laundry service - molhr.gov.bt report is a detailed feasibility study on the laundry services in...

LAUNDRY

SERVICE

LAUNDRY SERVICE 2017

1 Complied by: iBEST Consultancy, 2017

1 Executive Summary

This report is a detailed feasibility study on the Laundry services in Bhutan. People of today are

very particular about their dress material, furnishing, and linen, especially during public

appearances. People prefer to wear and use expensive, well cleaned and ironed dress materials.

Expenditure in clothing is increasing, including expensive clothes; therefore, the demand of

taking care of clothes also increases. With that it has opened the scope for laundry services and

dry Cleaning units. Initially the business will be located at Olakha where there are hotels and

colonies in need of laundry services.

A laundry service will help in Cleaning including any kind of laundry that are brought to the

laundry business be it from shirts to suits to evening dresses, and even curtains, carpets and bed

linens. Laundry services will do the necessary washing, ironing, dyeing, bleaching, patch

repairing, polishing and dry cleaning. For laundry services, you do not even have to go and

collect it, but they will deliver it right up to your doorstep.

The main reasons for selecting the location are as follows:

There is continuous flow of water

Numbers of hotels, shops and resident around that particular area

Have the advantage of monopoly

There is water shortage at Changjiji colony which is a scope for the business

The location has all the necessary prerequisites.

The report presents in detail the justification of the project, market analysis of Laundry Services

resources required, and technology used, Service location, cost presentation and financial

analysis.

(i) Justification of the Project: With the growth of Urbanization, washing of cloths has turned

out to be a commercial proposition and led to the establishment of modern laundry services

with dry cleaning units in the cities as well in big towns. The services of these units are very

prompt and efficient.

(ii) Market Analysis: The hotels those are located at Olakha is currently availing the laundry

services located at the main town as there is no nearby laundry business. Therefore, they are

ready to avail the laundry services from the proposed business where the costs are

comparatively low than the other laundry business.

(iii)Resources required: The main raw material for laundry services is water. Apart from this, the

unit requires electricity, laundry detergent which is also easily available in Bhutan.



(iv) Technology required: Laundry Services is committed in preserving the earth’s resources

which will only use high-efficiency equipment to reduce water and energy use.However

technical details have been provided along with necessary financial analysis.

(v) Service Location: The proposed business will be established in and around Olakha.

(vi) Cost Presentation and Financial Analysis:

Table 1: Project Summary

Fixed cost 563,800

Working capital 92,100

Total investment 655,900

Break Even Point (BEP) 13426

Return On Investment (ROI) 22%

Pay Back Period 0 Year and 6 Months



TABLE OF CONTENTS

1 Executive Summary ...................................................................................................................................... 1

1.1 Business Model Canvassing ............................................................................................................... 5

2 Justification of the Project ........................................................................................................................... 6

2.1 The need for the project ....................................................................................................................... 6

2.2 Benefits of hiring Laundry services ................................................................................................. 7

2.3 Competition Analysis ........................................................................................................................... 8

3 Market Analysis .............................................................................................................................................. 8

3.1 Demand vs. Supply ............................................................................................................................... 8

3.2 Pricing & Marketing Strategies ......................................................................................................... 9

3.3 Competitiveness of the project ....................................................................................................... 10

3.4 SWOT Analysis .................................................................................................................................. 10

3.5 Special attributes desired by target customers ........................................................................... 11

3.6 Assessment of Comparative Advantage ...................................................................................... 11

3.7 Determine potential for marketing collaboration ...................................................................... 11

4 Resources ....................................................................................................................................................... 11

4.1 Sources of inputs including water ................................................................................................. 11

4.2 Comparative analysis of critical inputs ........................................................................................ 12

4.3 Sources of raw Material .................................................................................................................... 12

4.4 Assess the availability of manpower & skills ............................................................................ 12

5 The Plant ........................................................................................................................................................ 12

5.1 Choice of technology ........................................................................................................................ 12

5.2 Source of technology ......................................................................................................................... 13

5.3 Rate of Consumption of power, fuel, utilities & consumables ............................................. 14

5.4 Raw Material Consumption ............................................................................................................. 14

