EXECUTIVE SUMMARY:

Bakery and Confectionery business is growing in both urban and semi-urban areas. This pre-feasibility study
encompasses the bakery business located in a commercial neighborhood surrounding and middle income
residential localities. Major products include cakes, snacks, sweets, nimko, buns, pizza, toasts, cream rolls &
tea cakes biscuits, bread and general confectionery items, which will be sold to target customers of the
vicinity. The sales outlet will be supported by an in house production facility. Selections of adequate product
mix and business location, supported by marketing efforts are the critical success factors. This project is a
feasibility report for establishing a bakery. The name of our partnership firm has been decided as ‘Bread &
Buns’. This project studies and analyses various parameters that decide the establishment of a bakery and
whether the venture shall be feasible or not. The project has been divided into four major branches of
feasibility study, namely, technical, human resource, marketing and financial. Our team has made an all-out
effort to present a comprehensive feasibility report and depict the feasibility of the project.

Project & Product:

The proposed Bakery and Confectionery shop is a small scale project with a production area and sales out-
let. It will be equipped with basic machinery and fixtures. The production area will require covered area of
5,000 sq.ft. And the outlet will be established on 750 sq.ft. The sales outlet will remain open for business for
16 hours per day around the year.

Product mix will include cakes, snacks, sweets, nimko, biscuits, bread and general confectionery items. This
merchandise will be prepared and acquired according to the demand of local customers and in quantities
directly proportional to expected sales.

Maximum sales are expected during Eid seasons and in winters. First year revenues of the project are
estimated to be Rs 18.35 million. It is expected that production growth rate will be 5% per annum along with
10% per annum increase in sales price.

1
Project Overview:

Name : Bread & Buns.

Products : Breads, Buns, Pizza, Toasts, Cream Rolls & Tea
Cakes and all the items related to bakery
Products.

Status : Medium Scale

Address :

Type of firm : Partnership Firm

Date of incorporation : July 1st, 2016.

Cost of project : Rs. 3,981,375

Source of finance : Partners’ capital - Rs. 1,990,688
Bank Loan - Rs. 1,990,688

Mission statement : “Our mission is to provide quality products at lowest

Prices”.

Vision : “To be the leader of quality bakery products provider

In the region. This will be achieved by the
Dedication of each employee in conjunction with
Supportive participation from management at all
Levels.”

2
Company Description:
As the name suggest above the venture this is related with the breads and buns industry we are stabilizing for
providing all kinds of pure wheat, barley, corn and the special thing is that we are proving these goods in
variety of flavors which have low fats as full as proper hygienic carbohydrates which will boost the energy
requirements of the human body. We will manufacture it locally and will be provided to the public at their
door steps by our delivery team members.

Company History:
Bread and Buns is a newly formed company with a purpose to provide variety of Breads in the market.
Beside this we are not only just limited to Breads and Buns we will also make bakery product items such as
Pizza, Confectionary items etc.

Mission Statement:
The Mission of "Bread and Buns" is to produce quality bakery products cost effectively; in an environment
that is safe, clean and friendly for our employees and community.

The integrity of our company is based on the principles of quality products, satisfied customers and consumers,
and our commitments to innovative growth and development.

Vision:

Vision for short-term planning

• To gain capital return within two (3.5) years.

Vision for long-term planning

• To become a well-known bakery’s brand name internationally.

• To launch new branches all over Pakistan.

Goals:
Our goal is to reduce out-of-stock items to improve sales.

3
Purpose:
Purpose of bread and buns is that, we feel there is a market gap and we have an opportunity because no
bakery is providing bread in different flavors with low fats and full of nutrition so the competition is low and
the chances of growth are high.

Current Status:
The current status of the company is that the basic feasibility is complete and the project is ready for the launch.

Legal Status:
The company is a partnership based business with four owners with equal share in the ownership. The
owners are also office bearers holding key management positions in the company.

