DECLERATION

I, student of MBA, Roll No: 18 hereby declare that the project titled “BUSINESS
DEVELOPMENT PLAN OF ANISHA MUSIC COMPANY” for the subject BUSINESS
DEVELOPMENT PLAN submitted by me for 4th trimester of the academic year 2015-2016, is
based on the actual work carried out by me under the guidance and supervision of Course
instructor Mr. Kishore Dhungana. I further state that this work is original and not submitted
anywhere else for any examination.

Place: Mid Baneshwor, Kathmandu, Nepal

Date: 2/2/2016

Rupesh Nyaupane

………………………

Name & Signature of Student

 EXECUTIVE SUMMARY

Anisha Music company is private limited music company located at Manamaiju 1, Kathmamndu,
Nepal and owed by owner Mr. Rupesh Nyaupane and co-owner Dhurba Nyaupane. We provide
audio and video music cd’s to the customers. Our main objective is to to increase the interest of
youth towards Nepali songs, to promote Nepali music all over the world in long run, to be the
market leader in this field, and to earn enough from this business and motivate other to enter this
business. Our mission is to delivery of music CDs in Kathmandu before the market covered by
competitors and promotes the product in Nepali market. The main vision of company is to
provide quality music CDs and established itself as the leader of quality music CDs in Nepali
music industry.

There is lots of Music Company around the city. It is very difficult to achieve competitive
advantage. Therefore, Anisha Music company tries use unique strategies about promotion and
place. We promote our product by providing track songs to the singers in different concert
programs.It is free of cost. Competitive based pricing is used. With the help of strong
management team we utilize the opportunity i.e technological advantage. Anisha Music
Company targets the singers and the cassette center which are available in Kathmandu. The
positioning strategy of Anisha Music Company is “Music for PLEASURE”.

Anisha Music Company will be established with the initial cost of Rs 327102. Out of that Rs
37350 comes from equity and Rs 87150 comes from loan. This is long term loan which financed
from bank and for the day to day operation we will finance from working capital loan, which is
amount of Rs.675310. we expect to earn profit of Rs. 39,501 in year 1st and preliminary expenses
will be redeemed from 1st year of its operation. On the basis of increase in sales in later years we
expect to increase the amount of profit gradually every year.

Net present value of the company is positive. It indicates that the project is accepted. The IRR of
the company is 70% indicating that if we invest in commercial bank it provides only 10% return
but if you invest in our company 70% return. So it is attractive for investment. The ROE and
ROA of the company is gradually increasing which shows that the company is strong able to
exist in the market for long period of time.
Our music company will provide customer satisfaction and also at the same time promote the
Nepali song. We expect to grow and expand in the future.
 TABLE OF CONTENTS

CHAPTER I..............................................................................................................1

INTRODUCTION....................................................................................................1

1.1 INDUSTRY BACKGROUND ............................................................................................. 1

1.2 COMPANY OVERVIEW .................................................................................................... 1

1.3 IMPLEMENTATION PLAN ............................................................................................... 1

1.4 STARTUP COST.................................................................................................................. 2

1.5 COMPANY OWNERSHIP .................................................................................................. 2

1.6 BUSINESS OPERATION .................................................................................................... 3

1.7 VISION ................................................................................................................................. 3

1.8 MISSION .............................................................................................................................. 3

1.9 OBJECTIVES ....................................................................................................................... 3

1.10 OUR VALUES ................................................................................................................... 3

1.11 KEY TO SUCESS .............................................................................................................. 4

1.12 SWOT ANALYSIS ............................................................................................................ 4

1.12.1 Strength ........................................................................................................................ 5

1.12.2 Weakness ..................................................................................................................... 5

1.12.3 Opportunity .................................................................................................................. 5

 1.12.4 Threats.......................................................................................................................... 5

CHAPTER II ............................................................................................................6

ORGANIZATION AND MANAGEMENT TEAM .............................................6

2.1 MANAGEMENT SUMMARY ............................................................................................ 6

2.2 ORGANIZATION STRUCTUIRE ...................................................................................... 6

2.3 BUSINESS MODEL ............................................................................................................ 7

CHAPTER III ..........................................................................................................8

PRODUCTE AND SERVICES ..............................................................................8

3.1 PRODUCT ............................................................................................................................ 8

3.2 SERVICES ............................................................................................................................ 8

CHAPTER IV...........................................................................................................9

MARKET AND COMPETITION .........................................................................9

4.1 MARKET SEGMENTATION AND TARGETING ............................................................ 9

4.2 COMPETITION ................................................................................................................... 9

CHAPTER V ..........................................................................................................10

MARKETING AND SALES PLAN .....................................................................10

5.1 CURRENT SCENERIO OF THE COMPANY ................................................................. 10

5.2 TARGET MARKET ........................................................................................................... 10

 5.3 MARKETING PLAN ......................................................................................................... 10

5.4 POSITIONING ................................................................................................................... 11

5.5 MARKETING STRATEGY ............................................................................................... 11

5.5.1 Product ......................................................................................................................... 11

5.5.2 Price ............................................................................................................................. 11

5.5.3 Place ............................................................................................................................. 11

5.5.4 Promotion..................................................................................................................... 12

5.6 SALES STRATEGY: ......................................................................................................... 12

CHAPTER VI.........................................................................................................13

LEGAL FRAMEWORK, ENVIRONMENT AND SOCIAL FACTOR..........13

6.1 LEGAL FRAMEWORK .................................................................................................... 13

6.2 SOCIAL FACTOR: ............................................................................................................ 13

