Feasibility Report on Internet Cafe

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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. 1

Transcript of Feasibility Report on Internet Cafe

Page 1: Feasibility Report on Internet Cafe

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

60000000

60000000

60000000

18481000

18481000

7000000

70000004500000

0

10000000

20000000

30000000

40000000

50000000

60000000

70000000

2001 2002 2003 2004 2005 2006 2007 2008

Years

Intr

enet

Use

rs

.

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

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CHAPTER - 4

CRUCIAL FACTORS & STEPS IN DECISION MAKING FORINVESTMENT

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.

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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.

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 orcheck 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

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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 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.

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4.10 MARKETING

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

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CHAPTER – 5

TECHNICAL ANALYSIS

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 Unit(Rs.)

Total Cost(Rs.)

Computer System(P-4)

21 25000 525000

Hub 1 6000 6000Computer Camera 21 1000 21000

UPS 1 60000 60000Printer 1 28000 28000

Scanner 1 4000 4000Modem DSL 1 8000 8000

Other EquipmentNetworking Cable 720 ft 10 per ft 7200Total Equipment

Cost659200

FURNITURE & FIXTURE DETAILS

Description No. Rate (Rs.) Total Cost(Rs.)Computer Table &

Cabins21 5000 105000

Computer Chairs 21 2000 42000Air Conditioner 2 25000 50000Telephone Sets 2 1000 2000

Fax Machine 1 5000 5000Carpet 900 sq ft 30 per sq ft 27000

Total Furniture & Fixtures

231000

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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 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 Salary(Rs)

Annual Salary (Rs)

Network Administrator

1 8000 96000

Security Guard 1 4000 48000Total 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 600Sitting Area 100Administrator Office 100Free Space 100Total 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. 4000 per marla

16000 192000

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5.4 UTILITIES REQUIREMENTS

Mainly two utility are required to operate the cafe.

Electricity Telephone

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CHAPTER - 6

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 231000Pre – Operational Expense 28000

Total Capital Expenditure (A) 918200Working Capital

Up Front Insurance Payment 0Up Front Building Rent 192000

Total Working Capital (B) 192000Total 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) 360258Pay Back Period (Years) 2.36

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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.

PARTICULAR RATIO AMOUNTEquity Shareholder

FundPriyank 1/3 370067Umang 1/3 370067

Jignasha 1/3 370067

6.3 KEY ASSUMPTIONS

FINANCIAL ASSUMPTIONS:

Project Life(Years) 5Equity 100%

Discount Rate 20%

PRODUCTION ASSUMPTIONS :

NO. Of Computers 21Total capacity per day(Hours) 240Maximum Capacity Per Year 86400Capacity Utilization (Year 1) % 70%Capacity Utilization (Year 1) hours 60480Capacity Growth Rate Per Year % 5%Maximum capacity Composing/pages/day

100

First year capacity 20%Increase in composing capacity 5%First year capacity Web Developing /web/year

5

Increase in W.D.per Year 2

OPERATING ASSUMPTIONS:

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

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ECONOMY RELATED ASSUMPTIONS

Electricity charges per month/year 25,212Electricity 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 300000Connection Type 512 KBConnection Charges Per Month 25000Composing Charges (%of Composing sales)

50%

Web Development Charges(%of Web sales)

50%

Internet connection charges(Decrease Rate)

1%

Equipment maintenance(%of internet sales)

2%

Prepaid Building Rate(Months) 12Rent Rate Per Marla 4000Sq. ft in per marla 225Rent Growth rate 10%Insurance Rate(%of net fixed Assets) 2%Marketing &selling Expense(% of sales)

2%

Taxes 20%Printing expense(%of Printing Price) 50%Fax(%Price of per Fax) 50%

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REVENUE ASSUMPTIONS

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

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6.4 FINANCIAL ANALYSIS

6.4.1 PROJECTED INCOME STATEMENT

Particular 2010 2011 2012 2013 2014Sales

Internet Sales 1330560 1425600 1520640 1615680 1710720Printing Revenue 133056 142560 152064 161568 171072

Fax Revenue 39917 42768 45619 48470 51322Composing Revenue 144000 180000 216000 252000 288000

Web development Revenue 50000 70000 90000

Total Revenue 1647533 1790928 1984323 2147718 2311114

Cost Of Goods SoldInternet Connection

Charges 300000 297000 294030 291090 288179Printing Charges 66528 71280 76032 80784 85536

composing charges 72000 90000 108000 126000 144000Web Development 25000 35000 45000

Fax Charges 19958 21384 22810 24235 25661Machine Maintenance 26612 28512 30413 32314 34214

Direct Electricity 237553 219766 229217 238668 248118Total COGS 722651 727942 785502 828091 870708

Gross Profit/Loss 924882 1062986 1198821 1319627 1440406Operating Expenses

Payroll Admin 144000 158400 174240 191664 210830Marketing&selling 26611 28512 30413 32314 34214Amortization (Pre-