Legal requirements:
When planning our bakery business we must take the legal issues very seriously. For most people, the legal
part of starting a food business can feel overwhelming and scary. Like so many other aspects of starting our
bakery business, the key is to research and compile checklists. This is certainly not the fun part of starting
our business, but it is one of the most important. As we move toward our opening day, we must check off the
required permits, paperwork, inspections, etc.

Legal Restrictions:
We have a passion for baking, this is the only way i.e. by opening a bakery our dream come true. But in
addition to choosing which recipes to use and what names we will hang over, there are legal restrictions
about which we will definitely inform the concerned departments and we must abides the rules and
regulations. Because we are making and selling food to the general public, we must conscientiously obey
food safety laws and set up our business in line with laws specific to our state.

Licenses and Permits:

In addition to complying with food safety laws specific to our state, we may be required by our state laws to
acquire special permits and licenses before we can start and run a bakery. The necessity for some specific
types of licenses will depend upon whether we are a full service bakery making our own baked goods or
whether we

4
simply resell baked goods that we buy wholesale. For example, Oregon requires a specific license for
bakeries while requiring another license type for retail locations which simply sell baked goods but do not do
further processing of those goods.

Inspections:
Our bakery may be subject to regular inspections by health officials. We must have excellent sanitary
practices and maintain a bakery providing food which is safe to eat. Hazard Analysis & Critical Control
Points is a management system we should implement which will analyze the safety of the food we're selling
to the public. It allows us to monitor processes from raw materials to the finished product.

Legal Structure:
We must set up a legal structure for your bakery and establish a tax ID for the business. We may choose to
set up a fictitious name in our county, filing a DBA with the county clerk, or you may establish a corporation
and apply for an employer identification number with the IRS.

Taxes:
We must collect sales tax if our state mandates sales tax on baked goods. This money is then turned over to
our state's revenue department. The collection of sales tax depends on our specific state's requirements for
restaurants and bakeries. Normally, we must file tax forms with our state to obtain a tax ID number so that
we may pay the required sales tax to the revenue department.

Industry Analysis:

Industry Size and Growth Rate:

Bakery products are one of the most used edible items all over the world, and regular part of local diet. As
the population keeps on increasing, the demand for Bakery products is also increasing. Since the purchasing
power of the consumers has increased considerably, the potential for growth within a niche segment is very
high.

5
Nature of participants and industry structure:
Bakery products are one of the most used edible items all over the world, and regular part of local diet. As
the population keeps on increasing, the demand for Bakery products is also increasing. Since the purchasing
power of the consumers has increased considerably, the potential for growth within a niche segment is very
high.

Nature of participants and industry structure:

Bakery business is a fragmented business that follows a 4 tier approach (shown in Figure 1) that involves
production unit (baking of products), packaging unit (packaging of baked products), outlet (shop where
selling of products is conducted) and customers (the end users of bakery product).

Production unit

Packaging unit

Outlet

Customer

6
Market Analysis:

SWOT Analysis:

Strengths.
 Unique flavor in bread and buns
 Due to mass production the cost is reduced and it helps maintain the financials on smooth flow
 Bakery has its own setup and there is independent decision making.
 Our bakery is also ISO 9001 certified.
 Bakery owned delivery vans for special occasions.
 Location of our bakery will be placed in suck and area that can easily accessible from almost all
parts of Islamabad.
 Experienced staff is hired who has expertise in providing healthy baked products.

Weaknesses.
 Bakery products are perishable items hence needs to be sold as soon as possible and customers also
prefer fresh products.
 Cannot afford stock outs because it is total loss.
 Lack of experience. Will have to face stiff competition.
 Huge amount of investment is through loan,
 Cannot take small orders with reference to delivery.

Opportunities.
 Expansion of the product line in the future.
 Scope of expansion with the development of our outlets.
 Bakery industry is growing very fast and demand for bakery products are also increasing day by day.
 Potential to become premier bakery products provider in the makers
 Use of technology.

