project evauation

8/8/2019 Project Evauation

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PROJECT EVALUATION

AND MANGEMNT

ASSIGNMENT

Submitted To: Submitted By:

Dr. Rachita Rana Saurabh Kumar

Head PGDM Programme 13008(PGDM)

IITM, Janakpuri


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Q.1Develop a business proposal and evaluate it for acceptance based on project ratingindex (PRI) method. The evaluation should clearly indicate:

a) The factors likely to impact the success of the project proposal

b) The weights assigned to each factor and the logic for the weight

distribution.

c) The rating given to each factor and the logic for the rating.

The benchmark PRI.

Ans.:- Project rating index is used to evaluate a large number of project ideas regularly, it

may be helpful to streamline the process of preliminary screening.

QUASAR PLASTICSQuality at the BEST

Executive summary

Plastic is the basic need of our day to day life. During recent years the plastic industry has

grown with a substantial growth rate. This growth is driven by three sectors viz packaging,

infrastructure and agriculture. There are the various verities of plastics out of which PVC

(Polyvinyl chloride) and PET (Polyethylene terephthylene) plastics have their considerablecontribution. PET plastics are generally used in the manufacturing of beverage bottles for the

packaging and PVC plastic is used in the production of household plastic materials. The

growing utilization of plastics in industrial and consumer applications and surrounding solid

waste recycling, has led to an increased demand for recycled plastic resins and products.

We the Quasar plastics provide a wide range of plastic solutions for household and raw

material for packaging of various companies. As a part of our ongoing efforts to exploit this

opportunity we will recycle the plastics and then produce kitchen ware items and other

related plastic material. We will also sell the recycled plastics to the companies in the plastic

business. We will have a recycling plant along with the production unit. The raw materialwill be procured from the waste collectors. The raw material will be post consumed beverage

bottles and other soft plastic materials

Our main focus is our industrial customer whom we will sell PET bottles and PET flakes. It

will contribute more than 60% of our sales. We will also focus on the household plastic

business which is the part of our portfolio. The initial set up cost will be Rs 34, 40,000.

Quasar plastics will be a solution proprietorship business run by the promoter Saurabh Kumar

who is a MBA graduate with Marketing and Finance as specialization.


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Since plastic material does not carry any brand name so it will give us an addition benefit in

long term to establish our brand name. To exploit the market we will use penetration pricing

as our marketing strategy and utilize our stringent distribution network and strong industrial

relationship.

As a future plan in coming years we will increase the variety of plastics like LDPE (Low

density polyethylene) and HDPE (High density polyethylene). By doing this we will be able

to produce plastic carry bags and raw material for production for plastic chairs and tables and

other fiber based products.

COMPANY OVERVIEW

Quasar Plastics provide a wide range of plastic solutions for households and raw material for

packaging to the various companies. Allahabad is the place where the facility will be

established and other operation will commence.

We will collect the plastic garbage like consumer beverage bottles, plastic bags from various

garbage stores and then our recycle unit will process it which eventually be used for the

production of finished goods.

The plastic garbage we are getting as raw material has two components one is PVC

(Polyvinyl chloride) and other is PET (Polyethylene terephthylene ). Firstly the whole

garbage is melted and then PVC and PET are separated from each other by froth flotation

technique.

We will create a plant (actual facilities to be shared with the recycling unit) to manufacture

extruded plastic flakes (purified plastic). The extruded plastic is then molded in the various

products.

We will produce two types of replay plastics

PVC( Polyvinyl chloride)

PET( Polyethylene terephthylene )

Mission Statement

Quasar Plastics

Strive to provide the excellent plastic solution to the customers at competitive prices.

Continually expands our range of products.

Is poised to service both large and small customers.


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Markets and Products

The plastic products usually do not carry a brand name so intruding in the business like

plastic will not be too hard with low price strategy. The population of Allahabad and the

cities around it like Varanasi, Gorakhpur, Johnpur is around 3Cr. and this area is basically

comprises of low to middle income group families so they focus on plastic products rather

than fiber since it is a cheaper. Hence it is huge market to exploit.

From Allahabad city 500 tons of solid waste is produced from that 15tons of plastic bags and

around 7 tons of plastic bottles is generated per day. So the supply of raw material will be

continuous.

Apart from this we will sell raw material for packaging to the various small companies in this

area. Around 30 small and medium scale companies are working in this region. So a largeamount of industrial customer is also available.

There are two folds of products that we are providing one is industrial and other is household.

Objectives

Develop a business that survives on its own cash.

Create a company which exceeds customer satisfaction level.

Expand the service to whole UP in first five years and then to Delhi.

Extending the services to electronic component manufacturing companies for

production of capacitors printed circuit boards etc.

Key to success:

The main keys to the success of the Company are:

Secure Supply- Contract for supply of post-consumer bottles and post-industrialmanufacturing waste for PET raw material feed stock.

Satisfy our customer so that we can retain them Maintain low overhead and operating costs Provide better prices than all our competitors

Product and services


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We will provide a wide range of plastic products for households and raw material for

packaging.

The recycled plastic is processed to Polyethylene Terephthalate (PET). PET is a

thermoplastic polymer viscous of polyester family. The biggest property of this compound is

it transparent. This is the reason why it is used for packaging. Apart from thisPET have good

strength, ductility, stiffness and hardness. After the recycling process completed an extruded

plastic is generated. Plastics extrusion is a high volume manufacturing process in which raw

plastic material is melted and formed into a continuous profile.

The products we are producing are

Cleaned and recycled plastic flakes of PET and bottles, recovered from post-consumerbeverage bottles. (this PET will work as raw material for packaging to various firms,not for the end user)

Household finished plastic goods. We are manufacturing plastic tubes of various

diameter, plastic kitchen ware. ( for the end user)

PET flake will be sold to thermo formers (those who mold plastic sheets into usable products) primarily to be used to produce high-visibility packaging. And also to the beverage

companies for packaging.

Recycled plastic is widely used in mainstream construction products such as damp proofmembrane, drainage pipes, ducting and flooring. Bins, street signs and planters are frequentlymade from plastic. They are cost competitive and resistant to damage. Local authorities andschools are able to demonstrate recycling in action by specifying recycled products

High strength PET is used in the clothing, furnishings, tyre cord and technical textiles

Apart from PET the household plastic will be directly sold to the end customers. In day to

day life plastic items like water bottles, shop case scrubber etc is frequently used. So there isa big demand of these in local market.

Market comparison

While quality and delivery are important factors to our potential clients, price is most oftenthe determining factor in a buying decision. Good-quality packaging products manufactured

from recycled (less expensive) resins, as close as practical to the end customer's operations,


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will be most competitive and achieve a significant market share. These factors have helped todetermine the business parameters of Replay Plastics.

Possible obstacle

The product is completed and ready for the market launch. The possible obstacles are

Unavailable or scarce raw material stock for production

Replay is confident that it has secured good availability of low cost post-consumer

PET bottles (feed stock) derived from post-consumer beverage bottles. It may be

possible that we would not get desired raw material.

Company may not meet environmental standards

This environmentally-favorable venture provides for the development of technicallyfeasible and economically viable solutions to PET plastic beverage bottle recycling, aswell as environmentally aware in-house re-use practices which filter and return nearly allof the process water to the production lines

Industry and marketplace analysis

Industry analysis

Plastic recycling is an industry in itself in India. According to the Crisil research 7360companies are working in this industry with a turnover of Rs 9200 Crore providesemployment to 3.5 million people. In India per capita plastic consumption in lowest in theworld. The per capita consumption is just one fifth of world average which is 5kg. thedomestic demand of plastic has grown by 9% and reached to 4.5MMT in year 2005.The GDPhas grown during this period at 6.3% and plastic industry 1.3 times of GDP. According tothe Crisil report the demand of plastic by 2012 will be around 12MMT. The plasticconsumption in India is booming. Demand for commodity plastics is growing at the rate of

15% per year. .India holds immense potential for the use of plastic in the infrastructure andagriculture. In case of packaging industry we are using more plastic than the developedcountries. The growth is driven in three major sectors infrastructure which is 13%% of thetotal, packaging is 15% of the total and 10% for plastic consumer durables. It is projected thatthe plastic waste generation will reach the will reach the level of 1.6 million tons annually.

India produces 5600 tons of plastic waste per day.

