HOME APPLIANCES

Introduction
A home appliance, also referred to as a domestic appliance, an electric appliance or
a household appliance, is a machine which assists in household functions such as
cooking, cleaning and food preservation. Small appliances; major appliances, or
white goods; and consumer electronics, or brown goods.
Major appliances, often known as white goods, small appliances, and consumer
electronics are the three types of household appliances. Major appliances are huge
home appliances that are used for daily operations including cooking, laundry, food
preservation, and so on. They are usually connected with unique connections, such
as electrical, gas, plumbing, and ventilation arrangements, limiting their mobility
throughout the house. Small appliances are machines that are semi-portable or
portable and are typically utilised on platforms such as counters and tables.

Market Potential
The manufacturing of white goods such as refrigerators, washing machines, and air
conditioners has increased in India's primary appliance sector. In 2018, India's
refrigerator production climbed by 3% year on year to 11.88 million units. In 2018,
India's washing appliance production climbed by 5.1 percent year on year to 5.79
million units. The output of air conditioners in India increased by 4.9 percent y-o-y to
3.19 million units in 2018 (up to February 2018). In India, the white goods business is
highly consolidated, with the top five manufacturers controlling more than 70% of the
market. In India, Xiaomi, a Chinese start-up, joined the white goods market in 2019.
The market for home appliances in the Asia-Pacific region is largely dominated by
regional brands, including Haier, Midea, Gree, Hisense from China, Samsung, and
LG from Korea, Panasonic, Sharp, and Hitachi from Japan, and Videocon from India.
The smart appliances market in Asia-Pacific is expected to grow at a rapid rate.
Developed countries like Japan, Singapore, Hong Kong, and Indonesia are expected
to register an increase in the sales of smart appliances, mostly owing to the rising
energy and labour costs, the high purchasing power of consumers, and greater
awareness about smart cities and smart integrated appliances. China has the
highest demand for conventional air conditioners, by volume, across the globe,

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 owing to government policies that favour energy-saving appliances, a growing
property market, and hot weather.

Assumptions
1. For SME unit having yearly turnover of 500 lakhs, the Nayak Committee's
recommendation has been implemented by all the banks. Hence, we have
worked out the funding requirement accordingly.
2. Sales of such trading units is majorly impacted by the selection of business
location. The entrepreneur should examine all business aspects while selecting
this location. Normally, home appliances is established in a prevalent market
area. Thus, we have assumed that the unit has been set up in a market area.
3. The shop premises of this unit is taken on lease. 500 sq. ft. for display purposes
& 1000 sq. ft. for go-down purposes in which shall be spacious for stock display
and stock-keeping.
4. Computation of Closing Stock is done on the basis of Working Capital cycle
which is assumed to be of 3 months.
5. DSCR is high because of the term loan component is lesser than working capital
requirement. We have not considered repayment for working capital and it is
running on a continuous basis.

Cost of Project

Amount
Particulars
(Rs. in Lakhs)
Premises (Lease) -
Interior Civil Work including False Ceiling, Wall Rack, Partition Rack,
3.50
etc. @1500 per sq. ft. (Shop Premises)
Equipment -
Furniture and Fixtures as per Annexure 0.30
Electrical Equipment 1.51
Desktop and Printer 0.50
Software Cost (Tally/SAP) (as per Annexure) 0.30
Inverter (10 Kv office inverter) 0.70
Preliminary & Preoperative Expenses 1.40
Sub-total (A) 8.21
Working Capital Margin @25% of Total WC Requirement 11.25
Total Project Cost 19.46
Total Working Capital Required (lump sum) (B) 45.00
MEANS OF FINANCE
Total Funds Required (A+B) 53.21
Loan Component- -
TERM LOAN (75% of A) 6.16
WORKING CAPITAL (75% of B) 33.75
Total 39.91
Equity 13.30
Total 53.21

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 Detailed Cost Element

Sl. Amount
Particulars Quantity Rate
No. (Rs. in Lakhs)
Electrical Equipment
1 AC 2 45000 0.90
2 CCTV 6 2500 0.15
3 FAN 4 1500 0.06
4
4 Light LS LS 0.40
Total 1.51
Furniture and Fixtures
1 Table & chairs LS LS 0.30
Total 0.30

Preliminary Expenses

Amount
Particulars
(Rs. in Lakhs)
Incorporation Expenses 0.08
Project Report Preparation 0.08
Interior Designer's Fee 0.25
Legal Charges - Drafting for agreements, contracts, stamp paper, notary and
0.05
affidavit cost
Salary 0.45
Rent Expenses 0.45
Interest Cost for period before commercial production 0.04
Total 1.40

