paf project-theme restaurant

PROJECT APPRAISAL

on

Launching of a

“Theme Restaurant”

By ITC Ltd

Submitted to:

Prof. Deeksha Kumar

Submitted by:

Anisha Mukkerjee-08BS0000343

Bhawna Gambhir-08BS0000750

Parul Vij - 08BS0002181

Piyush Jain-08BS0002211

Surbhi Ahuja-08BS0003489

ACKNOWLEDGEMENT

We express our profound indebtedness and sincere thank to our faculty

Prof DEEKSHA KUMAR for giving us the opportunity of carrying out this

project and also for the continuous help and support we received from her during

the project.

We would also like to thank all the persons who cooperated with us and provided

us with the necessary details and information without which the completion of the

project wouldn‟t have been possible.

ABSTRACT

ITC is one of India's foremost private sector companies with a market capitalization of

nearly US $ 14 billion and a turnover of over US $ 5 billion. It has a diversified presence

in Cigarettes, Hotels, Paperboards & Specialty Papers, Packaging, Agri-Business,

Packaged Foods & Confectionery, Information Technology, Branded Apparel, Personal

Care, Stationery, Safety Matches and other FMCG products.

ITC's diversified status originates from its corporate strategy aimed at creating multiple

drivers of growth anchored on its time-tested core competencies: unmatched distribution

reach, superior brand-building capabilities, effective supply chain management and

acknowledged service skills in hoteliering. Having established a niche for itself in the

Hotel Industry, ITC has planned to enter into new segment of a Theme Restaurant by the

name of “Season Theme Restaurant”.

The themes has been finalized by carrying out a primary research using questionnaires

and surveys . Nearly 95% of surveyed individuals endorsed having a choice of different

themes within a restaurant. The themes finalized for the restaurant so as to cater to the

varied interest of our target audience are as follows:

SNOWY WINTERS

RAIN AND LUSH GREENERY

GOLDEN SUN AND BEACH

Background

ITC's foray into the hotels business began in 1975. Inspired by the vision to promote

India's rich tourism heritage and also contribute to the nation's then scarce foreign

exchange earnings, ITC's hotels business set about to create a unique value proposition

that would redefine the fine art of hospitality. Since then ITC-Welcomgroup has emerged

as one of India's premier hospitality chains offering hotels, resorts and palaces.

With over 100 hotels in more than 80 destinations and four brand propositions spanning

Luxury to Five-Star and Budget to Heritage, ITC-Welcomgroup has set new standards of

ain the hotel industry touching new dimensions in Accommodation, Cuisine,

Environment and Guest Safety. ITC‟s commitment to delivering globally bench marked

services, embedded in a culture deeply rooted in India‟s rich tradition of hospitality, gives

it a unique and distinct identity.

A leader in the premium hospitality segment, ITC Hotels have had the privilege of

hosting world leaders, Heads of State, business leaders and other distinguished guests

from all across the world.

ITC-Welcomgroup pioneered the holistic concept of „branded accommodation‟ in the

hospitality industry. It was the first to launch the idea of „A Hotel within a Hotel‟, by

segmenting, customizing and branding hotel services like „ITC One‟, „Towers‟ and the

„Executive Club.‟ Each of these caters to the specialized needs of the global business

traveler with unmatched quality and a range of custom made services. ITC has

strategically customized its hotels and appropriately categorized them to fulfill the

service and budgetary needs of travelers. ITC has an exclusive tie-up with global partner

Starwood for its top of the line premium brand, the „Luxury Collection‟.

Recent launches

In its hospitality segment ITC has launched the following recently:

Fortune Select Dasve, opened in Lavasa on the rolling green hillside of

Dasve village. It is a contemporary, full-service hotel offering a range of

services to business and leisure travellers.

Fortune Select Manohar opened in Hyderabad. It embodies modern

architecture and the unique aura of Hyderabad in its essence. The hotel is fully

equipped to handle all requirements of guests and make their stay truly

memorable.

The Fortune chain added to its properties with the launch of Fortune Select

JP Cosmos in the heart of Bengaluru city. The hotel offers an excellent range

of guest facilities, tailored to give the best of services to the discerning

business traveller.

WelcomHeritage Hotels brought into its fold 3 new properties, adding to its

array of more than 60 properties across 19 states in India. The first is the

Shivavilas Palace at Sandur, Karnataka; second the Sirsi Haveli near Jaipur;

and the third is WelcomeHeritage Naukuchiatal Resort, 30 kilometres from

Nainital, on the shores of the Naukuchiatal Lake.

„Za-aiqa‟ at WelcomHeritage Noor-us-Sabah Palace, Bhopal, a launch of

a specialty restaurant „Za-aiqa‟, offering customers vintage Nawabi,

robust, tandoori cuisines of the North West Frontier and culinary

delights of the Dum Pukht cuisine of Awadh.

Recent Awards

ITC Welcomgroup adjudged the Best Employer in Asia in the hospitality sector

by the global Human Resources consulting and outsourcing firm, Hong Kong-

Hewitt Associates in partnership with Wall Street Journal.

Bukhara, at ITC Maurya, was declared the Best Indian Restaurant in Asia - 2008

by the Restaurant magazine.

Best City Spa Award for Kaya Kalp at ITC Mughal at the Tatler Spa Awards in

London.

ITC Welcomgroup won the NCPEDP Shell Helen Keller Award 2008, in the

category „Companies /Organisations/Institutions who share our vision and

through their policies and practices demonstrate their belief in equal rights and

gainful employment for persons with disabilities‟.

The Best Premium Hotel Brand to ITC Hotels at the sixth edition of the annual

Galileo Express Travel World Awards, organised by The Express Group.

National Tourism Award for ITC Grand Central for the best private public

enterprise providing facilities for physically challenged guests at the hotel.

Project background

“Seasons Theme restaurant” is an independent chain of restaurants to be opened by ITC,

considering the huge potential of food service sector in India.

These shall be a premium segment restaurants catering to SEC A and SEC B category.

The socioeconomic classification (SEC) groups urban Indian households on the

basis of education and occupation of the chief wage earner (CWE: the person

who contributes the most to the household expenses) of the household into five

segments (SEC A, SEC B, SEC C, SEC D and SEC E households in that order).

This classification is more stable than one based on income alone and being

reflective of lifestyle is more relevant to the examination of consumption

behavior.

The CWEs of nearly half the SEC A households work in executive positions. The

other half comprises mainly of industrialist/businessmen or shop owners. Almost

all of them are either graduates or post graduates. CWEs of SEC B households

are primarily employed at clerical or supervisory levels (46%). 29% are

shopkeepers while 10% are industrialist/businessmen. Less than half are

graduates or post graduates (45%). 38% are educated till the 10th or 12th grade,

while 13% have had some college education.

Analysts say food is a major driving force in the retail sector, with a growth rate of 30%.

And contrary to belief that fashion is the largest segment in organized retail, the food and

beverages segment is worth Rs 8.97 lakh crore.

INDUSTRY ANALYSIS:

Food service industry in India has a huge potential and is expected to grow to $8

billion in 2012, with an increase of 26.2% from 2007.

Cafes and restaurants segment contributes 21.9% to the food service industry

annually (2007) and contributed 7.6% to GDP of India in 2007.

Considering the opportunities in the food service market ITC would like to

capitalize on it to strengthen its position in the hospitality segment.

SEGMENT ANALYIS

With more and more diners yearning for a break from the urban bustle, theme-

restaurants with out-of-the box offering in terms of ambience, cuisine and décor

are gaining acceptance.

"Eating out is no longer just about food but involves the entire experience of

enjoying it", says Babita Jayaram, Marketing Vice President of BJN group, a

leading player running a popular chain of theme restaurants in the country. Good

cuisine is a must and if blended with a good theme, a well-researched decor and

overall ambience that enhances the eating experience, there is little reason for

these players not to hope to see a full table, says Priyanka, the entrepreneur

behind the food portal, "Hungry Zone".

While industrialists and celebrities are known to frequent premium theme joints

and restaurants, slowly a new breed of consumers has started developing a liking

for theme restaurants. A number of restaurants differentiated on basis of themes

and nature of cuisines are getting more popular.