7
 Threats.
 Competition.
 External changes.
 Price wars.
 Product substitution.

Ideal customer:
Ideal customer of bake and buns is every person who love bakery products. Children, youngsters even aged
people also love to consume baked products.

Market needs:
In today’s era where there is shortage of time and there is always sense of urgency everywhere, demand for
bakery products is increasing day by day because people usually don’t have time in brake fast to take desi
cuisine like paratha. That’s why there is need for bread and buns in market.

Market Trends:
People living in posh areas and following international trends and are getting more health conscious. With
increased awareness, backed by requisite purchasing power people living in selected areas are making a
conscious effort to use products that are more beneficial for health.

Market segmentation:
 Demographic:-

Bakery products are well known among all age group people.
People of all:
 Age
 Gender
 Generation
 Family size

8
  Geographic:-

Bread and buns is initially targeting Islamabad. Later on we will be targeting all urban areas of Pakistan like
Lahore Karachi Rawalpindi Faisalabad Sialkot Multan.

 Behavioral:-

Those people having the requisite purchasing power and can afford to buy bakery products at premium prices.

 Competitor analysis:-

Our competitors are local bakeries operating in Islamabad such as Rahat bakers, Tehzeeb bakers, United
bakers, gourmet bakers and bakeman.

Organizational Plan:
 No. of Employees:

Our business is based on partnership. There are four partners who will be investing equally in this business.
Each partner has an equal percent of share which is 25%. Each partner will assume an important position in
the organization each having the authority according to their post.

Apart from the management staff the organization is divided into two activities i.e. production and selling.
For selling purpose we hire 4 salesmen who will deal with customers. The production house (Kitchen) will
be managed by our 3 Cooks who will do their best. All the employees will be hired through contract,
duration of contract depends upon the growth of the business. Initially we hire our employees for 6 months
after that the extension of contract takes place.

CEO:
CEO being highest ranking officers and administrator will be in charge of total management of the
organization; having the vast range of responsibilities as a communicator, decision maker, leader, manager
and executor. Chief Executive Officer will develop annual planning guidelines; will oversee the development
of the corporation’s annual service, will make plans and recommend strategies to achieve the organizations
goals and objectives.
Ammad Naqi will act as CEO. He is liable to take affirmative consent from other partners before execution
of all major activities.

9
CFO:
Ammad Naqi is one of the partner in our business. He will also act as CFO (Chief Financing Officer) for the
organization. He will deal and supervises accounting and financial matters and will also act as chief financial
spokesperson for the organization. His responsibilities also include financial planning, financial forecasting
and record keeping. He will deal with all external parties for matters such as raising funds for the
organization. CFO will assists the Chief Operating Officer (COO) and Chief Marketing Office (CMO) on all
strategic and tactical matters related to budget management, cost benefit analysis, forecasting needs and the
securing of new funding.

CMO:
Sidra Mustafa, another partner in the venture will act as CMO (Chief Marketing Officer). She will be the
executive, responsible for marketing activities, growth and marketing strategy. She will also share part of
responsibilities of sales management, product development, marketing communication which will include
advertisement and promotion campaign, and customer services. She is also member of executive team and
will report to the CEO.

Manager:
Humam Malik, a partner from the venture will also provide his services as a Manager of the bakery. He will
manage all the activities in a bakery to keep customers happy and satisfy. He will look upon employee’s
attitude and behavior towards customers. Also his duty to be in contact with Supply Chain Manager so that
He will timely and properly manage the purchasing of stock.

Supply Chain Manager:

Saad Shahbaz, also a partner from venture will also act as a Supply Chain Manager. His duty to provide all
the needed stock on time and to purchase things cheaply to earn as more as possible. The purchasing of stock
like wheat, maida etc will cost minimum if the relation between suppliers and manager is good. As a Supply
Chain Manager it should not rely only on one supplier, i must have contacts with different suppliers so in
case of emergency it would manage the order and deliver it on time.

Security guard:
There will be only one security guard who will be responsible of the security of the bakery premises. He is
required because of the bakery security to prevent any mishap.

