Footwear Retail Outlet

Pre-Feasibility Study

Prime Minister’s Small Business Loan Scheme Footwear Retail Outlet (Ladies and Children)

Small and Medium Enterprises Development Authority

Ministry of Industries & Production Government of Pakistan

www.smeda.org.pk

HEAD OFFICE 4th Floor, Building No. 3, Aiwan e Iqbal, Egerton Road,

Lahore Tel 92 42 111 111 456, Fax 92 42 36304926-7

[email protected]

REGIONAL OFFICE

PUNJAB REGIONAL OFFICE

SINDH REGIONAL OFFICE

KPK REGIONAL OFFICE

BALOCHISTAN

3rd Floor, Building No. 3,

Aiwan e Iqbal, Egerton Road Lahore,

Tel: (042) 111-111-456 Fax: (042)6304926-7

[email protected]

5TH Floor, Bahria Complex II, M.T. Khan Road,

Karachi. Tel: (021) 111-111-456

Fax: (021) 5610572 [email protected]

Ground Floor State Life Building

The Mall, Peshawar. Tel: (091) 9213046-47


Bungalow No. 15-A Chaman Housing Scheme

Airport Road, Quetta. Tel: (081) 831623, 831702


September 2013

Pre-Feasibility Study Footwear Retail Outlet (Ladies and Children)

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Table of Contents

1 DISCLAIMER ......................................................................................................................................... 2

2 PURPOSE OF THE DOCUMENT ........................................................................................................ 3

3 INTRODUCTION TO SMEDA ............................................................................................................. 3

4 INTRODUCTION TO SCHEME .......................................................................................................... 4

5 EXECUTIVE SUMMARY ..................................................................................................................... 4

6 BRIEF DESCRITION OF PROJECT & PRODUCT .......................................................................... 4

7 CRITICAL FACTORS ........................................................................................................................... 5

8 INSTALLED & OPERATIONAL CAPACITIES ................................................................................ 5

9 GEOGRAPHICAL POTENTIAL FOR INVESTMENT .................................................................... 5

10 POTENTIAL TARGET MARKETS / CITIES .................................................................................... 5

11 PROJECT COST SUMMARY .............................................................................................................. 6

11.1 PROJECT ECONOMICS ................................................................................................................... 6 11.2 PROJECT FINANCING .................................................................................................................... 7 11.3 PROJECT COST ............................................................................................................................. 7 11.4 SPACE REQUIREMENT .................................................................................................................. 8 11.5 MACHINERY AND EQUIPMENT...................................................................................................... 8 11.6 OFFICE EQUIPMENT ...................................................................................................................... 8 11.7 RAW MATERIAL REQUIREMENTS ................................................................................................. 8 11.8 HUMAN RESOURCE REQUIREMENT .............................................................................................. 9 11.9 REVENUE GENERATION ................................................................................................................ 9 11.10 OTHER COSTS .............................................................................................................................. 9

12 CONTACT DETAILS OF EXPERTS & CONSULTANTS .............................................................. 11

13 ANNEXURE .......................................................................................................................................... 12

13.1 INCOME STATEMENT .................................................................................................................. 12 13.2 CASH FLOW STATEMENT ........................................................................................................... 13 13.3 BALANCE SHEET ........................................................................................................................ 14

14 USEFUL LINKS .................................................................................................................................... 15

15 OPERATING AND FINANCIAL ASSUMPTIONS .......................................................................... 16


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1 DISCLAIMER

This information memorandum is to introduce the subject matter and provide a general idea and information on the said matter. Although, the material included in this document is based on data/information gathered from various reliable sources; however, it is based upon certain assumptions which may differ from case to case. The information has been provided on as is where is basis without any warranties or assertions as to the correctness or soundness thereof. Although, due care and diligence has been taken to compile this document, the contained information may vary due to any change in any of the concerned factors, and the actual results may differ substantially from the presented information. SMEDA, its employees or agents do not assume any liability for any financial or other loss resulting from this memorandum in consequence of undertaking this activity. The contained information does not preclude any further professional advice. The prospective user of this memorandum is encouraged to carry out additional diligence and gather any information which is necessary for making an informed decision, including taking professional advice from a qualified consultant/technical expert before taking any decision to act upon the information.

