Business Plan on

Sasto Khaja Express

Submitted To:

Sohan Babu Khatri

Courses facilitator - Business Development Plan

Ace Institute of Management, Pokhara University

Submitted By:

Kalyan Acharya and Garima Pokhrel

4th trimester, Section B, MBEe

Ace Institute of Management, Pokhara University

In partial fulfillment of the requirement for the degree of the Masters of

Business Administration

November, 2020
 SATEMENT OF PURPOSE

I believe that MBA is not just a degree but a platform to learn many tips and tricks and to
generate ideas with structured thoughts to go about it. Studying for an MBA requires a certain
demonstration and strength of characters. In recent years, the business world has become rapidly
integrated across the countries. MBA would be helping me to achieve my career objectives. My
education till now has given the perfect set up to understand and learn and to focus on solutions
and not to get bogged down by challenges. It would enable me to channel my conceptual skill in
analyzing business issue and resolve them, also would help me in understanding different issue
which affect organization strategy, structure and system.

To achieve the future goals, we need to learn more about the current developments, financial
markets and its applications. We need to have full knowledge on how to enter the market and
how to analyze the consumer for successfully running the business. The course taught me the
nuances especially when dealing with the people from other cultures and languages daily.

We have drafted this business plan with an objective to serve the potentials clients who are not
being able to have their foods on time due to their work. It is a potential market to do business
thus I believe this business plan will help me convert an idea into a reality. I took forward to
implementing all the possible way to implement a successful and profitable business plan.

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 DECLERATION
The business development plan has been prepared as an assignment required for the course of
MBA Pokhara University. This report is to be submitted to the Ace Institute of Management
purely for academic purpose.

There are not any market research agencies and other reliable sources for research and
development for the business plan of The Coffee House.

………………………..
Rishabh sarawagi | sanchita aryal

MBA spring 2019

Ace Institute of Management

Pokhara University

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 ACKNOWLEDGEMENT
It brings me great pleasure for an opportunity to work and submit my business development plan
on SASTO KHAJA EXPRESS. For this, I am deeply thankful to Mr. Sohan Babu Khatri of Ace
Institute of Management at Pokhara University who provided crucial guidance for accomplishing
this report. I am grateful to all the instructors for their help, invaluable guidance and elating
encouragement throughout the work.

I am also thankful to Ravins Pokhrel, Manisha Pokhrel and all my other friends whose immense
support and guidance made this project successful.

Finally, I would like to thank Ace Institute of Management whose direct and indirect support was
considered most in submitting this report. This accomplishment would not have been possible
without them. Thank You

Kalyan Acharya and Garima Pokhrel

Ace Institute of Management

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 ACRONYMS
SKE- Sasto Khaja Express

Pvt.- Private

Ltd.- Limited

i.e. – That is

NGO – Non-governmental Organization

INGO – International Non-governmental Organization

MBA – Master of Business Administration

EBDIT- Operating Profit Before Depreciation

NPV- Net Present Value

EBIT- Operating Profit After Depreciation

PBT- Profit Before Tax

NPAT- Net Profit After Tax

IRR- Internal Rate of Return

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Contents
STATEMENT OF PURPOSE.........................................................................................................1
DECLERATION.............................................................................................................................2
ACKNOWLEDGEMENT...............................................................................................................3
ACRONYMS...................................................................................................................................4
CHAPTER-1....................................................................................................................................8
Business Highlights.........................................................................................................................8
CHAPTER-2..................................................................................................................................12
Executive Summary.......................................................................................................................12
CHAPTER-3..................................................................................................................................13
BACKGROUND...........................................................................................................................13
CHAPTER-4..................................................................................................................................14
INTRODUCTION.........................................................................................................................14
4.1 Vision...................................................................................................................................14
4.2 Mission Statement...............................................................................................................14
4.3 Goals/Objectives..................................................................................................................14
4.4 Building blocks of business model......................................................................................15
4.4.1 Value Proposition.........................................................................................................15
4.4.2 Customer Segments......................................................................................................16
4.4.3 Key Activities...............................................................................................................26
4.4.4 Key Partners..................................................................................................................26
4.4.5 Key Resources..............................................................................................................27
4.4.6 Channels.......................................................................................................................27
4.4.7 Customer Relationships................................................................................................27
4.4.8 Revenue Streams..........................................................................................................27
4.4.9 Cost Structure...............................................................................................................27
CHAPTER-5..................................................................................................................................28
Products/ services Description.......................................................................................................28
CHAPTER-6..................................................................................................................................29
Business Environment, Industry and Market Analysis..................................................................29

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 6.1 Industry structure and market characteristics......................................................................29
6.2 Environmental Analysis.......................................................................................................29
6.2.1 PESTLE Analysis.........................................................................................................29
6.3 Five Forces of Market and its state in this industry.............................................................31
6.4 Market and competitor analysis...........................................................................................32
6.5 Demand Analysis.................................................................................................................33
CHAPTER-7..................................................................................................................................34
Business Strategy...........................................................................................................................34
7.1 SWOT Analysis...................................................................................................................34
7.2 Business Strategy.................................................................................................................34
CHAPTER-8..................................................................................................................................36
Marketing Plan...............................................................................................................................36
8.1 Marketing objectives and goals...........................................................................................36
8.2 Target Customer Segment...................................................................................................36
 Customer demographics.....................................................................................................36
 Customer management.......................................................................................................37
8.3 Marketing and growth strategy............................................................................................37
8.3.1 Positioning Strategy......................................................................................................37
8.3.2 Competitive advantage.................................................................................................37
8.4 Marketing Mix.....................................................................................................................38
8.5 Advertising & promotional strategy....................................................................................38
CHAPTER-9..................................................................................................................................40
Production/Operational Plan..........................................................................................................40
CHAPTER-10................................................................................................................................42
Organization/ Management and human Resource Plan.................................................................42
1. Organizational Structure........................................................................................................42
2. Management Team................................................................................................................42
3. Human Resource Policies......................................................................................................44
CHAPTER 11................................................................................................................................46
Financial Plan................................................................................................................................46
11.1 Financial Objectives..........................................................................................................46

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 11.2 Assumptions......................................................................................................................46
11.3 Startup investment.............................................................................................................47
11.4 Startup expense..................................................................................................................47
11.5 Capital structure.................................................................................................................47
11.6 Sales/ Revenue Projection.................................................................................................48
11.7 Income Statement..............................................................................................................49
11.8 Statement of Retained Earning..........................................................................................50
11.9 Cash budget statement.......................................................................................................50
11.10 Balance sheet...................................................................................................................51
11.11 Economic Appraisal.........................................................................................................52
11.12 Key financial Indicators...................................................................................................53
CHAPTER 12................................................................................................................................54
Risk and Contingency Plan............................................................................................................54
12.1 Risk management...............................................................................................................54
12.2 Legal considerations..........................................................................................................55
13.0 Exit Strategy..........................................................................................................................55
14. Appendix..................................................................................................................................56

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 CHAPTER-1

Business Highlights
The company provides homemade food to the working professionals. It is a startup company
with the initial investment of 12 lakh. The company will deliver lunch at the doorstep of the
office and help the working professional feel convenience and save their time as well. At the
initial phase the company will operate in Kathmandu city and target the people from this city.
Later on the company will gradually expand its services to other major cities of Nepal as well.

A. Name of the business:

Sasto Khaja Express
B. Nature of the business:
Homemade food Delivery Company
C. Legal status of Business:
Startup business- not yet registered
D. Date and place of registration:
NA
E. Address of office/ operation/ branches/ subsidiaries:
Kamaladi, Kathmandu
F. Contact (person, tel no, Fax, Email etc)
Kalyan Acharya (9809521065) and Garima Pokhrel (9860771422)
G. Major Product/services:
Homemade food which will be delivered at the workstation
H. Target Customers:
At the initial phase the working professionals of Financial institutions like bank, insurance
company, finance company, etc. will be targeted
I. Major Market:
Kathmandu Valley

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J. Capacity utilization and years

Estimated Number
SN
Year 1 year 2 Year 3 Year 4 Year 5
37,50
Sales of Lunch
0 41,250 45,375 54,450 65,340

The sales of lunch is expected to be 150 lunch per day in the first year. We have estimated that
the sales will increase by 10 in 2nd and 3rd year and 20 % in 4th and 5th year.