5.5 Man power requirement and organization chart ........................................................................ 15

6 Project Implementation Schedule ........................................................................................................... 16

7 Financial Analysis ....................................................................................................................................... 17

7.1 Total Project Capital Costs .............................................................................................................. 17

7.2 Working Capital Costs ...................................................................................................................... 18



7.3 Cost of Production per unit .............................................................................................................. 18

7.4 Human Resource cost ........................................................................................................................ 18

7.5 Project Profit and Loss Statement ................................................................................................. 19

7.6 Projected Cash Flow Statement ...................................................................................................... 19

7.7 Projected Balance sheet statement ................................................................................................. 20

7.8 Financial Ratio Analysis .................................................................................................................. 21

7.8.1 Interest on Loan .......................................................................................................................... 21

7.8.2 Break Even Point ....................................................................................................................... 21

7.8.3 Return on Investment ............................................................................................................... 22

7.8.4 Net Present Value and Internal Rate of Return ................................................................. 22

Project Viability: .................................................................................................................................................. 24

References .............................................................................................................................................................. 24

Annexure ................................................................................................................................................................ 25



1.1 Business Model Canvassing

Key Partners

Loden

Foundation

Banks

Self-Funding

Key Activities

Washing of any

types of items

(Garments and

carpets), Drying,

Ironing and

Collection and

delivery of items

at door steps.

Value

Propositions

Provide

laundry

services to the

customers at a

reasonable

price

Customer

Relationship

Provide

door step

services of

reaching

customers

wears

Customer

Segments

All level of

customers (i.e.,

low, medium

and high income

earners)

specially

targeting to

those who are

office workers

and changiji

colony people

Key resource

Detergent

Continuous

flow of water

Washing

machine

Machine

operators

Channels

Offline: word-of-

mouth, Online:

web and social

medias, Personal

relationship

Cost structure

Workers salary

Delivering services

Cost of washing machine

Revenue Streams

Rendering of laundry services to the

customers



2 Justification of the Project

2.1 The need for the project

General Scenario: According to the records of CSI 2014, there are thirteen Dry cleaning and

Laundry services within Thimphu region. But yet there are no Laundry services in an around

Olakha, Thimphu. Olakha is also one of the busy areas of Thimphu where most of the people

have resided; there are shops, hotels, schools and workshops established there. With the rapid

development of the country, the living standards of people have changed and they are becoming

more health conscious with cleanliness.

Figure 1 Total Laundry Services in Bhutan

(Source: Department Cottage and Small Industries, MoEA)

According to the Kuensel dated July 25, 2015, Phub Thinley, tenant said that the issue of water

shortage in Changjiji is serious. It has been there for a very long time now. Currently, the

housing complex gets water from a source in Jungshina through the two water tanks located in

Changjiji. There are 746 units of the complex share water from the two tanks with 48 shops and

25 private houses in Changjiji. In charge of Changjiji’s NHDCL branch office, Rinchen Drukpa,

said that after receiving complaints from the residents, the office inquired the thromde but there

has been no clear answer yet. He said that unless thromde supplies enough water from Jungshina,

they can’t do anything about the situation. Therefore, the proposed business was found to be

feasible and successful to start in an around Olakha benefiting Changjiji, Olakha and Babesa area.

133

2

3

1

3

3

2

3

Thimphu

Paro

Wangdue

Chukha

Samtse

Mongar

Sarpang

Tsirang

Samdrupjongkhar

Dzo

ng

kh

ag

s

No. of Laundry Services

Thimphu Paro Wangdue Chukha Samtse Mongar Sarpang TsirangSamdrupjo

ngkhar

No. 13 3 2 3 1 3 3 2 3

No. of Laundry services in Bhutan



2.2 Benefits of hiring Laundry services

The primary purpose of Laundry Service is to do cleaning, dyeing, bleaching, patch repairing,

polishing and dry cleaning. Laundry services have various needs and benefits and some of them

are:

It saves time. - Instead of facing own laundry and waste valuable hours you can rest after a

hard day and laundry business can do this job. So as not to hassle your schedule, you can

simply drop your laundry off at shop and they will surely be done by the time you get out of

the office. Then you can have fresh and clean clothes in your closet.

