Projects Assignment

Demand and Financial Analysis for Dominos

Submitted to:
Mrs. Kiran

Submitted by:
Chitwan Duggal
Deveshi Singh
Reetika Dhir
Upmanyu Rawal

Fast Food industry in India

The emergence of the fast food industry has, transformed urban food culture in
India to some extent. In India, fast food culture emerged after independence.
Eating at home used to be a significant aspect of Indian culture. However, over
a period of time, with a growth in the number of nuclear families, economic
growth and increasing per capita income as well as globalization, fast food
culture gained prominence. Similarly, children also resorted to fast food due to
their exposure to global urban culture and western cuisine which accelerated
their desire for cheap and delicious fast food. Moreover, fast food costs less than
traditional meals commencing with appetizer and concluding with dessert. With
the liberalization of the economy in 1992, new multinational fast food giants
targeted India as a huge potential market with their outlets. Burger King, Pizza
Hut, Dominos Pizza, McDonalds and KFC outlets are functioning in shopping
malls and other public areas. Changing consumer behaviour and favourable
demographics led India to witness a tremendous growth in fast food restaurant
industry.

According to a new research report, Indian Pizza Market Analysis by

RNCOS, the Indian fast food market has witnessed a robust growth over
the past few years, which earlier remained concentrated only in the
metropolitan cities.
The pizza industry is expected to register a strong growth in the coming
years in tier-II and tier-III cities. According to Pizza Power 2013 State of
Industry Report, U.S, Brazil, Russia, India and China are seen as
emerging pizza markets of the world.
They are being watched so closely that a quarterly newsletter called
BRIC, has been created, focusing solely on them, delivering
information about new business developments in all four countries.
Currently , Dominos operates in more than 70 countries.
The pizza market in India is worth, above 1500 crores, and is growing at
a CAGR (consumer annual growth rate) of 26% for the last 5 years, with
Dominos alone having over 55% market share in organized pizza market
and 70% market share in pizza home delivery segment.

 Not surprisingly therefore, Dominos opened its 600th store in India this
year and plans to reach 800 stores by 2016. As the population grew techsavvy over the last couple of years, Dominos began offering online
ordering to Indian customers in late 2010, as a result of which, more than
10% of sales came in through the web, shared, Harneet Singh Rajpal,
marketing vice president, Dominos Pizza.
And to help Indians too to celebrate the October pizza month, even in
times of economic slowdown, pizza chains are going beyond lucrative
pricing offers. 30minutes nahi to free, kushiyon ki home delivery, buy 1
get 1 free on Wednesdays are just a few tricks to stir the Indian appetite.

Dominos Pizza
Jubilant Food Works Limited (the Company) is a Jubilant Bhartia
Group Company, The Company was incorporated in 1995 and initiated
operations in 1996, The Company got listed on the Indian bourses in
February 2010, Mr, Shyam S, Bhartia, Mr, Hari S, Bhartia and Jubilant
Enpro Private Ltd, are the Promoters of the Company. The Company &
its subsidiary operates
Domino's Pizza brand with the exclusive rights for India, Nepal,
Bangladesh and Sri Lanka, The Company is India's largest and fastest
growing food service company, with a network of 500+ Domino's Pizza
restaurants
Restaurants (as of 31st March, 2012)The Company is the market leader in
the organized pizza market with a 54% market share and 70% share in the
pizza home delivery segment in India.
Over the period since 1996, Dominos Pizza India has remained focused
on delivering great tasting Pizzas and sides, superior quality, exceptional
guest care and value for money offerings.

The Project
This project outlines dominos expansion plans and venturing into the
drive-through segment. Currently only Mcdonalds and KFC have featured
drive through outlets. Thus, in the Pizza foray there is no competition in terms
of drive-through and Dominos already has an excellent market image of in-time
delivery. Therefore, the crux of this project is based on estimating the financials
of 10 new dominos outlets with drive-throughs across 10 different locations as:
Delhi, Bangalore, Ahmadabad, Pune, Mumbai, Kolkata, Bhopal, Jalandhar,
Chandigarh and Vadodra.

