Table of contents

Description of the business

Survey Report of bread consumers

Brief company history

Mission Statement

Target market

Market size Design of product Quality level of product Competitors Style of product

Pricing strategies

Per unit cost Total cost Forecasting sale

Customers feed back

Promotional modes

Cost of promotional modes Available budget Expected target market

Distributional channels

Producers to distributors’ modes

Description of the business

How the proposed business solves the problem or fills the need

The problem and issue that is to solve is to be is to vanish the old taste of the bread. So in order to full fill this need we initially have small surveys of different bakers to collect the consumer view about this.

Survey Report of bread consumers

QuestionsViews

Positive Negative

Are you agreeing with same old taste? 36% 64%

Do you need new taste? 85% 15%

Is your bread nutritious? 45% 55%

Is your bread fatless? 35% 65%

Does it provide the same taste once it opens? 23% 77%

So to solve all these issues we develop an idea of introducing multi flavor bread for the convenient of consumers

The size of our opportunity is huge and the demand for it is excessive and it is growing day by day. The change in people’s taste is the trend which supports our idea.

Brief company history

Fruity bread was incorporated by five persons M. nadir bhatti, Aqib manzoor, huma malik, tahira yasmeen and shoaib murtaza. This idea was generated in the month of January 2011. The formation of the business firm is partnership. The idea of multi flavor bread was introduce for the first time in the market by us. Initially we were five but later on two more members become the part of our firm.

Mission Statement

“Fruity bread mission statement is to provide a product of the greatest possible value to our customers, thereby gaining and holding their respect and loyalty while achieving sufficient profit to finance our business and it's growth”

Objectives

The objectives for fruity bread are:

To establish the market presence needed to support marketing and sales goals and to attract customers. 

To reach Rs.30,000 monthly sales by the end of 2010, Rs.33,000 average monthly sales by the end of FY 2011. 

To achieve profit margins over 10%.  To develop top-rated relationships with 2-4 well-respected, all encompassing distributors. Prove to be a best idea generating and consultancy firm Terminate the old tastes and set up new tangs

Keys to Success

The keys to success in this business are:

Marketing: promoting a new company, product, and delivery channels to a rural community. 

Product quality and consistency.  Pricing effectively with respect to the project quality and customer value proposition. Management: products availability, costs controlled, marketing budgets managed.  There

is a temptation to fixate on growth at the expense of profits. Reporting and controls in place for inventory and financials.

Competitive advantage

“Competitive advantage is a position a firm occupies against its competitors.”

Our company has a great competitive advantage with respect to our competitors. The reason is that the product of company as a huge desire in the market. Although many breads are available in the market but with same old taste but we are with the different one with new taste and quality

Some of the potential competitive advantages to be considered are:

Strong Competitive Advantages The strongest competitive advantage which we

have is our patents, trademarks and copyrights etc. The things which fruity bread possess is legal and registered with government nothing is illegal. We have complete record of our agreements with our customers and suppliers. Not even this but long term contracts are preplanned with our customers and suppliers

Credible Competitive Advantages It include our product and management

competitive advantage

Cost

Fruity bread always tries to produce low cost product with the good quality because quality is our ingredient

Price

Fruity bread have great control over the price as we are the first one in the market to produce multi flavor bread so we are the price setter and we have complete control on price and our prices are nominal

Channels

Fruity bread has a huge list of distribution channels through out the country who willing to do work with us.

World Class Management

Fruity bread has a world class management team which is working together as a single unit. We are just like family and we believe that professional management puts the company on the way to success.

Sustainable Competitive Advantage

Fruity Bread Resources

Our Capital structuring is based on 70% equity and 30% debts We have huge availability of raw material and good working capital Management is the blood of our firm and we have qualified and skilled management Intangible assets are patents trademarks and copyrights Qualified and experienced board of directors Highly skilled board of advisory

Fruity Bread Capabilities

Well developed, high-quality, accessible contacts that take years to build Science and technology experts Supply chain experts Product/service design experts Sales & distribution channels Great sales and marketing

Raw Material

We buy milk from farmers located at different parts of the city and eggs from poultry farm located near Raiwind Lahore. We buy raw material from wholesalers as well.

Demand Forecast

This is done by considering demands of customers. Our target customers relates to:

Elite class Upper Middle class Lower middle class

Production

Our production is done at Fruity bread own state of the art production plant.