Protect the quality of clothes and preserve fabric quality-If the laundry is done by self at

home there are chances of doing it in a wrong way because of not knowing to take care of

specific fabrics. Dry cleaning services are experts at this field. They know what cleaning

agents to use and the proper way to apply them to avoid damaging of clothes.

Helps you look clean and presentable- The clothes you wear say a lot about you. Dry

cleaning services are experts at cleaning all kinds of stain from your clothes and they make

sure that all your clothes are crisp and wrinkle-free once they release them to you.

Eco-friendly laundry practices - Laundry Services is committed in preserving the earth’s

resources which will only use high-efficiency equipment to reduce water and energy use.

Offer a variety of services- A mark of good laundry service is that they can clean not only

different types of clothes, but also different items. They can also provide their services to a

variety of clients, including offices, public houses, nurseries, salons, restaurants, hoteliers

and businesses of different types.

Affordable service- After all the great benefits from hiring a dry cleaning service, it is

surprising to know that it will only cost a little. This is due to the growing competition

between dry cleaning companies. Lower the price charges, the more customers will avail the

services.



2.3 Competition Analysis

There are around thirteen Laundry services within Thimphu region as per CSI, 2014.

Table 2: Laundry services as per CSI, 2014

Thimphu 13

Paro 3

Wangdue 2

Chukha 3

Samtse 1

Monger 3

Sarpang 3

Tsirang 2

Samdrupjonjkhar 3

Some of the competitors of laundry services at Thimphu are:

1. Tip Top Dry Cleaners

2. Thimphu Homecare

3. DP Laundry and dry cleaners

4. Deepak Dry Cleaners

5. New Light dry Cleaners

6. Jana dry Cleaners- Jungshina

7. Spotless

8. Dry and Wash Service

These are some of the competitors who are providing laundry services in and around Thimphu

but these businesses are rendering their services in town areas.

3 Market Analysis

3.1 Demand vs. Supply

With the change in the living standards of people in the country, people are becoming more

health conscious with cleanliness. People of today are very particular about their dress material,

furnishing, and linen, especially during public appearances. People prefer to wear and use

expensive, well cleaned and ironed dress materials. Expenditure in clothing is increasing,

including expensive clothes; therefore, the demand of taking care of clothes also increases.

Although there are various laundry services in the country, but they were not able to provide

satisfactory services.



This has opened the scope for laundry services and dry Cleaning units. The market still is in need

of Laundry businesses in Thimphu. They have become more health conscious, cleanness and are

always looking for fashion oriented in the market. There are around twenty laundry businesses

till date in Thimphu but yet there is no laundry business around Olakha.

3.2 Pricing & Marketing Strategies

To attract the customer, the proposed business will determine its selling price by following

penetration pricing method. After comparing the price at which the competitor provides its

services in the market, the proposed business will price its service at:

Table 3: Charges per Unit

Sl. No. Service Charges per Unit

1 Carpet 300

2 Blanket 300

3 Gho 200

4 Kira 200

5 Jacket 150

6 T-shirt 50

7 Pant 150

8 Bed sheet 50

9 Pillow Cover 50

10 Curtain 200

11 Others 400

This marketing effort will call for a strategy based on segmenting. The Laundry services in

Bhutan are primarily an urban phenomenon. It can be classified in to Individual consumers

and Institutional consumers

Further classifications can be done – Individual consumers can be broken down to

High Income

Middle Income

Low income groups

Similarly, Institutional users can be split into the following groups

Hotels & Restaurants

Hospitals

Armed forces

Residential schools & college



3.3 Competitiveness of the project

The area where the proposed businesses have projected to set up its business needs laundry

services. People residing at that particular location avails the service from the laundry services

located at town area. Moreover, price for the service is comparatively low compared to the price

of other laundry services.

The business aspires to deliver quality services at a reasonable price compare to the current

market price. It is therefore expected that there would be a demand pull at the customer end

which can be further strengthened through innovative promotional strategies. The demand pull is

estimated to be significant ensuring lowering of costs through economies of scale.