Marketing And Demand Analysis

Future growth for Dominos can be optimized with smart marketing decisions.
To assess Dominos marketing efforts, we analyzed Dominos segmentation and
positioning strategies. See Appendix E for our SWOT analysis of Dominos. We
also surveyed 221 U.S. adults regarding their impression of Dominos pizza
product as well as their views on hypothetical loyalty programs intended to
increase trial and repeat purchases.

Competitive Analysis :
Dominos is the 14th-largest QSR by U.S. revenue, and within the pizza
category Pizza Hut is #1, Dominos is #2 and Papa Johns is #3. Beyond that,
Dominos faces competition from other regional and local competition, both
domestically and internationally.
Competitors:
Dominos has many competitors both domestically and internationally.
Hoovers states thatDominos is the world's #2 pizza chain. Their competitors
include fast food companies such as McDonalds, as well as other pizza take-out
services like Papa Johns, and worldwide pizza delivery company giant Pizza
Hut.
a) McDonalds Corporation Inc.

A massive worldwide franchise that specializes in the fast food industry is

McDonalds. In 2008, McDonalds revenues exceeded $23 million.9
McDonalds brand image is a major strength for them as people of all
ages across the globe recognize the golden arches logo. With their well
recognized logo, McDonalds has been involved in many legal issues
such as being accused for false advertising and violation of fraud acts.
b) Papa Johns International, Incorporated:
Dominos competes with Papa Johns on the same level of pizza delivery
and pizza takeout. Chicken wings and chicken strips are also a specialty
(along with pizzas) for Papa Johns. They recorded a $36.8 million net
profit in 2008. This was a twelve percent increase from the previous year.
They remain a large competitor of Dominos with their increasing
popularity.
c) Pizza Hut:
Pizza Hut operates as a subsidiary to the food giant Yum! Brands. They
specialize in pizza making. Pizza Hut is even more focused on health
conscious people by incorporating a salad bar into their sit down
restaurant section and by serving nutritional pasta bowls. They also have
an extremely strong brand image and compete with Dominos for brand
recognition.
Varying consumer behaviour:
Talking about consumers, it has been a noticeable trend that food consumption
pattern of urban Indian families has changed dramatically with times owing to
the growing influence of Western culture. Indians have started dining out and
moved on to accept different varieties of delicious food from the world. Further,
studies indicate a radical change in the consumption patterns of Indian
consumers, who have traditionally been known for their price sensitiveness.
Middle-class families as well as the youth prefer to have a burger worth ` 25
rather than that worth ` 50-75. This reveals that despite looking for taste and
brand, consumers in India are still inclined to low-price and health issues. As
per a survey conducted in 2010, nearly 80 per cent of the fast food consumers
expect the fast food owners to implement required measures for reducing the
harmful impact of fast food. To tackle this issue, these owners have adopted
innovative cooking styles, such as baking and grilling that retain the flavor of
food and also require lesser quantity of oil. Besides, major retailers in this area
are now providing all necessary information like ingredients, nutrition and fat
contained on the product pack. These measures have helped Indian fast food

consumers select healthy and nutritious meal as well as protect them from the
dangerous effect of unhealthy fast food.
Customer Analysis & Market Segmentation :
Dominos target market segmentation is the consumer who is looking for
inexpensive pizza quickly. Customers are very price sensitive; higher prices
have historically led to decreased sales. Dominos does not offer dine-in areas at
it stores, instead focusing on delivery and carryout customers. Demographically,
Dominos appears not to have a specific target. Instead, it seems that Dominos
targets markets with the greatest number of people. It follows that Dominos has
sought to become a leader in online pizza orders, so it can reach the greatest
number of consumers possible while also improving its ability to meet customer
demand.

Positioning & Marketing Mix:

Dominos has positioned itself well to reach the customer who values quickservice pizza. Dominos uses geographic information software to locate its
stores in optimal locations. The majority of domestic stores are located in and
around highly populated large or mid-sized cities or near college campuses. In
FY 2009, Dominos posted a 92% on-time delivery rate and had an average time
of 12-15 minutes for pizza order-taking and production. In the past, Dominos
created the 30-minute delivery guarantee and also marketed its use of the Heat
Wave insulated delivery bag to keep delivered pizzas hot. Today, Dominos has
achieved significant online orders through its website, successfully reaching that
growing segment of the market.
Dominos revamped pizza has been very successful and has generated
significant sales growth since being introduced. Additionally, our survey data
showed that poor taste was the leading reason why customers avoid Dominos.
Dominos has used the new product to address this major weakness. Given the
positive results, it appears Dominos has been able to generate trial purchases
from customers who previously had excluded Dominos from their dining
options.
Governments role:
As far as the role of government is concerned, various initiatives in the recent
past have resulted in the entry of many international Fast Food Retailers in the
country. With the economic liberalization in 1991, nearly all tariff and non-tariff

barriers have been removed or minimized from the Indian boundary that has
helped many retailers to enter the growing Indian fast food industry.
As per the Food Safety and Standards Authority of India, the new rules and
standards will make it mandatory for street food vendors to register with state
health departments that are into policing hygiene. It requires the food authority
to issue licenses to food vendors only after ensuring that their products are safe
and hygienic. Vendors with products that are found unhygienic or unsafe will
face monetary penalties. Moreover, user friendly and IT-enabled licensing
system will be created to improve governance and compliance.
To try to ensure that India has the capacity to implement the new law, the
government has increased the number of state laboratories for testing eatables
and appointed more food safety officers to check food quality & hygiene instead
of merely monitoring adulteration.
Besides, the Indian government has also directed state governments to prohibit
sales of fast food and carbonated drinks on school premises & check out all
such items that lead to unhealthy eating from
cafeteria within a 1,500 feet radius of schools.
In addition, the countrys regulators have ordered food chains to provide
product nutritional labeling at the time of sale, so that customers can know
about what they are eating and what effect it can have on their health. This step
is a result of various studies that have shown that a typical fast food has very
high density that causes people to eat more than they usually require, causing
people to fall ill with many health-related problems like obesity, diabetes and
heart diseases.
Opportunities for Growth :
Future growth opportunities exist for Dominos both domestically and
internationally. We recommend that Dominos focus on both of these fronts to
grow its business, pay down its long-term debt and increase value for
shareholders. We have two primary recommendations:
1. Develop a loyalty program to drive trial and repeat purchases.
2. Increase expansion in China.
Developing a Loyalty Program:
According to Barclays, the average Dominos customer orders five times per
year while the average quick-service pizza customer orders an average of 17-18

times per year. This data indicates that Dominos is underperforming in driving
repeat purchases. A loyalty program would specifically address this
underperformance.
In our survey of 221 U.S. adults, we proposed three different hypothetical
loyalty programs. Each of the three subgroups we analyzed favored a status
program that would give different benefits that would increase with repeat
purchase frequency. Our survey data indicates that a status program would
increase average order frequency by more than two orders per customer per
year. The infrequent Dominos consumer subgroup had the strongest response to
the status program, with data indicating that average order frequency would
increase by more than three orders per customer per year. These data suggest
that a status loyalty program would be effective in converting casual Dominos
consumers to more loyal Dominos consumers. The loyalty program could be
coordinated with Dominos current marketing efforts to promote its revamped
pizza. The new, inspired pizza has been effective at getting customers in the
door, and our data indicates that a loyalty program could help ensure they keep
coming back.
Short Term Recommendations:
With the decline in the economy, Dominos experienced negative sales in 2007
due to the decreasing demand of their customers. This directly correlates with
their customers spending habits. Because of the harsh conditions of the
economy, many people are not able to spend as freely as they used to in years
past. Dominos advertising campaigns has had little to no appeal to their
consumers during these hardships. To combat the hard economic times,
Dominos should invest in marketing procedures like offering more coupons or
special offers for certain reasons or times. This not only would help combat
competitors, it would also help increase their revenues during these hard
economic times.
Along with coupons and special offers, Dominos can also enhance their
customer base by improving their online ordering procedures. For example,
Dominos could implement a strategy that would be helpful for customers who
are looking towards Dominos for parties or special events. They could allow
the user to create an order and specify the date in which the pizzas would be
needed. The user would also need to enter certain criteria, such as the number of
people attending, what type of pizza(s) they wanted, and a contact number so
Dominos could confirm the order before the pizzas are made. Dominos could
work to implement their online ordering strategy to all of their international and
domestic stores. This would allow for Dominos to be more competitive in the
market as well as be more flexible with their customersneeds