K. Working Schedule- Annual working Days

Opens 6 days a week, 250 days a year
L. Human Resource(Number)
Cook-2
Accountant-1
Delivery Man-2
Marketing person-1

M. Number of shareholders:
Partnership Of 2 person

N. Capital Structure (debt: equity) :

Debt: Rs. 4,80,000
Equity: Rs.7,20,000

O. Milestones of achievements(time plans of key milestones to be achieved)

Make a loyal customer base and expand the service to the major cities of Nepal within 20 years.

P. Key performance indicator

 Year of loss/ from when profit would be made
Company’s profit will be less in the initial years. The payback period of the company will be 2.87
years

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 Net income/Profit Margin

Key Indicators Year 1 Year 2 Year 3 Year 4 Year 5

2.64% 7.34% 11.26% 16.91% 21.42%
Net Profit Margin

  Total Assets Turnover

Key Indicators Year 1 Year 2 Year 3 Year 4 Year 5

Total Assets Turnover 2.13 2.27 2.31 2.32 2.44
Ratio

 Fixed Assets Turnover

Key Indicators Year 1 Year 2 Year 3 Year 4 Year 5

Fixed Assets Turnover 5.67 8.17 11.75 18.43 28.89
Ratio

 Return On Assets

Key Indicators Year 1 Year 2 Year 3 Year 4 Year 5

Return on Total 5.64% 17.14% 27.23% 41.42% 55.33%
Assets

 Return On Investment

Key Indicators Year 1 Year 2 Year 3 Year 4 Year 5

Return on 7.02% 23.12% 41.78% 79.72% 127.64%
investment

 Return On Equity

Key Indicators Year 1 Year 2 Year 3 Year 4 Year 5

10.48% 28.51% 40.17% 54.37% 67.69%
Return on Equity

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Key Indicators Year 1 Year 2 Year 3 Year 4 Year 5
BEP sales (in 2,888,208 3,086,652 3,303,896 3,553,129 3,835,203
amount)
 Breakeven Point

 Net Present Value

Rs. 2,212,443
 Internal Rate of Return

51.82%

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 CHAPTER-2

Executive Summary
This report aims to outline the plan to start up of homemade food Delivery Company. The report
has been subdivided into various chapters with each chapter targeting a different aspect about the
operation of the business. The business concept, the business model, the idea, the marketing
strategy, operation plan, financial plan, risk and contingency plan, exit strategy, organizational
structure, etc. has been discussed in detail in this report. A feasibility study has also been carried
which involved a market as well as a financial feasibility as well. SWOT analysis, PESTEL
analysis, Porters five force model has been used to analyze the market and industry scenario.

Sasto Khaja Express will be established by 2 partners with equal capital investment. The total
start up investment will be 12 lakh where we will take 480000 amortized loan having 5b years of
maturity. The company will be established in Kathmandu valley and will target the working
professional of this city. At the initial phase we will not take any delivery charges and haul the
customers will minimum possible price for the lunch. We have assumed that we will gain profit
in the business starting from the first year but the profit in the initial year will be minimum. The
profit will rise gradually as the years pass by. We have calculated the payback period in our
business i.e. 2.87 years.

So, this document is a comprehensive business plan of Sasto Khaja Express. All the analysis has
been done that closely replicate the market trend. This report could be a good reference for
startup companies.

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 CHAPTER-3

BACKGROUND

Kathmandu is the capital and largest city of Nepal. It is the most crowded city having the
population of around 2.5 million. The city is enriched with all the organizations like hospital,
school/college, and financial organizations, NGO/INGO and so on. So, we can find all the
facilities in this beautiful city. Hence, product and services are relatively expensive than any
other cities.

Most of the working professionals are there in Kathmandu. They are quite busy with their work.
Specially, the employees of financial institution like bank, insurance company, finance company,
etc. are quite busy with their work. Most of the office does not have any dedicated canteen in the
workplace. So, the employees are compelled consume restaurant food which is relatively
expensive and at the same time it is not hygienic as well. Even though there are few online food
delivery companies in the market, they are not able to meet the expectations of the people. So,
there is requirement of healthy and hygienic lunch which can be delivered in their workstation
that would also save their crucial time as well. Sasto Khaja Express would solve their problem.

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 CHAPTER-4

INTRODUCTION
Sasto Khaja Express will be a partnership company which will be jointly owned by Kalyan
Acharya and Garima Pokhrel. The company will help the people by providing healthy and
hygienic homemade lunch. Initially, the business operation will be focused in Kathmandu area.
The customer can order their food before breaktime through mobile app or phone. They will
have the preselected weekly changing menu of 6 items. The initial funding for the business will
be 12 lakh which will be partially managed by the 2 partners and partially by taking loan from
the bank.

The target customer will be those who are working in financial institutions like bank, finance
company, insurance company and so on who have ability and willingness to pay for homemade
food. Meantime, they are busy at their work and they would be more than happy if they get their
lunch delivered at their workstation. The company will be directed towards retaining the
customer base by providing quality food relatively cheaper price. The business will have unique
selling proposition than the existing competitors in the market. After successful operation of
business in Kathmandu for some years, the company will later on expand its business operation
in other cities of Nepal as well.

4.1 Vision
Our vision is to satisfy the customers by providing healthy and hygienic homemade food and
establish our self as a leading food delivery company in the market.

4.2 Mission Statement

Sasto Khaja Express is on the prime mission to provide the homemade food at your doorstep. We
deliver food at the best price and customer satisfaction is our utmost importance.

4.3 Goals/Objectives
 Short Term Objective
The short term objective of the company would be to gain customer’s attention
towards our company. For this we will provide food with very less profit margin then
the competitors
 Long Term Objectives
i. Expand service to various major cities around Nepal
ii. Become market leader by keeping up with market trends and gaining
competitive edge
iii. Become a complete event organizing company in the long run

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4.4 Building blocks of business model

4.4.1 Value Proposition

Customers Job

 Enjoy delicious food

 Fulfill hungriness
 Become stress free

Customer Gains

 Changing menu
 Hygienic food
 Cheaper price
 Save time
 Discount facility

Customer Pains

 Bear delivery charge

 Dissatisfaction
 Unable to enjoy leisure time

Gain Creators

 Providing various food options

 Delivering homemade healthy food
 Providing food in relatively cheaper price
 Delivering food at workstation
 Providing privilege card to regular customer

Pain killers

 Taking minimum delivery charge

 Satisfy customer with quality assurance

Product/Service

 Track order through mobile app and phone

 Privilege card
 Healthy and hygienic food
 Delivery of food in workstation

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4.4.2 Customer Segments
 Busy Professionals (Those who don't have time to go out for lunch)
 Health conscious people
 Price sensitive customers
 Customer who do not want to go to restaurant

Buyer’s Persona

Background of the Company

Sasto Khaja Express is the company that produce and deliver home made lunch at the
workstation. It has weekly changing menu and the consumer can easily order their lunch through
app and phone. The company basically targets those group of working professionals who are
busy in their work and are health conscious. The company will fulfill their needs in reasonable
price.

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 Background of the Persona

Mr. Sudip Aryal is a banker who works in Citizens International bank Ltd. in Transactional Banking
Department. He is currently studying evening MBA Finance at CG Institute of Management as well.
He lives in rent in Sankhamul with his sister. He is little fat and quite conscious about his health. In his
workstation there is no any dedicated canteen. So, he has to go to outside restaurant to take lunch. He
is really worried that regular consumption of food available in restaurant might harm his health.
Meantime, he is also worried that the restaurant food is more expensive. So, our company will try to
solve his fear on health related issue by providing homemade healthy food in relatively cheaper price.