Distribution channel

Wholesalers Retailers Hyper Star Metro etc

Sales to customers

Selling products to the customers through retailers, wholesalers and collecting feedback from customers.

Business Model

Description of Business Model

Business model of fruity bread

is traditional. We first of all

analyze the demand in the

market. Through a survey we

came to know that there is a

gap between the old and multi flavored bread. Then we collect materials, as raw

material will be purchase some

of it from whole sale markets in Lahore at very nominal prices with fine quality and from

farmers and poultry farm owners. After that we go to the next step which is production process.

The production of fruity bread is done at its own state of the art production plant. The next step is

to distribute our product to the customer. Initially we are selling our product through wholesalers

and retailers. So, through these distribution channels we sell our products and our marketing

team and salesmen will get the customer feedback which is used for the next demand forecast.

Current Status and requirements

Our start-up costs come to approximately 100,000, which is mostly renovation of the occupied office space, professional fees, and expenses associated with starting our first head office.  The start-up costs are to be financed by direct owner investment, financial institutions, and private

investors.  The assumptions are shown in the following table and illustration.

Start-up Expenses Amount (Rs)

Professional Fees (Legal, Accounting, Consulting) 1,800

Placemats, Stationery, Business Cards 1,100

Renovation 8,300

Marketing 2,500

Rent 2,000

Expensed Equipment 5,000

Insurance 350

Website Development 1,000

Misc Expense 3,800

Total Start-up Expenses 25,850

Product Life Cycle

Fruity Bread

The future prosperity of our business depends upon the following important aspects:

Our passion, desire and interest will play a key role in moving towards

success

Management expertise and commitment to the business

Sound strategies

Close eye on the future competitors

Good name recognition

Increased quality and excellence of the services

We will give due care to these factors as they can be of vital importance for our future

survival.

Start-up Assets Amount (Rs)

Cash Required 23,100

Other Current Assets 5,250

Long-term Assets 20,300

Total Assets 54,650

Start-up Funding Amount (Rs)

Start-up Expenses to Fund 25,850

Start-up Assets to Fund 54,650

Total Funding Required 80,500

Assets Amount (Rs)

Non-cash Assets from Start-up 31,550

Cash Requirements from Start-up 23,100

Additional Cash Raised 0

Cash Balance on Starting Date 23,100

Total Assets 54,650

Liabilities and Capital

Liabilities Amount (Rs)

Current Borrowing 0

Long-term Liabilities 25,000

Accounts Payable (Outstanding Bills) 9,500

Other Current Liabilities (interest-free) 0

Total Liabilities 34,500

Capital Amount (Rs)

Planned Investment

Investors 15,000

Owners 30,000

Additional Investment Requirement 1,000

Total Planned Investment 46,000

Loss at Start-up (Start-up Expenses) (Rs 25,850)

Total Capital (Rs 20,150)

Intellectual Property

FRUITY BREAD Name is registered

Logo is registered

P atents

Fruity bread has registered its process and product under the patents ordinance 2000 and

follows all the patent rules 2003 so according to this no other firm is allowed to follow

the same process and products used by Fruity bread.

T rademarks

The logo, name and slogan of fruity bread are registered as a trademark.

Copy Rights

Fruity bread has registered under the copyright act 1962.

Industry Analysis

“Industry analysis” is a business research that focuses on the potential of an industry.

Industry Trends

Right now all of the bread industry is producing the similar type of bread with same flavor and no new innovation has taken place in the bread industry for the long time. There are only three types of bread available in market

Normal Bread Sugar Free Bread Milky Bread

These breads are available in three different sizes

Small Medium Large Bread for Sandwiches

So the window of opportunity is very much open for our product “Fruity Bread” which is multi flavored bread having different types of flavors in single bread so with our new innovative product we have a first mover advantage in the industry and with the strength of our management team combined with the “Gourmets” name and trust which people have on Gourmet we can capture the market.

Industry Size

Size of bread industry is very large as there are many different bread producers in the country which produce the regular bread in the country but few of them are producing it on large scale and have major market share the rest of the bread industry consist of small bread makers which usually don’t even have a name for their product these small bakers usually operate in small villages and bread made by these small producers is not even up to the standard maintained by branded bread producers.