In association to their better online strategy, Dominos could also continue to

improve their delivery strategy. Although their delivery time has been reduced,
there are always situations where customers believe their pizza could have been
delivered faster. If Dominos can implement a better way of taking and
delivering a pizza at a faster pace, they can improve their customers visions of
the company, which would increase their market share as well as profits.
Long Term Recommendations:
Dominos has continued to produce fantastic revenues over the past few years.
However, Dominos can use various strategies in order to increase their
customer base as well as international expansion in the long run. For example,
they could offer new menu items specific to the store location, open more stores
around the world, and develop new products. All of the strategies would
continue to better their brand recognition across the world.
By offering new menu items that are specific to the locations that their stores
are located, customers can experience dominos superior products as well as
maintain their countries local customs and culture. For example, Dominos can
expand further into India and offer better products that do not contain beef.
They can create products that include more poultry items such as chicken, duck,
and other items. Also, Dominos could also offer more white sauce products on
their menu rather than the traditional red sauce that the majority of their
products contain. By offering more products, it would allow for Dominos to
open more stores in different areas of the world.
Dominos could expand their stores into new parts of the world. By doing so,
this would create numerous jobs for the local public. If Dominos was able to
create stores in third-world countries, it could have the possibilities to boost the
countries revenues, as well as stimulate the local economy. By doing so, it
would better help customers live their lives because they could afford a cheaper
food as well as work for Dominos and create money for their family. If
Dominos could expand into different areas around the globe, they could
increase their already strong financials as well as create a stronger customer
base. By having a wider range of customers, Dominos can create more products
that would better suit their customers wants. New products in any business can
turn into a competitive advantage for any business. For example, they could
compete with Pizza Hut by creating a Pizzone or they could compete with
Little Caesars by creating a quick and easy pizza that would be ready to eat in
less than ten minutes. In addition, Dominos could offer soups, salads and other
such items that could complement their main course meals. They could pull

everything together and market certain items for certain parts of the world,
whether new or old, and increase their brand name across the globe. But with all
the challenges that are facing Dominos, they have experienced many situations
that have made them become a better company, which will help them in the
long run become an even greater one.

SWOT Analysis

Strengths:

Product:
Newly revamped pizza recipe
brought in high growth levels
for the first three quarters of
2010.
Strong brand name, #1 pizza
delivery company in the U.S.
with market share of 18.4%.
Focused
menu
enables
quality
consistency
and
operational efficiency. Total
operational
process
is
completed
within
12-15
minutes.
Price:
Competitively priced product.
Place:
With almost 5000 franchises
in the U.S., domestic store
delivery covers the majority
of households.
Promotion:
Continuous price promotion
such as two 2-topping pizzas
for $5.99 each.
Market-leading
online
ordering and website features.

Weaknesses:

Product:
Despite aggressive marketing
efforts to rebrand Dominos
as a quality, great tasting
pizza, survey respondents still
said that does not taste
good and low quality were
the primary reasons they did
not order Dominos.
Proposition for investors is
limited.
Cant
promise
shareholders that they can
guarantee strong returns.
Price:
The low price may actually
be working against Dominos
efforts to rebrand as a high
quality, great tasting pizza
company.
Place:
Less-than-optimal
international presence.
Promotion:
Minimal
incentive
customer loyalty.

for

Opportunities:

Product:
According to survey results,
frequent Dominos pizza
consumers prefer ordering
online at a much higher rate
than the total respondents,
suggesting Dominos could
establish themselves as an
industry leader in online
ordering.
Ability to increase proportion
of total sales placed online
from 20% currently.
Place:
Dominos believes it has
achieved 50% of its growth
potential across its top 10
international markets.