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Mr Sudip Aryal

• Works in bank
• Studying evening MBA in CG Institute of Management
• Lives in rent is Sankhamul with sister
• Unmarried

• Young Man
• Age: 24
• Monthly Income: 27500
• Permanent residence is Gulmi

• Very much dedicated towards the work

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• Simple life style, makes less expenses and conscious about his health

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 Mr Sudip Aryal

• Remain healthy
• Maintain body weight at appropriate level
• Save money for education and future

• Unable to find restaurant that provide healthy food

• Food being expensive in restaurant
• Unable to manage time to prepare home made food that can be
brought in office

• Provide healthy and hygienic food at workstation and various food option

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Mr Sudip Aryal

• “I will be fit and fine if I consume home made healthy food”

• “I wouldn’t have to waste any time to select restaurant if food is
available at my doorstep”
• “I will live happily if I become healthy”

• Will the food be delivered at mentioned time?

• Will they have quality assurance?
• Will the price be cheaper then the available restaurant?

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Mr Sudip Aryal

• We provide homemade hygienic food

• We deliver food the workstation and in mentioned time
• You will remain healthy by the consumption of our food
• You will get lunch in relatively cheaper price

• “food at your workstation”

• “Consumer home made food, be healthy and happy”

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Persona 2

Background of the Persona

Rajaram Sharma, a very hardworking man whose permanent resident is Chitwan but stays at kathmandu to works at Nepal
Insurance Company. At the age of 25 he works very hard to earn (25000-27000) per month so that he can run his family. Hence, he
is unmarried so it is very hard for him to manage time for cooking food. He is workaholic so he always have his lunch outside. He
doesn’t likes to eat outside but due to lack of time it has been very hard for him to have healthy lunch every day. So, our company
can help him to save his time and he can have healthy lunch as well.

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 Mr Rajaram Sharma

• Works in the Nepal Insurance Company

• Unmarried
• Stays at Pepsicola

• Hardworking Man
• Age 25
• Permanent resident of Chitwan
• Income Rs (25000-27000)
• Education: Under Graduate

• Shy and Less Confident

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• Caring and Loving Son

25
Mr Rajaram Sharma

• Enhancing own career

• Keep himself safe from hygiene related diseases
• To be able to earn huge amount of money which will help him
to run his family

• Lack of hygiene knowledge

• Lack of time
• Getting Healthy Food

• Provide him Hygienic Foods

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• Save his time

27
 Mr Rajaram Sharma

• I wish I could magically prevent myself from getting hygiene

related diseases
• I wish I could save my time.

• Lack of trust in new products

• Why should I believe that a online tiffin service can provide healthy
foods?
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 • Staying away from home, lazy to cook?
Sasto Khaja Express is here by hook or
by crook.

• Saves time and energy

• Gives guarantee that we provide only
healthy foods

4.4.3 Key Activities 

 Processing order
 Delivering lunch
 Managing payment
 Preparing lunch
 Promoting through social media
 Managing reward system

4.4.4 Key Partners

 Grocery
 Social media influencers
 Legal Partner
 Payment processor
 Technology Partner (App development and brochure design)

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4.4.5 Key Resources
 Physical Resource (Delivery vehicle, equipment, kitchen tools, inventory)
 Capital
 Human resource

4.4.6 Channels 
 Telephone
 Mobile app
 Email
 Delivery vehicle

4.4.7 Customer Relationships 

 Social media pages
 Dedicated telephone for tracking order
 Referral reward
 Token system
 Email
 Feedback and reviews

4.4.8 Revenue Streams 

 Sale of food
 Advertisement through website

4.4.9 Cost Structure 

 Cost of operation
 Legal cost
 Processing cost
 Cost of acquiring assets
 Maintenance Cost

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 CHAPTER-5

Products/ services Description

SKE will provide lunch delivery facility to the people who work in different financial
institutions. It will deliver food at their workstation and make them convenient and save time.
Our product will be purely homemade and hygienic. It will provide pre-determined menu for the
week. The lunch for the week will be as below:

Day Items Price

Sunday Puri/Aachar/Tarkari 90
Monday Momo veg/chicken 100/150
Tuesday Parautha, Tarkari 90
Wednesday Khir, aachar 80
Thursday Roti Tarkari 70
Friday Mixed Fruits 80

These products may change on the basis of time, situation and taste and preference of the
customers. Meantime, we will provide related lunch in the special occasion like Tarul, Ganji,
Chaku in Maghe Sankranti, Dai Chura in Asar 15, and so on.

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 CHAPTER-6

Business Environment, Industry and Market Analysis

The target market for Sasto Khaja Express at the initial phase would be Kathmandu city. The
total population of the city is more than 2.5 million where there mostly working professionals
and students. So, our target group of customers would be these working professionals who are
generally conscious about their health. The lunch will be delivered at their workstation which
would save their time as well.

6.1 Industry structure and market characteristics

There are many restaurants operating in Kathmandu city which are doing good business. They
are delivering their items online as well but it has been secondary choice for them to deliver
food. Some of the online food delivery companies like foodmandu, foodmario are in operation
but still they are not able to capture the specific need of the customers. There is certain group of
customer segments who need homemade food which is very difficult to find in restaurants. So,
there will be good demand for healthy and homemade food in the market.

In the market the similar modality of the business concept has emerged and has been operating
well in foreign countries. Even in our neighboring country India, this concept has led to the good
business. In Nepal, even though some of the companies have invested in this modality of
business but haven’t able to grab the customers attention significantly. The working
professionals especially of the financial sectors like bank, insurance, finance companies, etc are
earning good income. So, these customers segments in the market will be willing and able to
demand our products.

6.2 Environmental Analysis

6.2.1 PESTLE Analysis

 Political Factors
Political factors are related to the general political environment of a country. They also
refer to the plans and policies proposed by a government that might have positive as well
as negative impact on a business. Therefore, it is highly beneficial to examine the
political environment of a country before starting a business. In general, political
environment includes the factors such as labor law, consumer law, trade restriction, and
political stability of a country.
In case of Nepal, we have to face situation of political instability which lead to the
frequent change in policies and laws. This could be the threat to our business. Change in
labour law, consumer law could create challenge in our effective operation of our
business. Meantime, various bandas and strikes could also be the major threat in the
effective performance of our company.

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 Economic factors
Economic factors are related to the country economy and economic policies. For any
businesses, economic factors such as the level of economic growth, currency exchange
rate, inflation, interest rate plays an important role to success.
The life style and per capital income of the people of Nepal has been gradually increasing
which is the positive sign for our business. The inflation rate is little higher in our country
which will result in increase in production and promotion cost each year. This would
create us challenge to maintain our service quality.

 Social factors
Social factors are related to cultural background, people’s lifestyle, population growth
rate, working life, consumer behavior and ethics. All these factors have a significant
influence in the success of a business.
The life style of the people of Nepal has been changing. Especially in the Kathmandu
city, there are mostly the education working groups of professionals who are more
conscious about their health. So, these factors of social aspects provide the opportunity to
our business.

 Technological factors
Technological factors include the rate of technological innovation and development. The
level of technological capability of a country significantly influences the business
environment. This also includes the people’s awareness on technological development.
Greater the technological capability better will be the business environment.
The advancement in telecommunication and internet facility in our country will help our
business to perform effectively. Use of various social medias will be an opportunity for
us to promote our business effectively.

