Introductory Page
Name and
address of business
KHUSHAAL KISAAN
Nature of
Business
The nature
of business is trading. We are engaged in Agriculture Retailing which directs
its marketing effort towards the farmers for the purpose of selling goods or
services related to farmer.
Statement
of Financing Needed
Financing
needed is 150 Million PKR of which 100 Million PKR is personal financing and 50
Million PKR is Debt Equity. The debt will be paid in 5 years.
Confidentiality
of Report
This report
is confidential and is the property of the co-owners listed above. It is
intended for use only to whom it is transmitted, and any reproduction or
divulgence of any of its contents without the prior written consent of the
company is prohibited.
Industry
analysis
Agriculture constitutes the largest sector of our
economy. Majority of the population, directly or indirectly, dependent on this
sector. It contributes about 24 percent of Gross Domestic Product (GDP) and
accounts for half of employed labor force and is the largest source of foreign
exchange earnings. It feeds whole rural and urban population. The important
crops are such as wheat, cotton, rice, sugarcane, maize etc. Pakistan Pakistan Pakistan
Rice
Wheat
Mango
Apricot
Chickpea
Cotton
Sugarcane
Onion
Date Palm
Mandarin oranges
Although Pakistan Pakistan
A PEST analysis is an analysis of the external
macro-environment that affects all firms. P.E.S.T. is an acronym for the
Political, Economic, Social, and Technological factors of the external macro-environment.
A. Political Analysis
Although Pakistan’s government supports
agriculture sector still government policies like labor wages, employment laws,
taxes and tariffs can affect our business as we are only facilitating not
directly participating in agricultural development.
B. Economic Analysis
Economy
of Pakistan Pakistan
C. Social Analysis
Most of the population in Pakistan
D. Technological Analysis
Research and
technology development have been the foundation of impressive productivity
gains in the agricultural sector. The ability of the sector to conserve natural
resources and protect the environment depends, in part, on the technologies
used. Agricultural research is the source of new technologies, and important
new technologies have emerged that may benefit the farmers if adopted.
SWOT
Analysis
A. Strengths
Economies of scale
No direct competition
Suitable location
Rich image of retailing
B. Weakness
Business initiation problems e.g. licenses
Less distribution
Problems in locating skilled personnel
C. Opportunities
More growth potential
Backward integration
Related Diversification
(i.e. forestry, live stock)
D. Threats
New entrants
Retaliation from supplier and small retailers
Bad debts
Economic issues
Legal and political issues
Description
of Venture
A. Products
Our
business is about providing services related to Agriculture sector. So we are
not dealing in any kind of self manufactured products. Our suppliers are
PABX:9272307-15,9272318-9
FAX: (051)9272316,9272345
http://www.ffc.com.pk
ENGRO CORPORATION LIMITED
8th Floor, Harbor
Front Building Marine Drive Clifton
Contact Number: +92 21 111 211 211
Syngenta
Pakistan Limited
Phone: +92 (0)21-2354240-47
Fax: +92 (0)21-2354210
Fax: +92 (0)21-2354219
ALI AKBAR
Ph: 5321461-5.
GREEN CROPS
Zip/Postal code 61100
Phone: +92-67-3361887
Fax: +92-67-3366887
MILLAT TRACTERS LIMITED
Telephone No. +92-42-111200786
ALGHAZI
11th Floor, NICL Building Abbasi Shaheed Road
Karachi 74400
Telephone 21-5660881-5, Telefax 21-5689387
E-mail:agti@alghazitractors.com
Web: www.alghazitractors.com
Ayub
Agricultural Research
Jhang road near Faisalabad
Ph. 041-2650690
B. Services
We are
providing agricultural products to the farmer’s conveniently under one roof.
These products will be available to the farmers at the competitive prices.
We will
arrange awareness programs for
Plough
Seeds
Sowing
Irrigation
Fertilizer
Pesticides
Harvesting
C. Size of Business
a.
The
market share of the business is a good measure. As we are new to the market we
hope to capture the 30% of the market for the first year and then grow at 15%
rate for next four years.
b.
The
level of sales turnover is another factor. We hope to have a sales turnover of
10 million estimated.
c. We have 28 employees.
d. The value of capital employed is 100 Million PKR.
e.
The value
of the business is more than 150 Million PKR because it is one of its kind and
in Pakistan
D. Office Equipment and Personal
Following
is the office equipment detail that we need in conducting out routine
operations
Stationary
Furniture
Counters
Chairs
Tables
Racks
File drawer
Machinery
Computers
Peripherals
Chillers
Security cameras
Fans
Lifters
Refrigerator
Detective Machines
Speakers
LCD
Projectors
Tea maker
Tool box
Bar code readers
Personnel
Manager
Assistant Manager
Financial Manager
Cashier
Supervisor
Salesmen
Security Guards
Sweeper
Office Boy
E. Back Ground of Entrepreneurs
Mr. Ali Zubair Marketing Specialization
Mr. Tayyab
Khan Marketing Specialization
Mr. Tosif Ur Rehman Marketing Specialization
Mr. Muhammad Qadeer Marketing Specialization
Mr. Umar Farooq Finance
Specialization
Mr. Asim Ali Nasir Finance Specialization
Organizational Plan
Contents
of Organizational Plan
Form of
ownership
Terms of
Agreement
Name and
addresses of Board of Directors
Organizational
chart
Job
descriptions
Management
team
Check sighing
Authority
Form of
Ownership
It is partnership firm of seven partners,
contributing the same amount of i.e. 10 million each.