10
Project Financing:
Following table provides details of the equity required and variables related to bank loan:

Project Financing
Description Details

Total Equity (50%) Rs. 1,990,688

Bank Loan (50%) Rs. 1,990,688

Markup to the Borrower (%age / annum) 15%

Tenure of the Loan (Years) 5

Project Cost:
Following fixed and working capital requirements have been identified for operations of the proposed
business:
Project Cost
Descriptio Amount Rs.
n
Capital Investment
Machinery & Equipment 1,294,400
Furniture & Fixtures 440,000
Office Vehicles 861,000
Office Equipment 141,500
Pre-operating Costs 180,000
Training Costs 10,000
Total Capital Costs 2,926,900
Working Capital
Raw Material Inventory 329,475
Upfront Building Rent 225,000
Cash 500,000
Total Working Capital 1,054,475
Total Investment 3,981,375
11
Space Requirement:
The space requirement for the proposed Bakery and Confectionary Unit mainly includes the production hall,
store room and a retail outlet. For this purpose, it is recommended that a rental place of maximum 5,750
sq.ft. (i.e. 5,000 sq.ft. for production space and 750 sq.ft. for outlet) would be acquired. The production space
and bakery outlet could be acquired at separate places. However, it should be ensured that both the facilities
are located closely for easy supply of produced goods to the outlet.

Space Requirement
Description Estimated
Area(Sq.) Total
Rent(Rs.)
Production Unit 5,000 30,000

Outlet Space 750 45,000

Total Rent 5,750 75,000

Machinery & Equipment Requirement:

Plant, machinery and equipment for the proposed project are stated below:

Machinery & Equipment Requirement (10% Straight Line)

No. Description No. of Cost per Original Value
Item Item
1. Flour Sifter 1 250,000 250,000
2. Mixer Cakes and Cream Type 1 250,000 250,000
3. Oven (8x8 ft) 1 400,000 400,000
4. Dyes 30 80 2,400
5. Deep Freezers 2 35,000 70,000
6. Frier and Burner 4 6,000 24,000
7. Ceiling Machine 1 3,000 3,000
8. Moving Trollies 7 5,000 35,000
9. UPS and Batteries 5 30,000 150,000
10. Trays 50 200 10,000
11. Misc. Tools & Equipment’s(Pans, Knives 1 100,000 100,000
and others)
1,294,400

12
The required machinery is easily available in the local markets. Used and new machinery can be purchased
from different whole sale markets including Lahore, Karachi, Peshawar, Gujranwala, etc.

Furniture & Fixtures Requirement:

In addition to the above plant machinery and equipment, following necessary items will be required for the
proposed venture:

Furniture & Fixture Requirement (10% Straight Line)

Sr. Description No. of
Item Cost per Item Original Value

1 Tables for Production 2 5,000 10,000

2 Chairs & Other Furniture 1 20,000 20,000
3 Cost of Renovation and Interior Designing 1 200,000 200,000
4 Air Conditioner 1 60,000 60,000
5 Freezers 1 40,000 40,000
6 Weighing Scales (For Cash Counter & Production) 2 5,000 10,000
7 Micro Wave Oven 2 15,000 30,000
8 Sign Board 1 20,000 20,000
9 Miscellaneous 1 50,000 50,000
440,000

Office Equipment Requirement:

Following office equipment will be required for the proposed bakery and confectionery shop:

Office Equipment Requirement (10% Straight Line)

Description Quantity Unit Cost (Rs.) Total Cost (RS.)
Computer with servers 1 125,000 125,000
Billing Machine 1 15,000 15,000
Telephone set 1 1,500 1,500

Total 141,500

13
Human Resource Requirement:
Details of human resource required to run the operations of the proposed business are as under:

Human Resource Requirement

Description No. of Employees Monthly Salary
per Person (Rs.)