 Legal Factors
Legal factors include the regulatory aspects of a country. Every country has its own rules
and regulation for starting a business. Those rules and regulation can have both positive
and negative impact in the operation of a business. Consumer’s law, safety standards,
labor law, employment law, trade regulations etc. can be considered in analyzing the
legal environment of a country.
Our will be registered under the company act and behave like a legal entity. The company
will conduct its operation in accordance with legal policies to avoid penalty and
punishment. Thus, the company needs to maintain some standards implying for all the
staffs, volunteers and other personnel against such legal issues.

 Environmental factors
33
 Environmental factors include all those factors that might have significant impact on
business environment, for example, the availability of energy sources, climate,
infrastructure of the country, waste management etc. In general, environmental factors
mainly include ecological aspects (recycling procedures and waste management),
tourism, and geographical location. Environmental factors are also considered to be one
of the important factors that impact the operations and sustainability of any business.
Our business should comply with all the environmental laws. We would have to manage
the waste properly. Since, we are initially operating in Kathmandu, we would have
privilege of good infrastructure and climate and also the raw materials in adequately
available for our business.

6.3 Five Forces of Market and its state in this industry

Michael porter determines five forces for industry and competitive analysis. Each of these
five forces is discussed below in detail.

 Threat of new entrants: As the new entrants bring additional production capacity, they
can threaten the market share of existing competitors. Threat of new entrant will be high for
those firms whose capital requirement is low. Since, SKE Tiffin express will be established
with the initial capital investment of less amount so there will be the high risk of new
entrants. We will try to minimize this threat through product differentiation and economies
of scale.
 Threats of substitutes: Substitute products are the goods and services that perform similar
functions as product/services that we delivered or produced. For SKE threats of substitutes
may arise if financial institutions started their own kitchen at office and if employee brings
food from home. Since we will be providing high quality homemade food and we will be
loyal toward our customer that’s why threat of substitutes might be lower.

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  Buyer’s power: Buyers of SKE may bargain for higher quality, greater level of service and
lower prices. Buyers power may become high if there will be large number of suppliers of
similar product. In Kathmandu, there are some of the companies with such type of service,
so there will be moderate level of buyers bargaining power.

 Bargaining power of suppliers: Suppliers exert pressures over the firms on prices and
quality of the products. For us there will be two major suppliers for grocery items and for
packaging materials. Since there will be large number of suppliers who supply grocery
items that’s why there bargaining power may be low. But for supplying packaging
materials there may be few supplier due to this reason there bargaining power will be high.
Our effort will always direct toward maintaining proper relationship with these suppliers.

 Competitive rivalry: In an industry, the firms normally compete for same market and
customers. As in Kathmandu, there are few firms who are performing similar business.
Meantime, local hotels and restaurants will also be our competitors. We will be trying to be
different from these competitors through product differentiation and by offering high
quality homemade food at their workplace.

6.4 Market and competitor analysis

A. Our strengths:
 We will provide healthy and hygienic food in reasonable price
 Our delivery charge is very much less as compared to our competitors.
 Our cost of production will be significantly low as we would only require a small room
with kitchen utensils.
B. Our Weakness:
 Inexperienced management team
 Startup ( no goodwill in the market)

C. Major competitors:
Competitors of SKS will be the companies which work in similar modality like us and local
hotels and restaurants. Following are our major competitors in the market.

 Foodmario

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 Foodmario is Nepal’s first and only platform that connects home chefs with customers all
over Kathmandu Valley. The chefs who use Foodmario’s services have been thoroughly
by the exacting team for hygiene, quality, taste and consistency. As of early 2019, we
have connected hundreds of home chefs with customers and delivered more than 100,000
orders. So, it would be our major competitors.

 Foodmandu
Foodmandu would be our major competitor. Foodmandu is a Private company that was
founded in Kathmandu, Bagmati in 2010. Foodmandu operates in the Application
Software industry. Foodmandu has more than 150 employees.
 Bhoj Deals
Bhoj has been one of Foodmario's top competitors. Bhoj is headquartered in Kathmandu,
Bagmati, and was founded in 2015. Bhoj is in the Application Software field. Bhoj has
more than 30 employess.

The Coffee House will have both Direct as well as indirect competitors. Direct competitors are
other coffee shops, and indirect competitors are other options that customers have to purchase
from us that aren’t direct competitors. This includes restaurants, supermarkets and customers
making coffee themselves at home. We need to mention such competition to understand that not
everyone who drinks coffee frequents a coffee house each day.

With regards to direct competition, we want to detail the other coffee shops with which we
compete. Most likely, our direct competitors will be coffee shops located inside Kathmandu
value

6.5 Demand Analysis

There are many working professionals in Kathmandu city. They are actually willing and able to
pay for homemade food that is beneficial for their health as well. So, there is good scope for our
company. We have assumed that the average demand for the lunch in the first year would be
around 150 lunches per day. There are many financial institutions in the Kathmandu city where
many working employee will be interested towards our company. The forecasted demand of
lunch from our company for 5 years will be as below:

Estimated Number
SN
Year 1 year 2 Year 3 Year 4 Year 5

36
 37,50 41,25 45,37 54,45 65,34
Sales Unit
0 0 5 0 0

There will be the average demand for 150 lunches in the first year of our operation. We have
assumed that we will operate 250 days in the year. Meantime, the demand will be increased by
10% in 2nd and 3rd year and 20% in 4th and 5th year.

A SWOT analysis will help us identify areas of our business that are performing well. These
areas are our critical success factors and they give our business its competitive advantage.
Identifying these strengths can help us make sure that we maintain them so we don't lose our
competitive advantage.

CHAPTER-7

Business Strategy

7.1 SWOT Analysis

A. Strength
 We will provide healthy and hygienic food in reasonable price
 Our delivery charge is very much less as compared to our competitors.
 Our cost of production will be significantly low as we would only require a small room
with kitchen utensils.
 We prepare our food ourselves.
B. Weakness
 Inexperienced management team
 Startup ( no goodwill in the market)
 Limited fund and small team
 Focusing only financial institutions in the initial phase
 Lack of trust among the people
C. Opportunity
 Unique business modality in the market
 Change in life style of the people
 Increasing per capita income of the people
 Increasing health awareness among the people

37
 D. Threats
 Similar business which are operating in the market
 Unstable government situation could be the threat for our company
 Frequent bandas and hadtal
 Unexpected pandemic situation like COVID.

7.2 Business Strategy

Business strategy can be understood as the course of action or set of decisions which assist the
entrepreneurs in achieving specific business objectives. It is nothing but a master plan that the
management of a company implements to secure a competitive position in the market, carry on
its operations, please customers and achieve the desired ends of the business.

 Staging
We want to expand our service to major cities our country after some years of our service in
Kathmandu city. We want to be the leading homemade food delivery company in the market.
 Arena
We will operate in Kathmandu city in the initial phase. We accept orders through phone and our
website and our payment service method will also be flexible.
 Vehicles

38
 Various promotional campaigns will be organized to promote our company. We will actively
promote our company through website, facebook, instagram, and various other social medias.
 Differentiators
We will differentiate ourselves from others in terms of our quality in customer service, quick
delivery facility and reasonable price of lunch.
 Economic Logic
We will gain cost advantage through the effective selection of our suppliers. We will maintain
good relation with them and deal raw materials in minimum possible price and reduce cost of
production. We will also retain our experienced human resource for the long period of time.

CHAPTER-8

Marketing Plan

8.1 Marketing objectives and goals

Marketing objectives are goals set by a business when promoting its products or services to
potential consumers that should be achieved within a given time frame. In other words,
marketing objectives are the marketing strategy set in order to achieve the overall organizational
objectives. A company's marketing objectives for a particular product might include increasing
product awareness among targeted consumers, providing information about product features and
reducing consumer resistance to buying the product.