Samir Chhabria, business head of Tetsuma, a Japanese joint says, “Industrialists

like Ness Wadia and Anju Taraporewalla are regulars with the frequency of visit

being as high as five to six times a month. However, a new segment of people has

started spending time at our joint. They also like to spend a lot of money and

flaunt their act of visiting our joint. On an average, each customer of this new

segment gives a billing of Rs 2500 to Rs 3000 per visit.” A sixty-seater joint at

Colaba, Tetsuma is a Japanese restaurant at Colaba.

Another example is Barcode, an international sports bar chain based out of

Australia. Himani Modi owns its franchise in India and runs a franchise outlet in

Delhi. Speaking to Hindustan Times, she says, “We have five floors in all, with

good sports décor and graphics on walls and mirrors.” Modi says that on an

average, the daily billing is as high as Rs 75000 to Rs 1 lakh, which definitely

goes up on weekends. Corporate clients like Siemens, National Geographic etc

also use the venue for throwing corporate parties. Modi also says that foreign

clients also contribute to as much as 30 per cent of the annual turnover. The fact

that all cricket matches are shown on LCD screens also is an added attraction for

the visitors.

In the suburbs too, theme restaurants are becoming more and more popular. As

suburban life gets more hectic, consumers are looking for more than just the pure

vanilla experience at restaurants. This explains the gradual increase in the number

of theme restaurants like Village, Machan and Rudey‟s Forest Café.

Amar Jog, Director, Marketing and Business Development, Kambala Hospitality

Pvt Ltd, which runs the Village theme restaurant tells HT, “We started with

„Village‟ on 15th August last year in Kandivli and from then till date, we have

seen three more „Village‟ restaurants at Ghatkopar, Thane and Vashi.” He adds

that with items like puppet shows for children, mehendi artists for women folk

and sing-and-dance opportunities, this makes for a wholesome experience.

On an average, the Village outlet attracts as many as 400 consumers daily while

weekends see double the number of consumers. At an average ticket price of Rs

300, this works out to a business of Rs 120000 daily.

Offering a variety of vegetarian cuisine like Gujrati, Marwari and Punjabi

specialities, in addition to masala milk, chaay-in-kullads as well as ganne ka ras,

all provided by traditionally clad staff in an environment that‟s given the look and

feel of a village.

Happy with the thumping business of Village, Jog has bigger plans, “We intend to

take the Village concept soon to Dubai and the UK market. The Dubai venture

should take off in 2008 itself.”

Jog informs that there is another upcoming theme concept, soon opening in Vashi

called „Umrao Jaan‟, which will boast of Lucknowi specialties and North Indian

food. In addition, Chowpatty- the spirit of Mumbai is also coming up soon at

Raghuleela Mall.

Source – “Theme restaurants cash in on concepts to sell”- Indian Express, Jun 18, 2009,

“Theme restaurants are the flavour of the season” – Hindustan times, Jan 07, 2008

Food Service Industry in India – Data monitor – Publication September 2008

MARKET AND DEMAND ANALYSIS

Instead of building a business around a preconceived concept, we conducted market

research and built a concept around our consumers. Our market analysis identified the

following key drivers as areas of opportunity to service ITC's theme restaurant

customers:

Theme Selection: Nearly 95% of our surveyed focus group endorsed having a choice of

different themes within a restaurant. ITC's Theme Restaurant concept is built to offer

different-themes within a restaurant. Our customers want the option to choose what

satisfies their desires. The introductory restaurant would be an epitome of the name of the

unit “Seasons Theme Restaurant”. The restaurant will have three segments with the

themes of snowy winters, golden sun and the beach, and rains and lush greenery

Menu Variety: Ethnic restaurants are increasing in the NCR region. The proliferation of

international cookbooks, food magazines, TV cooking shows and imported goods offers

ample evidence that India, as a whole, is currently on an international tasting spree. Our

research results do not identify any single ethnic style of restaurant as desired, but rather

suggest that incorporating strong multi-ethnic influences in the menu selection will be

popular. Again, variety is the underlying element for this concept.

The Dining Experience: Customer satisfaction with food and service has been and

continues to be of utmost importance, but our findings indicate that the décor, lighting,

bar, and other options to improve the dining experience are also factors in

customer decisions. ITC has taken all these factors in consideration for the design of this

theme restaurant.

Reasonable Prices: This was no surprise given the economic tide. Although the

restaurant industry as a whole has seen growth in 2008/2009, customers are demanding

value for their dining rupee. ITC's theme restaurant menu is priced at a upper and mid-

tier level. In addition ITC would have an extended Appetizer selection priced between

Rs. 200 – Rs. 1,500, allowing budget dining in a full-service restaurant.

The first step involved in the project analysis is to estimate the potential size of the

market for the proposed project. In this case we are planning to construct a theme

restaurant in the NCR region. So we did the analysis in various stages:

Firstly we find out whether there was any requirement of the theme restaurant.

As Delhi is a Cosmopolitan City with people from varied backgrounds having

different lifestyle, a theme restaurant would be a ideal hangout place for people

to de-stress themselves from their everyday routine. ITC‟s proposed theme

restaurant would be a complete experience in itself, as people would be free to

choose from any theme according to their requirements. Good cuisine is a must

and if blended with a good theme, a well-researched decor and overall ambience

that enhances the eating experience, there is little reason for these players not to

hope to see a full table,

For market analysis of the resorts and hotels, we tried to find out the answers to

various questions like:

a) Who will be the main customers?

b) What will be the total current demand of the theme restaurant?

c) What facilities would be required by the customers?

d) What are the prices they will be ready to pay?

e) What is the current strategy followed by other restaurant owners?

For primary data we conducted a questionnaire survey on the sample of 50

people in order to find the answers to the questions specified above.

Conclusion of the survey:

After the survey we came to the following conclusion that our proposed theme restaurant

will not only target business tourist but will also cater to the need of a vast market of

Downtown Working Couples ,The Destination Customer ,High-End Singles and the

Tourists. The new townships being developed by reputed builders in the nearby area will

also be an added advantage.

The Proposed Theme Restaurant is coming up with following facilities:

No. of Themes : 3

Theme 1 : Snowy winters

Theme 2 : Rains And Lush Greenery

Theme 3 : Golden Sun And The Beach

Market Segmentation

ITC's Theme Restaurant & Lounge intends to cater to a wide customer base. ITC want

everyone to feel welcome and entertained. It has defined the following groups as targeted

segments that contribute to our growth projections:

The Business Person

Downtown Working Couples

The Destination Customer

High-End Singles

Tourists

These particular market segments are 25-50 years old, have disposable income, and are

seeking upscale, trendy, and comfortable restaurant options. These are the types of people

who frequently visit other restaurants and bars in the area. They are likely to spend more

on experiences they perceive as unique, cosmopolitan, and sophisticated. They are also

the most open to trying something new, foodwise, and will embrace our international

fusion cuisine.

Market Analysis

Year 1 Year 2 Year 3 Year 4 Year 5

Potential Customers Growth

CAGR

Business Person 18% 9,925 10,223 11,348 11,688 12,039 4.95%

Downtown Working

Couples 32% 17,645 18,527 20,565 21,593 22,673 6.47%

Tourists 13% 7,168 7,311 7,896 8,054 8,215 3.47%

The Destination

Customer 8% 4,411 4,499 4,724 4,818 4,914 2.74%

High-end Singles 29% 15,991 16,950 18,815 19,944 21,141 7.23%

Total 5.76% 55,140 57,510 63,348 66,097 68,982 5.76%

Target Market Segment Strategy

The Business Person: They work hard all day and often stay overnight in a strange city.

They need a competent establishment that helps impress clients and prospects. Afterward,

they want to relax and use the money they are making (or is expensed by their company).

They spend the most on drinks, food and tips. ITC's cosmopolitan flair and comfortable

atmosphere will be perfect for sophisticated business people, whether they live in and

around NCR or are here for work.