Owner Manager 1 25,000

Master Chef 2 20,000
Salesmen 3 12,000
Helpers 5 12,000
Driver 1 12,000

Above HR composition shall be engaged in order to manage the operational affairs of this project under the
supervision of the Owner Manager. Appropriate experience for chef and salesmen would be required.

Utilities and other costs:

An essential cost to be borne by the company is the cost of electricity and gas. The electricity expenses are
estimated to be around Rs. 50,000 per month (both factory & outlet), whereas, gas expenses are estimated to
be Rs. 345,139 / year (including both natural gas and LPG at 70% capacity utilization). Considering the non-
availability or low pressure of natural gas alternate burning fuels i.e. LPG, wood or kerosene oil may need to
be considered. Advance procurement of raw materials and packing material for at least 10 days along with 05
days finished goods stock level will be maintained for uninterrupted sales of goods, at the production and
outlet facility.

Revenue Generation:
Following table provides the details of sales revenues for year one:

Revenue Generation – Year 1

Product Mix 1st Year Sales Revenue (Rs.)

Bakery Sales (70%) 14,113,575

General Item Sales (30%) 4,234,072

Total Sales 18,347,647

14
Income Statement:
Detail Monthly Year 1 Year 2 Year 3
Sales/Revenue 1,528,970 18,347,647 21,908,272 25,707,195
Cost of Sales:
Raw Material Cost 988,425 11,861,105 14,162,923 16,618,792
Operation costs 1 (direct 197,222 2,366,667 2,637,556 2,901,479
labor)
Operating costs 3 (direct 20,000 240,000 264,000 290,400
electricity)
Operating costs 4 (direct 2,071 24,850 29,673 34,818
water)
Operating costs 5 (direct 28,762 345,139 412,118 483,580
gas)
Total Cost of Sales 1,236,480 14,837,760 17,506,269 20,329,069
Gross Profit 292,491 3,509,887 4,402,003 5,378,126
General administration &
selling expenses
Administration expense 73,000 876,000 963,600 1,059,960
Administration benefits 7,300 87,600 96,360 105,996
expense
Building rental expense 75,000 900,000 990,000 1,089,000
Electricity expense Outlet 30,000 360,000 396,000 435,600
Travelling expense 7,645 91,738 109,541 128,536
Communications expense 1,460 17,520 19,272 21,199
(phone, fax, mail, internet,
etc.)
Office expenses 730 8,760 9,636 10,600
(stationary,
entertainment, janitorial
services, etc.)
Promotional expense 15,290 183,476 219,083 257,072
Depreciation expense 23,987 287,840 287,840 287,840
Amortization of pre- 1500 18,000 18,000 18,000
operating costs

15
Amortization of legal, 83.3 1,000 1,000 1,000
licensing, and training
costs
Subtotal 235,995 2,831,935 3,110,332 3,414,803
Operating Income 56,496 677,952 1,291,671 1,963,323
Gain / (loss) on sale of - - -
office equipment
EBIT 56,496 677,952 1,291,671 1,963,323
Interest expense on long 18,907 226,886 193,368 148,262
term debt (Project Loan)
Interest expense on long 6,812 81,740 69,665 53,414
term debt (Working
Capital Loan)
Subtotal 25,719 308,627 263,033 201,676
EBT 30,777 369,325 1,028,638 1,761,647
Tax - 76,796 199,829
NOPAT 30,777 369,325 951,843 1,561,818