The marketing objectives and goals for SKE will be as below:

 To increase awareness among the working professionals through proper advertisement

and persuade them through proper delivery of healthy and hygienic food at their
workstation
 To guide our clients with proper health tips to establish a "New Healthy Society"
 To build trust among the people by ensuring the quality food, reasonable price and
quicker delivery of food
 To be renowned food provider company and to expand its branch on all over the major
cities of our country

39
8.2 Target Customer Segment

 Customer demographics
Age: 18+

Gender: Male and Female

Locations: Kathmandu

Income level: above 15000 per month

Occupation: professionals (Financial Instutions)

 Key customers

The people looking for a satisfying, affordable and hygienic homemade meal. At the initial
stage we will only focus on financial institutions. After we establish ourselves as s good
brand and collect enough experience, we expand our service to other major cities and
provide service to all the sectors. In each institution, as an average there are 10 employees.

 Customer management
Our first step will begin with acquisition by finding our first time buyer and converting
them to regular customers following to this our next step will be word of mouth i.e they
will praise our products and refer customers to us. To keep our customers coming back we
will have unbeatable products and services, we will provide discounts, gifts and even
complementary food items on special occasion. We would develop trust if customers have
trust than they will surely come back. Most importantly, we will find out what our
customers want and listening to their complaints and try to improve them.

8.3 Marketing and growth strategy

8.3.1 Positioning Strategy

The wide variety of healthy and hygienic food items will be the core strength of our company. It
will offer food for good value for money. Quick service and casual establishments are now
trending with the demographics we are targeting hence training the staff about providing quality
customer service that is not only fast but also satisfying will be key. The company will be
directed towards gaining long term relationship with customers with quality service.

40
8.3.2 Competitive advantage
Competitive advantage refers to factors that allow a company to produce goods or services better
or more cheaply than its rivals. These factors allow the productive entity to generate more sales
or superior margins compared to its market rivals. The competitive advantages of the company
will be as below:

 Provide food in cheaper price then in the market

 Free delivery service
 Very interactive and easy to use website
 Hygienic and healthy food
 Quick delivery facility

8.4 Marketing Mix

A. Product/ Services
SKE will provide lunch delivery facility to the people who work in different financial
institutions. It will deliver food at their workstation and make them convenient and save
time. Our product will be purely homemade and hygienic. It will provide pre-determined
menu for the week. Predetermined menu may change on the basis of time, situation and
taste and preference of the customers. Meantime, we will provide related lunch in the
special occasion like Tarul, Ganji, Chaku in Maghe Sankranti, Dai Chura in Asar 15, and
so on.
B. Price
Our company will be focused towards low cost strategy. We will provide food in list
possible price to the customer and maintain long term relationship with them. In the
initial phase we will deliver food without taking any delivery charge to the customers.
This pricing strategy will help to gain competitive advantage in the market and enhance
our goodwill as well.
C. Place
Our company will be located in Kamaladi, Kathmandu at the initial phase of our
establishment and target the financial organizations located in Kathmandu city. We will
open our branches in several major cities after some years of service.
D. Promotion
Promotion will be done through facebook, instagram, sample distribution, by following customer
personally, distributing pamphlets and most importantly word of mouth. We will hire one

41
 marketing person for promoting our company. We will also promote our company through our
own website as well.

8.5 Advertising & promotional strategy

1. Brochure distributions: The brochures will distribute to our target market. We will be visiting
different offices and educational institutions and distribute brochure directly.
2. Social media advertisements: We will be using trending social media platforms like Facebook
and Instagram and promote our official our social media account/page. The pages will also be
boosted to reach more potential customers by making the needed payments to Facebook and
Instagram.
3. Referral methods: The customer who has successfully referred our products to others will
receive a discount, the next time he/she orders. For this, a referral card system will be introduced.
4. Sponsorship: We will provide sponsorship in different corporate and educational events
meeting our target market.

42
 CHAPTER-9

Production/Operational Plan
Production process: Once we receive the order through phone, message production process will
begin. The chef of SKE will be involved in cooking items as per the order of customers. After
that, delivery boy will be collecting prepared items and it will deliver through our delivery
scooter.

Flow Chart of SKE

Suppliers

Customer order Orders

Food Ordering Kitchen
Customers
System

Food

Reports
Delivery boy
Management
43
 SKE will operate in a hybrid environment where the environment changes rapidly. Despite being a
profit motive organization, it provides benefits to the society. The unemployed women
(preferably housewives, widow, differently abled) will be given priority in the kitchen and it will
also provide employment for a delivery boy. The whole operation of the company will be
professionally managed. The customer’s order will be handled properly to kitchen staff and
delivery boy will be placing the foods in customer’s hands. There will be proper request for
supplies just in time. The overall reports and performance of business will reviewed by
management and necessary actions will be taken according to situation.
 Suppliers: The suppliers of SKE will be grocery stores which will supply vegetables, spices and
other edible materials. We need packaging materials with the logo of SKE, for this our supplier will
be the local packaging company.
 Trading Hours: Tiffin express will operate at day time. Ordered items will be delivered to them
from 1.30 pm to 5.30 pm.
 Payment types accepted: The payment method accepted at SKE will be cash, cheque, fonepay,
esewa and other digital payment methods.
 Discount: 5 percent discount will be given to those customers who take weekly package.
 Technology (Software): We will develop our own website of SKE and which will include detailed
description of food preparation and nutrition of food items prepared over this platform.

44
 CHAPTER-10

Organization/ Management and human Resource Plan

1. Organizational Structure

Operations Manager Admin/Marketing Manager

(Kalyan Acharya) (Garima Pokhrel)

 Cook/Dishwasher  Administrator/Accountant
 Deliver Man  Marketing Man

Sasto Khaja Express is a small company with two people in the core management team, two
kitchen staffs, admin/accountant, marketing man and two delivery boys. Horizontal
organizational structure will be followed in which there will be no single CEO. All two core
management teams will share similar ownership and responsibilities and will coordinate with
each other.

2. Management Team

45
  (Kalyan Acharya)

• Percentage of ownership: 50%

• Extent of involvement : Active partner

• Type of ownership: Founding and general partner

• Position in the business: Managing Director and Operations Manger

• Duties and responsibilities: Looking after the procurement of raw materials, and overall
operations of the business

 Garima Pokhrel

• Percentage of ownership: 50%

• Extent of involvement : Active partner

• Type of ownership: Founding and general partner

• Position in the business: Managing Director and HR/Admin/Finance Manger

• Duties and responsibilities: Maintaining proper financial records, reports, and overall
management of staffs and handling other legal procedures.

 Key personnel

Required staff

46
Job Title Quantity Expected Skills necessary
staff
turnover
Cook/Chef 1 [2-3 years] • Educational background: Upto SLC
• Skills/Experiences/Training: Previously
worked in a small hotel as chef for two
years, received training on bakery and
kitchen hygiene from a recognized
institution.
• Duties and responsibilities: Cooking and
packing food in a given time, maintain
hygiene and quality,

Administratio 1 [2-3 years] • Educational background: Upto Bachelor level

n/Accountant • Skills/Experiences/Training: accounting
knowledge, good at Excel

• Duties and responsibilities: keeping income

and expenses records, maintaining stock
books, purchasing raw materials
Delivery man [2] [3-4 years] • Educational background: Upto SLC
• Skills/Experiences/Training: Previously
delivered couriers for a company, good
attitude and communication skills, valid
driving license.

• Duties and responsibilities: handling

customer’s orders, delivering food in time,
maintaining scooter in good condition.
Marketing [1] [3-4 years] • Educational background: Upto +2
Man • Skills/Experiences/Training: PR skill,.

• Duties and responsibilities: handling

customer’s orders, delivering food in time,
maintaining scooter in good condition.

47
3. Human Resource Policies
SKE is a small company with three people in the core management team, two kitchen
staffs and a delivery boy.