Few firms which have major share of the market are

Dawn Bread Shezan Gourmet Cakes and Bakes

Industry Attractiveness

Bread industry is very attractive and its is growing phase as more and more firms are entering into it but its window of opportunity is still open as there is no producer of multi flavored bread so by introducing a new innovative product such as multi flavored bread we can “consolidate” the market as our surveys has shown that people will love to have a bread which has different flavors.

Profit Potential

The industry has great profit potential generally the profit potential of an industry depends on these forces

1. Threat of substitute2. Threat of new entrants3. rivalry among existing firms4. bargaining power of suppliers5. bargaining power of Buyers

Rivalry among existing firms

Threat of New entrants

Bargaining Power of Buyers

Bargaining Power of Suppliers

Threat of Substitutes

Threat of Substitutes

Our bread has no direct substitute because we are introducing new bread in the market but as added measure we have our concept registered.

Secondly the closet substitute our bread has is normal bread available in market but price we are offering is very competitive and our quality is also great so people will be more attracted toward our bread and prefer it over normal bread.

Threat of new entrants

To avoid the threat of new entrants we have created some barriers to entry the biggest of them is

Copy Right

As we are introducing a new product we have our idea registered

Other then copyright the significant barriers to entry which will be created by us will be.

Economies of Scale As gourmet already have a vast network of branches and distribution we can generate this barrier by doing mass production which will result in lower average cost

Product Differentiation We will create this barrier by developing bread which is new and different from breads which are already available in market

Capital Requirement Since gourmet is a established name and already invested a lot of capital it will be difficult for new firm to enter in market with that much capital

First Mover Advantage As we are making a first mover advantage we can gain name recantation which will create a formidable barrier to entry.

Management Team Our management team is very skilled and has lot of experience in the food industry which creates a sustainable barrier to entry

Rivalry Among Existing Firms

Rivalry among existing firms which are already competing in the industry is high the firms which are already competing in the bread industry are

Dawn Bread Gourmet Cakes and Bakes Shezan

Bargaining Power of suppliers

Bargaining power of suppliers is low in this industry as raw material is easily available and there are lots of suppliers

Bargaining Power of buyer

Bargaining power of buyer is low as the price of our product is already very competitive and our product is different from our competitors.

Attractiveness of Breads Industry Using Five Forces Model

Competitive Forces Threat to Industry

Low Medium High

Threat of substitute ●

Threat of new entrants ●

Rivalry among existing firms ●

Bargaining power of suppliers ●

Bargaining power of customers ●

Description of Target Market

Our target market is huge it consist of general public both in cites as well as in villages because the trend in general public towards eating bread during day and specially in morning is continuously increasing so our target market is growing every day.

But we are specially targeting

1. Children

2. Hotels & Restaurants

Children

We are specially targeting school going children because usually children get bored very quickly with same old bread with only one flavor and mothers have lots of problem in feeding them in breakfast this can be solved with multi flavored bread which has flavors like mango, strawberry, chocolate etc which children love to have.

Hotels and Restaurants

We are also targeting hotels and restaurants and planed to supply them our bread at discount price.

Competitive Analysis Grid for Gourmet

Name Gourmet Bakers

Dawn Bread

Bunny’s Bread

Sona Bread

Cakes And Bakes

Unique Product

Brand Name Recognition

Access to distribution channels

Quality Of Product

Price

Marketing Support

Quality of Customer service

This competitive analysis grid shows us that gourmet has competitive advantage over its competitors in unique product, Quality of product and access to distribution channel this information can be used in making firms marketing plan

Marketing Plan

Market is sea. Marketing plan of fruity bread is constructed after a deep study of the market. Firstly we divide the market in different segments so that we can collect pure information about our idea.

Market Segmentation

When selecting a target market, a company usually engages in some form of market segmentation. This involves subdividing the market into clear subsets of customers that act in the same way or that have comparable needs. Fruity bread also divides the market in different segments for the marketing plan.

Concept testing & Usability testing

To test our idea and product we make a soft launch of our product in different areas and place stalls in front of bakery so that we get the honest response of the customers. For concept testing we prepared samples and distribute it in different areas such Defence, Model town, Gulberg and Johar town. And for usability testing and a for quick response we arrange stalls in front of bakeries.

To collect the customer response we prepared a small questionnaire their results are given below

Questionnaire

Do you like the idea of multi flavor bread?