16
Balance Sheet:
Assets Year 1 Year 2 Year 3
Current assets
Cash & Bank 1,346,629 2,201,161 3,693,989
Finished goods inventory 208,983 243,368 282,593
Raw material inventory 432,756 558,576 718,156
Pre-paid building rent 247,500 272,250 299,475
Total Current Assets 2,235,867 3,275,355 4,994,214
Fixed assets
Machinery & equipment 1,164,960 1,035,520 906,080
Furniture, fixtures and Office 396,000 352,000 308,000
Equipment
Office vehicles 774,900 688,800 602,700
Office equipment 113,200 84,900 56,600
Total Fixed Assets 2,449,060 2,161,220 1,873,380
Intangible assets
Pre-operation costs 162,000 144,000 126,000
Legal, licensing, & training costs 9,000 8,000 7,000
Total Intangible Assets 171,000 152,000 133,000
TOTAL ASSETS 4,855,927 5,588,575 7,000,594
Liabilities & Shareholders'
Equity
Current liabilities
Accounts payable 505,227 604,993 712,477
Other liabilities
Total Current Liabilities 505,227 604,993 712,477
Other liabilities
Deferred tax - 76,796 276,625
Long term debt (Project Loan) 1,463,450 1,172,510 836,465
Long term debt (Working Capital 527,238 422,421 301,353
Loan)
Total Long Term Liabilities 1,990,688 1,671,727 1,414,443
Shareholders' equity
Paid-up capital 1,990,688 1,990,688 1,990,688
Retained earnings 369,325 1,321,168 2,882,985

17
 Total Equity 2,360,013 3,311,855 4,873,673
TOTAL CAPITAL AND 4,855,927 5,588,575 7,000,594
LIABILITIES

Cash Flow Statements:

Details Year 1 Year 2 Year 3
Operating activities
Net profit 369,325 951,843 1,561,818
Add: depreciation expense 287,840 287,840 287,840
Amortization of pre-operating costs 18,000 18,000 18,000
Amortization of training costs 1,000 1,000 1,000
Deferred income tax - 76,796 199,829
Finished goods inventory (208,983) (34,385) (39,226)
Raw material inventory (103,281) (125,820) (159,580)
Pre-paid building rent (22,500) (24,750) (27,225)
Accounts payable 505,227 99,766 107,484
Cash provided by operations 846,629 1,250,289 1,949,941
Financing activities
Project Loan - principal repayment - (290,940) (336,045)

Working Capital Loan - principal - (104,817) (121,067)

repayment
Issuance of shares - - -
Purchase of (treasury) shares

Cash provided by / (used for) financing - (395,756) (457,113)

activities
Investing activities
Capital expenditure - - -
Acquisitions

Cash (used for) / provided by investing - - -

activities
NET CASH 846,629 854,532 1,492,828

18
 KEY ASSUMPTIONS.
Operating Cost Assumptions:
Description Details
Cost of goods sold growth rate 10%
Days operational per year – Factory 355
Days operational per year – Outlet 340
Operating costs growth rate 10%
Administration benefits expense 10% of administration expense
Travelling expense 0.5% of administration expense
Communication expense 2% of Sales
Office expenses (stationary, entertainment, 1% of administration expense
janitorial services, etc.)
Promotional expense 1% of revenue

Revenue Assumptions:
Description Sale price growth rate Production capacity utilization Details
Production capacity utilization growth rate 10%
Maximum capacity utilization Days operational / year for Shop Hours operational / day 70%
Shift length (hours)
5%
95%
340
16
8

Financial Assumptions:
Description Details
Debt 50%
Equity 50%

Interest Rate on Debt 15%

Debt Tenure 5 Years

19
Other Assumptions:
1. Bakery industry is highly fragmented and frequent rate fluctuations are common, that the rates that
are calculated are best possible estimations under the given circumstances.
2. The price of the product is set on the basis of the price taken from Kohsar market + 10% addition is
made in that price.
3. It is assumed that for summer season, the average consumption of Bakery Products in a household of
6 is 58 kg per month.
4. It is assumed that for winter the average consumption of vegetables in a household of 6 will be 42 kg
per month.
5. Financial calculations are based on assumption that households not individual will purchase. For ease
of revenue calculation a consumption package is designed and the price of that consumption package
is calculated. This price is used to get the sales revenue.
6. The method of depreciation is assumed to be 10 years straight line.
7. The loan will be taken from Prime Minister Youth Loan Scheme and loan will be amortize according
to their requirements but we are taking the assumption of amortization of loan on fully own based.
8. For the purpose of ratio calculations, wherever applicable we have used average balances rather than
taking end of the year data except year 1.
9. The marketing expense amount are very small and will be outlaid when we start selling because of it
very minute nature, we have taken average monthly expense for advertisement.
10. The wages and the commissions will be paid immediately so we will have any accruals regarding
both of them.
11. Sales are assumed on the basis of survey of Tehzeeb, Fresco, United, Bakes Man Bakers and the other
local shops for better understanding of the Breads and Buns for an average requirement of
Households.
12. Packaging of Goods are totally depends on the Production departments.
13. Detailed Financial Assumptions has been shown above for better understanding.