Terms of
Agreement
All partners will have the same ratio out of
profit after all deductions have been made.New partner will become the part of
the organization only after the consent of all the partners. If any partner
leaves or dies, partnership will not come to an end and the share of that
partner will be transferred to his/her family members.
Name and
Addresses of Board of Directors
Mr. Ali Zubair House No.230 Rahim
Town
Mr. Tayyab Khan 131 GB Fsd
Mr. Tosif Ur Rehman Chk No.77 JB Mulan Pur Fsd
Mr. Asim Ali Nasir 13 Gb Khuriyanwala Fsd
Mr. Umar Farooq House No.23 Gulfishan
Colony,Fsd
Mr. Muhammad Qadeer House
No.37 Rehman Pura Fsd
Organizational Chart
Job descriptions
Manager
Responsibilities:
He will be responsible for implementing all the
decisions made by the board of directors. He can take decision as well for the
betterment of the store. He will also perform the controlling function as well.
He will check out the activities of assistant manager and finance manager.
Skills:
- Administration skills
- 5 year experience
- Stress management
- Communication skills
- Controlling abilities
- Analytical skills
- Problem solving
- Leadership skills
Assistant manager
Responsibilities:
He will provide assistant to the manager. He will
see the work of all supervisors, security guards, sweeper and office boy. He
will also implement the decisions made by the manager. He will also give
feedback to the manager.
Skills:
- Communication skills
- 3 year experience
- Controlling abilities
- Problem solving
- Interactive skills
- Coordination skills
Finance Manager
Responsibilities:
He will look after all the financial dealings,
preparation of financial statements. He’ll be answerable to the manager. He
will perform controlling function over the cashiers. He will provide the
guidelines to the cashiers.be responsible for providing the salaries and
bonuses to the employees.
Skills:
§ Financial management skills
§ 4 year experience
§ Decision making skills
§ Problem solving
§ Coordination skills
Supervisors
Responsibilities:
All the supervisors will be responsible to
implement order passed by the assistant manager and bound to report their whole
activities to the assistant manager. They will also provide guideline to their
sales personnel.
Skills:
- Supervisory skills
- 3 year experience
- Controlling skills
- Coordination skills
- Interactive abilities
Salespersons
Responsibilities:
They are the most important persons because they
are going to deal with our customers. They will responsible for creating good
image of the organization. They will be responsible for introducing our
products to the farmers. They will be responsible for reporting to the
supervisors. The will carry out all the orders passed by the supervisors.
Skills:
- Salesmanship abilities
- 2 year experience
- High temperament
- High energy level
- Interactive skills
- Complete information about the products
Cashiers
Responsibilities:
He will make all the cash transactions i.e.
receiving of cash. He will maintain all the accounts. He will be responsible to
report to the finance manager.
Skills:
- Bookkeeping skills
- 2 year experience
- Communication skills
- High energy level
Warehouse Accountant
Responsibilities:
He will be responsible for maintaining all the
record of inventory. He will record all Inventory In and Inventory Out
transactions. He will follow the directions from the finance manager and also
answerable to him as well.
Skills:
- Inventory management skills
- 2 year experience
- competent
Management Team
Member of Management team:
Asma seher HR
Specialization
Muhammad Tayyab Marketing
Specialization
Tosif ur
Manager Business
Administration Management
Responsibilities of Management Team:
This team will be responsible for performing the following
functions:
·
Staffing
·
Selection
·
Training and
development
·
Evaluation
·
Employee
counseling
·
Conflict
resolution
·
Performance
management
·
Appraisals,
promotion and bonuses
·
Firing
Salary,
bonuses and form of payments
All salaries and bonuses will be issues through
banking channels
Monthly Salary
Board of director Only Profit
Manager 26000
Assistant Manager 12000
Finance Manager 16000
Cashiers 10000
Supervisors 9000
Salesmen 8000
Security guards 7000
Sweepers 5000
Office boy 5000
Check Signing Authority
Mr. Ali Zubair and Umar Farooq will be responsible
for signing all the checks. They will perform duty on behalf of all the Board
of Directors.
Marketing Plan
Contents of Marketing Plan
·
Marketing Goals
·
Marketing Research
·
Segmentation
·
Targeting
·
Positioning
·
Marketing Mix
a. Product
b. Price
c. Place
d. Promotion
e. People
f. Process
g. Physical
Evidence
Marketing Goals
Marketing
goals are congruent to the organization goals.