(a). yes (85%)

(b). no (15%)

How many flavors would you recommend?

(a). 5 (40 %)

(b). 4 (36 %)

(c). 3 (24 %)

How many sizes would u prefer?

(a). 3 (55 %)

(b). 2 (35 %)

(c). 1 (10 %)

Do you like the taste of flavor bread

(a). yes (80 %)

(b). no (20%)

Which flavor u like the most?

(a). Chocolate (45%)

(b). Mango (35%)

(c). Strawberry (20%)

Marketing Objectives

Maintain positive, steady growth each quarter. Experience a growth in new customers who are turned into long-term customers. Realize an increase in occupancy each subsequent year.

Marketing Mix

The fruity bread marketing mix is comprised of the following approach to pricing, distribution, advertising and promotion.

Product Line

Fruity bread has designed a product line that will create positive impressions in the leading market today. Products need to be readily available to consumers and distinguishable from competitor’s products. This plays a positive role in marketing our products, as the tastes are unique. The key to this product line is promoting our new product, the fruity bread. The unique product qualities include our focus on both taste and hygiene factor.

Packaging

Fruity bread products are sold in stylish packaging, in order to reflect the company’s ethical stance on environment. Fruity bread has a great reliance on packaging of the product. The only essential feature would be appropriate labeling and marking key benefits of proteins and vitamins in the bread

Promotion

The promotional plan to be adopted by fruity bread, has two key objectives. That is, gaining new product acceptance and increasing sales for the company. Promotion of the fruity bread will mainly involve above-the-line promotion techniques including advertising in specialized industry journals and magazines, internet promotion and to a more limited extent; television. Our focus on magazine advertisement reflects a growing Pakistani trend, with 8 out of 10 Pakistani reading at least one magazine, with readership increasing by 6.4% over the past five years (Magazine Publishers of Pakistan, 2010). Combining this with internet advertising will reflect a recent study which revealed natural synergies between magazines and the internet (MPP, 2010).

Fruity bread will be adopting a product development strategy, in relation to the promotion of the Fruity bread. This will involve targeting an existing market of bread consumers, with a new and unique taste of bread.

Plac ement

Fruity bread will be acting as a distribution channel to retail stores and wholesalers initially in three Pakistani capital cities such as Lahore, Karachi & Islamabad. These retail stores will consist of specialized wheat products. Our intentions would be to expand distribution to every state within two years. Our website will also allow for direct sales.

The placement of the main warehouse is in the Lahore which will allow distribution via both land and air. The fruity bread is relatively light and small and so transport will be easily contractible.

Pricing

By employing a cost-plus pricing strategy, the organization will be earning fixed gross profit. This will also enable a better control of costs, to ensure that manufacture of the Fruity bread does not exceed Rs35. This price is derived from a development cost of Rs20 per unit and a mark-up of 35%. This mark-up is based on rule-of-thumb mark-up figures provided by The University of central Punjab

Almost half of survey participants indicated that the quality of the product was of higher importance than the price or value of the good. This suggests that the demand for the product is relatively inelastic. For this reason, we have no hesitation in suggesting that the price of our good reflects the willingness of consumers in our target market to buy.

Expected Market Share

We surveyed 100 peoples and asked them whether they would purchase a Fruity bread, knowing the taste, quality and the price; 40% said they would purchase it if it was available in very well known bakery shops, 35% said they might buy one, 25% said Rs35 is too expensive and the remaining 10% said they are not afraid of Fruity bread so wouldn’t buy one, as illustrated below.

40%

35%

15%

10%

Market Share Survey

Would Purchase

Might Purchase

Won't Purchase

Not Afraid of Fruity

SWOT Analysis

Fruity bread is entering an industry as a sole producer of flavored bread. As such, a myriad of opportunities lie in the fact that as a first mover, there are no direct substitutes to compete against. The key threat therefore, is the potential for competitors entering the market. The development of strategic measures is the key to manifesting the strength of having obtained a unique product concept. However development will be required in terms of building relationships with retailers and direct customers through research and communication.