 Recruitment: The Company will not use any media or advertisements for the
recruitment process. Staffs will be hired through word-of-mouth and other personal
networks.
 Training: Staffs will be provided training based on their previous experiences.
Off-the-job training will be provided by teaching them the basics of cooking,
kitchen maintenance, quality, customer order handling and relationship
management. This will be provided for a short period of time. They will learn most
of the job process on the on-the-job training where they will be supervised on the
real job.
 Performance review: The staffs will be salaried on the basis of contracts and
bonus and incentives will be provided on the basis of their performance. The
appraisal will be done every month mainly on the basis of their engagement
towards work, targets they meet, and quality in their work.

48
 CHAPTER 11

Financial Plan

11.1 Financial Objectives

During the start up or initial phase in any business, the resources are scare. The main
financial objective of the organisation is to focus their limited resources on the most
important activities when setting up the business. 

11.2 Assumptions

Revenue 10% increment on sales revenue in 2 nd and 3rd

year and 20% in 4th and 5th year
Expense 5 % increase in all operating expenses in each year
expects fuel.
Fuel will be increased by 10% each year
Salary 10% increment every year

Depreciation method Written Down Value

Taxation Tax rate applied as per the law as 25%

First year- No Dividend

Dividend Second year- 30%

49
 Third year- 30%
Fourth year- 30%
Fifth year- 40%
Loan interest rate 14% per annum

Loan terms 5 year long term loan, yearly interest payment

Interest income from investment 10% per annum

11.3 Startup investment

Total Initial requirement vs Sources of fund

Particulars Amount in NRs.

Total Assets
Fixed Asset 691,500
Preliminary Expense 236,000
Cash 272,500
Total 1,200,000

Source of Fund
Owner's Equity 720,000
Long Term Loan 480,000
Total 1,200,000

11.4 Startup expense

Preliminary Expense
In Nrs
Particulars Amount
Advertisement cost 150,000

50
Website 50,000
Legal expenses 20,000
Office Expenses 6,000
Miscelleneous expenses 10,000
Total 236,000

11.5 Capital structure

S.N Proportio
Particulars Amount In Nrs
o n
1 Share Capital 720,000 60%
2 Project Term Loan 480,000 40%
Total 1,200,000
Cost Of capital 15.00%

11.6 Sales/ Revenue Projection

Revenue Estimation For 5 years

In Nrs
Estimated Number
SN
Year 1 Year 2 Year 3 Year 4 Year 5
37,50 41,25 45,37 54,45 65,34
Sales Unit
0 0 5 0 0
3,187,50 3,681,56 4,252,20 5,357,77 6,750,80
Sales revenue
0 3 5 8 0
100,00 200,00 300,00 400,00
Annual Advertisement revenue
0 0 0 0
3,187,50 3,781,56 4,452,20 5,657,77 7,150,80
Total 0 3 5 8 0

51
11.7 Income Statement
Sasto Khaja Express
Kamaladi, Kathmandu
Projected Profit & Loss Statement

Particulars Year 1 Year 2 Year 3 Year 4 Year 5

Sales revenue 3,187,500 3,681,563 4,252,205 5,357,778 6,750,800
Advertisemet revenue 100,000 200,000 300,000 400,000
Total Revenue 3,187,500 3,781,563 4,452,205 5,657,778 7,150,800
Less:
COGS (40% of sales) 1,275,000 1,512,625 1,780,882 2,263,111 2,860,320
Gross Profit 1,912,500 2,268,938 2,671,323 3,394,667 4,290,480
Less:
Operating and administrative expenses 1,556,000 1,693,650 1,846,268 2,013,561 2,196,970

Operating Profit before

Depreciation(EBDIT) 356,500 575,288 825,055 1,381,105 2,093,510

Less:
Depreciation 129,725 111,141 88,870 71,116 56,952
Preliminary Expense Writen off 47,200 47,200 47,200 47,200 47,200

Operating Profit after Depreciation(EBIT) 179,575 416,946 688,985 1,262,790 1,989,358

Add:

52
 10,00 25,00 45,00 70,00
Investment Income - 0 0 0 0
Less:
67,20 57,03 45,44 32,23 17,17
Interest on Term Loan 0 4 4 2 0

Profit Before Tax (PBT) 112,375 369,913 668,541 1,275,557 2,042,188

Less:
28,09 92,47 167,13 318,88 510,54
Tax @ 25% 4 8 5 9 7

Net Profit After Tax (NPAT) 84,281 277,434 501,406 956,668 1,531,641

11.8 Statement of Retained Earning

Statement of Retained Earnings
In Nrs
Particulars Year 1 Year 2 Year 3 Year 4 Year 5
Opening Balance - 84,281 253,201 528,225 1,039,425
Add: Net profit after tax 84,281 277,434 501,406 956,668 1,531,641
Total Available RE 84,281 361,716 754,607 1,484,893 2,571,066
Less: Dividend Paid - 108,515 226,382 445,468 1,028,426
Closing Retained Earnings 84,281 253,201 528,225 1,039,425 1,542,640

11.9 Cash budget statement

Statement of Cash Budget
In Nrs
Particulars Year 1 Year 2 Year 3 Year 4 Year 5
Opening Cash 272,500 6,690 39,884 84,565 200,334

Receipt
Cash from customers 2,550,000 3,682,750 4,338,076 5,436,663 6,872,196
Investment income - 10,000 25,000 45,000 70,000
Total Receipt 2,550,000 3,692,750 4,363,076 5,481,663 6,942,196

Payment
Payment to Suppliers 2,547,900 3,168,748 3,585,062 4,211,720 4,979,228
53
Interest Payment 67,200 57,034 45,444 32,232 17,170
Payment of tax 28,094 92,478 167,135 318,889 510,547
Dividend Payment - 108,515 226,382 445,468 1,028,426
Principle Payment 72,616 82,782 94,372 107,584 122,646

Total Payment 2,715,810 3,509,556 4,118,395 5,115,894 6,658,018

Surplus 106,690 189,884 284,565 450,334 484,512
Less: Investment 100,000 150,000 200,000 250,000 300,000

Closing Balance 6,690 39,884 84,565 200,334 184,512

11.10 Balance sheet

Sasto Khaja Express

Kamaladi, Kathmandu
Projected Balance sheet
In Nrs
Particulars Year 1 Year 2 Year 3 Year 4 Year 5
Assets
Furniture- Cost 60,000 60,000 60,000 60,000 60,000
Accumulated Depreciation 15,000 26,250 34,688 41,016 45,762
Net Book Value 45,000 33,750 25,313 18,984 14,238

Machine and equipment- Cost 81,500 81,500 81,500 81,500 81,500

Accumulated Depreciation 12,225 22,616 31,449 38,956 45,338
Net Book Value 69,275 58,884 50,051 42,544 36,162

Kitchen Appliances -Cost 150,000 150,000 150,000 150,000 150,000

Accumulated Depreciation 22,500 48,000 68,400 84,720 97,776
Net Book Value 127,500 102,000 81,600 65,280 52,224

Vehicles- Cost 400,000 400,000 400,000 400,000 400,000

Accumulated Depreciation 80,000 144,000 195,200 236,160 268,928
Net Book Value 320,000 256,000 204,800 163,840 131,072

Net Fixed Assets 561,775 450,634 361,764 290,648 233,696

54
Investment 100,000 250,000 450,000 700,000 1,000,000

Current Assets
Trade and Other Receivables 637,500 736,313 850,441 1,071,556 1,350,160
Cash & Bank Balance 6,690 39,884 84,565 200,334 184,512
Total Current Assets 644,190 776,196 935,006 1,271,890 1,534,672

Unamortized Expenditure
Preliminary Assets 188,800 141,600 94,400 47,200 0

Total Assets 1,494,765 1,618,430 1,841,169 2,309,738 2,768,369

Current Liabilities
Trade and Other Payables 283,100 320,628 362,715 427,667 505,729
Total Current Liabilities 283,100 320,628 362,715 427,667 505,729
Long Term Liabilities
Project Term Loan 407,384 324,602 230,230 122,646 0