Region wise and polymer wise turnover of recycling industry in Rs.Crore

Region PVC PET

West 156 383East 75 86


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North 338 158

South 111 139

Total 680 766

Each region is specialized in one type of plastic viz south: PET; north: PVC;

The current plastic recycling rate is estimated as 60% by Plastic India Foundation. Oneestimate is that about 20,000 microenterprises are engaged in reprocessing and recovery of

plastic waste in addition to 180,000 of various sorting and washing units, 60% of which areunregistered .Delhi alone has estimated 53,400 units and Delhi and Bombay together processover 50% of India's waste plastics.

STRUCTURE OF THE PLASTICS INDUSTRY

The following pattern is likely to be general but there will be some variation from country tocountry.

Raw Material Producers

These are chemical and petroleum companies who produce "virgin" plastic (sometimes calledresin or polymer) in huge quantities. The main influence they have on the recycler is to fix

prices and availability of virgin materials. Virgin material is delivered in powder or pelletform, in plastic or paper sacks of around 20 kilos weight, in large cardboard drums that holdmany times that quantity or even by road tanker.

Compounders

These specialist companies, usually small, stock various polymers and provide themanufacturers of plastic goods with technical advice and the most suitable materials or

mixtures for each individual need. The compounder is often the best market for the recyclerbecause he possesses superior technical knowledge and has a large volume throughput ofvirgin material, in which small percentages of reclaim will reduce cost without seriouslyaffecting the quality required by the molder.

Stockists

These warehouses stock polymers and compounds but neither manufacture themselves, nor provide a compounding service. They may be agents or subsidiaries of the producercompanies or departments of companies concerned with the supply of other materials such aschemical, rubber or paper. They may be willing to stock reclaim alongside virgin materials,especially if these are in short supply.

Specialist Manufacturers or Molders

These buy their raw materials from compounders. If they do their own compounding, or if thematerial is used as produced and does not need compounding, they may buy direct fromstockists or producers. They are specialists in plastics and do not perform other types ofmanufacturing. They may be an attractive market to the recycler because they operate at highvolume, but rarely have as much flexibility to vary product quality as molders who know,accurately, the final market for the product.

Other Manufacturers

Many companies are not plastics specialists but employ molding operations in the

manufacture of some other product. For example shoe and boot makers use plasticsextensively and may carry out the various plastics molding operations in the same production


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sequence as the work in leather, canvas, rubber etc. Many manufacturers use plasticpackaging machinery at the end of a production operation.

Fabricators

These firms cut and join sheet, rod or extrusion to manufacture a variety of products. Theyhave no opportunity to use reclaim. Machinery and Tool Makers One other sector of the

plastics industry justifies mention although not customers for reclaim. The makers andsuppliers of plastics manufacturing machinery, tools, moulds and dies are well informedabout who does what, who makes what and who uses what within the local plastics industry.They may advise who is likely to buy material.Marketplace analysis

Various overseas players wish to explore the Indian market and invest in opportunities

thrown open by the country, projected to be world number 3 in plastics consumption by

2010.As shown above the north region of India is specialized in recycling of PVC. So

there is a great scope of PET recycling. Apart from this the other

A huge market with full of opportunity.

Absence of standard product and service

Well connected with other rural areas

Having good transportation facility

Customer analysis

Since we are new player in the market so we need to make some stringent strategies topenetrate market and grab customers. The customers of the plastic industry are scattered dueto lack well known brand names. So our first priority will be to accumulate the defusedcustomers.

The direct customers are the customers whom we are selling our product regularly. So for ushouseholds whom we are selling plastic goods and companies who are getting raw materialsfor packaging are direct customers (PET bottles). So only in Allahabad around 20,000families are our direct prospective customers and in terms of business to business market

around 20 small and medium scale companies are our direct customers

Apart from them there are few small companies which are giving compounding services.They use to collect various types of plastics flakes along with the virgin plastic and suggestcustomer (companies) in choosing appropriate plastic. An Asha enterprise is one compounderwhom we will sell our plastics.

Competitor analysis


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In plastic manufacturing market there is no specific brand name is existing so the market isflooded by small companies which are in this business. So they are our biggest directcompetitors.

As we are also not alone as a supplier of PET to the companies as raw materials there are

many companies in this region which are supplying PET. Indira Plastics is one of them whois currently selling all types of plastics items. So in case of business to business market theyare our direct competitors. Kanpur is plastic recycling city of UP. The direct threat we willalso have is with the companies operating in Kanpur. But as the distance between Kanpur andAllahabad is 600km as well as the road is not in good condition, so it will not affect much.

Marketing strategy

The Company has chosen to focus on the production of plastic packaging materials fromrecycled post-consumer beverage bottles. we have identified a significant available market inthe eastern part of UP. All of our initial marketing strategy will be to secure contracts in thatsegment, and after reaching full planned capacity, look to grow in concert with that segmentand related markets. We see little need at present for further market research anddevelopment, and will focus on continually updating our production technology in an effortto remain in the forefront of our chosen marketplace.

Product/ service strategy

The packaging companies require high quality and highly transparent PET bottles. The

companies which are producing mineral water will reject PET bottles with even a smallimpurity/ opaqueness. So we the Quasar Plastics provide high end PET flakes for the perfectpackaging.

Quasar Plastics will apply recycling and extrusion technology managed by decades ofindustry specific expertise to create a competitive advantage for its clients. These processeswill produce clean, cost-efficient, recycled raw material for manufacturers of thermoform,laminate and other high value-added products, and high strength packaging strapping forshippers of large products and pallets, thereby reducing costs and creating a clear pricingedge among their competitors.

Plastic bags and plastic sheets are now in high demand. And this demand is driven bycontinuously increasing promotional activities.

Pricing strategy

As plastic products do not carry any brand name so only pricing and distribution strategieswill works to achieve competitive edge. The pricing strategy we will use is penetration

pricing. The price of all household plastic goods we will sell will be lower than the marketprice. Also for the PET flakes and bottles the price will be lower than the competitors. Alower price enables me to get contracts of PET bottles and sheets from various companies.

In case of kitchenware and other household products we will provide combo offers anddiscounts which a common customer expects.


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Distribution strategy

As I described before that firstly we will target Allahabad city and villages close to it. Wewill have a distribution center in the Allahabad city which continuously maintains the supplyof goods. So the household plastics will be sold through small local grocery shops from

which the customers can get them easily. Apart from this we will hire street hawkers whowill roam around the city and sell the goods door to door.

PET bottles will be stored in warehouse which is close to the facility itself. The sales peoplewill directly contact to the companies which require these bottles for packaging and look forthe contracts. In city as stated above that we will have a distribution center, from that centerwe will distribute to whole sellers.

Advertising & promotion strategy

As I described we are in both B2C and B2B so for this we will use two different promotionalstrategies. For B2C business we will use flyers which will have full detail of our productrange, price, combo offers and discounts. These flyers will circulate through the newspapersacross whole city. For B2B business we will promote through online social media and wewill also develop our website through which enable us to widely spread our contact amongvarious companies. the site will have full details of product which are available forcompanies as well as end user.

Sales strategy

The strategy of sales effort will be to convert potential and first time customers into long term

customers. Our sales strategy is totally based upon the distribution channel and the pricingstrategies. We will have a distribution centre in the city that will take care of sales ofhousehold and also supply products to the wholesalers. We will also give the industrialcustomers a facility to order the products through our website which will help them inreducing the delivery time.

Tomarket the products, the Company will use a number of sales agents/brokers. They have acustomer base of their own, having developed successful relationships with their client overthe years. Their customer base is currently demanding product so they can expand upon theircurrent base. Of course, they will expand that to new customers when product is available.

If the Company grows faster than its prime customer base, additional capacity may bedeveloped. We will identify additional prospective customers who can be attracted for our

products.

Marketing & sales forecast

The first month prior to the opening will be used to get the new office in order, set upappointment and begin marketing activities. In the first month we will focus on the

generating public visibility. The sales forecast is based on the assumption that we will sell allof the highest volume PET bottles that we can produce. This flake will be sold to


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other manufacturing companies. Recycling industry is growing with 15-20% each year. Sowe can assume that we will grow with at least 20%. There is a continuing strong demand forflake and extruded products made from recycled PET.