3.4 SWOT Analysis

STRENGTH

Door-to-door service

Quick and convenient

Reasonable prices with attractive

discount program

WEAKNESS

Small form of business

No experiences

Limited exposure and advertising

New in the area

OPPORTUNITY

Opportunity from busy people

Increasing number of medium and small

hotels, spa, shops.

THREAT

Changes in their living standard

Existing, well- recognized competition

in the marketplace

SWOT Analysis for the Laundry Services:

The offering of door to door service for dry cleaning and laundry provides another choice for

customers with give the quality or state of being strong business. The quick and convenient

service in order to save a customer’s time and offering a special discount for valuable and regular

customer’s is the strength for the business. Many people have a tight schedule so they consider it

a waste of time doing their laundry. The state or quality of being weak, lack of strength is that a

business is a small form of business and if the location of the service isn’t a good place it will not

be convenient for people to come and serve our service. The competition from already

established business and having less experience than competitors gives weakness to the business.

The threat from well-established competitors. There is a threat from new entrants as there are

relatively low barriers of entry. There is a threat from customers as a majority prefers to do their

own laundry. Laundry price is cheaper than others which help to attract more customers. The

increasing number of medium and small hotels, spa shop which is good for our market and

increasing of disposable income and changing the daily lifestyles. It also just required minimal

time and labor participation in a steadily growing country.



3.5 Special attributes desired by target customers

In general customers would prefer:

1. High Quality of Fabric used while Washing clothes

2. They would prefer an affordable price: some may prefer to have a credit period

3. Some would look forward to promotional offer

4. Timely delivery in good condition

5. Ready availability

3.6 Assessment of Comparative Advantage

Availability of Water: The reason for establishing laundry service in and around Olakha is

due to the continue flow of water. The main resource for the business is water.

Ready Availability of Laundry detergents: The required laundry detergents is available in

nearby market in Bhutan which is also most important factors that must be taken into

account for service provider.

3.7 Determine potential for marketing collaboration

There is a tremendous potential for marketing collaborations at the customer end of the supply

chain. The unit can think of appointing independent agents or exclusive tie ups with certain

schools, hotels, residents or outlet.

Moreover, the laundry service can collaborate in providing its services with the hospitals, people

of changiji, Olakha and Babesa area.

4 Resources

4.1 Sources of inputs including water

Utilities required by the plant consist of electricity, water and Laundry detergents.

Electricity is required to run the automatic heavy washing machine and to provide lighting for

the business.

Water is required to clean and to wash up the items brought for the services. There is continue

flow of water at the located area.

Laundry Detergents: itis used for cleaning, softening and maintaining the fabric balance. This

Laundry detergent is available in nearby market but it is not manufactured in Bhutan and would

have to be imported.



4.2 Comparative analysis of critical inputs

Electricity: It plays an important role for the function of heavy washing machine for laundry.

But it would certainly be more cost effective to source power from the grid. Keeping a small

generator as a part of redundancy may be considered to take care of the lighting load.

Water: It is also one of the vital inputs for the success of the business if there is continue flow of

water for the cleaning and washing of items brought for the laundry services.

4.3 Sources of raw Material

The raw material required for the proposed business is laundry detergents which include

detergent powder, detergent liquid, soap, Fabric softener and other raw materials. The laundry

detergents are easily available in nearby town of Bhutan that is from Karma Tshongkhang.

4.4 Assess the availability of manpower & skills

As per the Labor Force Survey Report 2013finds that a total of 335,870 individuals were

employed and 9,916 were found to be unemployed out of a total projected population of 745,939

in 2013, making unemployment rate at the national level by 2.9%.

For this proposed business it required less number of manpower and it doesn’t require high

qualification to do laundry service. The Manager or Accountant should have Diploma in

Account and for skilled worker qualification is not required but they should know the basic

cleaning and should have the knowledge of laundry services.

5 The Plant

5.1 Choice of technology

The major operations involved in the Laundry service are: cleaning, pressing, dyeing, bleaching,

dry cleaning, patch repairing and polishing and home service delivery for all types of clothes and

carpets.

The Laundry service process is given below:

Table 4: Process of Laundry Service

Step 1: Receiving from customers or collecting from customers from their doorsteps.

