E-CONTENT-SERIES ON ENTERPRENEURSHIP AND MSMEs

by
PROF. MADHURIMA LALL
DEPTT. OF APPLIED ECONOMICS, UNIVERSITY OF LUCKNOW

CASE STUDY - SAMPLE PROJECT REPORT

on ‘Tea Cafe’
I Name of the Organization

Chai
Owners
MR A AND B
II. Table of Contents
Executive Summary
The Business
The objective
Brief History
Form of Ownership
Name, Qualification of the owners
Proposed Headquarter
Funding Requirement
Debt
Equity
The Market
Description of product
Comparative Analysis
Licensing Agreement
The Plan
Marketing Plan
Operational Plan
Organizational Plan
Financial Plan
The Appendix
 E-CONTENT-SERIES ON ENTERPRENEURSHIP AND MSMEs
by
PROF. MADHURIMA LALL
DEPTT. OF APPLIED ECONOMICS, UNIVERSITY OF LUCKNOW

III. Executive Summary

India is the largest producer and consumer of tea. This is where the Opportunity lies! Chai is the
oldest tea trader in the state of Uttar Pradesh. We are catering to tea lovers with Darjeeling Tea,
Sikkim Tea, Niligiri Tea & Assam tea since 1929. Chai offers world's finest teas in more than
100 varieties. We are at present trading in UP and some cities of Maharastra& Rajasthan. In the
business plan proposed we intend to enter a new Business – the fast-food joints. The fast food
culture is on rise amongst teenagers, working professionals and public at large. The reasons are
simple – the adaptation of western culture, rising income and the simplicity of arranging for any
kind of meeting; be it business or social. In the business plan proposed below Chai café wants to
enter into a highly competitive market of fast food and coffee café. But there is no single food
joint offering tea as a specialty that would act as a USP for the company. The market offers
tremendous opportunities. A market survey and estimations have revealed that the potential
market is as large as 70,000 customers. The financial projections have been conservative based
on assumption that even if acceptability is by only 1% of the total market, (which is quite
conservative), markets display a handsome profit of 25%, which is very promising and
motivating for the owners.
Both the owners are well educated, talented and motivated. They vision creating chains of
similar fast-food centers in the whole country. Since this is their nascent project individually they
are seeking loans from banks. Though they are new into the business they are supported by their
fathers who have sound 35 years of experience in business.
E-CONTENT-SERIES ON ENTERPRENEURSHIP AND MSMEs
by
PROF. MADHURIMA LALL
DEPTT. OF APPLIED ECONOMICS, UNIVERSITY OF LUCKNOW
 E-CONTENT-SERIES ON ENTERPRENEURSHIP AND MSMEs
by
PROF. MADHURIMA LALL
DEPTT. OF APPLIED ECONOMICS, UNIVERSITY OF LUCKNOW

IV. The Business

Objective: To provide high quality & variety of tea and fast food in the state of UP

Form of ownership: Partnership Firm

Name, Qualification of the owners: Owner 1: Mr. A
Educational Qualification: M. Com
Owner 2: Mr. B
Educational Qualification: MBA
Proposed head quarter: Kapoorthala, Lucknow

V The Funding Requirements

a) Debt: The debts would be borrowed from family members, on which no

interest rates would be charged. A loan would be requested from banks and
other funding agencies
b) Equity: No equity funds.

VII The Product / Service

a) Description of product: The product offered to the market will be ‘Tea
& Accompanying Snacks’.

b) Comparative analysis with similar products/ substitute products: there are

more than 69 coffee house cum snack bar in the city of lucknow but there is
no food joint that offers variety of tea
 E-CONTENT-SERIES ON ENTERPRENEURSHIP AND MSMEs
by
PROF. MADHURIMA LALL
DEPTT. OF APPLIED ECONOMICS, UNIVERSITY OF LUCKNOW

c) Licensing agreements have been obtained from the Lucknow development

authority.