For more information on services offered by SMEDA, please contact our website: www.smeda.org.pk


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2 PURPOSE OF THE DOCUMENT

The objective of the pre-feasibility study is primarily to facilitate potential entrepreneurs in project identification for investment. The project pre-feasibility may form the basis of an important investment decision and in order to serve this objective, the document/study covers various aspects of project concept development, start-up, and production, marketing, finance and business management.

The purpose of this document is to facilitate potential investors in Footwear Retail Outlet by providing them with a general understanding of the business with the intention of supporting potential investors in crucial investment decisions.

The need to come up with pre-feasibility reports for undocumented or minimally documented sectors attains greater imminence as the research that precedes such reports reveal certain thumb rules; best practices developed by existing enterprises by trial and error, and certain industrial norms that become a guiding source regarding various aspects of business set-up and it’s successful management.

Apart from carefully studying the whole document one must consider critical aspects provided later on, which form basis of any Investment Decision.

3 INTRODUCTION TO SMEDA

The Small and Medium Enterprises Development Authority (SMEDA) was established in October 1998 with an objective to provide fresh impetus to the economy through development of Small and Medium Enterprises (SMEs).

With a mission "to assist in employment generation and value addition to the national income, through development of the SME sector, by helping increase the number, scale and competitiveness of SMEs" , SMEDA has carried out ‘sectoral research’ to identify policy, access to finance, business development services, strategic initiatives and institutional collaboration and networking initiatives.

Preparation and dissemination of prefeasibility studies in key areas of investment has been a successful hallmark of SME facilitation by SMEDA.

Concurrent to the prefeasibility studies, a broad spectrum of business development services is also offered to the SMEs by SMEDA. These services include identification of experts and consultants and delivery of need based capacity building programs of different types in addition to business guidance through help desk services.


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4 INTRODUCTION TO SCHEME

Prime Minister’s ‘Small Business Loans Scheme’, for young entrepreneurs, with an allocated budget of Rs. 5.0 Billion for the year 2013-14, is designed to provide subsidised financing at 8% mark-up per annum for one hundred thousand (100,000) beneficiaries, through designated financial institutions, initially through National Bank of Pakistan (NBP) and First Women Bank Ltd. (FWBL).

Small business loans with tenure upto 7 years, and a debt : equity of 90 : 10 will be disbursed to SME beneficiaries across Pakistan, covering; Punjab, Sindh, Khyber Pakhtunkhwah, Balochistan, Gilgit Baltistan, Azad Jammu & Kashmir and Federally Administered Tribal Areas (FATA).

5 EXECUTIVE SUMMARY

This SME venture entails setting up Footwear Retail outlet in urban centres of Pakistan. The outlet is proposed to cater the demand of ladies’ and children’s footwear, belonging to middle to upper middle income groups.

The demand for footwear is constantly rising and there are a number of local manufacturers producing quality footwear. The consumers are becoming increasingly quality conscious and seek products offering value for money. This trend has led to strong growth in retail footwear outlets around Pakistan.

The focus of the business would be to provide casual, semi-formal and formal, quality footwear at affordable prices. The shoes are assumed to be purchased from different subcontract manufacturers and sold at the retail outlet.

The total project cost for setting up footwear retail outlet is estimated at Rs. 2.16 million out of which Rs. 0.93 million is capital cost and Rs. 1.23 million as working capital. The project is proposed to be financed through 90% debt and 10% equity. The project NPV is calculated to be around Rs 4.79 million, with an IRR of 49% and payback period of 2.83 years. This business will provide employment opportunity to 7 individuals including the owner manager. The outlet will remain operational for 12 hours per day, and sell 16,000 pairs of shoes in first year. The legal business status of this project is proposed as ‘Sole Proprietorship

6 BRIEF DESCRITION OF PROJECT & PRODUCT

This document provides information for setting up a Footwear Retail Outlet selling ladies’ and children’s shoes. It involves purchase of ladies’ and children’s shoes from any local manufacturer and selling it through retail outlet opened in rented premises, under a brand name in any of the urban centres of Pakistan. The retail outlet will have covered area 900 sqft. Shoes of requisite qualities and


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quantities will be sourced from the wholesale market and small shoe manufactures.