Sales forecast

year 1 year 2 year 3 year 4

Annual sales 1620000 2106000 2737800 3559140

Monthly sales 135000 175500 228150 296595

PET Sales 94500 122850 159705 207617

Household items 40500 52650 68445 88978.5

Development

The development of Quasar plastics required to accomplish a series of action and formalities.Since we are new in the market we kept our production is low initially, as demand will

increase the production will be enhanced respectively. Now we are recycling and producing

only two types of plastics i.e. PVC and PET, as we grow we will produce a wide the range of

plastics and its finished product. . The development process involves following steps:

Legal formalities

Office/business setup

Future offerings and expansion plan

Development strategy

In future we are looking for the production of a variety of plastic. These plastics will be

LDPE ( Low density polyethylene)

HDPE ( High density polyethylene)

LDPE plastic is used in the production carry bags and other plastic sheets as well as clingwrap, car covers, squeeze bottles, liners for tanks and ponds, moisture barriers inconstruction. And HDPE plastics are used in production of freezer bags, water pipes, wireand cable insulation, extrusion coating.

Our development strategy will base on timely completion of the establishment of the business

centre with low execution cost. Our strategy will focus not only the current uninterrupted

production of PVC and PET and acquisition of customer as fast as we can, but we will also

look for the future expansion plan and execution strategy.

Our future development strategy will focus on to chart out a careful plan for the future

expansion and growth of our business. The development strategy will address following

issue: How will we expand our services?


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Which are the new areas we will include to provide our services?

What will be the format of the business

Our development strategy will address all those above mentioned point. As we will grow

and our earning will increase, we will produce more of PVC and PET as well as expand

in new area. We have a development strategy to expand our facility size in order to meet

the production size.

Management

The company will be managed by promoter and six supporting staff. Saurabh Kumar, a MBA

graduate with specialization in Marketing and Finance is the owner and promoter of Quasar

Plastics. He has intensive knowledge and vast understanding in financial areas like Risk and

Return management, Investment portfolio and Capital Budgeting, which undoubtedly will be

of intense help in the business. Apart from this he also has a good knowledge of chemicals

and their properties.

Marketing skills like convincing power, negotiating ability, creating promotional strategies

and sales skills will all be extremely helpful in taking the business a long way and will prove

intensely valuable to take Quasar Plastics to flaring heights.

Thus with such potential skills, and other qualities like efficient interpersonal skills,

leadership skills and decision making quality, aptly makes him the best promoter and eligible

founder and owner of Quasar Plastics

Along with promoter five more employees will work for the accomplishment of companies

objective. One supervisor will work on the facility along with two supporting staff.

Supervisor who will work upon the facility does not need to be a chemical engineer a simple

technician has experience on working upon the facility can be able to do this.

Job description


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Process No of employees Proficiency

Sorting 2 unskilled

Belt Conveyer 1 semiskilled

PET Separator 1 semiskilled

Packaging 4 unskilled

Operations

The operations is defined as the process used to deliver your products and service to the

customer market place and also include manufacturing transportation logistics travel and after

sales services.

The facility is located at outside the city. Facility is divided in two parts

Recycling and Production unit

Warehouse

The facility is located in an area of 3000sqft. Apart from these two units there will be an

office which will look for the perpetual supply of required raw material and also take care

about the outbound logistics. The production capacity is 80kg/hr.

The operations will be based upon JIT i.e. just in time. We will have contracted with the

suppliers who can supply the raw material as quickly as we want. The raw material contains

post consumer beverage bottles and other plastic materials. The bottles and other plastic

material that can be recycled have a specific sign from which it can be identified that it can be

recycled or not.

The plastic is then transferred to respective unit to be recycled because PET and PVC cannot

be recycled simultaneously due to their different properties. There will be two units running

parallel to each other. On unit will recycle and produce PVC plastic and other will perform

the same for the PET plastic.

The recycled PVC is then moved for the plastic injection moulding unit in the various shapes.

Since there are a variety of product is being produced so the preference will be given to that

product whose demand is high. All the products will not be produced each and every day.

There will be different products which will be produced on different day according to the

demand in market.

After the recycling process is completed one part of PET flake is moved to the warehouse

according to the demand of raw material which different companies need and other part will

move for the moulding in bottles.


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The recycled PET flake is then heated and made the viscous solution of it. The PET resin is

then feeded to moulder and moulder will give it various shape bottles. And then it left for

drying. Those products which further need for processing like buckets, the handle will be

inserted after the bucket is dried.

Stages of Recycling and Production

The process of recycling of waste plastics into products of varying usefulness involves the

following essential steps:

Sizing / Chipping

Cleaning

Segregation.

Agglomerating / Colouring

Extrusion / Palletisation Fabrication into end Product.

Chipping:

The plastics waste is then required to be properly sized so that those may be fed into the

extruders for processing and palletizing. The sizing operation depends on the type and shape

of the waste plastics. During this process, attention is required to separate any powdery

material from the sized / chipped plastics.

Segregation:

Certain polymeric materials are compatible with each other at all proportions. For example

LDPE and LDPE are generally compatible to each other at all proportions.

The advanced technology of separating / segregating different types of waste plastics

involves Floatation Process. In this process the property of the varying densities of different

plastics is made use of for segregating different types of plastics.

However in the Indian Context, this separation or segregation process, in many cases, are

done by manual process utilizing the availability of cheap and expert labor force. In case the

waste is contaminated with embedded metals, proper method of separating the metals / other

contaminants is required.

Cleaning:

The scale of cleaning depends on the type of waste. Whenever a cleaning operation is

involved, it is to be ensured that the water or any other cleaning material used, should be

discharged after ascertaining that the discharge does not contain any objectionable substance.


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A proper Treatment Device may have to be deployed like a water treatment plant / effluent

treatment plant. For drying, a suitably designed drier is used.

Many industries situated outside the metropolises, use open space for natural drying of the

cleaned waste.

Agglomerating / Colouring

In the next operation the sized plastics waste is mixed with colour master batch in high-speed

mixers / agglomerators and the output is ready for extrusion into pellets.

Extrusion / Palletisation

This is the most important part of the process wherein the sized / chipped plastics are

plasticized and granulated to make the plastics material ready for fabrication next.The type and size of the Extruder depend on the type and volume of the plastics waste.

Fabrication into end Product

Finally the reprocessed plastics granules are used as raw material for producing end products

using similar fabrication machines like Injection Molding / Extrusion etc., depending upon

specific requirement.

Scope of operations

Now presently our production capacity is 200kg/day from which in initial stages we are

utilizing around 50% of it. As the business expands we will reach to optimum capacity

utilization. We are expecting that we will start producing more advance plastics in the fourth

year of our operations and accordingly the sales will increase and the facility will have to be

expanded.

Supply chain

In the city there are various small post consumer plastic bottle collectors. To make a

continuous supply of raw material we will have four suppliers with us. There will be one

permanent supplier which will continuously supply the raw material. In case of excess

demand other suppliers will be taken into consideration. The transportation cost will be

covered by supplier only. The finished product will be stored in the warehouse and according

to the demand it will be send to city distribution centre. The distribution center will directly

sell the finished household plastics as well as to the small shops.


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Our average daily demand of raw material is 300kg and the lead time we will keep lead time

of 6hrs. We keep a safety stock of 50 kg. So the reorder point is given by

Reorder point= average daily uses x lead time + safety stock

Reorder point = 300 X .25day + 50= 125 kg.

So at each and every day we will have minimum of 125kg (safety stock+ reorder point) of

raw material in our inventory.

This means that when the raw material level reaches to 125kg we will place the next order. Thedifference time in which we will place the order and receive the order is the lead time which is 6hrs.


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Process flow chart

Gantt chart

As it is an assembly line the output of one stage is feeded to the input of next stage. Thewhole process will run in series format. That is the reason why no parallel process ismentioned in the gantt chart.


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Facility Layout

Financials:

The startup cost of our business is as follows:


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Start-up

Requirements Amount

Start-up Expenses

Legal 6,000

Stationery 500Business Cards 500

Initial Mailing 100

Process Funding 400

Office Equipment 2,500

Total Start-up Expenses 10,000

Start-up Assets

Cash Required 1,00,000

Other Current Assets 0Long-term Assets 33,30,000

Total Assets 34,30,000

Total Requirements 34,40,000

Income statement

The projected income is as shown below it shows that first year we will end up with loss butfrom second year we will start making profits.