Downtown Working Couples: The restaurant will have an intimate, romantic, enticing

adult atmosphere that suggests "date." ITC's will be the best date location in town. These

young Midtown couples are generally very successful working professionals. In most

cases they are budgeting to eat out on a regular basis, as they don't have the time to

prepare food nightly.

The Destination Customer: NCR is a very 'sectioned' city, and consumers often look

only in their own neighborhoods for restaurant options. ITC will break these habits, using

marketing to draw customers from outside the main city limits. will be a destination

restaurant. Our Destination Clients tend to be new suburbanites that miss the excitement

of the inner city. They have disposable income, and will spend quite a bit on such

outings. ITC's will be especially appealing to married suburban couples indulging

themselves with a "date night" downtown, away from the kids.

High-end Singles: We will attract them with our electic atmosphere and layout. Our

international menu, striking decor, entertainment and events, excellent service and

engaging clientele will confirm the feeling of being in "the in place" in NCR. These are

the individuals that pride themselves on socializing and dining at the premier locations -

The Image Seekers.

Tourists: New Delhi being the capital of India attracts many vacationers during the

summer months of May through September. ITC's will be a destination dining locale,

with its attractive atmosphere, international menu, and lounge. A large percentage of the

tourist population are vacationing singles, here to socialize and be entertained. This is

especially true for the tourist population that visit for sporting and social events - they

are not interested in family establishments.

The Next step involved in the project analysis is to decide the

Marketing Strategy for the proposed project

Strategy and Implementation:

ITC‟s STR intend to succeed by giving people a combination of excellent and interesting

food in an environment that appeals to a wide and varied group of successful adults.

It will focus on establishing a strong identity in our community with a grand opening. Its

main focus in marketing thereafter will be to increase customer awareness in the

surrounding communities. It will direct all of its tactics and programs toward the goal of

explaining who it is and what it does. It will keep its standards high and execute the

concept flawlessly, so that word-of-mouth will be its main marketing force.

STR will create an appealing and entertaining environment with unbeatable quality at an

exceptional price. As an exciting and eclectic restaurant, it will be the talk of the town.

Therefore, the execution of the concept is the most critical element of its plan.

All menu items are competitively priced for the area. While STR is not striving to be the

lowest-priced restaurant, it is aiming to offer exceptional food at reasonable prices for the

premium restaurant diner.

Competitive Edge

STR's competitive edges are:

1. The owners' thorough understandings of opening and running a restaurant

2. An extraordinary contemporary restaurant design

3. International menu with featured menu changes every 4 months

4. Unique, 3-Tiered spatial layout

5. Chef Co-op program to allow new entrants, trainee and featured chef

6. Chef/Management Stock Incentive Program.

7. Employee Training, Incentive and Retention program

Marketing Strategy

STR Restaurant & Lounge's Marketing strategy will be to promote our electric food,

superior service, and exciting concepts to draw in the local repeat customers. Marketing

initiatives will concentrate on the following:

Promotional Campaign:

The best way to reach our potential customers is to develop an intense advertising

campaign promoting our STR concept .In addition to standard advertising practices, we

will gain considerable recognition through newspapers, newsletters and public

announcements. Consumers will be encouraged to visit our website to be greeted with a

flash media intro that highlights the restaurant, past happenings, upcoming attractions and

our dynamic menu.

Our periodic customer surveys and weekly menu item sales evaluations will help us to

understand what advertising is working and what is not; basically, who we are reaching.

Our goal is to understand our customer, measure the success of our direct marketing and

media activities, and redirect advertising as effectively as possible.

Publicity Strategy:

ITC will focus on the following publicity strategies:

Develop a sustained public relations effort, with ongoing contact between key

editors and top-level personnel at local dining publications.

Develop a regular and consistent package update program for the major target

media, keeping key editors abreast of all new promotions, and menu

introductions.

Establish contact with editorial staff for the purpose of being included in

entertainment "round-ups"--product comparisons in dining publications and the

local papers.

Produce a complete STR Restaurant history and menu offering piece to be used as

the primary public relations tool for all target media editorial contact. This will

also be effective for inclusion in press kits.

Press Release/Grand Opening: STR Restaurant will release a series of press releases on

the Grand opening.

Editorial Visitation: Leading up to the Grand Opening, and over the first 6 months of

operations, we will invite the most influential reporters and editors from all local

publications to STR Restaurant in order to evaluate our menu, service, and atmosphere.

Community: ITC will look for key opportunities to pair with local community

development organizations and radio stations to interface with our customers. We will

continually look for local community programs in which we can participate, in order to

better our community, and give something back.

Marketing Program

In line with our Marketing strategy, we will employ three different marketing tactics to

increase customer awareness of STR: In-Restaurant Marketing, Public Relations

Marketing, and Media Marketing. Our most important tactic will be word-of-mouth/in-

restaurant marketing. This will be by far the cheapest and most effective of our marketing

programs.

Word-of-mouth/In-Restaurant Marketing

Restaurant Night: Every first Monday of the quarter, we will have a special

evening for restaurant people. A perfect night for the local area's restaurant

owners, chefs and staff to get together to discuss the market and food trends.

Monthly Dating Connection: With the increasing appeal of Internet and speed

dating, the restaurant will offer a monthly dating night. In addition to food and

beverages, customers can choose from an array of dating packages up for auction.

Wait Area Marketing: Wait staff will service appetizers to customers waiting to

be seated or on the wait list.

Live Entertainment parties

Special Events

Valentine's Day

Wine tasting weekends

New Year's Eve party

Media Marketing

Newspaper campaign: A very targeted media campaign to obtain featured

articles about the restaurant in their Living, Entertainment and Dining segments.

Notices of all live entertainment segments and special features will be posted to

local newspapers' calendar announcements.

Restaurant and Special Events Website: We have contracted with local design

teams to deliver a high-quality, navigable, constantly updated website.

Media Relations: Several media relations teams will be utilized to market the

Restaurant. HT City food guide & India Todayare two media companies we will

utilize for media relations. Both companies have an insightful presence and

connection with our target market.

Billboard Advertisement: One month prior to the opening, distinct billboard ads

will advertise the launch of the Restaurant.

Sales Strategy

Our strategy is simple: we intend to succeed by giving our customers a combination

of delicious and interesting food in an appealing environment, with excellent customer

service, whether on their first visit or their hundredth.

Our marketing strategies are designed to get critics and initial customers into our doors.

Our sales strategies must take the next step and encourage customers to become repeat

customers, and to tell all their friends and acquaintances about the great experiences they

just had at STR.

New restaurants often make one of two mistakes: they are unprepared or underprepared

for opening, and initial poor service, speed, or quality discourages customers from

returning, or they spend all of their efforts at opening, and are unable to maintain the

initial quality customers expect on return visits, decreasing word of mouth advertising

and leading to poor revenues.

STR's sales strategy requires consistently high quality food, service, speed, and

atmosphere. They can accomplish this by:

Hiring employees who genuinely enjoy their jobs and appreciate STR's unique

offerings

Continually assessing the quality of all aspects mentioned above, and immediately

addressing any problems

Interacting with our customers personally, so they know that their feedback goes

directly to the owners

Evaluating food choices for popularity, and keeping favorites on the menu as we

rotate seasonal foods and specials

Sales Forecast

ITC is looking at forecasting sales for its new theme restaurant. ITC‟s new restaurant

STR as discussed earlier would have three themes decided that it would be able to seat

fifteen tables of four people each as a starting point. Then they did some simple math:

fifteen tables of four means at capacity they would be serving 60 meals. Meals take about

an hour at lunch, and about two hours at dinner. STR figured they would have one

servicing of lunch and two of dinner, roughly calculating the 5-5:30 crowds as the first

serving, and the 7:30-8:00 crowd as the second serving. So an absolutely full lunch

service in a day would be 60 lunches. An absolutely full dinner service in a day would be

120 dinners.

They decided that an average lunch would be Rs.1000 of food and Rs.800 of beverage.

And that an average dinner would be Rs.2000 food and Rs.1000 beverage.

At capacity STR would sell 60 lunch and 120 dinners in a day, with matching beverages.