The goals set for marketing are realist and achievable. These are the
marketing goals;
·
Capture market share of 30 % for the first year
·
Growing at a rate of 15 % annually
·
Organization Image Building
·
Increasing Customer Satisfaction
·
Cost Minimization
Marketing Research
Marketing
research is an important thing to in order to run a business venture
successfully. This marketing research tells us about the needs that are still
unsatisfied. This will give a deep look about the target market situation. In
order to conduct the marketing research, questionnaire is used to identify the
response of people regarding their attitude towards our venture.
Questionnaire’s language used was in Urdu but here for the ease of you we have
written it in the English language to create harmony in the report.
Segmentation
In the
value delivering process, first of all we have segmented our target market. We
have segmented the market on four bases which are discussed as under:
Geographic
The first base for segmentation is Geographic. It
includes the region of the world or country, city, density and climate etc.
Region: We have selected the most populous province of Pakistan
City: Faisalabad
Density: According
to the nature of our products offering we think that density of 100 persons per
square meter will be suitable for our business.
Climate: No
such major consideration is given to the climate because in Pakistan
Demographic
Segmentation on the bases of demographic is very
important because it tells that what are the characteristics of the market? It
includes the age, gender, family life cycle stage, family size, income and
occupation.
Age: As
our business is trading of agricultural products so we have chosen the age
level of 20 or more because most of the agricultural products are purchased by
the young and old age people.
Family Size: Family size is 4 individuals or more because most of the villagers’
families are large in individual size.
Family Life Cycle Stage: It includes those families that have married
couples with small and young children.
Gender: All
agricultural products are purchased by the males.
Income: Income
level of Rs.10000 per month or more is chosen for segmentation.
Occupation: Occupation will only be farming because we are dealing only in
agricultural products.
Social Class: Upper lower, Middle, Upper Middle and lower upper are classes for
demographical segmentation.
Psychological Segmentation
This
segmentation deals with life style and personality of the segment.
Life Style: The segmented part of the population is culture oriented. They have
their cultural traditions, customs and values. They are not as modernized as
the urban population.
Personality Traits: Their personality trait is hard working and they
have strong belief in nature.
Behavioral Segmentation
This last segmentation is relevant to the
behavioral aspect of the segment. It tells about the buying pattern, benefits
they want usage rate and loyalty with the products.
Occasion:
Our products are of regular
use because farmer needs seeds, fertilizers, pesticides, tools, spare parts and
machinery time to time for their fields
Benefits: Farmers need quality products at lower price with convenience.
Usage Rate: Depending upon size of farm, farmers have different needs for their
farms. So they could be low users, medium users and heavy users as well.
Loyalty: Farmers
have strong loyalty with the products they are currently using.
These are the four bases
that we have used for segmentation. All this segmentation is described in table
format as below:
Segmentation
|
Geographic
|
|
|
Region
|
|
|
City
|
|
|
Density
|
100 persons per square kilo meter
|
|
Climate
|
Summer, winter, autumn and spring
|
|
Demographic
|
|
|
Age
|
20 years or more
|
|
Family Size
|
4 individuals or more
|
|
Family Life Cycle Stage
|
Married couples with small and
young children.
|
|
Gender
|
Male
|
|
Income
|
Rs 10000 per month or more
|
|
Occupation
|
Farming
|
|
Social Class
|
Upper lower, Middle, Upper
Middle and lower upper
|
|
Psychographic
|
Culture oriented
|
|
Personality
|
Hard working
|
|
Behavioral
|
|
|
Occasion
|
Regular
|
|
Benefits
|
Quality, Economy and Convenience
|
|
Usage Rate
|
Low user, Medium user and Heavy
User
|
|
Loyalty
|
Strong Loyalty
|
Targeting
In delivering the value we have target the rural
areas where most of the farming is basic occupation and source of bread and
butter. We are targeting the farmers both big and small farmers.
Positioning
We have position ourselves on two basic things
that are LOW PRICE and CONVENIENCE. So we say that “Low Price, More
Convenience”. This thing tells that we are conscious about delivering the
convenience to our customer with economy.
Market Size
The market size includes 70 villages and total
number of customers are about 30000 estimated.
Product Mix
As our business is service oriented so we have
7P’s that are:
·
Product
·
Price
·
Place
·
Promotion
·
Physical
evidence
·
People
·
Process
All these P’s are
explained individually as under:
Product: We are engaged in the trading of agricultural
products. We are providing the products of following suppliers:
All these products will be provided in six
different sections that are:
1.
Seeds
§ Maize
Dessi
§ Maize Hybrid
§ Hybrid Mullet seed
§ Basmati Supper
§ Basmati Kynat
§ Charri
§ Wheat
§ Sunflower
§ Bailer
guard
§ Round
guard
§ Spinach
(Palik)
§ Mung
Seed
§ White
round
§ Okra
seeds
§ Watermellion
§ Tar `
§ Cucumber
§ Chilly special
§ Bottle guard
§ Bring a
§ Turnip purple
§ Carrot seed
§ Radish
2.