The product mix would include ladies' and children's shoes in all the sizes. This product mix is divided into further categories: casual, semi-formal and formal footwear which include pumps, heels, coat shoes, sandals, slippers etc. made of leather and other materials. The three categories among ladies' and children's shoes are further classified by three different proposed selling prices, ranging between Rs.700 – Rs. 1,050 for ladies’ shoes and Rs. 350 – Rs. 630 for children’s shoes.

7 CRITICAL FACTORS

Following are the factors critical for the success of the footwear retail business. Develop strong linkages with suppliers for sourcing quality product at

competitive prices. Efficient management of stock to keep inventory cost at the minimum. Selection of a central location keeping in mind the target market. Remain updated of the market trends including latest fashions and designs. Induction of trained sales personnel for efficient customer handling. Strong competition with several shops opened in same commercial area. Very frequent changes in designs in shoe brands in the market.

8 INSTALLED & OPERATIONAL CAPACITIES

Since the proposed venture is a trading business, there are no installed capacities per se. The turnover will depend on the seasonal sales and ability of the venture to attract customers through quality and price incentives. Experience and efficient sales staff also plays a critical role in determining the sales revenue of the business. The business is expected to have capacity to sell 24,000 shoes in one year.

The proposed project assumes to sell around 16,000 pairs in the first year of operation at 70% capacity. These turnover estimates are based on expert opinion and market sources. The outlet will operate for 12 hours daily.

9 GEOGRAPHICAL POTENTIAL FOR INVESTMENT

It is important to choose a location where customers have an easy access to the shoe store, therefore shopping malls, busy markets or similar high traffic areas would be preferable location options.

10 POTENTIAL TARGET MARKETS / CITIES

Lahore is the footwear centre of the country, followed by Karachi, Faisalabad, Hyderabad, Peshawar, Sahiwal, Gujranwala and Rawalpindi. Most of the shoe


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manufacturing units and numerous shoe stores are established in these cities. Therefore, any of the above cities would be a profitable option for setting up a footwear retail outlet.

11 PROJECT COST SUMMARY

A detailed financial model has been developed to analyze the commercial viability of Footwear Retail Outlet under the Prime Minister’s Small Business Loan Scheme. Various cost and revenue related assumptions along with results of the analysis are outlined in this section. The projected Income Statement, Cash Flow Statement and Balance Sheet are attached as appendix

11.1 Project Economics

A target sale of 16,000 shoes pairs would be achieved by footwear retail outlet in first year. The following table shows internal rates of return and payback period.

Table 1: Project Economics

Description Details Internal Rate of Return (IRR) 49% Payback Period (yrs) 2.83 Net Present Value (NPV) Rs. 4,797,019

Returns on the scheme and its profitability are highly dependent on the efficiency of the entrepreneur in selecting appropriate business location, hiring trained sales persons and maintaining quality in terms of shoe designs and customer services.


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11.2 Project Financing

Following table provides details of the equity required and variables related to bank loan:

Table 2: Project Financing

Description Details Total Equity (10%) Rs.216,506 Bank Loan (90%.) Rs.1,948,557 Markup to the Borrower (%age/annum) 8%Tenure of the Loan (Years) 7

11.3 Project Cost

Following requirements have been identified for operations of the proposed business.

The furniture and fixture is required for display of shoes and storing of stock and while the office equipment including computers, printer and air conditioner is necessary for routine business operations and giving a professional outlook to attract customers and achieve customer satisfaction.

Table 3: Capital Investment for the Project Capital Investment Rs. Furniture & fixtures 809,725 Office equipment 103,500 Pre-operating costs 21,758 Total Capital Costs 934,983 Working Capital Rs. Repair material inventory 5,241 Opening inventory 546,840 Upfront building rent 378,000 Cash 300,000 Total Working Capital 1,230,081 Total Investment 2,165,064


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11.4 Space Requirement

The area has been calculated on the basis of space requirement for display area, store, management space and washroom. Following table shows calculations for project space requirement.

Table 4: Space Requirement

Space Requirement (in ft.) Rs/Sqft Sqft Amount (Rs.)