20
Ratio Analysis:
Following are the ratio Analysis of the projects which are taken by assumptions:

Description Year # 1 Year # 2 Year # 3

Current Asset Ratio. 4.4 times 5.4 times 7 times

Gross Profit Ratio 19.1% 20.09% 20.90%

Operating Profit Ratio. 3.69% 5.8% 7.6%

Return on Investment 9.27% 23.90% 39.28%

Overall Profitability Ratio. 0.076 0.17 0.22

Assets Turnover Ratio. 3.78 3.92 3.67

Working Capital Turnover 17.40 20.77 24.37

Ratio
Profitability Ratio 0.02 0.04 0.06

Return on Assets Ratio 0.76 0.18 0.15

Interest Coverage Ratio 2.98 6.67 13.24

21
Amortization of Loan:
Following are the details of the Amortization of loan:

Given Data;
Details Values
Loan Amount 1,990,688
Annual Interest Rate 15%
Loan period in years 5 Years

Yearly Payment 593,853

Monthly Payments 47,358

Loan Schedule.
Years Loan Amount Principal Interest Total Remaining
(15%) Payments Balance
1. 1,990,688 295,250 298,603 593,853 1,695,438

2. 1,695,438 339,537 254,316 593,853 1,355,901

3. 1,355,901 390,468 203,385 593,853 965,433

4. 965,433 449,038 144,815 593,853 516,395

5. 516,395 516,395 77,459 593,853 0

22
Calculation of Additional Funds Needed:
For the Calculation of Additional funds we are going to use the formula approach and taking the assumption
that we are using DPO 25% as for the calculation purpose:

AFN = (7,000,594 / 25,707,195 * 6,426,799) – (712,477 /

25,707,195 * 6,426,799) – (32,133,994 * 1,561,818 / 25,707,195
* (1-0.25)

AFN = 107,825

23
Value of Firms:
For a Venture it is important to know that what the Value of the firm is. For this purpose the following are
the cash flows and the growth rate are as follows and R assumption is 25%. We are assuming that after 3 rd
year the growth rate will be constant @ 20%.

CASH FLOWS 846,629 854,532 1,492,828

GROWTH 10% 19% 17%

Cash flow 4 = CF3 (1+g).

= 1,492,828 (1+0.20).

Cash Flow4 = 1,791,394.

Terminal Value = FCF4 / R – G.

TV = 1,791,394 / 25 – 20
TV = 358,279.

PVCF1 = 705,524.
PVCF2 = 593,425.
PVCF3 = 1,071,242

Present Value of Venture: 2,370,191.

**PVCF3 = TV3 + FC3 / (1+G) 4

24
Conclusion:
We would finally like to conclude the project with a great feeling of having gained enormous knowledge
about bakery industry. First of all we are thankful to our teacher who gave us such a wonderful opportunity
to learn about the practical aspects of knowledge.

By conducting an extensive research on all the aspects of establishing a bakery, we conclude that the project
is feasible as per capital budgeting techniques.

While making the project we learnt how to communicate or deal with people and how to maintain contacts
with them. We saw all the marketing factors and were able to understand more about it because of seeing
them practically. It has been said that practical knowledge is more important than theoretical knowledge.

References:
www.bakerybazaar.com

www.wikipedia.org

www.justdial.com

www.fao.org

www.blog.franchiseindia.com

www.google.com

E.T,C.

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