SWOT Analysis

STRENGTHS

1. DELIVERY

2. MARKETING

3. MANAGEMENT/INFORMATION

4. PROCUREMENT

5. COMMITMENT TO TECHNOLOGY

6. HUMAN CAPITAL

7. REPUTATION/ IMAGE

8. FINANCIAL POSITIONING

40%

35%

15%

10%

Market Share Survey

Would Purchase

Might Purchase

Won't Purchase

Not Afraid of Fruity

WEAKNESSES

1. HEALTH RISK

2. HEALTH CONSCIOUS SOCIETY

3. ATMOSPHERE (Dull)

4. NON MOTIVATIONAL EMPLOYEES

7. COMPACT LOCATIONS

9. AVAILABILITY

OPPORTUNITIES

1. INCREASE IN DEMAND FOR MULTI FLAVOUR

2 EASILY ACCESSIBLE

3. INCREASE IN POPULARITY

4. VALUE ADDED SERVICES (DELIVERY, DISC CARDS)

5. POSSIBILITY OF OFFERING MORE DIVERSIFIED MENU

6. CREATING INELASTIC DEMAND THRU ADVERTISEMENT

7. GROWTH IN OTHER CITIES

8 CATERING TO HEALTH CONSCIOUS PEOPLE

9. EASILY AVAILABLE TECHNOLOGY.

THREATS

1. STRENGTH OF COMPETITION

2.NOT ACCEPTABLE BY SOME PORTION OF SOCIETY

3. EMERGING NEW CHAINS

6. HEALTH RISK

7. DECLINE IN CONSUMER BUYING POWER

8. POLITICAL INSTABILITY

9. LOSING POTENTIAL CUSTOMERS DUE TO PRICE

Target Market

The target market for fruity bread is children teenagers and adults as well, who is part of a distinct segment

The geographical location of the market will initially be Lahore, Islamabad and Karachi which each have over 4,000,000 people

The demographic of the market is approximately 45% male 55% female.

The psychographic qualities of the market are middle or upper class citizens who hold quality in higher esteem than price.

Operating Expenses

The annual operating expenses necessary to run the business will initially total Rs.968,000 including staff, utilities, marketing, loan repayments and interest. These expenses will vary each year and will gradually drop; yearly estimates follow

Expense Year 1 Year 2 Year 3 Year 4 Year 5

Staff Rs.600,000 Rs.600,000 Rs.500,000 Rs.400,000 Rs.200,000

Utilities Rs.50,000 Rs.50,000 Rs.50,000 Rs.50,000 Rs.50,000

Marketing Rs.100,000 Rs.100,000 Rs.50,000 Rs.50,000 Rs.50,000

Loan Repayment

Rs.168,000 Rs.168,000 Rs.168,000 Rs.168,000 Rs.168,000

Interest Rs.50,000 Rs.40,000 Rs.30,000 Rs.20,000 Rs.10,000

Totals Rs.968,000 Rs.958,000 Rs.798,000 Rs.788,000 Rs.478,000

Promotion Schedule

The implementation of fruity bread promotional schedule is a critical aspect of the success of the product.

The company’s promotion will include the following.

Paid magazine articles and advertisements to generate sales and brand awareness. Fruity bread event sponsorship to create brand awareness. Creating affiliations with sales websites to capture the online sales market. Placing classified advertisements in newspapers. TV commercials

Operations Plan

Method of production

For Fruity Bread we use same method of production as it has been using by other bread manufacturer, we mean to say that our production operation for manufacturing of multi-flavor Rainbow Bread is same as it is using by other bread companies except we add extra fruitful and delicious flavor in the each slices of the bread.

The three main steps involve in bread manufacturing:

The mixing of raw material. We process the raw material in bread manufacturing plant. After manufacturing desire shaping and packing of bread.

Availability of qualified labor pool

As a business graduate we all partner know the importance of HR portion for success of any business firm. Our HR manager Mr. Bilal make selection of very qualified labor pools especially in processing department of bread manufacturing.

As our chief chef Mr. Willam Asghar who is very experienced fellow, he has worked for 6 year in Switzerland and has got a diploma and training session in baking of cakes and bread. We request him to join our organization due to social relation factors , Because currently he is also chief chef at five star hotel Pearl Continental Hotel Lahore. He served as engine for the train because it is due to his specific formula in the bread manufacturing our product will be successful and will be differentiated from other bread companies.

Our Floor Mixer Mr. Qasim Shah is also very much experienced person and most importantly already know all the basic techniques of measuring the exact mixing techniques.

Processing Chefs and other labors persons control the processing of bread manufacturing plants.

