1790928 1984323 2147718 2311114
Assets 0.83 0.93 1.04 1.17 1.30
Turnover(times)

Total Assets Turnover(times)

1.4 1.3
1.17
1.2
1.04
1 0.93
0.83
Percentage

0.8

0.6
0.4

0.2

0
2010 2011 2012 2013 2014
Years

4. RETURN ON OWNER’S EQUITY = PAT / Owner’s Equity X 100

24
Year 2010 2011 2012 2013 2014
PAT 253168 335153 415633 481580 544772
Owner’s Equity 919288 1254440 1670075 2151657 2696427
Return on 27.54 26.72 24.89 22.38 20.20
Equity (%)

Return on Owner's Equity

30 27.54 26.72
24.89
25 22.38
20.2
20
Percentage

15

10

0
2010 2011 2012 2013 2014
Years

5. CASH RATIO = Cash / Current Liabilities X 100

Year 2010 2011 2012 2013 2014


Cash 400678 875997 1425712 2034436 2698437
Current
Liabilities 231010 248570 268242 290238 314789
Cash Ratio(%) 173.45 352.41 531.50 700.95 857.22

25
Cash Ratio(%)

1000
857.22
900
800 700.95
700
Percentage 600 531.5
500
400 352.41
300
173.45
200
100
0
2010 2011 2012 2013 2014
Years

26
CHAPTER – 7

CONCLUSION

After making this report we have faced real environment stress in real business.
This research work has enabled us to gather a lot of information about the café
business and we have been able to apply our classroom knowledge to the
practical life very effectively.

In conclusion, from the above Projected Balance Sheet, Projected Income,


Projected Cash Flow and other major financial ratio calculation it can be said that
the project is very much feasible, having good profitability, conceived by the
people already experienced in the similar field. Promoters are having expertise in
marketing for decades. Individually each promoter is having a sound financial
background. The group concerns are also in profitable existence for a number of
years. The financial and economic feasibility of the project is well established on
the basis of estimates and projections. All the assumptions and basis of
estimation are on the principle of conservatism and prudence. Therefore, it can
be concluded that the business has a high potential.

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