Shop 70 900 63,000

11.5 Machinery and Equipment

This particular project does not entail machinery and equipment for production.

11.6 Office Equipment

The computer and printer are required for routine office operation and record maintenance similarly barcode reader and inventory management software is necessary for keeping track of inventory and ease of reference of customer and owner both.

Table 5: Office Equipment Costs

Description Quantity Cost Amount Computers 1 20,000 20,000 UPS 1 7,500 7,500 Computer printer (s) 1 10,000 10,000 Bar code reader 1 15,000 15,000 Inventory Management/Acc software

1 20,000 20,000

Security camera 1 30,000 30,000 Telephones 2 1,000 1,000 Total Office Equipment 103,500

Rental Vehicle will be used as a mode of transportation of goods. Hence no vehicle is proposed for this project.

11.7 Raw Material Requirements

The shoe will be purchased from the manufacturers and wholesalers and the purchase price per unit is depicted in the table below.


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Table 6: Cost of Material Purchase price per unit year 1 - Ladies shoes Qty %age Price (Rs)

Pair A 20% 750 Pair B 50% 625 Pair C 30% 500 Purchase price per unit in year 1 - Children shoe

Pair A 20% 450 Pair B 50% 350 Pair C 30% 250

11.8 Human Resource Requirement

Table 7: Human Resource Requirement Description No. of Employees Salary per month

Store manager 1 17,000Salesmen 4 10,000Helper 2 10,000Total Staff 7

The table above provides details of human resource required in 1st year to run this project. Salaries of all employees are estimated to increase at 10% annually. 11.9 Revenue Generation

Table 8: Revenue Generation

Product Unit Qty Sales Price (Rs./Unit)

First Year Sales

Revenue (Rs)

Ladies Shoes Pair A No. 2,575 1,050 2,704,800Pair B No. 6,440 875 5,635,000Pair C No. 3,864 700 2,704,800Children Shoes Pair A No. 644 630 405,720

Pair B No. 1,610 490 788,900

Pair C No. 966 350 338,100

Total 12,577,320

11.10 Other Costs

Following table shows other cost such as Furniture, interior designing and electrical equipments etc.


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Table 9: Other Costs

Description Quantity /

Area Cost / Rate Amount / Other

Furniture Executive Chairs 1 7,000 7,000Counter 1 20,000 20,000Seating for customers 8 1,500 12,000Floor equipment (baskets, mirrors etc) 1 10,000 10,000Interior Designing Shoe Racks with glass material 315 515 162,225False ceiling, front door & paint 450 500 225,000Flooring 900 sq ft @ 167 450 167 75,000Electrical equipment Air conditioners (2 ton split)

1 60,000 60,000

Generator (5 KVA) 1 70,000 70,000Electric wiring & lighting 60,000Bracket fans 4 1,800 7,200Shoe Store Shoe Racks with iron & Wood 280 300 84,000Lighting & Wiring 30,000Wooden Stools 4 1,000 4,000Admin Office Desks and Chairs 1 13,300 13,300Total Furniture & Fixtures 809,725


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12 CONTACT DETAILS OF EXPERTS & CONSULTANTS

Principal Govt. Institute of Leather Technology, Gujranwala P.O Anwar Industry G.T.Road, Gujranwala Phone, 055 – 9230056

Principal Footwear Training Institute Plot # 24, Phase 5, Hayatabad, Peshawar 091 – 9217244

Principal

National College of Arts 4- Shahrah-E-Qaid-E-Azam, Lahore Tel: +92 42 99210599, 99210601

Principal Pakistan School of Fashion Design 51-J/3, Johar Town, Lahore TEL: +92 42 3531 5401 – 08

Pre-Feasibility Study Footwear Retail Outlet

September 2013

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13 ANNEXURE

13.1 Income Statement

Income StatementYear 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Revenue 12,577,320 15,424,794 18,101,576 21,159,466 24,647,919 28,622,467 31,553,911 34,709,302 38,180,232 41,998,255