Particulars YEAR 1 YEAR 2 YEAR 3 Year 4

net sales 1620000 2106000 2737800 3285360

cost of good sales 891000 1158300 1505790 1806948

gross margin 729000 947700 1232010 1478412

operating expenses:

admin exp. 3000 3150 3308 3473

Advertisement 6000 7200 8640 10368

Salaries 192000 211200 232320 255552Transportation 96000 105600 116160 127776

Maintenance 15000 15750 16538 17364

Electricity 4800 5040 5292 5557

Telephone 10000 11000 12100 13310

Legal exp. 10000 1000 1000 1000

Insurance 20000 20000 20000 20000

Rent 24000 26400 29040 31944

other exp 6000 6600 7260 7986

386800 412940 451657 494330


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EBITDA 342200 534760 780353 984082

less depreciation 303000 272700 245430 220887

EBIT 39200 262060 534923 763195

Less interest paid 175550 165061 153243 139926

EBT -136350 96999 381680 623269

tax @ 30% 0 29100 114504 186981

PAT -136350 67899 267176 436288

Balance sheet

The projected balance sheet of four years is as follows:

Sources of Funds Year-1 Year-2 Year-3 Year-4

Capital

Owner's capital 1930000 1930000 1930000 1930000

Surplus -136350 -68451 130274 765287

Net worth 1793650 1861549 2060274 2695287

Long Term loan

Loan 1417302 1324116 1219111 1100789

Current Liabilities

Creditors 70500 56722 68066 81680

Total liabilities 3281452 3242387 3347451 3877756

Application of fund

Plant & M/C 3030000 2727000 2454300 2208870

Less depreciation 303000 272700 245430 220887

2727000 2454300 2208870 1987983

Land 300000 300000 300000 300000Actual Fixed Asset 3027000 2754300 2508870 2287983

Current Assets:

Inventory 97200 315900 410670 821340

Bank 10000 40000 100000 100000

Debtors 147252 132187 117911 232703

Advance to suppliers 0 0 210000 335730

Investment 100000

Total Assets 3281452 3242387 3347451 3877756


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Break Even Point

Variable Cost Amount in Rs Fixed Cost Amount in Rs

Admin 3000other exp 6000 Interest 175550

transportation 96000 advertisement 6000

telephone 10000 Insurance 20000

wages 119250 Salary 192000

carriage inward 238500 Rent 24000

power 119250 maintenance 15000

raw material 414000 depreciation 303000

Legal 10000

Total 1003000 Total 748550

contribution 617000

pv ratio 0.3808642

BEP units 1965398.703 135000

BEP SALES 15 in months

1.21 In years

AstheBEP is 15months it means that at 15

th

month we will be in a trade off total expensesand revenue.

Appendix

Annuity table:

total loan amt.=pmt[1-1/(1-

i)^n]/in is number of yearsi is interest rateloan amount 1500000 ######

interest rate annually 0.12 ###### pmt = 21521 21520.64

month EMI Interest principle balance O/S Annual interest

1 21521 15000 6521 1493479


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2 21521 14935 6586 1486894

3 21521 14869 6652 1480242

4 21521 14802 6718 1473524

5 21521 14735 6785 1466738

6 21521 14667 6853 1459885

7 21521 14599 6922 1452963

8 21521 14530 6991 1445972

9 21521 14460 7061 1438911

10 21521 14389 7132 1431780

11 21521 14318 7203 1424577

12 21521 14246 7275 1417302 175550

13 21521 14173 7348 1409954

14 21521 14100 7421 1402533

15 21521 14025 7495 1395038

16 21521 13950 7570 1387468

17 21521 13875 7646 1379822

18 21521 13798 7722 1372099

19 21521 13721 7800 1364300

20 21521 13643 7878 1356422

21 21521 13564 7956 1348466

22 21521 13485 8036 1340430

23 21521 13404 8116 1332313

24 21521 13323 8198 1324116 165061

25 21521 13241 8279 1315836

26 21521 13158 8362 130747427 21521 13075 8446 1299028

28 21521 12990 8530 1290498

29 21521 12905 8616 1281882

30 21521 12819 8702 1273180

31 21521 12732 8789 1264391

32 21521 12644 8877 1255515

33 21521 12555 8965 1246549

34 21521 12465 9055 1237494

35 21521 12375 9146 1228348

36 21521 12283 9237 1219111 15324337 21521 12191 9330 1209782

38 21521 12098 9423 1200359

39 21521 12004 9517 1190842

40 21521 11908 9612 1181229

41 21521 11812 9708 1171521

42 21521 11715 9805 1161716

43 21521 11617 9903 1151812

44 21521 11518 10003 1141810

45 21521 11418 10103 1131707

46 21521 11317 10204 112150447 21521 11215 10306 1111198


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48 21521 11112 10409 1100789 139926

49 21521 11008 10513 1090277

50 21521 10903 10618 1079659

51 21521 10797 10724 1068935

52 21521 10689 10831 1058103

53 21521 10581 10940 1047164

54 21521 10472 11049 1036115

55 21521 10361 11159 1024955

56 21521 10250 11271 1013684

57 21521 10137 11384 1002300

58 21521 10023 11498 990803

59 21521 9908 11613 979190

60 21521 9792 11729 967461 124920

61 21521 9675 11846 955615

62 21521 9556 11964 943651

63 21521 9437 12084 931567

64 21521 9316 12205 919362

65 21521 9194 12327 907035

66 21521 9070 12450 894584

67 21521 8946 12575 882010

68 21521 8820 12701 869309

69 21521 8693 12828 856481

70 21521 8565 12956 843526

71 21521 8435 13085 830440

72 21521 8304 13216 817224 10801073 21521 8172 13348 803876

74 21521 8039 13482 790394

75 21521 7904 13617 776777

76 21521 7768 13753 763024

77 21521 7630 13890 749134

78 21521 7491 14029 735104

79 21521 7351 14170 720935

80 21521 7209 14311 706624

81 21521 7066 14454 692169

82 21521 6922 14599 67757083 21521 6776 14745 662825

84 21521 6628 14892 647933 88957

85 21521 6479 15041 632892

86 21521 6329 15192 617700

87 21521 6177 15344 602356

88 21521 6024 15497 586859

89 21521 5869 15652 571207

90 21521 5712 15809 555398

91 21521 5554 15967 539432

92 21521 5394 16126 52330593 21521 5233 16288 507018


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94 21521 5070 16450 490567

95 21521 4906 16615 473952

96 21521 4740 16781 457171 67486

97 21521 4572 16949 440222

98 21521 4402 17118 423104

99 21521 4231 17290 405814

100 21521 4058 17462 388352

101 21521 3884 17637 370715

102 21521 3707 17813 352901

103 21521 3529 17992 334910

104 21521 3349 18172 316738

105 21521 3167 18353 298385

106 21521 2984 18537 279848

107 21521 2798 18722 261126

108 21521 2611 18909 242216 43293

109 21521 2422 19098 223118

110 21521 2231 19289 203829

111 21521 2038 19482 184346

112 21521 1843 19677 164669

113 21521 1647 19874 144795

114 21521 1448 20073 124722

115 21521 1247 20273 104449

116 21521 1044 20476 83973

117 21521 840 20681 63292

118 21521 633 20888 42404119 21521 424 21097 21308

120 21521 213 21308 0 16031

PROPOSAL EVALUATION

Factors likely to impact the success of the project proposal (With reason why we are giving a

good weightage to the inputs):

1). Inputs availability: Availability of raw material and inputs is very important for starting

a business. They plays a vital role in the success of the project. Input availability has a major

part of weightage in the success of a project.

Replay our supplier of raw material is confident that it has secured good availability of low

cost post-consumer PET bottles (feed stock) derived from post-consumer beverage bottles. It

may be possible that we would not get desired raw material.


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2). Finance availibity: Finance availability is also a key factor in success of a business

proposal because without finance no one can start an business. It also take a good weightage

in a project proposal.

We need 34,40,000 for setting up QUASSAR Plastic. we are approaching to Corporates and

Financial institutions, who can finance this project.

3). Adequacy of the market: Market condition prevailing in the market can create a huge

gap between your assumed and current position. Player in this at this time is very less but if

competition start increasing in the market or market demand get reduces for the product

because of a ban on use of plastic items. It is also a major problem and plays a average

weightage in the project.

4). Complimentary Relationship with other products: This plastic product is related to

kitchenware items, which is consumer durables, whose sales can not go down. So it carries a

low weightage in project success. If a product is a complimentary product of other product,

then sale of that product will depend on the sales of the main product and carry a high

weightage.

5). Reasonableness of cost adequacy: The cost structure of the proposed project must

enables it to realize an acceptable profit with a price. One has to use Economies of scale for

reasonableness of the cost. For reasonableness of the cost purpose main aim of the

businessman has to be reduce expenses by economies in operations. So it carries a good

weightage in projects success.