Pesticides
§ Tope
§ Boxer
§ Banser
§ Glatoficate
§ Torque
§ Resham
§ Cracker
§ Sadmiging
§ Relax
§ Selector
§ Tonck
§ Compound
§ Target
Zinc
§ Actara
§ Curacron
§ Karaty
§ Match
§ Polo
§ Polytrin
c
§ Proclaim
§ Supracide
§ Logran
§ Topik
Seed Treatment
§ Actara
§ Dival gold
§ Fungicides
§ Pidimol
Gold
Sprayer
§ Micron
handy
§ Micron
VLVA+
§ Micron PB-16
§ PB-20
knapscak
§
Micro
Nutrient
§ Cultar
§ Isbaicn
§ Maddus
§ Sopubor
§ Nayazinc
2. Fertilizers
§
Sona DAP
§
Sona Urea
§
Sona Urea Granular
§
Gawara
§
Kisan Urea
§
Kisan Super phosphate
§
Kisan DAP
§
Gypsum
§
Urea,
§
Engro DAP
§
Engro Zorawar
§
Engro Zarkhez
§
Zingro.
3.
Tools and
equipment
§
HULL 9PHALLA
§ HULL 11 PHALLA
§ KARRA 10FIT
§ KARRA 8 FIT
§ ROTTA
WETTER 40BLADS
§ ROTTA
WETTER 45 BLADE
§ DRILL
MACHINE
§ WHEAT RAZZOR
§
TERPHALLA
§
RAJJOR
§
TUBE VELL FAN 5,6``
§
TUBE VELL
FAN 6,7``
§
TUBEVELL FILTURE PIPE
§
TUBEVELL WALL WALL
4.
Machines
Massy Ferguson;
§ MF
240
§ MF
260
§ MF 375
§ MF
385
ALGHAZI;
§ ALGHAZI
480
§ ALGHAZI 640
DIESEL ENGINE
CHIEF
§ 16
HP
§ 20
HP
§ 25 HP
MILLAT
§ 16
HP
§ 20
HP
§ 25 HP
QAIM
§ 16
HP
§ 20
HP
§ 25
HP
5.
Spare
parts
We will take spare parts from the suppliers
of the machinery like tractors and Diesel engine and equipments.
6.
Tools And
Equipment
Intangible
Products
Along
with the tangible products we are also offering intangible products to our
farmers. These services are related to the awareness programs of:
·
How to plough
field
·
Seeds sowing
methods
·
Best seeds
for the crops
·
Irrigation
methods
·
Harvesting
·
Information
about the new technological advancements in the agricultural sector
Pricing: Before setting prices, we have determined our
price objectives. Our price objective is sales oriented i.e. to increase sales
volumes and increase market share. We will charge prices below the competition
that will result in increased sales volumes and discourage the new entrants in
the market. It will automatically increase our market share.
To achieve the pricing objectives, we will
implement the Market Penetration Pricing Strategy. This strategy is helpful for
our business because:
·
Large market
exists for agricultural products: Pakistan
·
Our product
demand is elastic because our target market is price conscious and this thing
will encourage our business because we are charging lower prices.
·
Fierce
indirect competition already prevails in the market. But they are charging high
prices. As we will purchase in bulk quantity, we have economies of scale. Thus
we have the opportunity to charge lower prices.
Placement: Placement tells that where will deliver our
products and services to our customer’s. Our business location is Summandri
Bypass, Faisalabad
Promotion: Promotion will be used to familiarize ourselves to
our customers. Our promotion in the beginning will be in the Awareness Phase.
As we are new to the market, first we have to provide awareness about our
business, products and services to our customers.
The
promotional budget
In first 3 months promotional expenses are assumed
to 200000, then 150000 for next 6 months & 100000 for next 3 months.
We will use following promotional mix:
·
Advertisement
·
Personal
Selling
·
Sales
Promotion
Now this promotional
mix is explained individually as under:
Advertisement:
In advertisement we have two media for i.e. Print
and Electronic.
1. Print
Media:
We will use JHANG newspaper, broachers and
banners.
2. Electronic
Media:
We will use Radio because most of the target
population listen this media.
Personal
Selling:
Personal selling will also use as promotional
tool. We will deal directly with our big customers because in rural areas words
of mouth and roll model play a major role in the purchase of agricultural
products. Keeping in view this concept we can use these big farmers as the role
model for other customers.
Sales
Promotion:
Sales promotion will also use in order to attract
customers’ attention.
1. Discounts
Cash
and trade discounts will also offer to the customers as well.
Physical Evidence: Physical evidence is relevant to the exterior and
interior look of the business location. From exterior aspect will look like a
big store. And in interior, interior will be designed to give a farming look.