Threats:

Product:
With obesity rates on the rise,
health is becoming an
increasing concern in the U.S.
One slice of Dominos new
pizza contains as much as
two-thirds
of
a
days
maximum
recommended
amount of saturated fat.
Prices in commodities such as
cheese increasing.
Minimum wage increases.
Place:
Supply chain not positioned
to
address
potential
sustainability regulations.
Promotion:
Challenging to continue
meeting
customer
expectations that have now

been inflated by new, higherquality product

Trend Analysis

Year
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
SUM
AVERAGE

T
1
2
3
4
5
6
7
8
9
10
55
5.5

Sales = Y
80.57
108.61
155.39
236.03
313.91
475.52
765.24
1017.36
1407.57
1723.5
6283.7
628.37

TY
80.57
217.22
466.17
944.12
1569.55
2853.12
5356.68
8138.88
12668.13
17235
49529.44

T2
1
4
9
16
25
36
49
64
81
100
385

b = 181.44

= -369.55 +
181.44t
Therefore, as per the above trend analysis, the demand projections for the next
10 years are as follows:

Year
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024

Sales
80.57
108.61
155.39
236.03
313.91
475.52
765.24
1017.36
1407.57
1723.5
1626.29
1807.73
1989.17
2170.61
2352.05
2533.49
2714.93
2896.37
3077.81
3259.25

Rate of growth
0.348020355
0.430715404
0.518952314
0.329958056
0.514829091
0.609269852
0.329465266
0.383551545
0.224450649
-0.056402669
0.111566818
0.100368971
0.091213923
0.083589406
0.077141217
0.071616624
0.066830452
0.06264393
0.058951007

The above chart indicates the sales figures in crores on the Y axis, whereas the
X axis comprise of the years mentioned on the right hand side of the graph from
2015 onwards.

Financial Analysis of Dominos

This project outlines dominos expansion plans and venturing into the drivethrough segment. Currently only Mcdonalds and KFC have featured drive
through outlets. Thus, in the Pizza foray there is no competition in terms of
drive-through and Dominos already has an excellent market image of in-time
delivery. Therefore, the crux of this project is based on estimating the financials
of 10 new dominos outlets with drive-throughs across 10 different locations as:
Delhi, Bangalore, Ahmadabad, Pune, Mumbai, Kolkata, Bhopal, Jalandhar,
Chandigarh and Vadodra. The financial dimensions of the project are as follows:
Cost of the Project and Means of Finance:
Cost of the project
Particulars
Land & Site Development
Building & Civil Work
Plant & Machinery:
1. Imported
2. Indigenous
Misc.Fixed Assets
Contingency
Security Deposits
Preliminary and Preoperative expenses
Working Capital Margin
Total

Amount in lacs
Means of Finance
Amount Particulars
Amount in
in lacs
lacs
765.00 Capital
3922.00
1708.00 Term
7293.00
Loan
2209.00
3908.00
1133.00
287.00
35.00
605.00
565.00
11215.00 Total

11215.00

Land & Site Development:

The total costs of land and site development is estimated for Rs. 7.65 crores
which includes cost of land @Rs.80.00 lacs per outlet at the total cost of
Rs.6.98 crores including registration charges of Rs.0.58 crores .Site
development would require cost of Rs. Rs.67.00 lacs which includes Site
development Rs.20.00 lacs, Compound Walls for Rs.24.00 lacs , internal &
approach roads for Rs.18.00 lacs and entrance and main gate Rs.5.00 lacs.
Building & Civil works:

As per project report, the company proposes to construct the building with RCC
Roofing at the chosen locations. The cost of buildings has been estimated
Rs.17.08 crores.
Plant and Machinery:
The company shall install specialized kitchen equipment in the form of vats,
boilers, ovens, refrigerators, vents, grills, stoves, furniture and lighting of
reputed suppliers. The Ovens and frying vats shall be imported from Germany.
The cost of proposed Plant & machinery comprising imported (Rs.22.09 crores)
and indigenous (Rs.39.08 crores) has been estimated Rs.61.17 crores.
Misc. Fixed Assets:
The cost for Misc Fixed Assets estimated for Rs. 11.33 crores include Oil
Recycling Unit, Home delivery vehicles, DG Sets, Transformers, Electrical
Installations & Production accessories etc.
Preliminary & Preoperative Expenses :
Preoperative Expenses for Rs. 6.05 crores mainly comprises of processing fees,
Project establishment expenses, LC expenses & Interest During Construction
(IDC) period.
Particulars

Amount

Upfront fees & appraisal fee

0.60

Project Establishment

1.20

Interest during construction

4.04

LC EXPENSES

0.21

TOTAL

6.05

Contingencies
The company has taken contingency provision of Rs 2.87 crore i.e @ 3% of
cost of building, Plant & Machinery, MFA. Keeping in view the size of the
project, the contingency provision of Rs 2.87 crore is considered reasonable.