VI The Plan
Marketing plan

 Market Summary: ‘Chai’ Chai has entered a mature market, which is highly
competitive. There are 69 coffee houses in the city of lucknow but ‘chai café’
would be offering 100 variety of Indian tea and coffee plus bakery products.
 Market Demography: The Potential customers can be divided into following
broad categories:
a) School/ College going students
b) Working professionals
c) Senior Citizens
 Market Research
A market research on 100 correspondents evenly distributed amongst the
demography discussed above revealed following results:
a) 89% correspondents visit fast food centers/ coffee houses in at least once a
week
b) 70% correspondents visit thrice a week
c) 76% correspondents order for some snacks along with tea/ coffee/ cold
drink
d) More than 8000 individuals pass the way (where the tea café is proposed)
 SWOT Analysis of the market: SWOT analysis provides us with an
opportunity to examine internal strengths & weakness and external
opportunities & threats.
E-CONTENT-SERIES ON ENTERPRENEURSHIP AND MSMEs
by
PROF. MADHURIMA LALL
DEPTT. OF APPLIED ECONOMICS, UNIVERSITY OF LUCKNOW

Strengths
- Tea at ‘Chai café’ is of premium quality and is in the market for more
than 100 years
- More than 100 variants of tea are available with ‘Chai Café’
- Employees at chai are highly dedicated, loyal and understand the tase
of customers of Lucknow.

Weakness
- Inadequate finance to start an independent café.

Opportunity
- Market is growing at the rate of 20%
- Lucknow is becoming hub of all the major business centers
- Middle class is growing at the rate of 27%

Threat
- There is lot of political interference in Lucknow
- Market is already saturated with 69 café in the city
- Emergence and preference of multiplex culture.

 Marketing Mix Strategy

- Marketing Objective:
a) To grow sales by 10% every year
b) Diversify services
c) Build customer loyalty
- Market Segmentation: potential customers can be segmented into
Students, working professional and senior citizens.
- Target market: All the segments would be targeted
 E-CONTENT-SERIES ON ENTERPRENEURSHIP AND MSMEs
by
PROF. MADHURIMA LALL
DEPTT. OF APPLIED ECONOMICS, UNIVERSITY OF LUCKNOW

- Market Positioning: The café would be positioned as ‘ A food joint

that specializes in tea and provides sumptuous snacks for all age
groups. High quality products and customer centric services would be
our priority.
- Product Mix Strategy
1. 100 floavour of tea
2. Espresso Coffee and cold drinks
3. 35 varieties of icecreams
4. Bakery items like cake, pastries, pizza
5. Home Delivery through Dial-an-order services

- Pricing Mix Strategy : leadership pricing to maintain its premium

quality and brand equity

- Promotion Mix Strategy

Promotion would be through
a) Radio advertisements on AIR FM and Radiocity
b) Through Pamphlets

Facilities Plan/ Operational Plan

i. Plant Location

The location of chai café would be adjacent to CMS school, aliganj, lucknow. this location is
ideal because it provides access to all the potential customers discussed in the market
demography. Market research has given an indication that around 8000 individuals pass this
street everyday. There are about 2000 students in the adjacent school and more than 150 offices
in the nearby aliganj area. Moreoverlucknow university and IT college are 3 km from this place.
 E-CONTENT-SERIES ON ENTERPRENEURSHIP AND MSMEs
by
PROF. MADHURIMA LALL
DEPTT. OF APPLIED ECONOMICS, UNIVERSITY OF LUCKNOW

The total no. students in them are more than 25,000. the population of Sector B Aliganj is
approximately 30,000. Thus we have approx 70,000 potential customers. Initially the location
would be leased at Rs 10,000 pm & with electricity, salaries, material cost the total cost per
month would be Rs 30,000.
The equipments that would be required are Ice-cream machine, coffee maker, refrigerator, food
display counter, computer and air conditioner
The layout would be a simple L-shaped selling counter with a seating capacity of 50 people at a
time , storage space of food would also be required.

Organizational Plan

It would be a partnership establishment. Saurabh and Alam would be the partners, with equal
ownership in business. The duties and responsibilities of each would be as under:

Saurabh: Would be responsible for general administration. This would include all the
administrative/ HR activities: recruitment, training, development, compensation, performance
appraisal and everyday working.

Alam: Would be responsible for sales & marketing as well as financial accounting. He would
make promotional efforts, monitor sales, maintain accounts, payroll, billing and payment of
taxes.