We will use green color in wall paints, walls will be decorated with different
agricultural pictures. Physical outlook of our staff will also give the
agricultural touch. They will have proper uniform. Overall look of the store
will give a pleasant look to the customers. Air conditioning and pleasant
fragrance will provide mental comfort to our customers.
People: The essential ingredient of any service provision
is the use of appropriate staff and people. Recruiting the right staff and
training them appropriately in the delivering of their services is essential if
the organization wants to obtain a form of competitive advantage. Consumers
make judgments and deliver perceptions of the services based on the employees
they interact with.
Our staff will have appropriate interpersonal skills,
aptitude and complete knowledge about the product and its usage. They will be
given proper training relevant to their field of work.
Process: Process tells that how customers will get products
and services. In the store there will be two options that is either farmers can
get products of their own choice from the racks or they can get products by
asking the frontline employees to provide them the needed products. Hence this
will provide convenience to the customers in getting their required products.
Financial Plan
CONTENTS OF FINANCIAL PLAN
- ASSUMPTIONS
- PRO FORMA INCOME STATEMENT
- PROFORMA BALANCE SHEET
- CASH FLOW STATEMENT
- SOURCES AND USES OF FUNDS
ASSUMPTIONS
- Financing needed
is 100 Million PKR of which 70 Million PKR is personal financing and 30
Million PKR is Debt Equity.
- Land and building
will be amounted to 30000000.
- We have 28
employees & total compensation paid to them will be 248000.
- Furniture will be
amount to 500000 and other equipments will be amounted to 1000000.
- Sales are expected
to be 10000000/month & an increment of 2% per month is expected for
first 12 months. In the month of February & March, when there is off
season, sales are expected to cut of up to 60% & 50% respectively. In
the month of October & November, the sales are expected to decrease to
80% of previous months.
- In 2nd & 3rd
year, the sales are expected to grow 5% per year. On the basis of heavy
advertisement.
- The aggregate cost
of goods sold is assumed to be 80% of the sales.
- Utilities expenses
are expected to change with the climate changes.
- In first 3 months
promotional expenses are assumed to 200000, then 150000 for next 6 months
& 100000 for next 3 months.
- Fire insurance
policy amounted to 10000 will be taken for safety purposes.
- Depreciation on
land, building, furniture & equipment will be for 15 years on straight
line basis.
- Interest on bank
loan will be paid every month & interest rate is assumed to 13% as the
- Tax rate for
private limited firms is 35%.
- A major portion of
sales are assumed to be on credit basis, so a large amount of accounts
receivable will on balance sheet
- Goods can be
purchased on credit so account payable will exist.
- Loan of bank will
be paid in three years, 3 installments of 10 million each.
- Owner’s equity
amounted to 70 million & profit of the year added every year in it.
PRO FORMA INCOME STATEMENT
|
Pro forma Income Statements
|
||||||
|
|
Jun-10
|
Jul-10
|
Aug-10
|
Sep-10
|
Oct-10
|
Nov-10
|
|
Sales
|
10015000
|
10215300
|
10419606
|
10627998.12
|
8502398.496
|
8672446.466
|
|
Cost
of goods sold
|
8012000
|
8172240
|
8335684.8
|
8502398.496
|
6801918.797
|
6937957.173
|
|
Gross
profit
|
2003000
|
2043060
|
2083921.2
|
2125599.624
|
1700479.699
|
1734489.293
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
Salaries
|
248000
|
248000
|
248000
|
248000
|
248000
|
248000
|
|
Utilities
|
25000
|
25000
|
25000
|
25000
|
20000
|
20000
|
|
Advertising
|
200000
|
200000
|
200000
|
150000
|
150000
|
150000
|
|
Insurance
|
10000
|
10000
|
10000
|
10000
|
10000
|
10000
|
|
Office
expenses
|
15000
|
15000
|
15000
|
15000
|
15000
|
15000
|
|
Depreciation
|
175000
|
175000
|
175000
|
175000
|
175000
|
175000
|
|
Total
operating expenses
|
673000
|
673000
|
673000
|
623000
|
618000
|
618000
|
|
Earning
before interest and taxes
|
1330000
|
1370060
|
1410921.2
|
1502599.624
|
1082479.699
|
1116489.293
|
|
Interest
expense
|
325000
|
325000
|
325000
|
325000
|
325000
|
325000
|
|
Earning
before tax
|
1005000
|
1045060
|
1085921.2
|
1177599.624