They can do a simple calculation to figure a good day‟s sales:

1. Lunches are 60 times Rs.1000 plus 60 times Rs.800, which comes to 60,000 plus

48,000, or Rs. 108,000, when it‟s at full capacity.

2. Dinners are 120 times Rs.2000 plus 120 times Rs.1000, which comes to

Rs.240,000 plus Rs.120,000, or Rs.360,000, when it‟s at full capacity.

ITEM SUB- ITEM NUMBER

Tables 15

Seats per table 4

Meals at capacity per serving 60

Servings

Lunches 1

Dinners 2

Beverages at capacity

Lunches 1

Dinners 2

Units

Lunch 60

Lunch Bevarage 60

Dinners 120

Dinner Beverage 120

Projected Demand throughout the week:

UNITS Averages Sun Mon Fri Sat week month

Lunch 60 60 35 45 60 320 3840

Lunch Beverage 60 60 35 45 60 320 3840

Dinner 120 120 55 120 120 625 7500

Dinner Beverage 120 120 55 120 120 625 750070

Projected demand throughout the weekTues-Thurs

40

40

70

Projected figures of Sales weekly:

Unit Prices Number Price (in Rs)

Lunch 60 1000

Lunch Bevarage 60 800

Dinners 120 2000

Dinner Beverage 120 1000

Sales AVERAGE Sun Mon Tues-Thurs Fri Sat Total

Lunch 60000 60000 35000 120000 45000 60000 320000

Lunch Beverage 48000 48000 28000 96000 36000 48000 256000

Dinner 240000 240000 110000 420000 240000 240000 1250000

Dinner Beverage 120000 120000 55000 210000 120000 120000 625000

TOTAL 468000 228000 846000 456000 468000 2466000

Projected figures of weekly sales (In value Rs.)

TECHNICAL ANALYSIS:

LOCATION

The location for the themed restaurant has been finalized as on Gurgaon Faridabad road,

sector 54. This is one of the busiest roads of India and more than five lakhs vehicles pass

through this road on a single day. The location can be highlighted as under:

The themed restaurants will cater to the upper segment of the society. Gurgaon

being a hub of restaurants, clubs, hotels, nightlife centers, malls, spas & salons is

a prime location for such lifestyle options

There are many sports clubs like basketball club, badminton club, football club

squash club and many more. The clubbing culture in sector 52 in particular and

Gurgaon at large helped us secure this location.

There are over two dozen restaurants in the vicinity of the area that sell food at

similar prices. Although this presents an obvious challenge in terms of market

share, it also indicates the presence of a large, strong potential. And moreover it is

the only themed restaurant in Delhi/NCR Region

Companies like TCS,HCL,GE Capital, Unitech limited and many more have their

units in gurgaon. We are expected a good number of corporate clients

Gurgaon is connected to all major cities by air, rail and road.

Easy availability of land, parking facilities ,low traffic congestion.

By 2010, the state government hopes to complete a world class Golden Triangle

City Centre (GTCC) in Sector 29 with as many as four skyscrapers higher than

Taipei 101. The fast growing population with increasing purchasing power is yet

another reason for zeroing on the location

RESTAURANT LOCATION ON MAP

LAND

Average cost Rs 4,600 per square foot

Land 3200 square foot

Basic cost Rs 147 lacs

Stamp duty Rs 3.54 lacs

Other costs @15% Rs. 22.58 lacs

Total cost of land Rs 173.43 lacs

BUILDING AND CIVIL WORK

S.NO PARTICULARS OF BUILDING AREA AND RATE COST

(Rs. In

Lacs)

1 Cost of construction of Building 281.44

including structure at basement, G.F,

internal roads, Boundary walls, sewerage,

drains, railings & car porch

2 Ceiling with paint 7000 sq. ft. @Rs 25 1.75

3 False Gypsum ceiling with Paint 25000 sq. ft. @ Rs 65 16.25

4 Sky- lite metal frame with toughened Glass/ 1800 sq. ft. @ Rs. 600 10.8

poly carbonate

5 Floor stone with laying cost 30000 sq. ft. @ Rs. 140 42

6 Floor inlays, special treatment with laying

cost

2000 sq. ft. @ Rs.300 6

7 Walls punnings & paints 106000 sq. ft. @ Rs. 25 26.5

8 Wall cladding - Windows 20000 sq. ft. @ Rs. 300 60

9 Special walls cladding with special treatment 5000 sq. ft. @ Rs. 1000 50

10 Landscaping 10000 sq. yards 15

TOTAL 509.74

Say Rs. 510.00

EQUIPMENTS

The detailed lists of the equipments required are given below:

S.NO. NAME OF MACHINE &

EQUIPMENT

NO. RATE COST NAME OF SUPPLIER

(Rs. in

Lacs)

1 Central air conditioning system for the 81.93 Blue Star Ltd., Delhi

Restaurant with specifications

2 DMF & Softening plant 1.15 Eco- Water Solutions, Delhi

3 Reverse Osmosis Plant of 500 LPH 2.1 Eco- Water Solutions, Delhi

4 Sewage Treatment Plant 12.48 Eco- Water Solutions, Delhi

5 Rain water harvesting system 2.84 K.C. Tube well Works, Delhi

6 Generator set

62.5 KVA 2 4.95 9.9 Kushal Engineers Inc.,

Meerut

125 KVA 2 6.95 13.9 -- do --

250 KVA 2 12.75 25.5 -- do --

7 Transformer 1.27 Kushal Engineers Inc.,

Meerut

8 Solar water heating system 1 5.85 5.85 Hitek Solutions, Delhi

9 Indigeneous Passenger lift 2 9.65 19.3 Apex Elevators, New Delhi

10 Kitchen Equipments 25.8 SL Industries, Haryana

11 Security system 8.0 Kobra India Security System,

New Delhi

12 Fire - Fighting system 18.25 Somya pyrotex services,

Delhi

13 Electrical Wiring, Cabling, 25.0 Sukam Power system ltd,

Haryana

Sub- station, panels & earthing

14 Special equipments for various

themes

Snow making machine&

snow liquid

Humidity control system

Showers

Dry ice making machines

24

15

3

3

FM Engineers

Vishal (Cool) India Pvt Ltd

Prabhat Door Win Industries

S.S. Foundry Chemical

Industries Private Limited

15 Garbage Shoots 1.0

TOTAL 299.27

Add Sales Tax, Installing, Freight, 11.97

Loading, Unloading etc. 4%

GRAND TOTAL 311.24

a)

FURNITURE AND FIXTURES

.

S.NO. PARTICULARS COST

Rs.in

Lacs

1 Loose furniture- wooden & metal 40.00

2 Fixed woodwork paneling/ cornes/finishes 20.00

5000 sq. ft. @ Rs. 400

3 Fabrics - Curtains, Uniforms, Guest room 5.00

& service table

4 Internal lightings

general , moods, tasks & Effects 20.00

5 External lightings 15.00

Facade, Landscape & Security

6 Lighting automation 10.00

Dimming System, Sensors & Timers

7 Landscape feature 8.00

Wooden, Marble & Metal

8 Landscape furniture 2.10

wooden & metal

9 Acoustics- wooden boxing with glass wool 9.36

7800sq. Ft. @ Rs. 120

TOTAL 129.46

Say Rs. 129.50

POWER

The estimates of the power are given below:

Particulars Proposed

Total Power Requirement 150.00 KW

Total Units required at installed capacity 1051200

Load Factor 0.80

N.D.P.L. (70%) 588672

Rate per Unit 5.50 (Rs.)

Cost of power through H.V.P.N. (A) 32.38 (Rs. in Lacs)

G.Set Units (30%) 252288

Cost per unit by G. Set 6.50 (Rs.)

