1.1. Executive Summary Veling Institute of Management London is a reputed and popular management institute, which offers courses in retailing management. The school also owns retail outlets that give the students hands on experience to the students. Having seen the acceptance, it decided to open retail malls in Senegal which is basically a third world country. It is its second venture. The first has been in India. Having group of highly qualified professionals in retailing, it will be easier of us to venture into real retail business in Senegal and slowly in the African region. Motivated by increased industrial growth, high preference for touch and feel shopping experience, existence of consumer pull market and growth of middle and high income group households, our institution is decided to implement this proposal by being active participator in retail business. The second objective was to promote the employment generation in the area by training the local candidates who are eligible to enroll into the course.
Key to success of our institution are : - we have 20 years recorded, academic experience in retail area, so we can easily implement practically such knowledge. - Our old students are big players in retail market, so we can associate them to our visualized business plan in actual practice. - We maintained industry - institution interaction since inception, so we have actual idea of what is going on in this sector.
1.2. Ownership pattern and owner's profile Veling is privately owned education institution, jointly owned by Sri Thomas & Sri Alies Cherian which offers Diploma Post Graduate, Diploma and Master Degree in Business management. We decided to diversify not just into geographies but also into unrelated area, that is having mall in at least 10 important cities in India initially.
1.3. Product Description - We offer ideal shopping experience with an amalgamation of product, service and entertainment all under common roof.
- We have : Home appliance Fresh Groceries Apparels Cosmetics Music chain Books Electronic Devices Fast food outlet Juice Centre Special Nutritious centre Health care products Baby care products - We have multi brand products of above categories. - We provide an opportunity to choose from medium to high priced - Worth for quality items
1.4. Competitive Comparison We have many competitors, of which significant are, Hypercity, prime mall and inorbit. Hypercity is a hyper market even though it offers wide variety products. Customers are feeling so restricted because of its narrowed interior structure. Inorbit is a big mall which has already established good image but as for as its source of supply it is facing some problems. Prime mall is currently meeting the needs of upper class market. So we decided to fill the gap by having good economic source of supply, offering medium to high priced multi brands under same product line category and by making customer to feel that they are in such place which definitely provide lot of space to invest their hard earned money economically and productivity.
1.5. Technology We decided to emphasize on automating the process, using bar codes to identify the product, scanners, and computerized billing. This will speed up the billing process, reduce the human intervention and errors, the retail shop people can focus on customers for personal attention etc. This will help to differentiate ourselves from not successful retailer and even to get cost advantage.
1.6. Market Analysis By being aware of the fact that retailing is the largest private sector industry in the world economy with global industry size exceeding $6.6 trillion, we explored the potential for starting mall in Senegal and other parts of African region. The market research indicates that there will be investment for Hypercity Retail by K. Raheja Group to establish SS Super market by 2015. Reliance of India is another giant which is India's largest contemporary retailer and the size of organized retailing it's expected to touch $30 billion by 2010 which is also planning to take initiatives. We expect growth of 22% per annum initially, which definitely rise in the years to come. We decided to utilize growth in the consumer preference for shopping in congenial Environs.
1.7. Financial Plan We need $ 500,000,000 initially to start 10 malls in 10 important locations of Ghana and other places.
1.7.1 Sources of requirements will be: Owners fund -> 70% Borrowed Fund -> 30% (Secured Bank loan @15%)
1.7.2 Application of Fund will be : Fixed assets 30% Initial investment to get Building on lease basis 30% Working capital requirement 40%
1.7.3 We need minimum 50,000, maximum 1,00,000 square feet area building having 4 floors. The plan for utilization of building will be; Ground Floor - Parking and Store First Floor - Grocery, home appliances Electronic items, Fast food outlet Second Floor - Apparel Third Floor - Cosmetic, music chain and book - Store and office maintenance Instead of having building of our own, we decided to get it on lease basis as it is cost effective way of financing our fixed asset requirement. We have already booked building under construction from building developers.
1.7.4 First years expected cash inflow will be; Sales $400,000,000 (-) cost of goods sold $120,000,000 Gross profit $280,000,000 (-) operating expenses $110,000,000 (-) depreciation on fixed Asset @ 10% $ 15,000,000 Operating profit $165,000,000 (-) Financial charge $ 22,500,000 $ 147,500,000 (-) Tax 40% $ 59,000,000 Earning after tax $ 88,500,000 (+) Depreciation $ 15,000,000 $103,500,000 Cash inflow $ 24,500,000 Operating expenses would include salary, maintenance cost, electricity, water, logistics, uniform, incentives etc Computers and other IT tools are considered for depreciation.
1.8. Summary The cash flow statement indicates that the plan is viable and is a profit making business. This will certainly change the customer behavior in terms of purchasing process, acceptance of branded products etc. The mall will might initially encourage window shopping and later attract more customers.