|
757479.6992
|
791489.2932
|
|
Tax
@ 35%
|
351750
|
365771
|
380072.42
|
412159.8684
|
265117.8947
|
277021.2526
|
|
Net
profit
|
653250
|
679289
|
705848.78
|
765439.7556
|
492361.8045
|
514468.0406
|
|
Pro forma Income Statements
|
||||||
|
|
Dec-10
|
Jan-11
|
Feb-11
|
Mar-11
|
Apr-11
|
May-11
|
|
Sales
|
10840558.08
|
11057369.24
|
6634421.546
|
5528684.622
|
10840558.08
|
11057369.24
|
|
Cost of goods sold
|
8672446.466
|
8845895.395
|
5307537.237
|
4422947.698
|
8672446.466
|
8845895.395
|
|
Gross profit
|
2168111.616
|
2211473.849
|
1326884.309
|
1105736.924
|
2168111.616
|
2211473.849
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
Salaries
|
248000
|
248000
|
248000
|
248000
|
248000
|
248000
|
|
Utilities
|
20000
|
20000
|
20000
|
25000
|
25000
|
25000
|
|
Advertising
|
150000
|
150000
|
150000
|
100000
|
100000
|
100000
|
|
Insurance
|
10000
|
10000
|
10000
|
10000
|
10000
|
10000
|
|
Office expenses
|
15000
|
15000
|
15000
|
15000
|
15000
|
15000
|
|
Depreciation
|
175000
|
175000
|
175000
|
175000
|
175000
|
175000
|
|
Total operating expenses
|
618000
|
618000
|
618000
|
573000
|
573000
|
573000
|
|
EBIT
|
1550111.616
|
1593473.849
|
708884.3093
|
532736.9244
|
1595111.616
|
1638473.849
|
|
Interest expense
|
325000
|
325000
|
325000
|
325000
|
325000
|
325000
|
|
Earning before tax
|
1225111.616
|
1268473.849
|
383884.3093
|
207736.9244
|
1270111.616
|
1313473.849
|
|
Tax @ 35%
|
428789.0658
|
443965.8471
|
134359.5083
|
72707.92354
|
444539.0658
|
459715.8471
|
|
Net profit
|
796322.5507
|
824508.0017
|
249524.801
|
135029.0009
|
825572.5507
|
853758.0017
|
|
Pro forma Income Statements
|
|||
|
|
At the end of may
2011
|
At the end of may
2012
|
At the end of may
2013
|
|
Sales
|
114411709.9
|
120132295.4
|
126138910.2
|
|
Cost of goods sold
|
91529367.92
|
96105836.32
|
100911128.1
|
|
Gross profit
|
22882341.98
|
24026459.08
|
25227782.03
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
Salaries
|
2976000
|
2976000
|
2976000
|
|
Utilities
|
275000
|
275000
|
275000
|
|
Advertising
|
1800000
|
1800000
|
1800000
|
|
Insurance
|
120000
|
120000
|
120000
|
|
Office expenses
|
180000
|
180000
|
180000
|
|
Depreciation
|
2100000
|
2100000
|
2100000
|
|
Total operating expenses
|
7451000
|
7451000
|
7451000
|
|
Earnings before interest and taxes
|
15431341.98
|
16575459.08
|
17776782.03
|
|
Interest expense
|
3900000
|
2600000
|
1300000
|
|
Earning before tax
|
11531341.98
|
13975459.08
|
16476782.03
|
|
Tax @ 35%
|
4035969.693
|
4891410.678
|
5766873.712
|
|
Net profit
|
7495372.287
|
9084048.402
|
10709908.32
|
PROFORMA BALANCE SHEET
|
Balance Sheet As On 31st may 2011
|
||||||
|
Liabilities
|
|
Amount
|
|
Assets
|
|
Amount
|
|
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
Current
Assets
|
|
|
|
Accounts
payable
|
|
15000000
|
|
Cash
|
|
2245372
|
|
|
|
|
|
Bank
|
|
12000000
|
|
Loan
from bank
|
30000000
|
|
|
Account
receivables
|
|
35000000
|
|
Less
;loan payment
|
10000000
|
20000000
|
|
Inventory
|
|
33850000
|
|
|
|
|
|
Fixed
assets
|
|
|
|
Owners
Equity
|
70000000
|
|
|
Furniture
& equipments
|
1500000
|
|
|
Add
profit for the year
|
7495372
|
|
|
Less
: depreciation
|
100000
|
1400000
|
|
Total
owners equity
|
|
77495372
|
|
|
|
|
|
|
|
|
|
Land
& building
|
30000000
|
|
|
|
|
|
|
Less
: depreciation
|
2000000
|
28000000
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
112495372
|
|
TOTAL
|
|
112495372
|
|
Balance Sheet As On 31st may 2012
|
||||||
|
Liabilities
|
|
Amount
|
|
Assets
|
|
Amount
|
|
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
Current
Assets
|
|
|
|
Accounts
payable
|
|
10000000
|
|
Cash
|
|
788886
|
|
|
|
|
|
Bank
|
|
8000000
|
|
Loan
from bank
|
20000000
|
|
|
Account
receivables
|
|
32500000
|
|
Less
;loan payment
|
10000000
|
10000000
|
|
Inventory
|
|
37990534
|
|
|
|
|
|
Fixed
assets
|
|
|
|
Owners
Equity
|
77495372
|
|
|
Furniture
& equipments
|
1500000
|
|
|
Add
profit for the year
|
9084048
|
|
|
Less
: depreciation
|
200000
|
1300000
|
|
Total
owners equity
|
|
86579420
|
|
|
|
|
|
|
|
|
|
Land
& building
|
30000000
|
|
|
|
|
|
|
Less
: depreciation
|
4000000
|
26000000
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
106579420
|
|
TOTAL
|
|
106579420
|
|
Balance Sheet As On 31st may 2013
|
||||||
|
Liabilities
|
|
Amount
|
|
Assets
|
|
Amount
|
|