Cost of power through G. Set (B) 16.40 (Rs. in Lacs)

Total(A+B) 48.78 (Rs. in Lacs)

MAN POWER

The total man power requirement of the restaurant will be 90 persons who will get direct

employment. Their detailed salaries and wages pattern is given below:

Sr.No. Particulars No. Salary/ Total Salary

month

A. Indirect/Administrative

1 General Manager 1 25000 25000

2 Manager 1 15000 15000

3 Front Office Manager 3 7500 22500

4 Account Manager 1 7500 7500

5 Accountant 1 4000 4000

6 Receptionist 3 4000 12000

7 Head Security Guard 1 5000 5000

8 Operator 1 3000 3000

9 Security Guards 3 3000 9000

Total(A) 13 95000

B. Direct/Operations

1 House Keeping Incharge 1 25000 25000

2 Head Chef 3 20000 60000

3 Assistant Chef 12 10000 120000

4 F & B Manager 1 7500 7500

5 Security Incharge 1 5000 5000

6 Electrician 1 5000 5000

7 Guide/Trainer 2 4000 8000

8 Plumber 1 4000 4000

9 Helpers 10 3500 35000

10 Store Keeper 1 3500 3500

11 Sweeper 6 3500 21000

12 Driver 4 3500 14000

13 Gardener 10 3000 30000

14 Waiter 24 3000 72000

Total(B) 77 4100000

505000

Total Wages

ENVIRONMENTAL ASPECTS

ITC constantly endeavors to minimize the direct and indirect environmental impact of its

business operations. Not only does it ensure serious and concerted efforts to conserve

natural resources but, wherever possible, the Company also strives to enrich the

environment.

ITC group is actively committed to environmental protection and so is its subsidiary STR

Pvt. Ltd. The launch of the new theme restaurant by STR will work on the similar lines of

ITC group with their guiding principle of „Reduce, Reuse and Recycle‟

The proposed restaurant consist of 3 themes namely :

SNOWY WINTERS

RAIN AND LUSH GREENERY

GOLDEN SUN AND BEACH

ENVIRONMENTAL ANALYSIS

Environmental repairs and maintenance is a tedious job which was needed to be

conducted on a large scale so as to practice the principles of conservation i.e., to create a

safe, harmonious and ecologically balanced environment for our hotel guests and

employees.

ENVIRONMENTAL REQUIREMENTS for our venture are listed below:

1. Requirement Under Air Pollution Control Ordinance

There shall be no visible fume emission from the kitchen exhaust and no Odour

nuisance to the nearby sensitive receptors.

2. Requirement Under Noise Control Ordinance

There shall be no Excessive levels of noise, from ventilating systems &

refrigeration Units.

3. Requirement Under Waste and Water pollution Control Ordinance

Public sewers of sufficient capacity are available to collect the effluent discharges

from the restaurant and adequate space and facilities for waste storage and pick up

available.

SALIENT FEATURES SO AS TO COMPLY WITH ENVIRONMENTAL

REQUIREMENTS :

1. Health

i. Premise is laid on with mains water supply.

ii. Premises are provided with a proper drainage system.

iii. Premises are provided with proper flushed toilets.

iv. No manholes are located in the proposed kitchen, food preparation room

and scullery.

v. Premises are capable of providing an independent and separate

ventilating system to the kitchen, toilets and seating accommodation.

2. Sustainable Site

i. Artificial Rain Water Management: Rain Water Harvesting System is used

so as to ensure zero discharge into municipal drainage.

ii. Heat Island Effect: More than 75% of the terrace will be insulated and

coated with the reflective high albedo roof paint. “High albedo paint” deflects

heat back into the atmosphere. Given that the roofs and side walls of a

building account for 47 per cent of heat gain in a building, the heat-deflecting

paint means that the air-conditioning can run at a comparatively higher

temperature .

iii. Light Pollution Reduction: Minimum exterior lighting will be used to limit

night sky pollution.

3. Water Efficiency

i. Innovative Waste Water Technologies like Fluidized Aerobic Bioreactors

(FAB) sewage treatment plant will be used so as to save on the loss of water.

ii. For water saving the focus will be on zero discharge i.e. all water will be

recycled through a sewage treatment plan. For the lawns outside, the plants

have been chosen for not being water intensive.

4. Energy & Atmosphere

1. Use of solar photo voltaic for emergency lighting would be done so as to save

on generators.

2. Use of green material would be done to reduce heat gain from rooftop /

building envelope with high performance glazing and proper insulation material .

3. A solar hot water system and solar concentrator would be installed for kitchen.

4. Cooking stoves in restaurant kitchens are designed in such a way that no

excessive air pollutant emissions are generated when in use.

5. Indoor Environmental Quality

1. Environment Tobacco Smoke Control: Designated smoking area will be

provided at convenient locations with separate exhausts. Designated area is

provided so as other customers do not get affected by the smoke.

2. CO2 Monitoring: Sensors at various locations are planned to monitor CO2

levels.

6. Low Emitting Materials: Low VOC levels of adhesives / sealants would be used

for carpets /composite woods / paints.

7. Food Quality

All the requirements of Food Safety Act are adhered to for ensuring that food is

safe for human consumption, and no sale of food that is contaminated or

otherwise unfit for human consumption will be fulfilled.

8. Educating Employees

Educating employees about the environmental actions the property takes, why

those actions are important, why the staff needs to support the program, as well as

encouraging staff to take their own green actions would be promoted and any

ideas towards the green movement would be supported by STR.

COST OF THE PROJECT

It is the first step in conducting financial analysis and it is very important as it decides the

initial investment that the project need to be carried on.On the basis of this,the means of

Financing is decided.

Here the following assuptions have been considered after the technical analysis:

Average cost of land = Rs 4600 per sq ft of land

Here land required = 3200 sq ft

Total land cost( basic cost + other costs) =Rs173.43 lacs

Through technical analysis all components of the the cost of the project can be calculated.

The preoperative expenses incurred up to the point of time the plant and machinery are

ready for use are capitalised by apportioning them to depreciable fixed assets in

proportion to their book values.the interest on term loan during the construction period of

6 months at the rate of 12% is Rs 49.58 lacs. This is excluded while calculating

contingencies.

Cost Of The Project

(Rs. In lacs)

Land 173.43 Site Development 228.30 Building 281.44 Machinery 311.24 Furniture & Interiors 129.50 Other Fixed Assets 50.00 Pre-operative Expenses 80.00 Preliminary Expenses 15.00 Provision for Contingency 104.59 Margin Money for Working Capital 4.86

Total Project Cost 1,378.36

Over and above the escalation under various items of cost on the basis of latest

avaliable rate of inflation, contingency provision is made on the basis of project

implementation scheldule.

Escalation may arise due to minor changes in the specifications of the buildings, plant

and machinery which result in the increase of costs.

Thus the total provision of the contingencies would be Rs 104.59 lacs(excluding margin

money for working capital and interest during construction period).

The preliminary expences incurred is about 1% of the total project cost and therefore can

be written off over the ten years entirely.

Contingency Provision

Firm Costs Non-Firm Costs Escalation @ 10%

Site Development 0 228.30 22.83 Buildings 0 281.44 28.14 Machinery 0 311.24 31.12 Furnitures & Interiors 0 129.50 12.95 Other Fixed Assets 0 50.00 5.00 Preliminary Expenses 0 15.00 1.50 Pre-operaticeEXpense(Excluding Interest) 0 30.42 3.04

Total 104.59

WORKING CAPITAL REQUIREMENT

Particulars Usage at 100 % capacity utilization Requirements(months)

Bank Finance %

Utilities 48.78 2 75

Salary 41.95 1.5 75

Raw Materials

perishable 12.37 0.5 75

nonperishable 19.79 1 75 cash requirement 88.14 1 75

Here the cash required to be held by the unit for day to day expenses is estimated to be

Operating cost (181.57) +salaries (35.66) +administrative overheads (10) –depreciation

(129.57) - Raw Materials (9.52) = 88.14

Working Capital = Heads * Usage * (Requirement In months/12)

Particulars

Utilities

Salary

Raw Materials

perishable

nonperishable

cash requirement

Total

1st year 85% operating capacity

Working Capital Working Capital Gap Margin Money

6.911 5.183 1.728

4.457 3.343 1.114

0.438 0.329 0.110

1.402 1.051 0.350

6.243 4.682 1.561

19.451 14.588 4.863

Particulars

Utilities

Salary

Raw Materials

perishable

nonperishable

cash requirement

Total

2nd yr 90% operating capacity


7.317 5.488 1.829

4.719 3.540 1.180

0.464 0.348 0.116

1.484 1.113 0.371

6.611 4.958 1.653

20.595 15.446 5.149

Particulars

Utilities

Salary

Raw Materials

perishable

nonperishable

cash requirement

Total

3rd yr 95% operating capacity


7.724 5.793 1.931

4.982 3.736 1.245

0.490 0.367 0.122

1.567 1.175 0.392

6.978 5.233 1.744

21.739 16.304 5.435

MEANS OF FINANCING

Here the project is proposed to be funded through promotor‟s contribution (40%) and

term loan from banks (60%). Here rate of interest on the loan is 12 % from IDBI.