Equity Capital
Paid Up Share Capital 720,000 720,000 720,000 720,000 720,000
Reserves and retained earning 84,281 253,201 528,225 1,039,425 1,542,640

Total Capital and Liabilities 1,494,765 1,618,430 1,841,169 2,309,738 2,768,369

11.11 Economic Appraisal

Particulars Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Operating Profit after 179, 426, 713, 1,307,7 2,059,
Depreciation(EBIT) 575 946 985 90 358
(67,2 (57,0 (45,4 (32,23 (17,1
Less Interest 00) 34) 44) 2) 70)
112, 369, 668, 1,275,5 2,042,
EBT 375 913 541 57 188
(28,0 (92,4 (167,1 (318,8 (510,
Less tax@25% 94) 78) 35) 89) 547)
84, 277, 501, 956,66 1,531,
EAT 281 434 406 8 641
129, 111, 88, 71,11 56,
Add back Depn 725 141 870 6 952
47, 47, 47, 47,20 47,
Add: Amortization 200 200 200 0 200
Add Working Capital released - 1,028,

55
 - - - 943
1,000,
Add: Investment - - - - 000
(1,200,00 261, 435, 637, 1,074,9 3,664,
0) 206 776 476 84 736
PVIF @ 15% 1 0.8696 0.7561 0.6575 0.5718 0.4972
(1,200,00 227, 329, 419, 614,62 1,822,
Discounted Cashflow 0) 136 509 151 6 021
(1,200,00 (938,7 (503,0 134, 1,209,4 4,874,
Cummulative Cashflow 0) 94) 18) 458 42 178

Total Discounted Cashflow (Total 3,412,44

From Year 1 to 5) 3
(1,200,00
Less Initial Outflow 0)
2,212,44
Net Present value 3

Payback Period (In years) 2.87

Discounted Payback (In Years) 2.78

2.84
Profitability Index 4

Internal Rate Of Return 51.82%

11.12 Key financial Indicators

Particulars Formulae Year 1 Year 2 Year 3 Year 4 Year 5
Current Ratio Current Assets/Current Liabilities 2.28 2.42 2.58 2.97 3.03
operating profit margin EBDIT/Revenue 11.18% 15.21% 18.53% 24.41% 29.28%
net profit margin NPAT/Revenue 2.64% 7.34% 11.26% 16.91% 21.42%
Fixed Assets Turnover Ratio Revenue/Net Fixed Assets 5.67 8.17 11.75 18.43 28.89
Total Assets Turnover Ratio Revenue/Total Assets 2.13 2.27 2.31 2.32 2.44
Return On Total Assets NPAT/Totaal Assets 5.64% 17.14% 27.23% 41.42% 55.33%
Return On Equity NPAT/(paid up capital+ Reserve) 10.48% 28.51% 40.17% 54.37% 67.69%
Return On Investment NPAT/Total investment 7.02% 23.12% 41.78% 79.72% 127.64%
Debt Service Coverage Ratio EBDIT/PMT 2.55 4.11 5.90 9.88 14.97
2,888,20 3,086,65 3,303,89 3,553,12 3,835,20
Break even Sales (Rs) Fixed Assets/ Contribution margin Ratio 8 2 6 9 3
Break Even Sales (units) Fixed Assets/ Contribution per unit 33,979 33,670 33,672 34,195 35,044

56
 CHAPTER 12

Risk and Contingency Plan

12.1 Risk management

Risk is very common in business. But the question is, whether we will be able to manage
these risk or not. These risks might arises while operating our business

Possible Risk Likelihood Impact Strategy

Cancel of order Likely High We will ask for the advance
payment from customers.

Time management: Likely High We will hire part time staff.

They will be paid in hourly
Sometimes we may receive
basis
order of large quantity; in
that situation there might be
difficulty in managing time.

57
 Possible Risk Likelihood Impact Strategy
Price fluctuations of grocery Likely High We will adopt strategies like

items/economic risk JND (just noticeable

difference) where price of
product will be same but the
quantity will be slightly
lower.

Operational risks Likely High We will be emphasizing the

need to keep the premises
clean, educating employees
about using equipment. Most
importantly, insurance will
be done of delivery scooter to
avoid risk of accident.

12.2 Legal considerations

SLS Tiffin express will need to obtain permits in order to operate its business. In this case at first
we register at small and cottage industry, after that we will be registering at PAN and TAX
office.

13.0 Exit Strategy

There is not always certainty that the business will operate as per our expectations. Sometimes
business might fail to achieve its target. There may come the situation where it is even better to
exit from the business rather than to operate. So our exit strategy would be to sale the company
to others if possible or to sale the assets of the company.

58
 14. Appendix
A1) Startup Assets Details

Details of Initial Assets Requirement

In Nrs
Furniture
Particulars Qty Rate Total Cost

Chairs 5 2,000 10,000

Kitchen Cupboard 1 40,000 40,000

Office table 1 10,000 10,000

Total Furniture Value 60,000

Office Equipments
Particulars Qty Rate Total Cost
Computers 60,000 60,000

59
 1

Printer 1 20,000 20,000

Telephone 1 1,500 1,500

Total Office Equipments 81,500

Kitchen Appliances
Particulars Qty Rate Total Cost
Refrigerator 1 45,000 45,000
Gas Cylinder 4 4,000 16,000
Gas Stove 2 4,000 8,000
Microwave 1 25,000 25,000
Mixture and toster machine 1 10,000 10,000
Lunch bag 2 8,000 16,000
Cooking utensils _ _ 30,000
Total kitchen appliances 150,000

Vehicles
Particulars Qty Rate Total Cost

Scooter 2 200,000 400,000

total vehicle expenses 400,000

Preliminary Expense
In Nrs
Particulars Amount
Advertisement cost 150,000
Website 50,000
Legal expenses 20,000
Office Expenses 6,000
Miscelleneous expenses 10,000
Total 236,000

60
A2) Revenue Estimation

Revenue Estimation For 5 years

In Nrs
Estimated Number
SN
Year 1 year 2 Year 3 Year 4 Year 5

Sales Unit 37,500 41,250 45,375 54,450 65,340

Sales revenue 3,187,500 3,681,563 4,252,205 5,357,778 6,750,800

Annual Advertisement revenue 100,000 200,000 300,000 400,000
Total 3,187,500 3,781,563 4,452,205 5,657,778 7,150,800

Fee per month for 5 Years

In Nrs
Avg Price Per Lunch
SN
Year 1 year 2 Year 3 Year 4 Year 5
Avg Lunch price 85 89 94 98 103

A3) Expenses Details

Operating and administrative Expense for 5 Years

In Nrs
Particulars Year 1 Year 2 Year 3 Year 4 Year 5

Operating and 1,693,65

administrative Expense 1,556,000 0 1,846,268 2,013,561 2,196,970

1,329,90
Salary & Allowances 1,209,000 0 1,462,890 1,609,179 1,770,097
Electricity and water
expense 42,000 44,100 46,305 48,620 51,051

Internet 18,000 18,000 18,000 18,000 18,000

Telephone 6,000 6,300 6,615 6,946 7,293

Fuel

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 72,000 79,200 87,120 95,832 105,415

Rent 96,000 100,800 105,840 111,132 116,689

Stationery 12,000 12,600 13,230 13,892 14,586

Insurance 5,000 3,400 3,400 3,400 3,400

Website 5,000 5,000 5,000 5,000 5,000

Advertisement 24,000 24,000 24,000 24,000 24,000

Packing Material 25,000 26,250 27,563 28,941 30,388

Repair and Maintenance 18000 18,900 19,845 20,837 21,879

Miscelleneous Expenses 24000 25,200 26,460 27,783 29,172

A4) Salary Estimation

Salary Estimation for 5 years

In Nrs
Numbe Per Year
Personnel
r Month 1 2 3 4 5

Cook/Dishwasher 2 15,000 390,000 429,000 471,900 519,090 570,999

Administrator/Accoun
tant 1 18,000 234,000 257,400 283,140 311,454 342,599

Delivery Man 2 15,000 390,000 429,000 471,900 519,090 570,999

Matketing man 1 15,000 195,000 214,500 235,950 259,545 285,500

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TOTAL 6 48,000 1,209,000 1,329,900 1,462,890 1,609,179 1,770,097