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
Current
Assets
|
|
|
|
Accounts
payable
|
|
12500000
|
|
Cash
|
|
375232
|
|
|
|
|
|
Bank
|
|
8500000
|
|
Loan
from bank
|
10000000
|
|
|
Account
receivables
|
|
34000000
|
|
Less
;loan payment
|
10000000
|
0
|
|
Inventory
|
|
41714096
|
|
|
|
|
|
Fixed
assets
|
|
|
|
Owners
Equity
|
86579420
|
|
|
Furniture
& equipments
|
1500000
|
|
|
Add
profit for the year
|
10709908
|
|
|
Less
: depreciation
|
300000
|
1200000
|
|
Total
owners equity
|
|
97289328
|
|
|
|
|
|
|
|
|
|
Land
& building
|
30000000
|
|
|
|
|
|
|
Less
: depreciation
|
6000000
|
24000000
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
109789328
|
|
TOTAL
|
|
109789328
|
CASH FLOW STATEMENT
|
Statement of cash flow as on 31 may
2012
|
||||||||
|
Cash
flow from operating activities
|
|
|
|
|
|
|||
|
Net
income
|
|
|
|
|
|
|
9084048
|
|
|
Depreciation
|
|
|
|
|
|
|
2100000
|
|
|
Cash
provided (used) by current assets and operating related current liabilities
|
|
|||||||
|
Decrease
in account payable
|
|
|
|
|
|
-5000000
|
||
|
Decrease
in bank
|
|
|
|
|
|
|
4000000
|
|
|
Decrease
in account receivable
|
|
|
|
|
|
2500000
|
||
|
Increase
in inventory
|
|
|
|
|
|
|
-4140534
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash provided (used) by operating activities
|
|
|
|
8543514
|
||||
|
|
|
|
|
|
|
|
|
|
|
Cash
flow from financing activities
|
|
|
|
|
|
|||
|
Decrease
in bank loan
|
|
|
|
|
|
-10000000
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase
(decrease) in cash & cash equivalents
|
|
|
|
-1456486
|
||||
|
Balance
of cash as on 31 may 2011
|
|
|
|
|
2245372
|
|||
|
|
|
|
|
|
|
|
|
|
|
Balance
of cash as on 31 may 2012
|
|
|
|
|
788886
|
|||
|
Statement of cash flow as on 31 may
2013
|
||||||||
|
Cash
flow from operating activities
|
|
|
|
|
|
|||
|
Net
income
|
|
|
|
|
|
|
10709908
|
|
|
Depreciation
|
|
|
|
|
|
|
2100000
|
|
|
Cash
provided (used) by current assets and operating related current liabilities
|
|
|||||||
|
Increase
in account payable
|
|
|
|
|
|
2500000
|
||
|
Increase
in bank
|
|
|
|
|
|
|
-500000
|
|
|
Increase
in account receivable
|
|
|
|
|
|
-1500000
|
||
|
Increase
in inventory
|
|
|
|
|
|
|
-3723562
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash provided (used) by operating activities
|
|
|
|
9586346
|
||||
|
|
|
|
|
|
|
|
|
|
|
Cash
flow from financing activities
|
|
|
|
|
|
|||
|
decrease
in bank loan
|
|
|
|
|
|
-10000000
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase
(decrease) in cash & cash equivalents
|
|
|
|
-413654
|
||||
|
Balance
of cash as on 31 may 2012
|
|
|
|
|
788886
|
|||
|
|
|
|
|
|
|
|
|
|
|
Balance
of cash as on 31 may 2013
|
|
|
|
|
375232
|
|||
SOURCES AND USES OF FUNDS
|
Sources and Uses of funds statement
2012
|
||||
|
Sources
|
|
Uses
|
||
|
Funds provided by operations
|
|
|
|
|
|
Net profit
|
9084048
|
|
||
|
Depreciation
|
2100000
|
|
Decrease
in account payable
|
5000000
|
|
|
|
|
Increase
in inventory
|
4140534
|
|
Decrease in bank
|
4000000
|
|
Decrease
in bank loan
|
10000000
|
|
Decrease in account receivable
|
2500000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Decrease in cash & cash
equivalents
|
1456486
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
||
|
Total
|
19140534
|
|
Total
|
19140534
|
|
Sources and Uses of funds statement
2013
|
||||||||||||
|
Sources
|
|
Uses
|
||||||||||
|
|
||||||||||||
|
Funds provided by operations
|
|
|
|
|
|
|
|
|||||
|
Netprofit
|
|
|
|
10709908
|
|
|
|
|
|
|
||
|
Depreciation
|
|
|
2100000
|
|
Increase
in bank
|
|
|
500000
|
||||
|
|
|
|
|
|
|
Increase
in account receivable
|
|
1500000
|
||||
|
Increase in account payable
|
|
2500000
|
|
Increase
in inventory
|
|
|
3723562
|
|||||
|
|
|
|
|
|
|
Decrease
in bank loan
|
|
10000000
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Decrease in cash & cash
equivalents
|
413654
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Total
|
15723562
|
|
Total
|
15723562
|
||||||||
Ratio Analysis
|
Ratio/Year
|
2011
|
2012
|
2013
|
|
Current ratio
|
5.53 times
|
7.92 times
|
6.76 times
|
|
Acid test ratio
|
3.28 times
|
4.12 times
|
3.43 times
|
|
Debt/equity ratio
|
25.80%
|
11.55%
|
0%
|
|
Gross profit margin
|
20%
|
20%
|
20%
|
|
Net profit margin
|
6.55%
|
7.56%
|
8.49%
|
|
Interest coverage
|
2.95 times
|
5.37 times
|
12.67 times
|
|
Return on assets
|
6.66%
|
8.52%
|
9.75%