Working Capital Margin:

Working capital margin has been projected at Rs 5.65 crores, which is considered
acceptable keeping in view the level of operations in FY 2014-15.
Means of finance:
The estimated cost of the project at Rs 112.15 crores will be met through the
promoters contribution of Rs 39.22 crores and term loan of Rs 72.93 crores. The
Debt equity ratio of the project is 1.86:1.
FINANCIAL DETAILS
Projected Balance Sheet
LIABILITI
ES

Rs. In lacs

2015

2016

2017

2018

2019

2020

2021

2022

Capital
(including
quasi
capital)

3922.0
0

3922.0
0

3922.0
0

3922.0
0

3922.0
0

3922.0
0

3922.0
0

3922.0
0

Surplus &
Profit

366.85

688.47

1244.6
0

1351.0
8

1415.7
8

1476.2
2

1540.0
2

1607.2
0

Secured
Term Loan

7293.0
0

6511.6
1

5469.7
5

4427.8
9

3386.0
4

2344.1
8

1302.3
2

260.46

Bank
Borrowing
CC

1382.3
9

1595.9
9

1802.3
1

1807.9
3

1809.2
6

1810.2
7

1811.2
7

1812.3
0

Sundry
Creditors

373.17

426.48

479.80

479.80

479.80

479.80

479.80

479.80

Expenses
Payable

20.00

22.00

24.20

24.20

24.20

24.20

24.20

24.20

Total

13357.
41

13533.
41

13997.
98

14312.
82

14688.
08

15123.
45

15622.
61

16188.
99

ASSETS

Gross Block

10615.
00

10615.
00

10615.
00

10615.
00

10615.
00

10615.
00

10615.
00

10615.
00

Depreciation

664.04

1549.4
2

2434.8
0

3320.1
8

4205.5
6

5090.9
4

5976.3
2

6861.7
0

Net Block

9950.9
6

9065.5
8

8180.2
0

7294.8
2

6409.4
4

5524.0
6

4638.6
8

3753.3
0

Cash &
Bank

849.41

1451.4
2

2354.0
9

3445.3
3

4704.0
6

6023.4
6

7406.6
7

8857.0
5

Closing
Stock Raw
Material

1098.9
4

1255.9
3

1412.9
3

1412.9
3

1412.9
3

1412.9
3

1412.9
3

1412.9
3

Stock in
process

226.99

258.38

289.70

290.20

290.62

291.05

291.50

291.96

Finished
Goods

453.98

516.76

579.40

580.39

581.24

582.11

583.00

583.91

Stores &
Others

13.72

15.68

17.64

17.64

17.64

17.64

17.64

17.64

Sundry
Debtors

528.41

634.65

729.02

736.52

737.14

737.20

737.20

737.20

Other
Current
Assets

200.00

300.00

400.00

500.00

500.00

500.00

500.00

500.00

Noncurrent
asssts

35.00

35.00

35.00

35.00

35.00

35.00

35.00

35.00

Total

13357.
41

13533.
41

13997.
98

14312.
82

14688.
08

15123.
45

15622.
61

16188.
99

Projected Profitability & Cash Flow (For the entire period of TL)
Year

2015

2016

2017

2018

2019

2020

2021

2022

Net Sales

9511.2
9

15231.
55

17496.
54

17676.
44

17691.
43

17692.
68

17692.
78

17692.
79

Raw
Material

6593.6
5

10047.
47

11303.
41

11303.
41

11303.
41

11303.
41

11303.
41

11303.
41

Other
manufacturin
g expenses

1300.1
8

1932.0
1

2120.6
4

2137.8
4

2155.5
5

2173.7
9

2192.5
8

2211.9
4

Selling,Gen.
&
Admn.expen
se

277.78

422.79

481.51

488.22

490.91

493.37

495.92

498.60

Depreciation

664.04

885.38

885.38

885.38

885.38

885.38

885.38

885.38

Interest

909.23

1198.4
7

1076.8
0

926.36

775.44

624.48

473.53

322.57

80.53

151.13

478.15

585.65

666.24

737.32

803.28

865.07

366.85

688.47