% Means Of Financing

0.6 Term Loans @ 12% 827

0.4 Promotors 551

Total Project Cost 1378.36

ESTIMATION OF REVENUE EXPENSES AND PROFITS

As already mentioned in the Demand Analysis, the estimated sales are:

SALES ESTIMATION

SUNDAY MONDAY TUESDAY- THURSDAY FRIDAY SATURDAY

Total per week

LUNCH 60,000 35,000 120,000

45,000 60,000 320,000

LUNCH BEVERAGE 48,000 28,000 96,000

36,000 48,000 256,000

DINNER 240,000 110,000 420,000

240,000 240,000 1250000

DINNER BEVERAGE 120,000 55,000 210,000

120,000 120,000 625,000

TOTAL per day(in Rs) 468,000 228,000 846,000

441,000 468,000

TOTAL annually in lacs 1,274.52

Total Annual Revenue 1,274.52

COST OF PRODUCTION

Cost of production includes Raw materials, labor, utilities and administration overheads.

Cost of Production

Years I II III IV V VI VII VIII IX X

Operational Utilization 0.85 0.9 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95

Power, fuel, gas 41.463 43.902 46.341 46.341 46.341 46.341 46.341 46.341 46.341 46.341 Repairs and Maintenance(in lacs) 1.02 1.5 1.6 1.6 1.6 1.6 1.6 1.6 1.6 1.6

Salary 41.95 35.66 37.76 39.85 41.85 43.94 46.13 48.44 50.86 53.41 56.08

Administrative Expense 10 12 14 14 14 14 14 14 14 14

Estmated Power, Fuel and Gas as well as Salaries have been calculated in the Technical

Analysis.

Repairs and maintainance as well as administration overheads have been taken as rough

estimates.

Here capacity utilaization has been assumed to be 85% in the first year, 90% in the

sesond year and 95 % in the third year.

The Raw Materials have been calculated by taking into account its two components:

Perishable items

Non perishable items

Raw materials

average cost (in Rs per lt,

kg,nos,bottle) Daily consumption (lt,kgs,nos,bottle)

annual consumption

cost per year

perishable

Milk 9 6 2190 19710 vegetables 65 15 5475 355875 red meat 190 4 1460 277400 white meat 320 5 1825 584000

Total 12.37

non perishable

rice 28 4 1460 40880 wheat 22 5 1825 40150 flour 35 4 1460 51100 eggs 3 40 14600 43800 others 40 2 730 29200 alcoholic drinks

beer 42 20 7300 306600 wine 1000 1 365 365000 vodka/gin/ rum 320 2 730 233600 whisky 350 3 1095 383250 others 330 1 365 120450 non alcoholic drinks 50 20 7300 365000

Total 19.79

PROVISION FOR DEPRECIATION

Here provision for depreciation is made by the Written Down Value method as per the

rates given in the Income Tax Act.

Preoperative expences during the construction period and contingencies are allocated to

the fixed assets in proportion to their values before providing depreciation.

Apportionment Table for Pre-op Expenses and Contingencies

Fixed Assets Value Proportion Pre-op Expense Contingencies

Building 509.74 0.51 40.76 53.29 Machinery 311.24 0.31 24.89 32.54 Furnitures & Interiors 129.5 0.13 10.36 13.54 Other Fixed Assets 50.0 0.05 4.00 5.23

Total 1000.48

Depreciation Schedule(Written Down Value Basis)

Years

I II III IV V VI VII VIII IX X

Land 173.43 173.43 173.43 173.43 173.43 173.43 173.43 173.43 173.43 173.43

Building

Opening Balance 603.8 543.4 489.1 440.2 396.1 356.5 320.9 288.8 259.9 233.9

Less:Depreciation@10% 60.4 54.3 48.9 44.0 39.6 35.7 32.1 28.9 26.0 23.4

Closing Balance 543.4 489.1 440.2 396.1 356.5 320.9 288.8 259.9 233.9 210.5

Machinery

Opening Balance 368.7 320.7 279.0 242.8 211.2 183.7 159.9 139.1 121.0 105.3


Closing Balance 320.7 279.0 242.8 211.2 183.7 159.9 139.1 121.0 105.3 91.6

Furnitue & Interiors

Opening Balance 153.4 138.1 124.2 111.8 100.6 90.6 81.5 73.4 66.0 59.4


Closing Balance 138.1 124.2 111.8 100.6 90.6 81.5 73.4 66.0 59.4 53.5

Other Fixed Assets

Opening Balance 59.2 53.3 48.0 43.2 38.9 35.0 31.5 28.3 25.5 22.9


Closing Balance 53.3 48.0 43.2 38.9 35.0 31.5 28.3 25.5 22.9 20.7

Total

Opening Balance 1358.5 1228.9 1113.8 1011.4 920.3 839.3 767.2 703.0 645.9 595.0

Less:Depreciation 129.6 115.2 102.4 91.1 81.0 72.1 64.2 57.1 50.9 45.3

Closing Balance 1228.9 1113.8 1011.4 920.3 839.3 767.2 703.0 645.9 595.0 549.7

INTEREST SCHEDULE

Interest has to be paid at the rate of 12% for the next ten years. Below is the repayment

schedlue.

Repayment and Interest Schedule of Term Loan

Year Opening Balance Amount Repaid Closing Balance Interest @12% Total Repayment

1 827 82.70 744 93.04 175.74 2 744 82.70 662 83.12 165.82 3 662 82.70 579 73.19 155.89 4 579 82.70 496 63.27 145.97 5 496 82.70 414 53.34 136.04 6 414 82.70 331 43.42 126.12 7 331 82.70 248 33.49 116.20 8 248 82.70 165 23.57 106.27 9 165 82.70 83 13.65 96.35

10 83 82.70 0 3.72 86.42

INTEREST ON BANK BORROWINGS

This is the amount that is calculated on the working capital gap to pay back the bank at

the rate of 12%.

Interest on bank borrowings@12%

1 2 3 4 5 6 7 8 9 10

Opening Balance 0 14.59 15.45 16.30 16.30 16.30 16.30 16.30 16.30 16.30

Repayment

Increase 14.59 0.86 0.86 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Closing Balance 14.59 15.45 16.30 16.30 16.30 16.30 16.30 16.30 16.30 16.30

Interest @12% 1.75 1.85 1.96 1.96 1.96 1.96 1.96 1.96 1.96 1.96

TAXABLE INCOME

Tax payable income Calculations

1 2 3 4 5 6 7 8 9 10

Gross taxable Profit

Profit as per profitability statement 689.34 765.47 840.36 879.53 897.42 914.07 929.61 944.15 957.79 970.60 Less:Depreciation under WDV basis 129.57 115.17 102.40 91.08 81.02 72.10 64.17 57.13 50.87 45.31 Less:Preliminary expenses written off 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50

Total 558.27 648.80 736.45 786.95 814.89 840.47 863.94 885.53 905.42 923.79

Deductions 167.48 194.64 220.94 236.09 244.47 252.14 259.18 265.66 271.63 277.14

Taxable Profits 390.79 454.16 515.52 550.87 570.43 588.33 604.76 619.87 633.79 646.65

Financial Appraisal

Project appraisal is a generic term that refers to the process of assessing, in a structured

way, the case for proceeding with a project or proposal. It often involves comparing

various options, using economic appraisal or some other decision analysis technique.

The technique used to financially appraise the project is called capital budgeting.

