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Question:
Any company that has to survive in a competitive environment can not remain
complacent with the present. It has to continuously bring about change in order to
Projects, that are endeavours to create unique products and services, are basically
the instruments leading to organizational growth. Projects have a long term impact
on the character of the organization. Projects create wealth not only for the
organization but also for the nation. Projects, therefore, form a very important part of
the organization's strategy for survival & growth and therefore are the main concern
opportunity. The better this is characterised, the easier it will be to judge the levels
of expenditure and risk that are justified. Identifying the patterns by which
technology treates new products & services and exploiting them early gives the
1. Market Analysis
2. Technical Analysis
3. Financial Analysis.
1) INTRODUCTION:
ABC Company is focusing on investments in emerging retail sector
throughout India. It has proposed to develop a commercial space in Panaji-Goa. This
gives an opportunity to enter a market not tested so far by the big players in retail
sector and reap benefits of the first footer.
Goa State has established itself among the fastest growing industrial
& commercial centers in India. It has made impressive progress in all round
development, measured by socio-economic indicators and ranks among the leading
union territory states of India. This is one of the most urbanized states in India.
Tourism and mining are the main sectors of the state economy. Sizeable percentage
of population works in the Middle East and western countries and brings home not
only valuable foreign exchange kitty but also a new consumer test of those places.
The tourists from India and all over the world are spending much on leisure while on
holidays in Goa. This brings us a good opportunity to invest in retail sector.
2) MARKET ANALYSIS:
a) Situational analysis
Company proposes to develop a Shopping Mall in Panaji-Goa. The
market is mainly consisting small-scale retail outlets, virtually monopolized by the
sellers. The market also lacks presence of strong cooperative sector. Due to
scattered and satellite patterns of development, the city lacks cohesive and
homogenous volume of population compared to other Indian cities. However,
excellent infrastructure, importance of capital place, large base of floating
population, high purchasing power of consumers and higher level of consumer
spending gives a solid base for investment decision.
b) Secondary Information:
Economic Profile of Goa: The Eleventh Finance commission Report,
2000 ranked Goa as the premier state in terms of social and economic
infrastructure. Goa is an attractive destination for foreign Direct Investment
( FDI) . The contribution of FDI to the state’s economy has increased ten fold
in the past years.
Census of India has projected population by Sex i.e. 16,28,000 for Goa as on 1st
March – 2008
Sr. No. of
No. District Total/Rural/Urban Households Persons Male Females
North
1 Goa Total 1,64,129 7,58,573 3,88,502 3,70,071
North
2 Goa Rural 88,265 4,16,824 2,11,543 2,05,281
North
3 Goa Urban 75,864 3,41,749 1,76,959 1,64,790
South
4 Goa Total 1,30,683 5,89,095 2,98,746 2,90,349
South
5 Goa Rural 56,964 2,60,267 1,29,002 1,31,265
South
6 Goa Urban 73,719 3,28,828 1,69,744 1,59,084
Source of information: Census of India
Percentage of population below specific MPCE: (Ref. annexure no.lll & VI)
In 2006-07, roughly one-half (50.3%) of the rural population of India had MPCE
less than RS.580 (column 2 of Table P1) compared to only 17.4% of the urban
population column 6). For urban India, the median level of MPCE was Rs.990.
c) DEMAND FORECASTING:
Demand forecast was done using casual method of forecasting. As the project
involves products of direct consumption, Consumption Level Method suits best
to forecast demand of the products.
d)TECHNICAL ANALYSIS:
DETAILS OF FACILITIES: The proposed shopping mall may have
outlets as detailed below
Departmental Store
Fashion and Shoes
Health and Beauty
Food
Sports and outdoor
Electrical and phones
Jewellerys
Gifts and Music
Children
Miscellaneous
CAPACITY STRATEGY:
• The only limiting factor from aggregate demand point of view
discussed in the last chapter is population growth rate. This is
lesser than other Indian states; hence, we should adopt
'CHASING' strategy.
• The projected demand and existing demand to be
diverted may take longer time span.
LOCATION OF SITE:
• The project site is located in the capital city of Panaji. The proposed
site is situated in the EDC Plaza behind central bus stand and hence a very
convenient and crowd pulling location.
PROPOSED SITE:
E) FINANCIAL ANALYSIS:
COST OF PROJECT
Other Expenses
Total 20,51,14,000.00
Year 1910 1921 1931 1940 1950 1960 1971 1981 1991 2001 2011
Population
Growth
Rate 2.36 (3.55) 7.62 7.05 1.21 7.77 34.77 26.74 16.08 15.21
Three
Months
Moving
Average 2.14 3.71 5.29 5.34 14.58 23.09 25.86 19.34
Two
Months
Moving
Average 0.59 2.04 7.34 4.13 4.49 21.27 30.75 21.41 15.64
Sum of square error ( three months) = 2.142 + 3.712 + 5.292 + 5.342 + 14.582 + 25.862
= 216.83
Sum of square error (three months) = 0.592 + 2.042 + 7.342 + 4.132 + 4.492 + 21.272 +
30.752 + 21.412
= 243.99
1. Hence, we can assume, population growth rate applicable to year – 2011 i.e.
19.34% due to lower average square error i.e. 216.83
2. Projected population in the year 2011 i.e. 50 percentage of North Goa district
plus 50% of south Goa district, which will serve as a consumer base.
( 1,34,7668/2) x 19.34 / 100 = 2,60,638
CALCULATION OF COSTS
FINANCIAL STRUCTURE
Less –
Add-
Less-
Add-
Cash – Interest earned @9.5% on Rs. Rs. 18,87,982.00
19873498.00
Less-
Assuming earnings remain same in the sixth year, period required to recover
above amount Rs. ( 4,05,75,361.00 / 4,72,35,991.00)/12 = 10.3 , Say 3
Months
Hence, Pay back period for the project is 05 years and 10 Months.
References:
1. Project financing in corporate sector by C.G. Karandikar / G.M Dave
4. Website: http:/indiabudget.nic.in