Cost of salesCost of purchasing shoes 9,374,400 11,048,400 12,963,456 15,151,039 17,646,504 20,489,552 22,538,508 24,792,358 27,271,594 29,998,754 Direct labor 720,000 790,100 867,025 951,440 1,044,074 1,145,726 1,257,276 1,379,686 1,514,014 1,661,421 Fixing and repair material 125,773 154,248 181,016 211,595 246,479 286,225 315,539 347,093 381,802 419,983 Direct Electricity 438,696 482,566 530,822 583,904 642,295 706,524 777,177 854,894 940,384 1,034,422 Transport rental expense 234,360 276,210 324,086 378,776 441,163 512,239 563,463 619,809 681,790 749,969 Generator expense 147,150 161,865 178,052 195,857 215,442 236,987 260,685 286,754 315,429 346,972

Total cost of sales 11,040,379 12,913,389 15,044,457 17,472,611 20,235,957 23,377,253 25,712,647 28,280,595 31,105,014 34,211,520 Gross Profit 1,536,941 2,511,405 3,057,118 3,686,855 4,411,961 5,245,214 5,841,263 6,428,707 7,075,218 7,786,735

General administration & selling expensesAdministration expense 204,000 223,862 245,657 269,575 295,821 324,622 356,228 390,911 428,971 470,736 Sales commission 377,320 462,744 543,047 634,784 739,438 858,674 946,617 1,041,279 1,145,407 1,259,948 Building rental expense 126,000 138,600 152,460 167,706 184,477 202,924 223,217 245,538 270,092 297,101 Communications expense (phone, fax, mail, internet, etc.) 36,000 39,600 43,560 47,916 52,708 57,978 63,776 70,154 77,169 84,886 Office expenses (stationary, entertainment, janitorial services, etc.) 20,400 22,386 24,566 26,957 29,582 32,462 35,623 39,091 42,897 47,074 Promotional expense 180,000 189,000 198,450 208,373 218,791 229,731 241,217 253,278 265,942 279,239 Depreciation expense 91,323 91,323 91,323 91,323 91,323 91,323 91,323 91,323 91,323 91,323 Amortization of pre-operating costs 4,352 4,352 4,352 4,352 4,352 - - - - -

Subtotal 1,039,394 1,171,866 1,303,414 1,450,985 1,616,490 1,797,715 1,958,001 2,131,574 2,321,801 2,530,306 Operating Income 497,547 1,339,539 1,753,704 2,235,870 2,795,471 3,447,499 3,883,262 4,297,133 4,753,418 5,256,429

Earnings Before Interest & Taxes 497,547 1,339,539 1,753,704 2,235,870 2,795,471 3,447,499 3,883,262 4,297,133 4,753,418 5,256,429

Interest expense on long term debt (Project Loan) 155,885 138,414 119,546 99,169 77,161 53,393 27,723 - - - Subtotal 155,885 138,414 119,546 99,169 77,161 53,393 27,723 - - - Earnings Before Tax 341,662 1,201,125 1,634,158 2,136,701 2,718,310 3,394,106 3,855,539 4,297,133 4,753,418 5,256,429

Tax - 120,113 245,124 320,505 543,662 678,821 771,108 1,074,283 1,188,354 1,314,107 NET PROFIT/(LOSS) AFTER TAX 341,662 1,081,013 1,389,034 1,816,196 2,174,648 2,715,285 3,084,431 3,222,850 3,565,063 3,942,322

Balance brought forward 341,662 1,422,675 2,811,709 4,627,905 6,802,553 9,517,838 12,602,270 15,825,120 19,390,183 Total profit available for appropriation 341,662 1,422,675 2,811,709 4,627,905 6,802,553 9,517,838 12,602,270 15,825,120 19,390,183 23,332,504 Balance carried forward 341,662 1,422,675 2,811,709 4,627,905 6,802,553 9,517,838 12,602,270 15,825,120 19,390,183 23,332,504