|
|
Return on equity
|
9.67%
|
10.49%
|
9.75%
|
Operational Plan
Operational Plan’s Contents
·
Description
of Company’s Operations
·
Flow of
Orders for Goods and Services
·
Technology
Utilization
Description of Company’s Operations
At Khushaal Kissan
following major operations will be performed
·
Procurement
Operations
·
Logistics
Inbound
·
Inventory
Management System
·
Sales System
·
Mail Services
Mail services will be used for making contact with
suppliers. For contacting with our suppliers, we will use
·
Telephone
·
Fax
·
E. Mail
·
OCS
·
Pakistan
·
Timing
The
store will open at 09:00am to 09:00pm ,
seven days a week. On Friday timing
will be as 09:00am to 12:00pm.
Flow of Orders for Goods and Services
Flow of orders and
services are shown in the form of data flow diagrams (DFDs).
Sales Order System
Inventory Management System
Procurement Process
Technology Utilization
The purpose of the technology utilization will
enable us to make the operations of the organization quick, efficient and cost
effective. Following IT related technologies will be used:
·
Inventory
Management System (IMS):
This
system will be used to keep record of inventory
inflow and outflow.
·
Sales
Management Systems (SMS):
SMS will be used to keep track of all the sales
·
Time
Management System (TMS)
This
will enable us to ensure the punctuality of the employees.
·
Bar Code
Readers
·
Walk Through
Gate
Assessment of Risk
Contents of Assessment of Risk
- Evaluate weakness of Business
- New Technologies
- Contingency Planning
Weaknesses of business
- Business initiation problems e.g. licenses
- Less distribution
- Problems in locating skilled personnel
- High Investment
New Technologies
As we are dealing in services so emerging new
technologies will not affect us a lot. But technological breakthroughs are
important and critical for success of manufacturing concerns.
Contingency Planning
A Contingency plan is a plan devised for a
specific situation when things could go wrong. Contingency plans include specific
strategies and actions to deal with specific variances to assumptions resulting
in a particular problem, emergency or state of affairs.
Expected Risks and Back-up Plan
Economic Recession
The economy of Pakistan
Retaliation from
Competitor
If at any time we face severe competition from our
competitors than following measures will be taken:
Intangible services will be improved i.e.
customer awareness programs will be run, CRM will be more focused, Delivery
options will be offered to major customers.
New Entrants
As agriculture will be an attractive sector in up
coming years. So there is a chance that there will be more new entrants to meet
the needs of the farmers. In order to give them stiff competition following
steps will be taken:
- Lowering the Prices
- More Advertisement
- Shifting our non profitable customers to the
new entrants
Energy Crises
Energy crisis seems to be worst in coming years
and measures to solve these problems are not realistic. So to meet our energy
demands we will use back-up energy sources like generators.
Bad Debts
As in agriculture sector, the chances of bad debs
are more than any other industry. In order to recover our debts we will make
debt recovery policies lenient and installment options can also be there for
the customers.
Partners’ Dispute
If there is any dispute among the partners, an
arbitrary committee will be formed and according to its decisions the
implementation will be made.
Harvest Strategy
Harvest Strategy
Harvest strategy tells that how business will be closed. we have
following options to close the business.
Partners Consent
When investment has been covered through
the business and partners are willing to adjourn the business. The amount
received through the sale of business will be used to pay our liabilities and
remaining amount will be distributed among the partners according to their
principle share.
Business Failure
If our business is not profitable and is
not providing enough return on investment. in this case business will be
terminated as well. All business assets will be sold out on the market price.
and the amount received through the sale of business will be used to pay our
liabilities and remaining amount will be distributed among the partners
according to their principle share.
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