Salary

Amount
Designation Manpower
(Rs. in Lakhs)
Cashier 2 1.92
Staff 5 6.00

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 Profitability Statement
Amount (Rs. in lakhs)
Particulars Year- 1 Year- 2 Year- 3 Year- 4 Year- 5
A. INCOME
Total Working Days in a Year 300 300 300 300 300
Estimated Sales per Day (Rs) 0.60 0.66 0.73 0.80 0.88
Annual Sales (Rs.) 180.00 198.00 217.80 239.58 263.54
Total income during the year 180.00 198.00 217.80 239.58 263.54
B. OPERATING EXPENSES
Stock Consumed(75%of sales) 135.00 148.50 163.35 179.69 197.65
Salary 7.92 8.32 8.73 9.17 9.63
Rent 7.80 8.19 8.60 9.03 9.48
Power & utilities 3.60 3.67 3.75 3.82 3.90
Depreciation and Amortization 0.88 0.88 0.88 0.71 0.71
Administrative and General
3.60 3.96 4.36 4.79 5.27
Expenses
Total Operating Expenses 158.80 173.52 189.66 207.20 226.63
Operating Profit (A-B) 21.20 24.48 28.14 32.38 36.90
C.FINANCIAL EXPENSES
Interest on Term Loan 0.48 0.37 0.27 0.16 0.06
Interest on WC Loan 2.87 2.87 2.87 2.87 2.87
Total Expenses 3.34 3.24 3.13 3.03 2.93
Profit Before Tax 17.86 21.24 25.00 29.35 33.98
Provision for Tax 4.46 5.31 6.25 7.34 8.49
Profit after Tax (PAT) 13.39 15.93 18.75 22.01 25.48

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 Breakeven Point
Break Even Point (BEP) Amount (Rs. In Lakhs)
SL Particulars Year - 1 Year - 2 Year - 3 Year - 4 Year - 5
A. Net Sales 180.00 198.00 217.80 239.58 263.54
B. Variable Cost
Stock Consumed 135.00 148.50 163.35 179.69 197.65
Power and Utility 3.60 3.67 3.75 3.82 3.90
Total Variable Cost 138.60 152.17 167.10 183.51 201.55
C. Contribution (A-B) 41.40 45.83 50.70 56.07 61.99
D. Fixed
Salary 7.92 8.32 8.73 9.17 9.63
Rent Expenses 7.80 8.19 8.60 9.03 9.48
Interest on term loan 0.48 0.37 0.27 0.16 0.06
Interest on working capital 2.87 2.87 2.87 2.87 2.87
Depreciation and Amortization 0.88 0.88 0.88 0.71 0.71
Total Fixed Cost 19.94 20.63 21.35 21.93 22.74
E. Breakeven Point 48% 45% 42% 39% 37%
F. Cash BEP 46% 43% 40% 38% 36%

Debt-Service Coverage Ratio

Amount (Rs. In lakhs)
SL Particulars Year - 1 Year - 2 Year - 3 Year - 4 Year - 5
i Profit 13.39 15.93 18.75 22.01 25.48
ii Depreciation 0.88 0.88 0.88 0.71 0.71
iii Interest on term loan 0.48 0.37 0.27 0.16 0.06
A Total ( i + ii + iii ) 14.75 17.18 19.90 22.88 26.25
i Interest on term loan 0.48 0.37 0.27 0.16 0.06
ii Principal repayment on term loan 1.23 1.23 1.23 1.23 1.23
B Total ( i + ii ) 1.71 1.60 1.50 1.39 1.29
DSCR ( A / B ) 8.64 10.72 13.28 16.42 20.37

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 Interest on Term Loan and Principal Repayment
Refer Annexure I for Loan Repayment Schedule.
We have assumed the repayment tenure of term loan for a period of 5 years, Rate of
interest being 8.5% p.a.

Address of Vendors

Name of the Vendor Address and Contact Number

Partha International (CCTV 7, Chandni Chowk St, Near Sabir Hotel, Chandni Chawk,
and Computer Shops) Bowbazar, Kolkata, West Bengal 700072
099036 42800
11G, Temple St, Chandni Chawk, Bowbazar, Kolkata, West
Pugalia Refrigeration
Bengal 700072
Company
03322370846,+919331017074

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 ANNEXURE - 1

Year Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Annually
I
Principal
Opening 6.16 6.06 5.95 5.85 5.75 5.65 5.54 5.44 5.34 5.24 5.13 5.03
Repaid 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 1.23
Closing 6.06 5.95 5.85 5.75 5.65 5.54 5.44 5.34 5.24 5.13 5.03 4.93
Interest 0.04 0.04 0.04 0.04 0.04 0.04 0.04 0.04 0.04 0.04 0.04 0.04 0.48

II
Principal
Opening 4.93 4.83 4.72 4.62 4.52 4.41 4.31 4.21 4.11 4.00 3.90 3.80
Repaid 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 1.23
Closing 4.83 4.72 4.62 4.52 4.41 4.31 4.21 4.11 4.00 3.90 3.80 3.70
Interest 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.37

III
Principal
Opening 3.70 3.59 3.49 3.39 3.29 3.18 3.08 2.98 2.87 2.77 2.67 2.57
Repaid 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 1.23
Closing 3.59 3.49 3.39 3.29 3.18 3.08 2.98 2.87 2.77 2.67 2.57 2.46
Interest 0.03 0.03 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.27

IV
Principal
Opening 2.46 2.36 2.26 2.16 2.05 1.95 1.85 1.75 1.64 1.54 1.44 1.33
Repaid 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 1.23
Closing 2.36 2.26 2.16 2.05 1.95 1.85 1.75 1.64 1.54 1.44 1.33 1.23
Interest 0.02 0.02 0.02 0.02 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.16

V
Principal
Opening 1.23 1.13 1.03 0.92 0.82 0.72 0.62 0.51 0.41 0.31 0.21 0.10
Repaid 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 1.23
Closing 1.13 1.03 0.92 0.82 0.72 0.62 0.51 0.41 0.31 0.21 0.10 0.00
Interest 0.01 0.01 0.01 0.01 0.01 0.01 0.00 0.00 0.00 0.00 0.00 0.00 0.06

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