A project manager needs to be very careful that work in progress stays on course as the

project nears its end. Some employees have a tendency to drop the ball or let things slide as

the conclusion approaches. Costs may exceed budget. However, excellence must prevail all

the way to the finish line.

6). Government rules and regulations: The project must be feasible give the national goals

and governmental regulatory framework. All the factors like consistency with national goals,

environmental effect, difficulty in obtaining license for business. So while making a project

one should always keep one thing in mind, the project proposal should comply with all the

rules and regulations framework of the government. It carries a good weightage in the project

proposal.


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7). Acceptability of Risk Levels: The desirability of a project is critically dependent on the

risk characterising a project. Assessment of the risk is such a difficult task, indeed. Here one

has to keep in mind factors like technological changes, competition from substitutes, shift in

customers preferences etc. Acceptability of risk level depends on risk of the project and the

liquidity of the firm. It carries a good weightage in the project proposal.

8). Compatibility with the promoters: The idea must be compatible with the interest,

personality, and Resources of the entrepreneur. According to Murphy, a real opportujity has

tree characteristic (i) It fits the personality f the entrepreneur- it square with his abilities,

training, and proclivities. (ii) It is accessible to him. (iii) It offers him the prospect of rapid

growth and high return on invested capital.

Every project needs a leader- someone to take charge and keep things moving, even when the

going gets rough. Without a leader, confusion will rule and controversies ensue. A good

leader delegates, recognizes the strengths of each team member and places people in the most

effective positions.

Factor

Factor

weight

Rating Factors

ScoreV.G. Good Avg. Poor V.P.

5 4 3 2 1

Input Availability 0.25 0.75

Finance Availability 0.15 0.45

Adequacy of the market 0.10 0.50


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Complimentary

relationship with other

products

0.05 0.15

Reasonableness of costadequacy

0.05

0.20

Government Rules and

Regulations

0.15 0.45

Acceptability of risk

Level

0.10 0.30

Compatibility with

promoters(Firms

strenghth)

0.15 0.75

Rating Index 4.55 .

The Total Rating of the index is 4.75 and benchmark index is calculated is 3.75. As the

project above has total of 4.55 Rating Index, The project can be successful according to the

project rating index model. All the factors preliminary showing that project will be successful

if started. The search for a promising project idea is the first step towards establishing a

successful venture.

The project must be organized. Put a schedule in place with a beginning and proposed endingdate, and provide a budget so the dollars assigned to the project stay within cost perimeters.

Staff should know how much time is allotted for the project, so they can plan accordingly.

Distribute duties so everyone knows exactly what is expected of them.

Basically a promising investment idea enables a firm to exploit opportunities in the

environment by drawing on its competitive abilities. Hence, the firm has systematically

monitor and assess its competitive abilities.


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Q.2 Perform a social cost benefit analysis (SCBA) of the recently concluded commonwealth

games in India. The critique should clearly focus upon:

a) The various steps in the UNIDO approach to SCBA.

b) Discuss the impact on India in the short, medium to long term.

Ans.:

Social Cost Benefit Analysis

Of

Commonwealth Games held in India

Preface


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The world over, cities vie with each other to host hallmark events such as the Olympics,

World Cups etc. It is seen by many as a sure way of shooting the host city into the limelight,

resulting in an economic windfall (Baade and Matheson, 2003), and at the same time

giving these host cities the impetus to improve domestic facilities and infrastructure. The

impact of being the host city, range from the physical (construction projects) to the intangible

(local self-esteem or international impact). The impact that an event of this kind has on the

urban landscape can largely be gauged by the size of the legacy that it creates. It is

important to note here that it is not only legacy creation that is important, but creating a

legacy which is beneficial to the host community post games, and which justifies the costs

involved. The controversy surrounding these events however is centred on its economic

sense. Do these games make money for the host city or not? The data from past Olympic

games seems to suggest not. All recent Summer Games with the sole exception of the 1984

Los Angeles Games have lost money. The citizens of Munich continue to pay a special tax to

this day, to pay off debt incurred in the 1976 Games (Preuss, 1998). This is very often not

revealed to the public by using smart accounting techniques that do not include a lot of the

costs incurred under direct games expenditure. After the $200 million profit that L.A. made

on the games in 84, they have been increasingly looked upon as extremely profitable, though

LAs performance is yet to be replicated (Baade and Matheson 2003). Interestingly only Los

Angeles bid for the 1984 Games, largely due to the financial disasters that the Montreal and

Moscow Olympic Games in 1976 and 1980 were. This fact explains the absence of

significant public sector financial support in Los Angeles, and, perhaps, the private financial

success the 1984 Games are thought to have enjoyed. Eventhough here employment effects

and increased economic activity seem to have been transitory.

When numerous bidders are present however, theoretically the winning bid would be

constant with a zero economic return on the investment if opportunity costs were included in

the bidding calculus. The political nature of the event has however ensured that the games

give a negative return. In other words government is willing to pay something for perceived

political gains (Baade and Matheson, 2002).

Today, the bid process has also become a very expensive and long drawn out affair. Some

estimates place the amount spent by potential hosts for the 2012 Olympics during the bidding

process at nearly 200 million Euros.

In more recent years, therefore, hosting sporting events has been viewed as a prestigious

achievement resulting in opportunities for economic profit, urban regeneration and global

media exposure. Increasingly such sporting events are being aimed at increasing the exposure


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and visibility of the host city, and many academicians believe that success cannot be simply

decided by profit and loss, as there are many intangible and unaccounted for benefits (Brown

and Massey, 2001) Urban regeneration and the re-imaging of cities is now a central aspect of

game bids. Barcelona and Manchester can be viewed as partially successful in that they were

able to re align the popular image of the city, both of which were manufacturing centres to

that of tourist destinations as trendy European cities. In Delhi too, the emphasis is on

portraying Delhi as a world class city, one of international standards. This is of course a

little more problematic in third world conditions as it requires a further marginalisation of the

poor to portray this image to the world.

In Barcelona, for example, the largest component of investment went into the development of

roads and transport facilities, while the construction of offices, commercial property, hotels

and sports facilities also made up a large proportion.

IMPACT OF SPORTING EVENTS ON CITYS URBAN INFRASTRUCTURE IN

SHORT, MEDIUM AND LONG RANGE

The importance of the urban transformation of Barcelona due to the Games is seen in these

proportions: in relation to the dimension in 1989, the new road projects meant an increase in

expenditure of 15%, the new sewerage systems an increase of 17%, new green zones and

beaches an increase of 78%, and ponds and fountains, an increase of 268%.

Sporting events of these kinds are increasingly being seen as vehicles for urban renewal, a

catalyst to create jobs, increase investment and transform the landscape of the city. The 2002

Commonwealth Games in Manchester were aimed primarily to regenerate the area which,

had in recent years been undergoing a depression due to the re location of the many heavy

engineering and chemical industries which had been the mainstay of the regions economy.

The focal point of the regeneration was East Manchester which had been the worst affected.

The Cambridge Policy Consultants estimate that the Games will help to regenerate

approximately 60ha of land and create 72,000m of employment floor space in East

Manchester (Cambridge Policy Consultants, 2002). The image of the region seems to have

been greatly improved by the games, with 18 million people visiting the region in 2002

putting 6 billion into the North Wests economy, and with over 300,000 expected each year.

The wish to host an event of this kind does not derive from a sense of philanthropy or love of

sport, but is now largely seen as a business opportunity. The games act like a magnet,


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attracting attention, which in turn transforms into the more tangible investment and increased

tourism.

Qatar, host of the 2006 Asian Games, has spent an estimated $17billion on the development

of new sports, tourism and cultural facilities.

The games were seen as an opportunity to launch Qatar as a major tourist and financial hub.

Thus what one sees is that these hallmark events tend to serve as a spotlight, focusing the

worlds attention on the host city. This often results in improved infrastructure for the cities

citizens, as well as increased interest in the city as an investment destination.

Sporting events have an impact on many facets of citys urban infrastructure. The various

sectors on which events like the Olympics, or the Commonwealth Games can have. The event

does not only improve sports infrastructure, but over all infrastructure in the city. This is one

of the themes than one sees recurring in a number of bids for the games. Cape Town in its

failed 2004 Olympics bid highlighted the urban regeneration, and socio-economic impact that

the event would have. The Cape Town 2004 Olympic bid was designed to be developmental,

with every aspect ofthe plan attempting to contribute to the upliftment of those previouslydisadvantaged under apartheid.