Finally, after bread manufacturing we acquire some specific packing experts who know the whole procedure of packing and quality maintaining, all the packers cover their hands with polythene hand cover in order for germ safety.

Recipe of Fruity bread

Ingredients

1 1/4 cups water 1 tablespoon sugar 1 teaspoon salt 3 1/2 cups flour 1 1/4 teaspoons yeast Fruits Vegetable oil Coconut

For bread machine:

Measure ingredients into baking pan in order given. Set for dough cycle. When the dough is ready, proceed with "To Colour" below.

For hand mixed:

In a large bowl, Disolve sugar in lukewarm water. Add yeast. Let sit for 10 minutes.

Stir. Add 1 1/2 cups flour and salt. Mix vigourously for at least 5 minutes. This will reduce the

kneading time. Add balance of flour 1/2 cup at a time until dough is smooth and no longer sticky.

Turn onto a floured board and knead for 10 minutes. Cover dough with a clean tea towel and let rise in a warm place for 1/2 to 1 hour, until it doubles in size. Punch down to remove all air bubbles.

To Colour:

Divide dough into 3 or 4 equal parts (one part for each colour desired). Poke a hole in the dough with your finger. Put food colouring into the hole. Use a little (5-6 drops) for light colours, more for bright colours. Pinch the hole closed and knead the dough for 5 to 10 minutes, until the colour is well mixed in.

Use a rolling pin to roll the dough out very flat. Use a little water to moisten the top of one piece so the next piece will stick to it. This is very important if alot of extra flour was used to keep the dough from sticking during kneading. Roll the dough into a log and place it in a greased and floured bread pan. If you do not have a bread pan, it can be placed on a greased and floured cookie sheet. Let rise for 45 to 60 minutes. More rising time will produce a lighter bread, while less time will result in a denser bread.

Heat oven to 350'F. Bake bread for about 25 minutes. Remove bread from pan immediately when done. Bread should sound hollow when tapped on the bottom. If it does not, it is not cooked yet. Cool 10-20 minutes before cutting.

Quality control

Because our product is initial in the market, to make it the successful there should no compromise in the quality of the bread. Because it is matter of user’s health and also as our most targeted individuals are children and teen agers, these individuals are very conscious about their fitness and health. So, to provide best quality we use fresh raw material and put strong consideration on the cleanliness of labors operators and clean plant and equipment daily.

Also because we start new business, we concentrate to fulfill the entire requirement for acquiring

quality assurance award from ISO-9001 and ISO9002.

Customer Support Strategies

We use joint venture firm Gourmet outlet for the regular sales of our product and also other famous big superstores of the region, we did not want to provide it in backward areas initially. The reason behind it is that as we are beginner, we need support from conscious customer which comes from the sale of product from well trained salesperson of the outlets who knows the important of the specific products and then conveys it to potential customer, for this purpose we leave big profit margins for big superstore with best quality as compare to other bread so our initial sales will be boost up.

Customer support obligation

Because most usage of our product is at the morning so, to reach the fresh bread on time to superstores is big responsibility towards us because in opposite scenario, our product will be worthless because most of children have to use it as a breakfast and then go to school. In order to reach our product on time, we have formed specific teams, staff and hair vehicles for the transportation of bread in specific regions.

Financial Plan

Salaries and rent are the two major expenses, while depreciation is another significant cost that will increase as the company develops.

We want to finance growth mainly through cash flow. We recognize that this means we will have to grow slowly.

It should be noted that the owners of Fruity bread do not intend to take any profits out of the business until the long-term debt has been satisfied. Whatever profits remain after the debt payments will be used to finance growth, mainly through the acquisition of additional inventory.

Important Assumptions

Key assumptions for Fruity Bread are:

We do not sell anything on credit. Monthly sales are the largest indicator for this business. We assume access to capital and financing sufficient to maintain our financial plan as

shown in the tables.

Break-even Analysis

For our break-even analysis, we assume per month running costs which includes payroll, rent, utilities, and an estimation of other running costs.

Based on our anticipated margin, what we need to sell per month to break even is shown in the chart and table below.

Our sales forecast indicates that monthly sales are expected to be much greater than the break-even point mentioned in the table.