Operation) 5600 5600 5600 5600 5600Depreciation 178040 178040 178040 178040 178040

Total 354251 370552 388293 407618 428684Operating Profit/loss 570631 692434 810528 912009 1011722

Non Operating ExpensesFinancial Charges(Short

Term) 26880 32341 34800 37554 40633Financial Charges(long

Term) 35291 29952 23866 16927 9017Building rent 192000 211200 232320 255552 281107

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Total 254171 273493 290986 310033 330757

Profit Before Tax 316460 418941 519542 601976 680965Tax 63292 83788 103909 120396 136193

Profit After Tax 253168 335153 415633 481580 544772

Retained Earning(Year Beginning) 253168 588321 1003955 1485537

Retained Earning(year Ending) 253168 588321 1003954 1485535 2030309

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6.4.2 PROJECTED BALANCE SHEET

Particular Year 0 2010 2011 2012 2013 2014AssetsCash 400678 875997 1425712 2034436 2698437

upfront Insurance 17804 14243 10682 7122 3561Upfront 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 890200Less: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 314789Long Term Loan 252080 213944 170470 120909 64409 0

Total Liabilities 444080 444954 419040 389151 354647 314789Equity

Paid up Capital 666120 666120 666120 666120 666120 666120Retained Earning 0 253168 588320 1003955 1485537 2030307

Total 666120 919288 1254440 1670075 2151657 2696427

Total Liabilities & Equity 1110200 1364242 1673480 2059226 2506304 3011216

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6.4.3 PROJECT CASH FLOW

Year O 2010 2011 2012 2013 2014

Operating Activities

Net Profit 253,168 335,152 415,635 481,582 544,770Depriciation 178,040 178,040 178,040 178,040 178,040

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

Cash Provided By Operations

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

Financing Activities

Long term Debt principle Payment

-38,136 -43,475 -49,561 -56,500 -64,409

Building Rent Payment -192,000 -211,200 -232,320 -255,552 -281,107

-309,218

Building Rent Expense 192,000 211,200 232,320 255,552 281,107Addition to Long term debt 252,080

Addition to Short Term Debt 192,000 39,010 17,560 19,672 21,995 24,551Paid up Capital 666,120

Casfh Flow By Financing Activities

918,200 -18,326 -47,034 -53,121 -60,059 -67,969

Investing Activities

Capital expenditure -918,200

Cash Flow by Investing Activities

-918,200

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

Forward0 0 400,678 875,997 1,425,7

122,034,4

36Cash Balance 0 400,678 875,997 1,425,712 2,034,4

362,698,4

37

Cash carried Forward 0 400,678 875,997 1,425,712 2,034,436

2,698,437

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6.4.4 RATIO ANALYSIS

1. GROSS PROFIT RATIO = Gross Profit / Net sales

Year 2010 2011 2012 2013 2014Gross Profit 924882 1062986 1198821 1319627 1440406Sales 1647533 1790928 1984323 2147718 2311114Gross Profit Ratio(%)

56.14 59.35 60.41 61.44 62.33

Gross Profit Ratio(%)

56.14

59.3560.41

61.4462.33

52

54

56

58

60

62

64

2010 2011 2012 2013 2014

Years

Per

cen

tag

e

2. NET PROFIT RATIO = Net Profit / Sales

Year 2010 2011 2012 2013 2014Net Profit 253168 335153 415633 481580 544772

Sales 1647533 1790928 1984323 2147718 2311114Net Profit Ratio(%)

15.37 18.71 20.95 22.42 23.57

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Net Profit Ratio(%)

15.37

18.7120.95

22.4223.57

0

5

10

15

20

25

2010 2011 2012 2013 2014

Years

Pe

rce

nta

ge

3. ASSETS TURNOVER RATIO = Sales / Total Assets

Year 2010 2011 2012 2013 2014Total Assets 1364242 1673480 2059226 2506305 3011216

Sales 1647533 1790928 1984323 2147718 2311114Assets

Turnover(times)

0.83 0.93 1.04 1.17 1.30

Total Assets Turnover(times)

0.830.93

1.041.17

1.3

0

0.2

0.4

0.6

0.8

1

1.2

1.4

2010 2011 2012 2013 2014

Years

Perc

en

tag

e

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

Year 2010 2011 2012 2013 2014PAT 253168 335153 415633 481580 544772

Owner’s Equity 919288 1254440 1670075 2151657 2696427Return on Equity (%)

27.54 26.72 24.89 22.38 20.20

Return on Owner's Equity

27.54 26.7224.89

22.3820.2

0

5

10

15

20

25

30

2010 2011 2012 2013 2014

Years

Per

cen

tag

e

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

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Cash Ratio(%)

173.45

352.41

531.5

700.95

857.22

0100200300400500600700800900

1000

2010 2011 2012 2013 2014

Years

Per

cen

tag

e

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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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