September 2013

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13.2 Cash Flow Statement

Cash Flow StatementYear 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Operating activitiesNet profit 341,662 1,081,013 1,389,034 1,816,196 2,174,648 2,715,285 3,084,431 3,222,850 3,565,063 3,942,322 Add: depreciation expense 91,323 91,323 91,323 91,323 91,323 91,323 91,323 91,323 91,323 91,323 amortization of pre-operating costs 4,352 4,352 4,352 4,352 4,352 - - - - - Deferred income tax (140,082) (372,349) (424,881) (555,542) (570,845) (712,762) (809,663) (687,541) (760,547) (841,029) Closing stock (480,016) (59,540) (88,932) (101,325) (115,307) (131,072) (95,167) (106,998) (117,684) (129,438) Equipment inventory (5,241) (1,508) (1,567) (1,891) (2,277) (2,738) (2,398) (2,731) (3,154) (3,643) 27,147 Opening inventory (546,840) (129,875) (156,998) (189,409) (228,096) (274,225) (236,444) (273,092) (315,422) (364,312) 2,714,712 Pre-paid building rent (378,000) (37,800) (41,580) (45,738) (50,312) (55,343) (60,877) (66,965) (73,662) (81,028) 891,304 Accounts payable 837,011 152,962 175,325 201,249 230,738 256,573 193,487 214,026 236,869 1,930

Cash provided by operations (930,081) 485,067 697,615 909,182 1,175,567 1,482,602 1,919,627 2,121,622 2,341,422 2,566,041 6,698,271

Financing activitiesProject Loan - principal repayment (218,379) (235,850) (254,718) (275,095) (297,103) (320,871) (346,541) - - - Additions to Project Loan 1,948,557 - - - - - - - - - - Issuance of shares 216,506 - - - - - - - - - -

Cash provided by / (used for) financing activities 2,165,064 (218,379) (235,850) (254,718) (275,095) (297,103) (320,871) (346,541) - - -

Investing activitiesCapital expenditure (934,983) - - - - - - - - - - Acquisitions

Cash (used for) / provided by investing activities (934,983) - - - - - - - - - -

NET CASH 300,000 266,688 461,765 654,464 900,472 1,185,499 1,598,756 1,775,081 2,341,422 2,566,041 6,698,271

Cash balance brought forward 300,000 566,688 1,028,453 1,682,918 2,583,390 3,768,889 5,367,645 7,142,727 9,484,149 12,050,189 Cash available for appropriation 300,000 566,688 1,028,453 1,682,918 2,583,390 3,768,889 5,367,645 7,142,727 9,484,149 12,050,189 18,748,460 Dividend - - - - - - - - - - Cash balance 300,000 566,688 1,028,453 1,682,918 2,583,390 3,768,889 5,367,645 7,142,727 9,484,149 12,050,189 18,748,460 Cash carried forward 300,000 566,688 1,028,453 1,682,918 2,583,390 3,768,889 5,367,645 7,142,727 9,484,149 12,050,189 18,748,460


September 2013

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13.3 Balance Sheet

Balance SheetYear 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Current assetsCash & Bank 300,000 566,688 1,028,453 1,682,918 2,583,390 3,768,889 5,367,645 7,142,727 9,484,149 12,050,189 18,748,460 Closing stock 480,016 539,557 628,489 729,814 845,121 976,193 1,071,360 1,178,358 1,296,042 1,425,480 Equipment spare part inventory 5,241 6,748 8,315 10,206 12,483 15,221 17,619 20,350 23,504 27,147 - Opening inventory 546,840 676,715 833,712 1,023,121 1,251,217 1,525,442 1,761,886 2,034,978 2,350,400 2,714,712 - Pre-paid building rent 378,000 415,800 457,380 503,118 553,430 608,773 669,650 736,615 810,277 891,304 -

Total Current Assets 1,230,081 2,145,967 2,867,418 3,847,852 5,130,334 6,763,446 8,792,993 11,006,030 13,846,687 16,979,394 20,173,940

Fixed assetsFurniture & fixtures 809,725 728,753 647,780 566,808 485,835 404,863 323,890 242,918 161,945 80,973 - Office equipment 103,500 93,150 82,800 72,450 62,100 51,750 41,400 31,050 20,700 10,350 -

Total Fixed Assets 913,225 821,903 730,580 639,258 547,935 456,613 365,290 273,968 182,645 91,323 -

Intangible assetsPre-operation costs 21,758 17,406 13,055 8,703 4,352 - - - - - - Legal, licensing, & training costs - - - - - - - - - - -