Step 2: Weighing or counting pieces for normal wash and dry cleaning

Step 3: Washing

Step 4: Drying

Step 5: stretch , if any

Step 6: Ironing ( upon request )

Step 7: Folding

step 8: Packaging

Step 9: Delivery at door steps / Self pick



5.2 Source of technology

1. Sintex Water Tank

Capacity: 2500L

Supplier’s Details: Goyum Screw Press, India

2. Heavy Duty Washing Machine

Model Number: GL-25F

Brand Name: GLEAD

Place of Origin: Guangdong, China (Mainland)

Voltage: 220/380V

Size: 1000X900X1450mm

Power: 1.5KW



3. Dry Cleaning Machine with Motor

Model Number: GX

Brand Name: Jinzhilai

Place of Origin: CN;SHG,Shanghai, China

Product name: high speed motor fast dry automatic laundry dry-cleaing machine

Material: stainless steel

Certificate: ISO, CE

4. Sweing machine

Model Number: MQ 3800

Overall Dimensions: 625*250*560mm

Stitch Formation: Chain Stitch

Feed Mechanism: Walking Foot

Brand Name: MIQI

Type: Industrial Sewing Machine

5.3 Rate of Consumption of power, fuel, utilities & consumables

Power Consumption

For this project about 225 KVA (2.5KW) connections will be required. Depending on the

requirements of equipment to be installed in the company. A backup power supply should be

available to ensure that operations can continue during a power interruption.

Water Consumption

The water requirement for cleaning and washing will be approximately 10,000 liters per day

based on the processing capacity of the machine. Water is mostly required for washing. Apart

from it, water will also be required for domestic consumption purpose. The water should be

clean and treated well for hardness before use. Since water is in direct contact with the Laundry

services, it should be continued flow and clean.

5.4 Raw Material Consumption

The raw material required for Laundry Service would be the laundry detergent which could be

directly procured from nearby market.

The table below shows the annual requirement of raw materials:



Table 5: Annual Requirement of Raw Materials

Sl. No. Description Quantity

1 Detergent Powder (bag) 3,450

2 Detergent Liquid (Litre) 3,705

3 Soap ( Dozen) 750

4 Plastic bag ( bag) 6,000

5.5 Man power requirement and organization chart

The table below shows the manpower requirement:

Table 6: Manpower Requirement

Serial Number Job Title Required No.

1 Manager 1

2 Accountant 1

3 Salesperson 1

4 Cleaner 4

5 Driver 2



6 Project Implementation Schedule

Implementation Schedule

The table given below shows the project schedule:

Table 7: Project Timeline

PROJECT TIMELINE

Activities 2017

1st Month 2nd Month 3rd Month 4th Month

Feasibility study and

development of the project

proposal

If the project is going to be

funded:

Purchase of the Machineries

and Installation

Purchase of Inventories and

Start of the Service



7 Financial Analysis

7.1 Total Project Capital Costs

Table 8: Total Project Costs

COMPONENTS OF PROJECT COST

Amount in Nu.

PARTICULARS Forex

Component

Domestic

Component

Total Cost Remarks

Laundry space (security

deposit )

30,000 30,000

Plant & Machinery

Sintex Water Tank (2,500L) 25,000

Heavy Duty Washing Machine 125,000

Dry Cleaning Machine with

Motor

132500

Sewing machine 25,000

Total 307,500 307,500

Vehicle (Delivery van) 140,000 140,000

Miscellaneous Fixed Assets:

Computer 30,000

Office Furniture 17,250

Stationary 3,500

Workers Uniforms 1,350

Laundry Utensils 9,700

Electrical Fittings 7,000

Signboard 2,500

Total Cost 71,300 71,300

Preliminary Expenses 15,000 15,000

Total Project Startup Cost 563,800

Note:

The cost breakdown details of the miscellaneous fixed assets are attached in the

annexure.