1244.6
0

1351.0
8

1415.7
8

1476.2
2

1540.0
2

1607.2
0

1030.8
8

1573.8
5

2129.9
8

2236.4
6

2301.1
6

2361.6
0

2425.4
0

2492.5
8

2016

2017

2018

2019

2020

2021

2022

1351.0
8

1415.7
8

1476.2
2

1540.0
2

1607.2
0

Provision
Income Tax
Profit after
tax
Cash accrual

Fund Flow Statement

1.
SOURCES
OF FUND

2015

Profit After
Tax

366.85

688.47

1244.6
0

Depreciation

664.04

885.38

885.38

885.38

885.38

885.38

885.38

885.38

Increase in
Capital

3922.0
0

Increase in
Term Loan

7293.0
0

Increase in
CC/BB

1382.3
9

213.61

206.32

5.62

1.33

1.00

1.00

1.03

Increase in
Current
Liabilities

393.17

55.31

55.51

0.00

0.00

0.00

0.00

0.00

Deferred Tax

Total

14021.
44

1842.7
7

2391.8
1

2242.0
8

2302.4
9

2362.6
0

2426.4
0

2493.6
1

10615.
00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

Repayment
of Term
Loan

0.00

781.39

1041.8
6

1041.8
6

1041.8
6

1041.8
6

1041.8
6

1041.8
6

Increase in
Current
Assets

2522.0
4

459.37

447.28

108.99

1.90

1.35

1.34

1.38

Non current
Assets

35.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

Total

13172.
04

1240.7
6

1489.1
4

1150.8
5

1043.7
6

1043.2
0

1043.2
0

1043.2
3

Surplus

849.41

602.01

902.67

1091.2
3

1258.7
4

1319.4
0

1383.2
1

1450.3
7

849.41

1451.4
2

2354.0
9

3445.3
3

4704.0
6

6023.4
6

7406.6
7

1451.4
2

2354.0
9

3445.3
3

4704.0
6

6023.4
6

7406.6
7

8857.0
5

2.
DISPOSITI
ON OF
FUND
Increase in
Fixed Assets
Investment

Opening
Cash & Bank
Closing Cash
& Bank

849.41

SALIENT FINANCIAL INDICATORS

31.03.2015
(Projected )
a) Paid-up Capital Includes
Application Money
b) Net Worth
(Revaluation Reserve)
c) Tangible Net Worth (excluding
Revaluation Reserve)
d)
Long Term Secured Loans

(Rupees in Lacs)
30.03.2016
(Projected )

31.03.2017
(Projected )

31.03.2018
(Projected)

3922.00

3922.00

3922.00

3922.00

4288.85

4977.32

6221.92

7573.00

4288.85

4977.32

6221.92

7573.00

6511.61

5469.75

4427.89

3386.04

e)
Long Term unsecured Loans
( Quasi Capital)
f)
Net Fixed Assets including
Capital work-in-progress
g) Capital work-in-Progress
h) Noncurrent assets
i) Inventories

9065.58

8180.20

35.00
1793.63

35.00
2046.75

35.00
2299.67

35.00
2301.16

528.41

634.65

729.02

736.52

k) Other Current Assets

1049.41

1751.42

2754.09

3945.33

l) Total Current Assets

3371.45

4432.82

5782.78

6983.01

m) Current Liabilities

1174.56

1490.34

1545.86

1545.86

n) Bank Borrowings

1382.39

1595.99

1802.31

1807.93

814.50

1346.49

2434.61

3629.22

1.32

1.44

1.73

2.08

2.10

2.17

2.51

3.00

2.11

1.72

1.25

0.89

b)Considering Term liab. Only

1.52

1.10

0.71

0.45

c)Considering unsecured loan as

quasi capital- TOL/TNW

2.11

1.72

1.25

0.89

s) Gross Sales

9511.29

15231.55

17496.54

17676.44

t) Net Sales

9511.29

15231.55

17496.54

17676.44

u) Operating Profit/(Loss)

447.38

839.60

1722.75

1936.71

v)
Other income
w) Profit before interest ,tax and
depreciation(PBDIT)
x) Depreciation