The Commonwealth Games 2010,Delhi The XIX Commonwealth Games, were held in

Delhi, India, from 3 to 14 October 2010. A total of 6,081 athletes from 71 Commonwealth

nations and dependencies competed in 21 sports and 272 events. The opening and the closing

ceremony of CWG took place at the Jawaharlal Nehru Stadium in Delhi. The official Mascot

of the game was Shera, the motto of the Delhi game was "Come out and Play". The theme

song was Jiyo Utho Badho Jeeto composed by A.R Rehman

Brief history of Commonwealth games:

The event was first held in 1930 under the title of The British Empire Games. The event

was renamed as the British Empire and Commonwealth Games in 1954. The event was titled

Commonwealth Games in 1978. There are currently 54 members of the Commonwealth of

Nations, and 71 teams participate in the Games.

The Commonwealth Games is a multi-sport event held every four years involving the elite

athletes of The Commonwealth. See You in Delhi, was the message that the Indian

contingent had for the world, during the closing ceremony of the 2006 Melbourne

Commonwealth Games. In 2010, India is going to become the second developing nation ever,

to host the Commonwealth Games (CWG), the third largest multi sport event in the world.


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New Delhi, which has earlier played host to the 1982 Asian Games, is preparing itself to

amaze the world. The games have the ability to transform the citys urban landscape and at

the same time may simply be an extremely expensive PR exercise. Considering the Indian

contingent spent Rs. 40crores on getting the message, See You in Delhi, across at the

closing ceremony of the Melbourne games in an 11-minute show, it might end up being just

that. The challenge is to ensure that the potential of the games as a catalyst for change is

harnessed.

The CWG is going to be the first mega-event hosted by the city since the 1982 Asian Games,

a gap of nearly thirty years. Much has changed, and yet much has remained unchanged in this

time. India is preparing to break out on the world scene as an economic superpower, and the

games are a step in propelling India on to the world stage. Yet India is still a poor country,

ranked 127 out of 177 in the Human Development Index (HDI), and therefore one must

question the rationale of spending more than a billion dollars on a sporting event. Is it going

to be simply an exercise in nationalism and politician supported patriotism or is it going to

have some notable positive effects on the community, and if so what precisely?

Since 2003, when India won the bid to host the games, various agencies and government

bodies have been hard at work making plans for the upcoming event. The over arching theme

seems to be to make Delhi a world class city by 2010. This of course is a task easier said

than done in a city of nearly 15 million people, growing at a phenomenal pace, and largely in

a haphazard manner. Urban renewal or regeneration has been a theme in many such events in

the past and appears an important one in the 2010 games as well. This is because it gives an

opportunity to improve the infrastructure and appearance of the host city, and also gives

global media exposure meaning that the image of a city can be transformed in the eyes of

viewers. This was certainly true of Barcelona, which successfully rid itself of its traditional

manufacturing city image when hosting the 1992 Olympics (Brown and Massey, 2001).

Manchester used the 2002 Commonwealth games as a tool to revive East Manchester,

formerly an industrial area that had been suffering low growth and degradation7. The urban

landscape Delhi too, is set to change dramatically with many infrastructure projects being

pushed through in time for 2010.

In Delhis bid for the games, it states that through the games, the city wishes to, among other

things:

1. Stimulate economic growth and development.

2. Improve city infrastructure.


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Thus two of the professed aims of the games are to improve the welfare of the citizens of the

city through improving facilities and promoting investment in the city. The focus area of the

games this time is going to be East Delhi, across the Yamuna, where the games village and

some of the venues are to be located. Residents of the area are hoping for a similar

transformation as the one South Delhi experienced in the run up to the 1982 games.

Infrastructure investments have already increased dramatically in the region with a new

bridge being built at Wazirabad, the metro phase 2 being constructed, and numerous flyovers

and roads in the pipeline. There are indeed ambitious plans afloat ranging from improving

street furniture to setting up more power stations before the 2010 deadline.

The work ahead of the games can be broadly grouped into the following:

1. New Stadiums and renovation of existing stadiums

2. Games Village.

3. Transport sector.

4. Urban infrastructure like water and electricity.

5. Efforts to make Delhi world-class.

Originally the plan was to build a completely new athletics stadium, one that would outrival

J.N. Stadium. However lack of funds and available land has meant that the organising team

has had to rein in its ambitions. Now the plan is to build one large new stadium, an aquatics

centre in the Delhi University with five swimming pools, as well as a new TT hall in the

Yamuna Sports Complex and new stadiums for Badminton and Squash in the Siri Fort Sports

Complex. The project in DU, which is going to give a major boost to sports there, is to have

an Olympic-size (50 metres) pool, a diving pool, pool for synchronised swimming, one for

water polo and a warm-up pool as well as a gym. The university is also set to be the venue for

the Rugby 7s event. The existing stadiums are however going to need extensive renovation

before they can match up to the standards of the CWG. As reported in the Indian Express, the

work remaining on the existing stadium is extensive. The estimated expenditure, only for

renovation work, is over Rs.1250 Crores. Though construction of new stadiums and up

gradation of the existing ones is central to the run up to the Games, the CWG is after all a

sporting event; it is by no means the only focus area. Delhi is attempting to give itself a major

facelift due to the games, and develop a whole portion of the city, East Delhi and the Yamuna

riverfront, which until now has been largely neglected. As Delhi expands rapidly and space

runs out, until now undeveloped Yamuna riverfront, largely inhabited by slum dwellers and

vegetable growers, is looking like prime real estate. The banks of the Yamuna are the largest

open space left in the city, as well as the largest groundwater recharge zone. The 25 km


34/46

stretch along the river has 97 sq km of prime land, 7 per cent of Delhis total area. DDA and

other government authorities seem to have big plans for the area, developing the banks as

green spaces and commercial areas. The proposals are centered on a Thames-type Plan,

channelling the river and reclaiming the land for other uses. A first step in the development of

the region is the Games Village, a mammoth Rs. 955 crore project being built on a 63.5-

hectare site by the DDA, for the 8000 plus athletes and officials expected for the event. The

land has already been acquired from UP at a cost of Rs. 19 Crore and the project is in the

planning stage. The village will of course not be a one off structure, but will need extensive

transport links, amenity providers and so on. There are also eight to nine hotels planned for

the area, which will in turn give rise to other auxiliary services coming up. The village will be

a well-planned site, with facilities for recreation, commercial activities, hospitals, training,

shopping and living, all at hand. Interestingly, one proposal for post event usage is to hand

over the village to the Delhi University as hostels, as DU is facing a tremendous shortage of

hostel space. This however seems to have run into rough weather with high costs involved

and the DDA now seeming to prefer selling the units as mid income housing post games10.

Housing too is to get a shooting the arm with over 40,000 low-income housing units to be

built before the 2010 games.

Indias bid to the CGF:

Indias bid to the CGF On November 13, 2003, in Jamaica, the 2010 Commonwealth Games

bid was awarded to Delhi, with 46-22 voting in favour of Delhi, against the city of Hamilton.

Indian officials made a last-minute offer of US $7.2 million (Rs. 32.4 crore) during the

bidding process, which allegedly clinched the deal in Indias favour. This was an offer to

train athletes of all member countries of the Commonwealth (US $100,000 to each of the 72

members).

Organizing Committee:

The Organizing Committee of Commonwealth Games 2010 Delhi (OC CWG Delhi 2010)

came into being on 10 February 2005, as a registered society under the Societies Registration

Act 1860. Indian Olympic Association president Suresh Kalmadi was appointed as head of

the committee.


35/46

Benefits and development as a result of games:

Benefits and development as a result of games Construction of 24 flyovers, 75 aerobridges,

Construction of 1285kms of international standard roads, Construction of 11 world-class

sports venues. 5000 new low-floor buses in Delhi, 80 new metro destinations and Restoration

of 46 national monuments.

Indira Gandhi International Airport:

Indira Gandhi International Airport Costing nearly $1.95 billion, Terminal 3 has now

improved airport passenger capacity to more than 37 million passengers a year. A new

runway has been constructed, allowing for more than 75 flights an hour. At more than 4400

meters long, it will be one of Asia's longest.

Delhi Metro:

Delhi Metro Delhi Metro expanded to accommodate more people and boost the use of public

transport during the 2010 games. The metro extended to Gurgaon and the Noida regions.

Green Games:

Green Games The organizers signed a Memorandum of Understanding (MOU) with the

United Nations Environment Programme to show the intention to host a "sustainable games"

and to take the environment into consideration when constructing and renovating venues.

