TABLE OF CONTENTS

Letter of Transmittal Acknowledgement Project Brief Key Assumptions Depreciation and Amortization Schedule Income Statement Balance Sheet Cash Flow Reference

PROJECT BRIEF Clothing is a beautiful visual demonstration of the social and emotional needs of people wearing it. It also portrays in a clearly understood visual manner, what people of different cultures and styles want socially. Fashion, through times, has gone through so many rapid changes and bizarre extremes that it has examples of nearly every kind of clothing function. However, in a boutique business, the specifications and descriptions of the designs and clothes are so general that they can fit more than one costume, which actually are quite different in nature from each other and this is solely dependent on the taste of the people. The range of Indian dresses is remarkably wide, according to the vast cultures, geographical differences, purchasing capacities, influence of the western culture, and bewildering diversities of the ethnic groups. One has, therefore, to sift and isolate, and then relate and bring together, the ideas for creating various designs, which can fit in the context of the fashion in vogue and the culture in practice. In reference to India, the Boutique business is quite in vogue but has yet to be formalized. The market of this enterprise is quite scattered and unorganized. There are a few major players in Boutique business and these entrepreneurs have also taken an initiative based on their caprice and experience in the field of fashion design. However, there is a massive potential in this field, if one has the ability to design and market his/her products through introducing innovative designs both in stitching as well as the fabric sector. Furthermore, there is massive export potential in this sector, as the demand of Indian dresses, especially in countries like UAE, USA, and UK, is massive due to a high number of Indian expatriates who have settled in these countries. The Boutique business can also be expanded into a more profitable venture by providing stitching facilities to other boutiques, which do not own a stitching unit or are lacking this facility.

PROPOSED CAPACITY The Boutique business capacity is greatly dependent on the market size and the number of potential clientele one can attract. Furthermore, the women fashion wear garments will be designed through a contracted designer and then stitched through in-house stitching unit. On average, a designer can supply forty designs per month from which nearly twenty designs are selected on average. Approximately, total capacity of the defined unit with 5 stitching machines (basis on 8-10 hours shift) will be about 500 dresses. The breakup of the total number of dresses will be as follows:

Total designs selected by designer 20Number of dresses in each design 5Number of dresses in each size 5Total Number of dresses 500This production and sales capacity is estimated to be economically viable andjustifies the capital as well as operational costs of the project.

MARKETING The marketing of boutique follows the conventional marketing pattern, which is dependent on selection of venue of the outlet/s and the product mix (designs and sizes), as well as the promotional strategy. Furthermore, the boutique owner has to marketing techniques like:

Usage of print media i.e. printing of posters and pamphlets as well as displaying it and distributing it at proper places Advertisement in print media i.e. newspapers and fashion magazines, etc. Usage of electronic media i.e. projection of the boutique in fashion programs, advertisement on television, and provision of dresses to various television plays and films. Event arrangement like fashion shows and photo-shoots. Usage of e-commerce i.e. launching of website and advertising on web. Moreover, in order to keep abreast with the emerging trends and client tastes, surveys regarding customer satisfaction/needs should be a regular feature of this project. As this project of Boutique deals in designer women wear, therefore the product mix will comprise of different styles of the female dresses in different sizes. Whereas, the styles will be Salwar Kameez, Q-lots, Pajama Kameez, Sarees, Party dresses, Casual Dresses and other prevalent dresses based on the market trends. The average sale price per dress is assumed to be Rs.2100.

RAW MATERIAL The raw material required for such sort of projects, would be as follows: Fabric: The fabric, which is the basic raw material requirement for a boutique and a major component of the cost, can be obtained from wholesale markets or from markets specializing in designer cloth at Faisalabad, Karachi, and Lahore. Accessories: Accessories such as buttons, laces, zippers, elastics, threads, needles, embroidery threads, glasses, etc. will be procured from the local market at competitive rates. Labels, tags and packaging: Labels and tags can be obtained on order, as these serve as an identity for the boutique and are useful for promotion.

PRODUCTION PROCESS FLOW: The process for converting fabric in designer wear garments follows the below mentioned sequence:

Design: The initial process starts from the designing phase. Various patterns of clothing and the fashions in vogue, which also relate to the tastes of theconcerned clientele, are designed. The contracted designer as does thishe/she will provide the basic designs of which the fabric will be converted intothe designer wear garment. On average, a designer is supposed to provide 40designs per month or 100-120 designs per season i.e. three months. From thesedesigns, approximately 50% of the designs are selected for further developmentof clothes. Pattern Making/Cutting: Based on the designs selected, patterns for cutting are developed and based on these patterns, fabric is cut, embroidered, block printed, and processed accordingly 3 . Stitching: The cutting is then followed by stitching, which can either be done by the in-house stitching unit or by outsourcing it 4 . Labels are also attached to the apparels in this process. Finishing: The final phase is that of finishing, in which the garment will be checked for quality control and will cleaned (if required) for final presentation at the outlet. The garments will also be tagged for identification of sizes, prices, addresses, handling instructions, etc. Presentation/Market: Once the designer wears garment is ready after going through the above-mentioned process, it is presented at the outlet/shop for sale to the clientele.

