A Project on Feasibility Study of Photo Studio

Submitted To: Finance

Dr. Y. P. Singh Faculty of Project Management & IISE Business School

Submitted By:
Enroll No. PGDM 2nd Year

INTERNATIONAL INSTITUTE FOR SPECIAL EDUCATION

KANCHANA BIHARI MARG, KALYANPUR, LUCKNOW, PIN-226022

PREFACE
Feasibility Study is primary first step to analyze a business such a way to commence it considering logical factors. It is said well begun is half work done particularly true to commence a business or project. in class itself. Feasibility has many angels to . But what specially actual happens; some insights can be drawn from case studies presented explored economical, social, technical and financial viability so that it gives a fair idea.

CONTENTS

 Project at a glance Working assumptions Economies of the project Market analysis Ecological analysis Financial analysis 1. Estimate of cost of project 2. Estimate of revenue and expenditure 3. Depreciation chart 4. Projected income statement Project appraisal Estimate of project cash flow Appraisal criterion Discounted: NPV, BCR, IRR None discounted: ARR, PBP Calculation of BEP Calculation DSCR Conclusion

PROJECT AT A GLANCE

Name of the proposed project: Photo Studio Promoters name: Address: Sarjana Chowk, Ranchi Phone no.: 918092485121 Cost of project: Rs. 2, 95,500 Means of financing: owners capital IRR: 65 %

ARR: 98.11%

PBP: 1.79

WORKING ASSUMPTIONS

 It is assumed that the life of the project is 5 years.

There are no preliminary and pre-operating expenses. building by written down method.

Depreciation is charged 10% only on machine and No interest is to be paid because no loan has been taken. Tax is not applicable because business is new. Salvage value is taken from the book value. I have assumed that my expenses will increase by 5 % every year and revenue will increase by 10 % every year It is assumed that on the basis of prevailing market rate the minimum expected rate of return is 10 % and therefore the cost of capital will be 10 %. Working capital margin will be recovered from its book value. WCM will be maintained equivalent to next 6 months. It is assumed that the price will be based on prevailing market rates. All initial investment is occurred in the beginning of the project.

Market analysis
My target customers will be the individuals 1) Who are in urgent need in photographs for applying for any exam 2) Need photos for admission in any institution. 3) For those who want some editing in photographs. Target Place Sarjana Chowk which is located at the heart of the city where various form centers, colleges, banks and post-office is situated, where there is maximum foot-fall and its a hub of students and corporate people

Ecological analysis
I have analyzed about the environment where I will open my photo studio. The waste material mainly paper which is biodegradable which is not harmful to the environment.

Financial Analysis
Capital asset

Particulars Digital Camera Desktop Computer Printer Scanner Lamp & Lights Furniture

Quantity 2 2 1 1 4 4 chairs, 1 Sofa 2 Table

Price (Rs.) 80000 45000 10500 5000 8000 30000

Total

1, 78,500

Working capital margin (WCM) Cash at bank = 20000 Rs. Cash in hand = 25000 Rs.

Salary of staff for six months = 12000*6 = 72000 Rs. ( No. of staff is one and he is drawing 6000 Rs. /month) Total Working Capital Margin = 1, 17,000 Rs.

Estimate of revenue and expenditure Expenses Calculation of Rent: Rent/month = 2500 Rs. Total Rent = 12 * 2500 = 30000 Rs.

Calculation of cartridge: Cartridge cost = 800 Rs. / Cartridge Total cost of cartridge 800*6*12 = 57600 Rs. (Assuming 6 Cartridge/month)

Calculation of Paper: Cost of paper 10 Rs. / Sheet Consumption per day = 45

Total cost of paper for one year = 10*45*12 = 5400 Rs.

Calculation of Electricity Bill: Bill/month = 1500 Rs. Total Electricity Bill = 1500*12 = 18000 Rs.

Calculation of Telephone Bill: Bill/month = 800 Rs. Total Electricity Bill = 800*12 = 9600 Rs. Total Expenses = 1, 20,600 Rs.

Revenue 100/photos production in a day Average revenue per photo = 10 Rs. (Post card Size) 5 Rs. (Passport Size) 20 Rs. (Bigger Size) 50 Rs. (specially edited) Demand of different photographs:

Post-card size 20 Passport Size 70 Bigger Size 5 Specially edited 5

Revenue earned per day = 900 Rs. Hence Revenue / Year = 900*300 = 2, 70, 000 Rs. Total Revenue = 2, 70, 000 Rs. 3. Depreciation Schedule

Year Gross value 1 2 3 4 5 148500.00 99004.95 66006.60 44006.60 29339.20

Depreciation Book value 49495.05 32998.35 22000.00 14667.40 9778.76 99004.95 66006.60 44006.60 29339.20 19560.44

Estimate of expected project Cash flow

PARTICULARS Fixed Assets WCM Revenue Operating cost Depreciation EBIT Interest EBT(EBIT-Interest) Tax(50%) PAT Salvage value Working capital Initial investment operating cash flow(PAT+depre+int(1T) Terminal cash inflow PROJECT CASH FLOW

0 178500 117000

1.00

2.00

3.00

4.00

5.00

270000.00 120600.00 49495.05 99904.95 0.00 99904.95 0.00 99904.95

310500.00 126630.00 32998.35 150871.65 0.00 150871.65 0.00 150871.65

357075.00 132961.50 22000.00 202113.50 0.00 202113.50 0.00 202113.50

410636.25 139609.58 14667.40 256359.28 0.00 256359.28 0.00 256359.28

472231.69 146590.05 9778.76 315862.88 0.00 315862.88 0.00 315862.88 148500.00 117000.00

295500 149400.00 183870.00 224113.50 271026.68 325641.63 295500.00 295500 149400.00 183870.00 224113.50 271026.68 621141.63

4. Projected income statement Year 0 1 2 3 4 5 Projected Cash -Flow 295500 149400 183870 224113.5 271026.68 591141.63

Project appraisal
Appraisal criterion 1. Discounted : NPV, BCR , IRR By calculation through excel sheet we have NPV = net benefit in PV term = sum of all PV (benefit) - I NPV = 10115.19 IRR = 65 % 2. Non discounted : ARR, PBP

PBP = 1.79 Years or 1 Yr 9 Month 14 days ARR = 98.11%

Risk analysis
Since there is only one studio available at Sarjana Chowk (target place) and demand is very much high so there is very less amount of risk involved in opening a photo-studio at Sarjana Chowk. I have done market analysis of the project and am found to be feasible as well as profitable.

Conclusion

After making this project I have face real environment stress in real business. This research work has enabled me to gather a lot of information about the carpet business and I have been able to apply my classroom knowledge to the practical life very effectively.

In conclusion from the above projected income, projected cash flow and other major financial 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. 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 said that the business has a high potential.