9950.96
0

j) Receivables

o) Net Working Capital

p) Current Ratio (with T/L
23nstall. Due within 1 yr. as CL)
q) Current Ratio (without T/L
instl. Due within 1 yr. as CL
r) Debt-Equity Ratio
a)Considering all outside Liab.

y) Interest
z) Tax
aa) Profit after tax(PAT)
bb) Cash accruals
cc) Increase in Net sales (%)

--

0
7294.82
0

2020.65

2923.45

3684.93

3748.45

664.04

885.38

885.38

885.38

909.23

1198.47

1076.80

926.36

80.53

151.13

478.15

585.65

366.85

688.47

1244.60

1351.06

1030.89

1573.85

2129.98

2236.44

60.14%

14.87%

1.03%

dd) % of Gross profit to Net Sales

24.17%

21.97%

23.81%

23.97%

ee) PAT to Net Sales (%)

3.86%

4.52%

7.11%

7.64%

ff) Interest as % to Net Sales

9.56%

7.87%

6.15%

5.24%

gg) Return on Capital Employed

(%)
hh) Interest Cover (Times)

10.47%

15.67%

18.64%

17.84%

2.22

2.44

3.42

4.05

ii) Fixed assets to Secured Term

Liabilities

1.53

1.66

1.85

2.15

REVIEW OF FINANCIAL POSITION AND WORKING RESULTS:

Growth in operations:

The dominos fast food restaurant project is scheduled to start commercial

operation from November 2014. The company has projected sale turn over at Rs.
95.11crores (9 months working) at 70% capacity utilization during FY2015. The
company has projected turnover of Rs. 152.32 crores & Rs.174.97 crores which is
on account of increased capacity utilization at 80% and 90% with full year
working during the FY 2016 & FY 2017 respectively.
.
Profitability (PBT/net receipt):
The company has projected PBT at Rs. 4.47 crores during FY 2014-15 and Rs.
8.40 crores in the next FY 2015-16. The PBT/sales ratio comes to 4.70 % & 5.51
% respectively and is improving further due to increase in sale turnover. The
company has adopted Straight Line method for computation of depreciation
resulting more profit in the entail years.
TOL / TNW:
The TOL/TNW has been projected at 2.11 as on 31.03.2015 and 1.72 as on 31.03.2016.

Current Ratio:
The projected current Ratio of the company at 1.32 as on 31.03.2015 is marginally
below the indicative level of 1.33 which is due to term loan installment of Rs.
7.81 crores due next year taken as current liability. Excluding the term loan
instalment due next year from current liability, the current ratio works out to 2.10.

The current ratio has been estimated 1.44 as on 31.03.2016 which is well above
the benchmark level.
Capital Budgeting
a)

Pay Back Period :

112.15/19.39 =5 Years 10 months

b) Net Present Value :

Amount in lacs
Year

Cash Out
flow

Cash Inflow

1
1st
2nd
3rd
4th
5th
6th
7th
8th
9th
10th
11th

2
11215.00

3
1030.88
1573.85
2129.98
2236.46
2301.16
2361.60
2425.40
2492.58
2536.13
2536.13+
scrap value
Rs.2243.00
23867.17

Net
Cash
Accrual
4

Discounting
Factor
@18.59
5

Present value of
the Net Flow(4x5)
6
881.10
1345.17
1555.98
1396.38
1228.02
1077.15
945.52
830.51
722.25
1163.26

4779.13

1145.34

c) Cost of Capital = 12.60% after considering Loan @14% and equity @10%
d) Internal Rate of Return: 18.59%
We are of the view that the project may be acceptable as The IRR
18.59% is more than 12.60% of cost of capital.

Project Indices:
a)

DSCR

2.49

b)

Debt Equity Ratio(Considering term

1.52

Liability)
c)

Pay Back Period

5Years 10 Months

d)

Break Even Point

57.28%

e)

Return on Capital Employed

15.67%

f)

Interest Coverage Ratio

2.44

Conclusion: In light of the above financials and analysis of the fast food
restaurant project, it as a viable project, due to the ratio compilation which is in
line with the industry averages, projected adequate free cash flow for the next 8
years and a ready available market as per the demand analysis. A contingency
fund is there for unforeseen circumstances comprising sensitivity analysis. Also
the fast food industry industry shows signs of profitable growth in the near
future.