7.2 Working Capital Costs

Table 9: Working Capital Cost

Particulars Monthly Yearly

Advertising 500 6,000

Delivery Expenses 1,500 18,000

Inventory Purchases 39,600 475,200

Miscellaneous 2,000 24,000

Payroll 33,500 402,000

Rent or Lease 15,000 180,000

Utilities & Telephone 500 6,000

Total 92,600 1,111,200

7.3 Cost of Production per unit

Table 10: CPU

Particulars Year 1 Year 2 Year 3 Year 4 Year 5

Total Units 6,240 6,552 7,207 7,928 8,721

Cost of Production 636,000 667,800 701,190 736,250 773,062

Unit Cost of Production 101.92 101.92 97.29 92.87 88.65

7.4 Human Resource cost

Table 11: HRC

Particulars Monthly Year 1 Year 2 Year 3 Year 4 Year 5

Salary &

Allowances 33,500 402,000 422,100 443,205 465,365 488,634

Total 33,500 402,000 422,100 443,205 465,365 488,634



7.5 Project Profit and Loss Statement

Table 12: P&L Statement

INCOME STATETMENT PROJECTION FOR 5 YEARS

Year 1 Year 2 Year 3 Year 4 Year 5

Revenue 1,344,000 1,411,200 1,552,320 1,707,552 1,878,307

Cost of Goods Sold 493,200 517,860 543,753 570,941 599,488

Gross Profit / (Loss) 850,800 893,340 1,008,567 1,136,611 1,278,820

Expenses 713,070 744,870 778,260 813,320 850,132

Net Operating Income / (Loss) 137,730 148,470 230,307 323,292 428,688

30% BIT On NOI 41,319 44,541 69,092 96,988 128,606

Net Income / (Loss) after BIT 96,411 103,929 161,215 226,304 300,081

Additional Information:

Depreciation Expenses 77,070 77,070 77,070 77,070 77,070

% of Net Income / (Loss) - 7.80 55.12 40.37 32.60

% of Average Net Income / (Loss) 19.41

7.6 Projected Cash Flow Statement

Table 13: Cash Flow Statement

Projected Cash Flow Statement


Beginning Cash

Balance

325,400 569,840 709,574 1,130,773

Accts. Rec.

Collections 134,400 141,120 155,232 170,755 187,831

Loan Proceeds 656,400

Sales & Receipts 1,209,600 1,270,080 1,209,600 1,536,797 1,690,476

Other:

Total Cash

Inflows 2,000,400 1,411,200 1,364,832 1,707,552 1,878,307

Available Cash

Balance

2,000,400 1,736,600 1,934,672 2,417,126 3,009,080

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

Delivery 18,000 18,900 19,845 20,837 21,879

Inventory

Purchases 475,200 498,960 523,908 550,103 577,609



Miscellaneous 24,000 25,200 26,460 27,783 29,172

Payroll 402,000 422,100 443,205 465,365 488,634

Rent or Lease 180,000 189,000 198,450 208,373 218,791

Utilities &

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

Subtotal 1,111,200 1,166,760 1,225,098 1,286,353 1,350,671

Other Cash Out

Flows:

Capital

Purchases 563,800

Subtotal 563,800 - - - -

Total Cash

Outflows 1,675,000 1,166,760 1,225,098 1,286,353 1,350,671

Ending Cash

Balance

325,400 569,840 709,574 1,130,773 1,658,410

7.7 Projected Balance sheet statement

Table 14: Balancesheet

Projected Balance Sheet For 5 Years


Assets

Cash & Bank 325,400 569,840 709,574 1,130,773 1,658,410

Accounts Receivable 134,400 141,120 155,232 170,755 187,831

Prepaid Expenses 50,000

Total Current Assets 509,800 710,960 864,806 1,301,528 1,846,240

Net Fixed Assets 436,730 408,035 379,340 350,645 309,450

Total Assets 946,530 1,118,995 1,244,146 1,652,173 2,155,690

Liabilities & Capital

Accounts Payable 324,999 621,226 820,371 1,294,589 1,855,609

Total Current Liabilities 324,999 621,226 820,371 1,294,589 1,855,609

Long-Term Notes Payable 525,120 393,840 262,560 131,280 -

Total Long-Term Liabilities 525,120 393,840 262,560 131,280 -

Total Liabilities 850,119 1,015,066 1,082,931 1,425,869 1,855,609

Net Profit 96,411 103,929 161,215 226,304 300,081

Total Capital 96,411 103,929 161,215 226,304 300,081

Total Liabilities & Capital 946,530 1,118,995 1,244,146 1,652,173 2,155,690



7.8 Financial Ratio Analysis

7.8.1 Interest on Loan

The table below shows the Interest on Loan@ 12%

Table 15: Interest on Loan


Interest 73,283 60,355 45,788 29,373 10,877

Loan Principle 101,933 114,860 129,427 145,842 164,338

Loan Balance 554,467 439,607 310,180 164,338 0

EMI 175,215 175,215 175,215 175,215 175,215

7.8.2 Break Even Point

The table below shows the Break Even Point

Table 16: BEP

Time Unit Start Unit

Increment

Unit Price Unit Cost Variable Total Fixed Costs

Month - 3,000 215 178 513,800

BREAK EVEN X BREAK EVEN Y LABEL

13,772 2,966,277 break even unit =13772

-

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

- 5,000 10,000 15,000 20,000 25,000 30,000 35,000

Units

BREAK EVEN ANALYSIS

Sales Fixed Total Cost break even unit =13772



7.8.3 Return on Investment

Table 17: RoI

RETURN ON INVESTMENT

Service Year 1 Year 2 Year 3 Year 4 Year 5

Carpet 14% 29% 32% 35% 38%

Blanket 11% 23% 25% 28% 31%

Gho 7% 15% 17% 19% 20%

Kira 13% 27% 30% 33% 36%

Jacket 3% 6% 6% 7% 8%

T-shirt 1% 2% 3% 3% 3%

Pant 4% 7% 8% 9% 10%

Bed sheet 2% 5% 5% 6% 6%

Pillow Cover 2% 5% 5% 6% 6%

Curtain 9% 19% 21% 23% 26%

Others 37% 77% 84% 93% 102%

Total ROI 105% 215% 236% 260% 286%

7.8.4 Net Present Value and Internal Rate of Return

Table 18: NPV & IRR

Cost Data Entry Table

Sl.

No

Cost Element Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

1 Machinery and

Plant Cost

563,800

2 Startup Cost 92,600

3 Total

Expenditures

1,111,200 1,166,760 1,225,098 1,286,353 1,350,671

Total Cost by

Year

656,400 1,111,200 1,166,760 1,225,098 1,286,353 1,350,671

Grand Total Cost 6,796,481



Table 19: Benefit Entry Data

Sl. No Benefit Sources Year 1 Year 2 Year 3 Year 4 Year 5

1 Carpet 180,000 189,000 207,900 228,690 251,559

2 Blanket 144,000 151,200 166,320 182,952 201,247

3 Gho 96,000 100,800 110,880 121,968 134,165

4 Kira 168,000 176,400 194,040 213,444 234,788

5 Jacket 36,000 37,800 41,580 45,738 50,312

6 T-shirt 15,000 15,750 17,325 19,058 20,963

7 Pant 45,000 47,250 51,975 57,173 62,890

8 Bed sheet 30,000 31,500 34,650 38,115 41,927

9 Pillow Cover 30,000 31,500 34,650 38,115 41,927

10 Curtain 120,000 126,000 138,600 152,460 167,706

11 Others 480,000 504,000 554,400 609,840 670,824

Total Benefit per

Year 1,344,000 1,411,200 1,552,320 1,707,552 1,878,307

Table 20: Cost Benefit Analysis

Cost Benefit Analysis

Result Calculation Table

Sl.

No

.

Undiscounted

Flows

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

1 Cost (656,400) (1,111,200) (1,166,760) (1,225,098) (1,286,353) (1,350,671)

2 Benefit - 1,344,000 1,411,200 1,552,320 1,707,552 1,878,307

3 Net Cash

Flows (656,400) 232,800 244,440 327,222 421,199 527,637

Table 21: NPV & IRR

Net Present Value (NPV) 618,405

Internal Rate of Return (IRR) 37%



Project Viability:

The Internal Rate of Return of the project is 37%, which is significantly higher than the bank

return rate of 12%. Hence, the project is financially viable. The NPV of the project is positive

(Nu. 618,405).