A5) Loan Amortization Schedue

Loan Amortization Schedule

In Nrs
Particulars Year 1 Year 2 Year 3 Year 4 Year 5

Beginning Loan 480,000 407,384 324,602 230,230 122,646

PMT 139,816 139,816 139,816 139,816 139,816

Interest 67,200 57,034 45,444 32,232 17,170

Principle
payment 72,616 82,782 94,372 107,584 122,646

End Loan 407,384 324,602 230,230 122,646 (0)

A6) BEP Calculation

Projected BEP Calculation

In Nrs
Particulars Year 1 Year 2 Year 3 Year 4 Year 5
Total sale lunch 37,500 41,250 45,375 54,450 65,340

Revenue from Operation 3,187,500 3,781,563 4,452,205 5,657,778 7,150,800

Less:

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Variable Cost 1,275,000 1,512,625 1,780,882 2,263,111 2,860,320

Contribution Margin 1,912,500 2,268,938 2,671,323 3,394,667 4,290,480

Fixed Overhead 1,732,925 1,851,991 1,982,338 2,131,877 2,301,122

Salary & Allowances 1,209,000 1,329,900 1,462,890 1,609,179 1,770,097
Electricity and water expense 42,000 44,100 46,305 48,620 51,051
Internet 18,000 18,000 18,000 18,000 18,000
Telephone 6,000 6,300 6,615 6,946 7,293
Fuel 72,000 79,200 87,120 95,832 105,415
Rent 96,000 100,800 105,840 111,132 116,689
Stationery 12,000 12,600 13,230 13,892 14,586
Insurance 5,000 3,400 3,400 3,400 3,400
Website 5,000 5,000 5,000 5,000 5,000

Advertisement 24,000 24,000 24,000 24,000 24,000

Packing Material 25,000 26,250 27,563 28,941 30,388

Repair and Maintenance 18,000 18,900 19,845 20,837 21,879

Miscelleneous Expenses 24,000 25,200 26,460 27,783 29,172

Depreciation 129,725 111,141 88,870 71,116 56,952

Preliminary Expense written off 47,200 47,200 47,200 47,200 47,200

Profit 179,575 416,946 688,985 1,262,790 1,989,358

Contribution per Unit 51 55 59 62 66

Contribution Margin 60% 60% 60% 60% 60%

BEP Sales (In Amount) 2,888,208 3,086,652 3,303,896 3,553,129 3,835,203

BEP Sales (In Unit) 33,979 33,670 33,672 34,195 35,044

A7) Depreciation Schedule

In Nrs
Furniture
Particulats Year 1 Year 2 Year 3 Year 4 Year 5

Cost of assets 60,000 60,000 60,000 60,000 60,000

Book value at beginning

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 60,000 45,000 33,750 25,313 18,984

Depreciation 15,000 11,250 8,438 6,328 4,746

Accumulated depreciation 15,000 26,250 34,688 41,016 45,762

Book Value at end 45,000 33,750 25,313 18,984 14,238

Assumption :Depn rate @ 25% WDV

Office Equipment
Particulats Year 1 Year 2 Year 3 Year 4 Year 5

Cost of assets 81,500 81,500 81,500 81,500 81,500

Book value at beginning 81,500 69,275 58,884 50,051 42,544

Depreciation 12,225 10,391 8,833 7,508 6,382

Accumulated depreciation 12,225 22,616 31,449 38,956 45,338

Book Value at end 69,275 58,884 50,051 42,544 36,162

Assumption :Depn rate @ 15% WDV

Kitchen appliances
Particulats Year 1 Year 2 Year 3 Year 4 Year 5

Cost of assets 150,000 150,000 150,000 150,000 150,000

Book value at beginning 150,000 127,500 102,000 81,600 65,280

Depreciation 22,500 25,500 20,400 16,320 13,056

Accumulated depreciation 22,500 48,000 68,400 84,720 97,776

Book Value at end 127,500 102,000 81,600 65,280 52,224

Assumption :Depn rate @ 15% WDV

Vehicles

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 Particulats Year 1 Year 2 Year 3 Year 4 Year 5

Cost of assets 400,000 400,000 400,000 400,000 400,000

Book value at beginning 400,000 320,000 256,000 204,800 163,840

Depreciation 80,000 64,000 51,200 40,960 32,768

Accumulated depreciation 80,000 144,000 195,200 236,160 268,928

Book Value at end 320,000 256,000 204,800 163,840 131,072

Assumption :Depn rate @ 20% WDV

Total Cost of Asset 691,500 691,500 691,500 691,500 691,500

Total Depn 129,725 111,141 88,870 71,116 56,952

Total WDV 561,775 450,634 361,764 290,648 233,696

Preliminary Expense
Particulats year1 year2 year3 year4 year5

Cost of assets 236,000 236,000 236,000 236,000 236,000

Book value at beginning 236,000 188,800 141,600 94,400 47,200

Written off 47,200 47,200 47,200 47,200 47,200

Accumulated amortization 47,200 94,400 141,600 188,800 236,000

Book Value at end 188,800 141,600 94,400 47,200 -

Assumption : 5 year Amortization

A8 Key Profitability Ratio

Calculation of Key Profitability Ratios

Key Indicators Year 1 Year 2 Year 3 Year 4 Year 5

Profitability Ratios

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 Operating Profit Margin (all pre- 15.21 18.53 24.41
EBDIT/Revenue 11.18% 29.28%
operating expenses charged in Year 1) % % %
11.26 16.91
Net Profit Margin NPAT/Revenue 2.64% 7.34% % % 21.42%
17.14 27.23 41.42
Return on Total Assets NPAT/Totaal Assets 5.64% % % % 55.33%

NPAT/(project term loan 21.38 33.91 50.83

Return on Long Term Capital +paid up capital+ Reserve) 6.96% % % % 67.69%
NPAT/(paid up capital+ 28.51 40.17 54.37
Return on Equity Reserve) 10.48% % % % 67.69%
23.12 41.78 79.72 127.64
Return on investment NPAT/Total investment 7.02% % % % %
Efficiency Ratio

Revenue/(current Assets-
Net Working Capital Turnover Ratio Current Liabilities) 8.83 8.08 7.43 6.35 6.56
Fixed Assets Turnover Ratio Revenue/Net Fixed Assets 5.67 8.17 11.75 18.43 28.89
Total Assets Turnover Ratio Revenue/Total Assets 2.13 2.27 2.31 2.32 2.44
Expense and Coverage Ratio

(operating andadmn
Total Expense Ratio (all costs and exp+preli exp+depn+interest
expenses vs sales) on term loan)/ Total Assets) 1.20 1.18 1.10 0.94 0.84
Debt Service Coverage Ratio (DSCR) EBDIT/PMT 2.55 4.11 5.90 9.88 14.97
Times Interest Earned Ratio (TIE) EBDIT/ Interest on term loan 5.31 10.09 18.16 42.85 121.93

Liquidity Ratios

Total Current Assets/ Total

Current Ratio Current Liabilities 2.28 2.42 2.58 2.97 3.03
Quick Ratio 2.28 2.42 2.58 2.97 3.03

Net Working Capital to Current (Current Assets- Current

Liabilities Liabilities)/ Current liabilities 1.28 1.42 1.58 1.97 2.03

Payback Period 2.87

Discounted Payback Period 2.78
2,212,44
Net Present Value (NPV) 3
Profitability Index 2.84
Internal Rate of Return (IRR) 51.82%

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