Pattern making / cuttingStitching Designing

Market / ClientelePresentationFinishing

PREMISES FO R SHOP AND STITCHING UNIT

Recommended mode for renting a Shop It is recommended that the proposed location for the said enterprise be a posh area, where people have the buying capacity for women fashion wear. The size of the shop should be at least 800 Sq.ft i.e. 20 feet front and 40 feet depth. Furthermore, a small building will be required to establishing the stitching unit. One viable option is to rent a small house for this purpose.The shop will be obtained on rental basis, and the rent estimation for such a shop is Rs 30,000/month. According to the prevailing practice, six months rent as advance and three months rent, as security would be required for renting the shop. It is assumed that security is a one-time expenditure, whereas pre-paid rent will only be given at the beginning, while establishing the boutique. After first six months, rent will be paid on monthly basis.The cost estimates for setting up the Boutique are as follows:

Security for renting shop/outlet (Rent @ Rs.30, 000per month. 3 months rent as security)90000

Interior decoration (installing lighting, mannequins, hanging racks, mirrors, glass panes, cash counter, and other furnitures, etc.)

300000

INFRASTRUCTURE REQUIREMENTSThe project will have the following infrastructure components:

INFRASTRUCTURE REQUIREMENTSSq .fts

Main shop600

Try room36

Small store100

Building for stitching unit11 Village Palla

MACHINERY AND EQUIPMENTS

Single needle lock-stitch machine420,00080,000

Over-lock stitch machine150,00050,000

Accessories (Scissors, Cutting Board, Table, stools, carpet, etc.)50,00050,000

Air-conditioner13000030000

Stereo System12300023000

Computer and Printer13500035000

Telephone & Fax11000010000

KEY SUCCESS FACTORS: There are a number of factors, which contribute towards the success of a project. In case of the project of Boutique, some of the Key Success Factors are as follows: Proper care while producing dresses should be adopted. Proper Inventory management i.e. keeping minimum inventory as per past sales trends. The dress designs should be according to the emerging trends and fashions. Designing of dresses according to the consumer tastes/preferences gathered through consumer surveys. The location of the outlet should be properly selected and attractively decorated so as to target the clientele effectively. The customer satisfaction should be given due importance, because it is the customer satisfaction, which can increase the sales. Hence, excellent customer service should be provided.

THREATS FOR THE BUSINESS

Competitive Structure of the market- The market of the boutiques is highly competitive, therefore if the entrepreneur is not well responsive to the tastes and response of the clientele as well as the fashions in vogue he/she may not be able to capitalize the opportunity properly. Pilferage in the designs-The designs, which a designer produce can be sold by the staff even before that design is launched and that can pose serious threat to the business because in the fashion industry it is the uniqueness of the design which matters. Selection of the wrong venue- Selection of the wrong venue can be a major hurdle in achieving the desired business objectives. Selection of the wrong design- If the designs are not selected according to the tastes of the clientele then it can be detrimental for the business, so the clientele taste should be properly tracked. Tax - Improper documentation of the sales receipt record may lead to problems with Tax department.

KEY ASSUMPTIONS

PRODUCTION ASSUMPTIONS

Number of Stitching Machines5

Production Capacity (No. of dresses per month)500

Capacity Utilization for the first year (No. of dresses per month)200

Self Production (% of total production)60%

Dresses manufactured on CMT basis (% of total production)40%

Monthly self production (Year 1)120

Monthly Dresses manufactured on CMT basis (Year 1)80

COST ASSUMPTIONS

Material & Fabrics400

Accessories25

Embroidery Cost100

Direct Labor Cost280

Direct Electricity Cost20

Machine Maintenance Cost4

Admin & Rent expenses & promotional expenses446

Fixed electricity30

Average unit cost per dress (Rs.)1305

SALES ASSUMPTIONS:

No. of dresses sold per month (Year 1)120

Average unit price per dress (Rs.)2100

Average Monthly Sales through retail outlet (Rs.)252000

No. Of dresses sold on CMT basis per month (Year). CMT manufacturers are garments manufacturer, they are like the outsource for the company, In boutiques such garments are also available.80

Average unit price per dress on CMT basis (Rs.)250

Average Monthly Sales through outsourcing (Rs.)20000

Total Average Monthly Sales (Year 1) (Rs.)272000

Sale growth rate (Units)10%

Sale growth rate (price)13.33%

OPERATING ASSUMPTIONS

Hours operational per day8

Days operational per month (Production)25

Days operational per month (Boutique)25

CASH FLOW ASSUMPTIONS

Account Payable Cycle (Days)10

Account Receivable Cycle (Days) 10

Raw Material Inventory (Days)15

EXPENSE ASSUMPTIONS

Initial Promotional Expenses (Year 1) (%age of expected sales)3%

Promotion Expenses after Year 1 (% of expected sales)1.5%

Machine Maintenance per annum10000

Direct Electricity per month (Year 1)4000

Fixed Electricity per month (Year 1)6000

Telephone and Internet charges (Year 1)3000

Raw Material Price Growth rate11%

Payroll growth rate7%

Machine Maintenance growth rate2%

Direct electricity growth rate10%

Fixed electricity growth rate10%

Rent growth rate5%

Telephone and Internet charges growth rate5%

Depreciation MethodSTRAIGHT LINE

PROJECT COST

DECRIPTIONCOST (RS)

Machinery & equipment378000

Furniture & Fixture (Interior Decoration)300000

Security Deposits for Premises90000

Pre-operating expenses

Salaries98000

Promotional Expenses97920

Total Capital Cost881920

Working Capital

Raw material (Fabric & Accessories)178800

Accounts Receivable138800

Prepaid Rent (Boutique and Stitching Unit)492000

Total Working capital809600

Project Cost1773520

DESIGNERS BOTIQUE