This project is financially viable which could be operated with less investment. Moreover, the

water problem at Changiji colony has been still a rising issue which could be opportunity to the

proposed business located at Olakha. On the other hand, it has been seen till date in and around

changij and Olakha there is no laundry services which gives advantage for the business to enjoy

the monopoly.

References

Department of Cottage and Small Industry Report. (2014). Ministry of Economic Affairs

of the Royal Government of Bhutan

Changjiji residents face severe water shortage,(July 25, 2015). Retrieved from

www.kuenselonline.com on 3 march, 2017

www.alibaba.com



Annexure

Total Operational Expenditures

Particulars Monthl

y Year 1 Year 2 Year 3 Year 4 Year 5

Cost of Goods Sold:

Purchases (inventory &

others) 39,600 475,200 498,960 523,908 550,103 577,609

Freight-in -

- - - -

Direct labor

Indirect Expenses

(electricity) 1,500 18,000 18,900 19,845 20,837 21,879

Less: -

Ending Inventory -

Total Cost of Goods

Sold 41,100 493,200 517,860 543,753 570,941 599,488

Expenses:

Advertising 500 6,000 6,300 6,615 6,946 7,293

Salary & Allowances 33,000 396,000 415,800 436,590 458,420 481,340

Commissions -

Contract labor charges -

Credit card fees -

Delivery expenses 1,500 18,000 18,900 19,845 20,837 21,879

Depreciation 6,423 77,070 77,070 77,070 77,070 77,070

Dues and subscriptions - - - - - -

Insurance - - - - - -

Interest - - - - - -

Maintenance - - -

- -

Miscellaneous 2,000 24,000 25,200 26,460 27,783 29,172

Rent 15,000 180,000 189,000 198,450 208,373 218,791

Repairs -

-

Telephone 500 6,000 6,300 6,615 6,946 7,293

Travel -

-

Utilities -

- - - -

Vehicle expenses -

- - - -

Wages

Total Expenses 58,923 707,070 738,570 771,645 806,374 842,839

Total 100,023 1,200,270 1,256,430 1,315,398 1,377,314 1,442,327



Inventory Projection

Particulars

Daily

Requireme

nt (units)

Per

Unit

Cost

Daily Monthly Year 1 Year 2 Year 3 Year 4 Year 5

Detergent Powder

(bag) 5 250 1,250 30,000 360,000 378,000 396,900 416,745 437,582

Detergent Liquid

(Litre) 2 200 400 9,600 115,200 120,960 127,008 133,358 140,026

Soap ( Dozen) 6 10 60 1,440 17,280 18,144 19,051 20,004 21,004

Plastic bag ( bag) 2 10 20 480 5,760 6,048 6,350 6,668 7,001

Threads ( piece) 3 2 6 144 1,728 1,814 1,905 2,000 2,100

Fabric Softner (

Litre) 3 200 600 14,400 172,800 181,440 190,512 200,038 210,039

Total

1,650 39,600 475,200 498,960 523,908 550,103 577,609

Note:

Local retail price has been considered for the inventories.

5% inflation rate has been considered throughout all the financial years.

Miscellaneous Fixed Assets

Misc. Fixed Assets

Sl. No. Particulars Units Cost Amount

1 Office Furniture

A Writing Table 1 3,500 3,500

B Wooden Chair 3 2,500 7,500

C File Rack 1 3,000 3,000

D Telephone 1 3,250 3,250

Total 17,250

2 Workers Uniforms

A Apron 3 350 1,050

B Primeway Rubber Hand Gloves 3 100 300

Total 1,350

3 Laundry Utensils

A Laundry Bucket (big) 5 550 2,750

B Laundry Baskets ( big) 5 200 1,000

C Mesh Bags 20 30 600

D Hangers 25 25 625

E Drying racks 2 700 1,400

F Hand Iron 2 1,200 2,400

G Ironing Board 2 450 900

H Needle 5 5 25

Total 9,700

Grand Total 28,300

laundry service - molhr.gov.bt report is a detailed feasibility study on the laundry services in...

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