Capital budgeting is a required managerial tool. One duty of a financial manager is to

choose investments with satisfactory cash flows and rates of return. Therefore, a

financial manager must be able to decide whether an investment is worth undertaking and

be able to choose intelligently between two or more alternatives. To do this, a sound

procedure to evaluate, compare, and select projects is needed. This procedure is called

capital budgeting.

UNDERLYING ASSUMPTIONS FOR THE APPRAISAL

Return on equity required is 25% approximately, based on the return achieved in

FY 08-09, for ITC.

Term loan and working capital loan are charged at 12% p.a for 10 years

Market rate of interest as per:

o IDBI: 12% p.a.

o SBI : 13.5% p.a. payable semiannually

o ICICI : 12% p.a. payable at equal interest installments

Hence cheapest source is IDBI at 12 % p.a., reason being IDBI and ITC have long

banking relations.

Tax rate applicable is as follows:

o Tax rate @ 30%

o Surcharge @10%

o Education cess @ 3%

o Thus total tax rate being 33.33%

Depreciation rates are based on the market prevailing rates:

o Building @ 10%

o Machinery @ 13%

o Furniture and interiors @ 10%

o Other fixed assets @ 10%

For the purpose of calculation of cost of land prevailing market rate from property

from “Indiaproperty.com” has been used.

The seating at each restaurant shall be 60 seater with tables for two each which

could be conveniently joined and disjoined as per the requirement.

Each of the restaurants shall have enough vacant space to accommodate 150

people in case of large gatherings required.

Reinvestment rate is same as the discounting rate.

TECHNIQUES USED:

Payback period discounted:

Payback period in business and economics refers to the period of time required

for the return on an investment to "repay" the sum of the original investment. For

example, a $1000 investment which returned $500 per year would have a two

year payback period. It intuitively measures how long something takes to "pay for

itself." Shorter payback periods are obviously preferable to longer payback

periods (all else being equal).

Weighted Average cost of capital as calculated = 14.8%

Thus payback period calculated as per discounted values: 2.67 years

This implies that the restaurant shall break be able to recover initial investment at

the end of the 2.67 years.

This is a fairly good indicator, as 2.67 years , considering an average payback

period applicable in the industry is of 3 years .

"Elsewhere in the world, the cost of building a five-star hotel is very different

from that of building a three-star one, while in India these costs get leveled," said

Marina Smirnova, the head of the Analytical Department at the University of

Hotel, Travel and Restaurant Businesses association. "Profit margins vary from

hotel to hotel, but on the average a hotel operating in the high-end segment pays

back in six to eight years, and a restaurant in three to four. This is why this

segment is so attractive for investors."

Year Cash Flows

Cash Flows at

discounted value

Cummulated

Cash Flows

0 (1,382.20) (1,382.20) (1,382.20)

1 1433.85 1,248.99 (133.21)

2 1529.15 1,160.28 1,027.08

3 1629.46 1,077.00 2,104.08

4 1641.37 945.01 3,049.08

5 1650.54 827.78 3,876.86

6 1660.06 725.22 4,602.07

7 1669.85 635.45 5,237.52

8 1679.86 556.84 5,794.36

9 1690.01 487.98 6,282.34

10 1700.27 427.65 6,709.99

Payback Period

Internal Rate of return:

The discount rate often used in capital budgeting that makes the net present value

of all cash flows from a particular project equal to zero. Generally speaking, the

higher a project's internal rate of return, the more desirable it is to undertake the

project. As such, IRR can be used to rank several prospective projects a firm is

considering. Assuming all other factors are equal among the various projects, the

project with the highest IRR would probably be considered the best and

undertaken first.

IRR = 109%

Year Cash Flows

0 (1,382.20)

1 1433.85

2 1529.15

3 1629.46

4 1641.37

5 1650.54

6 1660.06 NPV @ 90% 298.08

7 1669.85 NPV @ 110% (15.69)

8 1679.86

9 1690.01 IRR 109.00%10 1700.27

INTERNAL RATE OF RETURN

Limitation of IRR in current project:

o IRR gives how much return is the project generating, but since the project

undertaken does not have a definite time period, thus is not valid enough.

o Cash flows used are for 10 years, however if only say 5 years cash flows

were to be used, then IRR would have surely been less than 109%.

o Thus shorter the period, lower would have been the IRR.

Profitability index:

An index that attempts to identify the relationship between the costs and benefits

of a proposed project through the use of a ratio.

Year Cash Flows

Cash Flows at

discounted value

Cummulated

Cash Flows

0 (1,382.20) (1,382.20) (1,382.20)

1 1433.85 1,248.99 (133.21)

2 1529.15 1,160.28 1,027.08

3 1629.46 1,077.00 2,104.08

4 1641.37 945.01 3,049.08

5 1650.54 827.78 3,876.86

6 1660.06 725.22 4,602.07 Profitability Index 4.85 7 1669.85 635.45 5,237.52

8 1679.86 556.84 5,794.36

9 1690.01 487.98 6,282.34

10 1700.27 427.65 6,709.99

Profitabilty Index

Profitability index of 4.85 is a very good indicator of the project.

An index above 1 indicates that the project is profitable. Industry average for

profitability index varies according to different ventures. There is no standard as

such available.

But to our understanding, a profitability index of 4.85 is a high index, indicating

high profitability associated with the project.

PROJECTION OF FINANCIAL STATEMENTS

For projecting the financial condition of the project, forecasts of income, assets and

liabilities and cash flows are necessary. Based on the assumptions and estimates the

following statements are prepared:

Projected Income Statement

Projected Cash Flow Statement

Sources of Fund 1 2 3 4 5 6 7 8 9 10

Profit before tax & preliminary expenses689.56 765.83 840.86 860.19 878.15 894.87 910.47 925.07 938.76 951.63

Add:Depreciation 130.11 115.65 102.83 91.46 81.36 72.40 64.44 57.37 51.09 45.50

Total generation of funds819.66 881.49 943.69 951.65 959.51 967.27 974.91 982.44 989.85 997.13

Term Loan 829.32

Increase in Working Capital loan11.23 0.66 0.66

Total(A) 829.32 1650.56 1763.64 1888.04 1903.30 1919.02 1934.53 1949.82 1964.88 1979.70 1994.26

Application of funds

Fixed Assets1000.48

Prelimianary/Pre-operative Expenses95

Increase in working capital3.60 0.21 3.81

Repayment of term loan 82.93 82.93 82.93 82.93 82.93 82.93 82.93 82.93 82.93 82.93

Income Tax 130.17 151.34 171.84 179.00 185.55 191.54 197.04 202.09 206.75 211.06

Total(B) 1095.48 216.71 234.49 258.58 261.94 268.48 274.47 279.97 285.03 289.69 293.99

Opening Balance 0 -266.16 1167.688 2696.838 4326.299 5967.666 7618.207 9278.266 10948.12 12627.97 14317.99

Difference(A-B)-266.16 1433.85 1529.15 1629.46 1641.37 1650.54 1660.06 1669.85 1679.86 1690.01 1700.27

Closing Balance-266.16 1167.69 2696.84 4326.30 5967.67 7618.21 9278.27 10948.12 12627.97 14317.99 16018.26

Projected Cash Flow Statement

Year I II III IV V VI VII VIII

Operational Utilization0.85 0.9 0.95 0.95 0.95 0.95 0.95 0.95

Income

Sales(A) 1083.34 1147.07 1210.79 1210.79 1210.79 1210.79 1210.79 1210.79

Operating Cost

Utilities(Power,Water&Fuel)41.463 43.902 46.341 46.341 46.341 46.341 46.341 46.341