Break-even Analysis

Monthly Revenue Break-even Rs.17,581

Assumptions:

Average Percent Variable Cost 67%

Estimated Monthly Fixed Cost Rs.5,838

Pro Forma Profit and Loss

FY 2011 FY 2012 FY 2013

Sales Rs.367,019 Rs.472,085 Rs.608,670

Total Cost of Sales Rs.245,154 Rs.314,147 Rs.402,472

Gross Margin Rs.121,865 Rs.157,938 Rs.206,198

Gross Margin % 33.20% 33.46% 33.88%

Expenses

Payroll Rs.26,400 Rs.39,680 Rs.66,016

Marketing/Promotion Rs.1,800 Rs.2,340 Rs.3,042

Depreciation Rs.4,140 Rs.4,140 Rs.4,140

Vehicle Expense Rs.1,700 Rs.1,850 Rs.2,000

Credit Card Surcharge Rs.3,498 Rs.4,547 Rs.5,911

Inbound Freight Charges Rs.4,964 Rs.5,497 Rs.6,036

Office Supplies Rs.600 Rs.780 Rs.1,014

Security/alarm Rs.360 Rs.360 Rs.360

Telephone Rs.2,650 Rs.3,445 Rs.4,478

Accounting Costs Rs.1,500 Rs.1,500 Rs.1,500

Rent Rs.19,200 Rs.19,200 Rs.19,200

Utilities Rs.2,400 Rs.2,400 Rs.2,400

Insurance Rs.840 Rs.840 Rs.840

Payroll Taxes Rs.0 Rs.0 Rs.0

Other Rs.0 Rs.0 Rs.0

Total Operating Expenses Rs.70,052 Rs.86,579 Rs.116,937

Profit Before Interest and Taxes Rs.51,813 Rs.71,359 Rs.89,261

EBIT Rs.55,953 Rs.75,499 Rs.93,401

Interest Expense Rs.0 Rs.0 Rs.0

Taxes Incurred Rs.15,544 Rs.21,408 Rs.26,778

Net Profit Rs.36,269 Rs.49,951 Rs.62,483

Net Profit/Sales 9.88% 10.58% 10.27%

Projected Cash FlowCash flow projections are critical to our success. The following table shows cash flow for the first three years, and the chart illustrates monthly cash flow in the first year. Monthly cash flow

projections are included in the appendix.

Pro Forma Cash Flow

FY 2011 FY 2012 FY 2013

Cash from Operations

Cash Sales 367,019 472,085 608,670

Subtotal Cash from Operations 367,019 472,085 608,670

Subtotal Cash Received 367,019 Rs.472,085 608,670

Expenditures

FY 2011 FY 2012 FY 2013

Expenditures from Operations

Cash Spending 26,400 39,680 66,016

Bill Payments 253,470 382,218 478,195

Subtotal Spent on Operations 279,870 421,898 544,211

Subtotal Cash Spent 279,870 421,898 544,211

Net Cash Flow 87,149 50,187 64,459

Cash Balance 88,149 138,336 202,795

Projected Balance SheetThe table shows the annual balance sheet results, with a healthy projected increase in net worth.

Pro Forma Balance Sheet

FY 2011 FY 2012 FY 2013

Current Assets

Cash 88,149 138,336 202,795

Inventory 28,816 36,925 47,307

Other Current Assets 0 0 0

Total Current Assets 116,965 175,261 250,102

Long-term Assets

Long-term Assets 29,000 29,000 29,000

Accumulated Depreciation 4,140 8,280 12,420

Total Long-term Assets 24,860 20,720 16,580

Total Assets 141,825 195,981 266,682

Liabilities and Capital

Liabilities and CapitalFY 2010 FY 2011 FY 2012

Current Liabilities

Accounts Payable 27,555 31,761 39,979

Current Borrowing 0 0 0

Other Current Liabilities 0 0 0

Subtotal Current Liabilities 27,555 31,761 39,979

Long-term Liabilities 0 0 0

Total Liabilities 27,555 31,761 39,979

Capital

Paid-in Capital 80,625 80,625 80,625

Retained Earnings (2,625) 33,644 83,595

Earnings 36,269 49,951 62,483

Total Capital 114,269 164,220 226,703

Total Liabilities and Capital 141,825 195,981 266,682

Net Worth 114,269 164,220 226,703

Business Ratios

Business ratios for the years of this plan are shown below.