Total Intangible Assets 21,758 17,406 13,055 8,703 4,352 - - - - - - TOTAL ASSETS 2,165,064 2,985,276 3,611,052 4,495,813 5,682,621 7,220,059 9,158,283 11,279,998 14,029,332 17,070,717 20,173,940

Current liabilitiesAccounts payable 837,011 989,973 1,165,299 1,366,548 1,597,286 1,853,859 2,047,346 2,261,372 2,498,240 2,500,170

Total Current Liabilities - 837,011 989,973 1,165,299 1,366,548 1,597,286 1,853,859 2,047,346 2,261,372 2,498,240 2,500,170

Other liabilitiesDeferred tax (140,082) (512,430) (937,311) (1,492,854) (2,063,699) (2,776,461) (3,586,124) (4,273,666) (5,034,213) (5,875,241) Long term debt (Project Loan) 1,948,557 1,730,178 1,494,328 1,239,610 964,515 667,412 346,541 - - - - Long term debt (Working Capital Loan) - - - - - - - - - - -

Total Long Term Liabilities 1,948,557 1,590,096 981,898 302,299 (528,339) (1,396,287) (2,429,920) (3,586,124) (4,273,666) (5,034,213) (5,875,241)

Shareholders' equityPaid-up capital 216,506 216,506 216,506 216,506 216,506 216,506 216,506 216,506 216,506 216,506 216,506 Retained earnings 341,662 1,422,675 2,811,709 4,627,905 6,802,553 9,517,838 12,602,270 15,825,120 19,390,183 23,332,504

Total Equity 216,506 558,169 1,639,182 3,028,216 4,844,412 7,019,060 9,734,345 12,818,776 16,041,626 19,606,689 23,549,011 TOTAL CAPITAL AND LIABILITIES 2,165,064 2,985,276 3,611,052 4,495,813 5,682,621 7,220,059 9,158,283 11,279,998 14,029,332 17,070,717 20,173,940

Liabilities & Shareholders' Equity

Assets


September 2013

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14 USEFUL LINKS

Prime Minister’s Office, www.pmo.gov.pk

Small and Medium Enterprise Development Authority, www.smeda.org.pk

National Bank of Pakistan (NBP), www.nbp.com.pk

First Women Bank Limited (FWBL), www.fwbl.com.pk

Government of Pakistan, www.pakistan.gov.pk

Ministry of Industries & Production, www.moip.gov.pk

Ministry of Education, Training & Standards in Higher Education,

http://moptt.gov.pk

Government of Punjab, www.punjab.gov.pk

Government of Sindh, www.sindh.gov.pk

Government of Khyber Pakhtunkhwa, www.khyberpakhtunkhwa.gov.pk

Government of Balochistan, www.balochistan.gov.pk

Government of Gilgit Baltistan, www.gilgitbaltistan.gov.pk

Government of Azad Jamu Kashmir, www.ajk.gov.pk

Trade Development Authority of Pakistan (TDAP), www.tdap.gov.pk

Security Commission of Pakistan (SECP), www.secp.gov.pk

Federation of Pakistan Chambers of Commerce and Industry (FPCCI)

www.fpcci.com.pk

State Bank of Pakistan (SBP), www.sbp.org.pk


September 2013

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15 OPERATING AND FINANCIAL ASSUMPTIONS

Table 10: Capacity Utilization Assumptions

Starting Capacity Utilization 45% Annual Growth Rate 5% Maximum Capacity Utilization for the project 90%

Table 11: Economy-Related Assumptions Electricity price growth rate 10% Wage growth rate 10%

Table 12: Cash Flow Assumptions Accounts Receivable cycle (in days) Cash Sales Accounts payable cycle (in days) 60 Raw material inventory (in days) 15

Table 13: Financial Assumptions Project life (Years) 10 Debt 90% Equity 10% Interest rate on long-term debt 8% Debt tenure (Years) 7

Table 14: Depreciation Rate Assumptions Office Equipment 33% Furniture & Fixtures 10%

Table 15: Revenue Related Assumptions Sale price growth rate 10% Purchase price growth rate 10% Percentage of Ladies shoes 80% Percentage of children shoes 20%

Documents

Footwear Retail Outlet