Thyagaraj Stadium is a key example of environmentally considered construction. A green

helipad constructed at the Commonwealth Games Village.

Games Village:

Games Village The Games Village, was built by Emaars MGF, at a cost of US $230.7 million

(Rs. 1,038 crore). The Delhi Development Authority (DDA) offered a Rs. 700 crore bailout

in May 2009 to the company to meet the costs of construction. This is probably the first ever

government bailout for a private realty company in India.


36/46

The 4 most Tangible benefits for the city of Delhi from hosting the CWG:

The four most talked about tangible benefits for the city of Delhi from hosting the CWG are:

Development of infrastructure, Employment generation, Boost to tourism, The

creation of a clean, beautiful, vibrant and world class Delhi. The event did not only

improve sports infrastructure, but over all infrastructure in Delhi.

Financial Cost:

The 2010 Commonwealth Games are the most expensive Commonwealth Games ever.

Business Today magazine estimated that the Games cost Rs. 300 billion (i.e US$ 6.8 billion).

The first budget for the Games approved by the Cabinet in April 2007 estimated the total

expenditure of the Games at Rs. 3,566 crore Rs. 300 crore.

The Human Cost of Beautification:

The Human Cost of Beautification Slum demolitions without rehabilitation, arbitrary

arrests and detention of beggars and homeless people. Causing destruction of livelihood to

hawkers, vendors, who were working on the streets.

Controversies surrounding big sports events:

Controversies surrounding these events are mainly centered on the economic sense. Chinahad spent a reported $20 billion on infrastructure improvements ahead for 2008 Olympics.

Montreal 1976 Olympic Games: The city incurred billions in deficit. The debt was finally

paid off in November 2006, i.e. 30 years later.

Consequence of the excessive expenditure in Delhi CWG:

The Delhi government has hiked bus fares and water tariff, withdrawn subsidy on LPG

cylinders, Increased VAT on a number of items. We are broke said Delhi Finance Minister,

A. K.Walia in April 2010. Have to pay Delhi Metro Rs. 758.87 crore, which is due on

account of the construction of Phase II. The obvious question that results from this, is the cost

justified, is yet to be answered conclusively either way.

Controversies surrounding XIX CGG, Delhi:

Excessive budget overruns Delays in completion of projects Allegedly widespread

corruption by officials of the Games Organizing Committee On September 23, The Daily

Telegraph UK showed photographs taken of child labour working on the Games sites. There

were also multiple cases of items being rented for the 45 days for more money than it would

cost to actually buy the item. For eg.: 72 golf carts were hired for 4.23 lakh (US$9,517.5)


37/46

each, when they could have been purchased for 1.84 lakh (US$4,140) each. In an incident,

three Ugandan officials were injured when the car they were travelling in hit a security wheel

stopper at the Games village.

Wasteful Expenditure: Whats the Justification?:

Street scaping of one street, Lodhi Road done Rs.18.55 Crore, Snacks and other items on 57

meetings the OC Rs. 29.29 lakh. Snacks and refreshments on a one-day meeting of the

Executive Board: Rs 1.75 lakh. Wasteful Expenditure: Whats the Justification? A green

helipad constructed at the Commonwealth Games Village costing Rs. 1.92 crore. Creating

signage of international standards in Delhis NDMC area at the cost of Rs. 40 crore, 10 lakh

plants add colour to the Games venue at the cost of Rs. 23.2 crore, The cost of overlays

(furnishings) was Rs. 687.06 crore.

Deficiencies in Project planning of Delhi CWG:

The budgetary commitment to the Games was apparently made without any detailed cost-

benefit analysis and social and environmental impact assessment. Cost of the games far more

than revenues generated.

Post CWG recommendations:

A full and detailed inquiry should be conducted into the finances and expenditure of theCWG. The Government of India must have a detailed legacy plan for the Games. National

Human Rights Commission should conduct an immediate and comprehensive investigation

into human rights violations related to the CWG.

Adequate compensation must be paid to all those who have lost homes and livelihoods. A

comprehensive environmental and social impact assessment, along with a detailed cost-

benefit analysis, must be conducted before any approval for such a large event is obtained.

Sector wise Changes caused by the CWG 2010:

Transportation: The transportation system is changed by an improved infrastructure and

new concepts of public transportation. In Munich 72, the subway was expanded, in Seoul

88 many major roads were improved and in Barcelona 92 the ring roads were built.


38/46

Benefits and development to Delhi as a result of games Construction of 24 flyovers, 75

aerobridges, Construction of 1285 kms of international standard roads, Construction of 11

world-class sports venues. 5000 new low-floor buses in Delhi, 80 new metro destinations.

The rickshaw industry is also getting a makeoverat least while the Games are in town.The

Municipal Corporation of Delhi (MCD) has plans to release 4,000 eco-friendly, battery-

operated rickshaws (dubbed E-ricks) before the start of

the Games. The slick three-wheelers are a far cry from

their older, two-stroke engine counterparts, and might

even include built-in LCD screens in the future. The E-

rickproject is run by a private company that will hire

drivers from the present pool of some 99,000 rickshaw-

Wallas registered in Delhi.

Telecommunication system: A high standard in telecommunications is another important

location factor to keep existing, or attract new enterprises. In this sector, the Olympics bring

the latest technology into the city to satisfy the demand in telecommunications services

during the Olympics. After the games, the systems remain existent.

Sports facility structure: Olympics have the strongest influence on the sports facilities

structure in the city. There must be adequate and sufficient sports and training facilities for all

sports at an international level. After the games, these facilities are often available for leisure

sports. Originally the plan was to build a completely new athletics stadium, one that would

outrival J.N. Stadium. However lack of funds and available land has meant that the

organising team has had to rein in its ambitions. Now the plan is to build one large new

stadium, an aquatics centre in the Delhi University with five swimming pools, as well as a

new TT hall in the Yamuna Sports Complex and new stadiums for Badminton and Squash in

the Siri Fort Sports Complex. The project in DU, which is going to give a major boost to

sports there, is to have an Olympic-size (50 metres) pool, a diving pool, pool for

synchronised swimming, one for water polo and a warm-up pool as well as a gym. The

university is also set to be the venue for the Rugby 7s event. The existing stadiums are

however going to need extensive renovation before they can match up to the standards of the

CWG.
http://blogs.wsj.com/indiarealtime/2010/06/04/delhis-pedal-pushers-get-a-makeover/http://timesofindia.indiatimes.com/city/delhi/4000-e-ricks-to-hit-capital-roads-before-Games/articleshow/5966390.cmshttp://blogs.wsj.com/indiarealtime/2010/06/04/delhis-pedal-pushers-get-a-makeover/http://timesofindia.indiatimes.com/city/delhi/4000-e-ricks-to-hit-capital-roads-before-Games/articleshow/5966390.cms


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Housing: In most cities, Olympic villages are newly constructed. The question of the social

distribution of the newly created housing units is reviewed. In Munich 72, the Olympic

Village was constructed for the socially deprived groups of society. In other cities, the

Olympic Villages were sold to the middle and lower-upper classes. In Los Angeles 84 and

Atlanta 96, the villages continued to be students homes.

Urban culture: The general embellishment of a city, an improved transportation system,

additional leisure time facilities and numerous ecological projects frequently lead to a revival

of the city centre by improving the city atmosphere.

CWG brings us to another interesting development, the arrival of developing nations on the

sports-hosting scene. Developing nations have only hosted two summer Olympics, one

Winter Olympics, one Commonwealth Games and six football World Cups. This of course,

due to the changing world order and rising prominence, is set to change. Beijing has host the

2008 Summer Olympics, India, the 2010 Commonwealth Games, South Africa the 2010

Football World Cup and South Asia the 2011 Cricket World Cup. However research seems to

point out that though the benefits of hosting these events are dubious at best, the factors seem

to work expressly against developing nations. The experience that a developing nation faces

is vastly different from that of a developed nation. This is especially pertinent in the Indian

context as we prepare to host the 2010 Commonwealth Games, and make a push to host the

2014 Asian Games, and the 2016 Olympic Games.

As Matheson and Baade (2003) point out, there are very good reasons for why developing

nations are more adversely impacted by such events. They can be listed as:

1. High infrastructure development costs.

2. Underutilization of facilities post event

3. High opportunity cost of capital4. Unable to attract large numbers of spectators

SOCIAL COST BENEFIT ANALYSIS (UNIDO METHOD) OF CWG 2010:

SCBA the focus is on the social costs and benefits of the project. These often tend to differ

from the cost incurred in monetary terms and benefits earned in monetary term by the project.