Ratio Analysis

FY 2011 FY 2012 FY 2013 Industry Profile

Sales Growth 0.00% 28.63% 28.93% 4.90%

Percent of Total Assets

Inventory 20.32% 18.84% 17.74% 47.50%

Other Current Assets 0.00% 0.00% 0.00% 28.90%

Total Current Assets 82.47% 89.43% 93.78% 76.40%

Long-term Assets 17.53% 10.57% 6.22% 23.60%

Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabilities 19.43% 16.21% 14.99% 39.20%

Long-term Liabilities 0.00% 0.00% 0.00% 15.50%

Total Liabilities 19.43% 16.21% 14.99% 54.70%

Net Worth 80.57% 83.79% 85.01% 45.30%

Percent of Sales

Sales 100.00% 100.00% 100.00% 100.00%

Gross Margin 33.20% 33.46% 33.88% 32.00%

Selling, General & Administrative Expenses

23.32% 22.87% 23.61% 19.60%

Advertising Expenses 1.13% 0.88% 0.68% 1.40%

Profit Before Interest and Taxes

14.12% 15.12% 14.66% 1.50%

Main Ratios

Current 4.24 5.52 6.26 2.03

Quick 3.20 4.36 5.07 0.59

Total Debt to Total Assets 19.43% 16.21% 14.99% 54.70%

Pre-tax Return on Net Worth 45.34% 43.45% 39.37% 3.50%

Pre-tax Return on Assets 36.53% 36.41% 33.47% 7.60%

Additional Ratios FY 2011 FY 2012 FY 2013

Net Profit Margin 9.88% 10.58% 10.27% n.a

Return on Equity 31.74% 30.42% 27.56% n.a

Activity Ratios

Inventory Turnover 9.67 9.56 9.56 n.a

Accounts Payable Turnover 10.13 12.17 12.17 n.a

Payment Days 27 28 27 n.a

Total Asset Turnover 2.59 2.41 2.28 n.a

Debt Ratios

Debt to Net Worth 0.24 0.19 0.18 n.a

Current Liab. to Liab. 1.00 1.00 1.00 n.a

Liquidity Ratios

Net Working Capital Rs.89,409 Rs.143,500

Rs.210,123

n.a

Interest Coverage 0.00 0.00 0.00 n.a

Additional Ratios

Assets to Sales 0.39 0.42 0.44 n.a

Current Debt/Total Assets 19% 16% 15% n.a

Acid Test 3.20 4.36 5.07 n.a

Sales/Net Worth 3.21 2.87 2.68 n.a

Critical Risk Factor

Management Risk

To avoid any kind of management risk we have given sufficient incentives and make key managers as equity holder of our firm so they remain with us for the longer time for lower level

employees we are giving salaries which are above than local market we are also giving them bonus as a result our employees are satisfied and give their maximum efficiency.

Marketing risksMarketing consists of advertising and promoting of product or service in order to sell it. Marketing is to lets potential customers know that they are available for sale. Sales, advertising, and public relations are each essential components of marketing and each require specialized skills and expertise. Fruity bread have only one person performing all these functions under the marketing umbrella, knowledge of each area is important to develop a focused effort.Marketing Manager having focused on what the customer wants and needs is essential to successful marketing efforts. This customer-orientation should go hand-in-hand with the company's objective of maintaining a profitable volume of sales. Marketing is a creative process combining all of the activities needed to accomplish both of these objectives.

Operational risksOperational Plans are those plans that specify the details of how the overall goals are to be achieved. At Fruity Bread, once a goal has been set, plans are made to ensure that goals are being achieved. The way this goal is being achieved at the moment is that the employees are trained to take the order as fast as possible, then input it in the system, forward it on to the production, and then place the order as soon as possible. The employees are trained to do this as fast as possible and we carried out a study to check how long the entire procedure takes and then based on the results, the management set a target that in how much time the order should be placed and then

the product should be at the shelves of the seller.

Financial risksTo avoid financial risk we raised our reserves to sufficient level to avoid any kind of financial stress for that we have Mr Bilal who is chief financial officer of Habib bank who can arrange finance for us if we face any problem in finance

Intellectual property risks

Fruity Bread has registered its intellectual property to avoid risk For this reason we have meet legal legislation through our lawyer Mr. Kashif Zia who have arranged to make our product register through trademark, patent rights and register our idea and logo so, there is no intellectual property risk legally left to worry about.