Raw materials 9.52 10.08 10.64 10.64 10.64 10.64 10.64 10.64

Work in progress0.204 0.216 0.228 0.228 0.228 0.228 0.228 0.228

Finished goods 17 18 19 19 19 19 19 19

Repairs ,Maintenance & Insurance1.02 1.5 1.6 1.6 1.6 1.6 1.6 1.6

Depreciation 130.11 115.65 102.83 91.46 81.36 72.40 64.44 57.37

Total(B) 199.32 189.35 180.64 169.27 159.17 150.21 142.25 135.18

C Administrative Expenses

Salary 35.66 37.76 39.85 41.85 43.94 46.13 48.44 50.86

Administrative Overheads10 12 14 14 14 14 14 14

Marketing Expense54.17 57.35 60.54 60.54 60.54 60.54 60.54 60.54

Total(C) 99.82 107.11 114.39 116.38 118.48 120.67 122.98 125.40

D Financial Expenses

Interest:Term Loan@10%93.30 83.35 73.39 63.44 53.49 43.54 33.59 23.64

Interest on Working Capital Loan@10%1.35 1.43 1.51 1.51 1.51 1.51 1.51 1.51

Total(D) 94.65 84.77 74.90 64.95 55.00 45.04 35.09 25.14

E Total Expenses(E=B+C+D)393.79 381.23 369.93 350.60 332.64 315.93 300.32 285.72

Profit(A-E) 689.56 765.83 840.86 860.19 878.15 894.87 910.47 925.07

Preliminary Expenses written off1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50

Profit before Tax688.06 764.33 839.36 858.69 876.65 893.37 908.97 923.57

Taxable Income390.56 454.08 515.57 537.07 556.70 574.68 591.17 606.34

Income [email protected]%130.17 151.34 171.84 179.00 185.55 191.54 197.04 202.09

Profit after Tax260.39 302.73 343.73 358.06 371.15 383.14 394.14 404.25

Retained Profits260.39 302.73 343.73 358.06 371.15 383.14 394.14 404.25

Projected Income Statement

Conclusion:

Appraisal of the product:

The restaurant business segment in food service industry is a highly

profitable venture.

Theme restaurants are the upcoming trend in the market and are here to

stay for long. Such restaurants have high potential demand in

metropolitan and tier 1 and 2 cities.

Factors like

o increasing household income at disposal

o higher number of working couples

o MNC culture

o Change in lifestyles

The above mentioned factors account for increasing demand and high

growth potential in this sector.

Finacial appraisal

The project is financially viable, as it has high profitability index and the

discounting payback period is shorter than the industry average.

Considering good scope of earnings associated with the project, the

project is highly recommended.

Thus combining together the various analysis, the project will certainly be a

business of good margin and high development potential

Finally the following 7 considerations suggested to the key reference for the

projects future development, as well as the conclusion of the report:

Reinforcing the brand ITC and its values.

Reinforcing the consciousness in quality.

To strive for authentication of ISO 9002.

To actively develop new recipes and innovative settings and ambience in

the restaurant

To constantly master the market trend, especially in comprehending the

competitive environment

Reinforcing the consciousness in talent, that is of its chefs.

Reinforcing the consciousness in service, where every business effort is

centered around serving the customers better than the competitors.

ANNEXURE 1

VENDOR

Vendors have been selected keeping in mind that the vendor‟s performance satisfies the

project needs. We are expecting a cordial vendor-vendee relationship. Most of the

vendors are Delhi based , this will ensure low transportation costs of equipments.

1.BLUE STAR LTD.,NEW DELHI

Block 2-A, DLF Corporate Park

DLF Qutab Enclave

Phase III

Gurgaon - 122 002 (Haryana)

Ph: (91) (124) 4094000

Fax: (91) (124) 4094004

2.ECO WATER SOLUTIONS TECHNOLOGIES (P) LTD.

B-83,

Okhla Industrial Area,

Phase- I,

New Delhi-110020

Ph:+91-11- 41024791,

+91-11- 41024792

Fax:+91-11-41024790

Email : [email protected]

[email protected]

[email protected]

mailto:[email protected]





3.KC TUBEWELL WORKS

RU-33, Pitampura,

New Delhi-110034

Ph : 27348618

Fax : 27345935

4. KUSHAL ENGINEERS INC.

34, Chak Bandi Road,

Begam Bagh

Near Satyam Plaza

Meerut - 250001

Uttar Pradesh

India

Ph:

+91 121 2652604

+91 9897100900

+91 9837035305

Fax

+91 121 4007596

5.HITEK SOLUTIONS

Shop 7 first floor

A-4 C s c Market Paschim Vihar

Delhi-110063

6.APEX ELEVATORS

WZ-1656 A,

First Floor, Nangal Raya,

New Delhi-110046, India

Ph.:- +91-11-28523721, Fax:-+91-11-28523718,

(M):- +91-9891983954

7.SUKAM POWER SYSTEM LTD.

Plot No. 54, Udyog Vihar

Phase VI, Sector 37

Gurgaon 122001 ph: 01244170500

8. S. L. INDUSTRIES, DELHI

Mr. K. K. Pahuja (+91-9811144169)

F -57, Mayapuri Industrial Area, Phase-II

New Delhi - 110 064, New Delhi (India)

Phone. : +(91)-(11)-41845134

E-mail: [email protected], [email protected]

9. KOBRA INDIA SECURITY SYSTEM

Janak Puri,

832, West End Mall,

District Centre,

New Delhi, Delhi 110058

011 25552337

09810055338 - Mobile

10.SOMYA PYROTEX SERVICES

Block A1, janak Puri,

102, A, TC Jaina Tower -III,

Local Shopping Center,

New Delhi, 110058

09811141246

11.F. M. ENGINEERING

I-73, Sector-1,

Bawana Industrial Area,

Delhi - 110039, India

Ph:91-11-27750653

Fax:91-11-27750654

12.VISHAL (COOL) INDIA PVT LTD

B-17, DB-1,

ST No. 9, Anand Parbat Industrial Area,

Delhi - 110 005, India

Ph: +(91)-(11)-28763690/28763486

Fax: +(91)-(11)-28763690

13.PRABHAT DOOR WIN INDUSTRIES

39, North West Avenue,

Punjabi Bagh, New Delhi,


Ph: +(91)-(11)-25224833/25224834

Fax: +(91)-(11)-25226473

14.S.S. FOUNDRY CHEMICAL INDUSTRIES PRIVATE LIMITED

A-6/3, Jhilmil Industrial Area,

G.T. Road,


Ph: +(91)-(11)-22583963/22583247/22134816

Fax: +(91)-(11)-22592770/22134814

ANNEXURE 2

QUESTIONNAIRE

Please spare a few moments to answer the questionnaire. Your responses

will help us understand your needs better.

Your responses will be kept confidential.

1. Do you prefer dining in a theme Restaurant?

a. Yes b. No

2. How many theme Restaurants are you aware of?

a. 0 b. 1-2

c. 3-4 d. 5-6

e. More than 6

3. What is the frequency of your Visit to a Restaurant?

a. Once a week

b. Once in 2 weeks

c. Once a month

d. Once in 2-3 months

e. None of the above

4. On which of the following parameters you make your decision regarding visit to

a new restaurant?

(Rank them according to your preference)

a) Price b) Ambience c) Multi-Cuisine

d) Brand name e) Food Quality f) Multi Theme

5. If given a choice, where will you Dine out of the following choices?

a. ITC’s theme Restaurant b. Restaurants in ITC hotel like Bukhara

c. Budget Restaurants d Others (Please Specify)

6. The reason that influenced your decision for the above choice?

a) Price

b) Brand Name

c) Dining Experience

d) Cuisine

e) Other (Please specify)

7. The company must start a Multi Theme Restaurant with Multi Cuisine and

excellent ambience?

a. Agree b. Disagree

8. Which theme excites you more from the following list of themes?

(Rank them according to your preference)

a. rainy b. beach c. bollywood d. winter e. retro

9. How much per person would you like to pay for a meal? Including beverage

a. Less than 500 b.500-1000 c) >1000 d) No limit

10. How many times would you like to come?

a. Once b. Many Times c. Depends d Never

11) Any other suggestion for a new theme Restaurant?

Name: ______________________ Age: _______

City: ______________

Gender: Male / Female

Marital status: Married / Single.

Occupation :

PERSONAL DETAILS (We assure you that your personal details would

be kept strictly confidential and would not be disclosed to anyone):

THANK YOU FOR YOUR TIME AND VALUABLE INPUT

paf project-theme restaurant

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