The principal reasons for discrepancy are:


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(i) Market imperfections.

(ii) Externalities.

(iii) Taxes.

(iv)Concern for savings.

(v) Concern for redistribution, and

(vi)Merit and demerit goods.

Since SCBA seeks to consider all costs and benefits, to whomsoever they may accrue,

external effect also need to be taken into account. The valuation of external effect is rather

difficult because they are often intangible in nature and there is no market price which can be

used as a starting point.

The UNIDO approach was first articulated in the guidelines for project evaluation in 1972

which provides a comprehensive framework for SCBA in developing countries. The rigour

and length of this work created a demand for a succinct and operational guide for project

evaluation in practice. The UNDIO method of project appraisal measures the desirability of

the project from different angle.

The UNIDO method of project appraisal involves five stages:

(i) Calculation of financial profitability of the project measured at market price.

(ii) Obtaining the net benefit of the project measured in terms of economic price.

(iii) Adjustment for the impact of the project on savings and investment.

(iv)Adjustment for the impact of the project on income distribution.

(v) Adjustment for the impact of the project on merit goods and demerit goods whose

social values differ from their economic value.

(i). Financial profitability of the project measured at market price:

The games have the ability to transform the citys urban landscape and at the same time may

simply be an extremely expensive PR exercise. Considering the Indian contingent spent Rs.

40Crores on getting the message, See You in Delhi, across at the closing ceremony of the

Melbourne games in an 11-minute show, it might end up being just that. The challenge is to

ensure that the potential of the games as a catalyst for change is harnessed.

The 2010 Commonwealth Games are the most expensive Commonwealth Games ever.

Business Today magazine estimated that the Games cost Rs. 300 billion (i.e US$ 6.8 billion).

The first budget for the Games approved by the Cabinet in April 2007 estimated the total

expenditure of the Games at Rs. 3,566 crore Rs. 300 crore.


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Consequence of the excessive expenditure in Delhi CWG, The Delhi government has hiked

bus fares and water tariff, withdrawn subsidy on LPG cylinders, Increased VAT on a number

of items.

We are broke said Delhi Finance Minister, A. K.Walia in April 2010. Have to pay Delhi

Metro Rs. 758.87 crore, which is due on account of the construction of Phase II. The obvious

question that results from this, is the cost justified, is yet to be answered conclusively either

way.

Benefits and development to Delhi as a result of CWG 2010 Construction of 24 flyovers, 75

aerobridges, Construction of 1285kms of international standard roads, Construction of 11

world-class sports venues. 5000 new low-floor buses in Delhi, 80 new metro destinations.

There must be adequate and sufficient sports and training facilities for all sports at an

international level. After the games, these facilities are often available for leisure sports.

Originally the plan was to build a completely new athletics stadium, one that would outrival

J.N. Stadium. However lack of funds and available land has meant that the organising team

has had to rein in its ambitions. Now the plan is to build one large new stadium, an aquatics

centre in the Delhi University with five swimming pools, as well as a new TT hall in the

Yamuna Sports Complex and new stadiums for Badminton and Squash in the Siri Fort Sports

Complex. The project in DU, which is going to give a major boost to sports there, is to have

an Olympic-size (50 metres) pool, a diving pool, pool for synchronised swimming, one for

water polo and a warm-up pool as well as a gym. The university is also set to be the venue for

the Rugby 7s event.

This is especially pertinent in the Indian context as we prepare to host the 2010

Commonwealth Games, and make a push to host the 2014 Asian Games, and the 2016

Olympic Games.

(ii). Obtaining the net benefit of the project measured in terms of economic price:

Sporting events have an impact on many facets of citys urban infrastructure. The various

sectors on which events like the Olympics, or the Commonwealth Games can have. The event

does not only improve sports infrastructure, but over all infrastructure in the city. This is one

of the themes than one sees recurring in a number of bids for the games.

The four most talked about tangible benefits for the city of Delhi from hosting the CWG are:

Development of infrastructure, Employment generation, Boost to tourism, The creation of a

clean, beautiful, vibrant and world class Delhi. The event did not only improve sports

infrastructure, but over all infrastructure in Delhi.


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CWG brings us to another interesting development, the arrival of developing nations on the

sports-hosting scene. The urban landscape Delhi too, is set to change dramatically with many

infrastructure projects being pushed through in time for 2010.

In Delhis bid for the games, it states that through the games, the city wishes to, among other

things:

1. Stimulate economic growth and development.

2. Improve city infrastructure.

Thus two of the professed aims of the games are to improve the welfare of the citizens of the

city through improving facilities and promoting investment in the city. Improved

infrastructure and facilities will attract more foreigners to visit India, because India is being

seen as a hottest destination worldwide to visit. It will boost foreign currency into India.

Meanwhile the economic growth and development will also boost, because economic

conditions of is good now as compared to other countries. It is growing rapidly that will

attract MNCs to come and set their business in India.

Since 2003, when India won the bid to host the games, various agencies and government

bodies have been hard at work making plans for the upcoming event. The over arching theme

seems to be to make Delhi a world class city by 2010. This of course is a task easier said

than done in a city of nearly 15 million people, growing at a phenomenal pace, and largely in

a haphazard manner. Urban renewal or regeneration has been a theme in many such events in

the past and appears an important one in the 2010 games as well. This is because it gives an

opportunity to improve the infrastructure and appearance of the host city, and also gives

global media exposure meaning that the image of a city can be transformed in the eyes of

viewers.

(iii).Adjustment for the impact of the project on savings and investment:

The Commonwealth Games are obviously pure consumption. They can add nothing to

investment As already pointed out, by using public money the Games divert funds from

investment to consumption. If bread and circuses were all that was needed to promote

economic welfare the Roman Empire would never have suffered an economic decline.

Consumption is the force that drives the economy one would expect consumer spending to

exceed business spending. It does not. As a proportion of total spending, business spending

greatly exceeds consumer spending. This truth is concealed by the fact that GDP, a value-

added approach, grossly understates total spending by omitting intermediate spending. It can


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never be sufficiently stressed that only savings and investment can raise a countrys

productive capacity and thus total demand, not consumption.

The social and environmental impact of the Games will be highly laudable as they are bound

to encourage improved standards of education to children, boost sports activities, create a

better quality of life and experience for citizens, increase international recognition and create

environmental consciousness among the community.It is estimated that the CommonwealthGames 2010 would result in an overall economic impact of approximately $4,940 million on

over the period of 2008-12.

Future investment opportunities lie not in big cities such as Mumbai and Delhi, but in smaller

centres. Investors will be able to get the growth prospects of a frontier market, but with the

stability of a more developed country. The consumer story is big in these regions. Not only

are the growing middle classes buying more goods and eating more meat, but their rise in

social status is encouraging more infrastructure to be built and bringing big business to the

financials.

"I come from a rural part of India," said Mr Patel. "I know how much people keep under the

mattress. But more people are getting bank accounts, mortgages and credit cards which is

why we chose to play the consumer trend more indirectly through the financials." Four of the

top five holdings in the J P Morgan investment trust are banks. The newly launched In

synergy absolute India fund favours financials too. It is run by India's largest business,

Reliance Group, which invests in HDFC Bank. The high savings and investment rate,

37percent of GDP, coupled with the large as yet untapped market make it a good long-term

growth holding.

(iv).Adjustment for the impact of the project on income distribution: CWG will enables

people of India with new jobs, globalization of the market, more foreigners to the market.

The social and environmental impact of the Games will be highly laudable as they are bound

to encourage improved standards of education to children, boost sports activities, create a

better quality of life and experience for citizens, increase international recognition and create

environmental consciousness among the community.

Two of the professed aims of the games are to improve the welfare of the citizens of the city

through improving facilities and promoting investment in the city. Improved infrastructure

and facilities will attract more foreigners to visit India, because India is being seen as a

hottest destination worldwide to visit. It will boost foreign currency into India. Meanwhile

the economic growth and development will also boost, because economic conditions of is


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good now as compared to other countries. It is growing rapidly that will attract MNCs to

come and set their business in India. That will improve income distribution amongst the

people of India.

Sporting events of these kinds are increasingly being seen as vehicles for urban renewal, a

catalyst to create jobs, increase investment and transform the landscape of the city. The

Cambridge Policy Consultants estimate that the Games will help to regenerate approximately

60ha of land and create 72,000m of employment floor space in East Manchester. T

project evauation

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