Financial Plan For Two-Five years

Start-Up Expenses
a) Land & building (on lease) Rs 10,000/- pm
b) Furniture & Office equipment Rs 25,000/- (fixed cost)
c) Machinery, equipment & tool Rs. 30,000/- (fixed cost)
d) Raw material & Inventory Rs 20,000/- (pm)
 E-CONTENT-SERIES ON ENTERPRENEURSHIP AND MSMEs
by
PROF. MADHURIMA LALL
DEPTT. OF APPLIED ECONOMICS, UNIVERSITY OF LUCKNOW

e) Connection of power supply Rs 5,000/- pm

f) Advertising & Promotion Rs 5,000/-pm
Budgeted Cost 3,00,000
operational cost 2,65,000
sales cost 5,000
personnel costs 30,000
Administrative Cost 50,000
Total Cost 3,50,000
Expected Sales 6,00,000
Gross Profit (Sales – Total Cost) 2,50,000
% Gross profit margin (gross profit/ Sales) 41.61%

ProformaFor Cash Flow Statement

Sources Of Funds
Mortgage Loan
Term Loan
Personal Funds
Net Income From Operations etc.
Add depreciation
Total Sources Of Funds
Dispositions (Uses) Of Funds
Purchase of Equipment
Inventory
Loan repayment
Total Dispositions (Uses) Of Funds
Net Increase in working capital
 E-CONTENT-SERIES ON ENTERPRENEURSHIP AND MSMEs
by
PROF. MADHURIMA LALL
DEPTT. OF APPLIED ECONOMICS, UNIVERSITY OF LUCKNOW

Balance Sheet of XYZ as on 31.3.200…-

Capital & liability Amt. Assets Amt.
Capital Fixed Assets: tangible
-Equity Share Capital Land & building
-preference Share Capital Leasehold
- General Reserves Plant & Machinery
- Funds Furniture & Fittings
Motor, van, lorry
Liabilities Fixed Assets: Intangible
Long Term Liability Goodwill
-Secured Loans (Public deposits, Copyrights & trademarks Patents
Long Term Loans)
-Unsecured Loans (Debentures, Fictitious Assets
Bonds)
Curent Liabilities Underwriting Commission
-Trade Liabilities Brokerage
- Bills Payable Discount on issue of shares &
debentures
-Creditors Interest paid out of capital
-Provision for taxes Development expenditure not
adjusted
-dividend payable Heavy advertisment expenses
-Overdraft Preliminary expenses
 E-CONTENT-SERIES ON ENTERPRENEURSHIP AND MSMEs
by
PROF. MADHURIMA LALL
DEPTT. OF APPLIED ECONOMICS, UNIVERSITY OF LUCKNOW

-Short Term Loans from bank Wasting assets

-deferred Revenue Current Assets
-Advances from customer Payment in advance/ prepaid
expenses
Contingent Liabilities Closing Stock/ Stock in trade (RW+
WIP+Finished Goods)
-Claims against the firm not Sundry Debtors (including
acknowledged as debt adjustments for bad debts 7 its
reserves)
- Uncalled Liabilities on investment Bills receivable
in other companies
- Arrears of fixed cumulative Temporay Investments/ Marketable
dividends Investments
- Liability on account of bill Cash In Bank
discounted with bankers
-estimated amount of contracts Cash in Hand
remaining to be executed on capital
account and not provided for
Contingent Assets
(e.g. wining of law suit)
Total Total

VI Critical Risks
Following types of risks are involved
a) Excessive Political Interference
b) Non-acceptability of the product & services
 E-CONTENT-SERIES ON ENTERPRENEURSHIP AND MSMEs
by
PROF. MADHURIMA LALL
DEPTT. OF APPLIED ECONOMICS, UNIVERSITY OF LUCKNOW

VII Exit Strategy

If the proposed project does not run successfully we would wind it up and payback the loan by
selling the machineries, equipments& tools, moreover we have enough financial backing from
our ancestral property that in case we are not able to run the business profitably we would still be
able to payback the loan by selling our ancestral property.

VIII Appendix
ii. Curriculum Vitae of the owners
iii. Ownership Agreement
iv. Certificate from pollution board
v. Memorandum Of Understanding