6.3 ENVIRONMANTAL ANALYSIS:.................................................................................... 14

CHAPTER VII .......................................................................................................15

FINANCIAL PLANNING AND ANALYSIS .....................................................15

7.1 ASSUMPTION ................................................................................................................... 15

7.2 FINANCIAL DETAILS OF SETUP EXPENSES ............................................................. 16

7.3 SALES FORECAST AND COST OF GOODS SOLD ...................................................... 16

7.4 BUDGET LOAN AND REPAYMENT ............................................................................. 16

7.5 PRO FORMA (PROJECTED) INCOME STATEMENT .................................................. 16

7.6 PRO FORM BALANCE SHEET STATEMENT .............................................................. 17

7.7 PRO FORMA CASH FLOW STATEMENT ..................................................................... 17

7.8 BUSINESS FINANCIAL RATIOS .................................................................................... 17

7.8.1 Current Ratio ................................................................................................................ 17

7.8.2 Quick Ratio .................................................................................................................. 17

7.8.3 Inventory Turnover Ratio ............................................................................................ 18

7.8.4 Fixed Assets Turnover Ratio ....................................................................................... 18

7.8.5 Total Assets Turnover Ratio ........................................................................................ 18

7.8.6 Debt Ratio .................................................................................................................... 18

7.8.7 Debt Equity Ratio ........................................................................................................ 19

7.8.8 Gross Profit Margin ..................................................................................................... 19

7.8.9 Net Profit Margin ......................................................................................................... 19

7.8.10 Operating Profit Margin ............................................................................................. 19

7.8.11 Basic Earning Power .................................................................................................. 19

7.8.12 Return on total assets ................................................................................................. 20

7.8.13 Return on Common Equity ........................................................................................ 20

7.9 NPV and IRR ...................................................................................................................... 20

 7.10 PAY BACK PERIOD ....................................................................................................... 20

7.11 EXIT STRATEGY............................................................................................................ 21

REFERENCE .........................................................................................................22

ANNEX ...................................................................................................................23
 CHAPTER I

INTRODUCTION

1.1 INDUSTRY BACKGROUND

In today's business sector music industry is one of the growing industries. Similar to any
industry, music industry has specific objectives and corresponding strategies that are designed to
improve a company's bottom line. Music is one of the instruments which help to reduce the stress
of individual. Everyone loves music so to fulfill the music need of individual, music companies
are established. There are more than hundred music company are registered in Nepal. Among
them Anisha music company is one of the promising company whose vision is to satisfy music
lovers by providing quality music CDs.

1.2 COMPANY OVERVIEW

Anisha Music Company is one of the profit oriented music company. its main function is
promotion and distribution of music CDs in the market which is previously recorded by other
recording studios. So we do not record songs. It copies CDs according to the demand of owner of
the CDs. The company is going to establish in Manamaiju, Kathmandu. The owner of the
company is Mr. Rupesh Nyaupane. He is MBA holder and five years experience in related field.
The main target market of company is music lovers who live in Kathmandu.

1.3 IMPLEMENTATION PLAN

The companies’ major activities before starting business with estimated month and weeks are
shown by following figure:

1
 Project Implementation
1/1/2016 1/16/2016 1/31/2016 2/15/2016 3/1/2016 3/16/2016 3/31/2016

Company Registration
PAN & VAT Registration
Anisha Layout Setup
Acquiring Necessary Equipments
Hire Staffs /Re cruit Project Team
Business Commencement

1.4 STARTUP COST

Anisha Music Company will be established with the initial cost of Rs 327102. Out of that Rs
37350 comes from equity and Rs 87150 comes from loan. This is long term loan which financed
from bank and for the day to day operation we will finance from working capital loan, which is
amount of Rs.675310. The calculation is resented in annex.

1.5 COMPANY OWNERSHIP

Anisha Music Company is profit oriented private ownership company owned by Mr. Rupesh
Nyaupane, an MBA graduate and having 5 years of experience in the related field. And Mr.
Dhruba Nyaupane is the partner of company, an MBA graduate and having 3 years experience in
the related field. It will be registered in Company Registrar’s act. The overall registration charge
and legal fees will cost Rs 4500. The company is situated at Manamaiju 1, Kathmandu.

2
1.6 BUSINESS OPERATION

The company is going to established in Kathmandu hence to distribute the music CDs is easy in
main shop in Kathmandu. The company is going to produce 10000 thousand music CDs per year
and it is accept the demand of 10 different people. It means we are going to produce 1000 CDs
for single owner of CDs. The company will operate with four board members and one helper.

1.7 VISION

The main vision of company is to provide quality music CDs and established itself as the leader
of quality music CDs in Nepali music industry.

1.8 MISSION

The mission of the company is to delivery of music CDs in Kathmandu before the market
covered by competitors and promotes the product in Nepali market.

1.9 OBJECTIVES

The following are the main objectives of Anisha music company:

 To increase the interest of youth towards Nepali songs.

 To promote Nepali music all over the world in long run.
 To be the market leader in this field.
 To earn enough from this business and motivate other to enter this business.

1.10 OUR VALUES

The values of Anisha Music Company are:

 Help the singer sustain.

 Promote Nepali songs.
 Customer satisfaction.

3
1.11 KEY TO SUCESS

The following are the main key factors which help to success in our business:

 Well and experience team members.

 Marketing through local media and local music programs (Mohadhsabh).

1.12 SWOT ANALYSIS

SWOT analysis is a strategic planning method used to evaluate the strengths, weakness,
opportunities and threats involved in a business venture. It involves specifying the objective of
the business venture or project and identifying the internal and external factors that are favorable
and unfavorable to achieve that objective.

Strength: weakness
Strong Management Team less market research
less product

SWOT
Threats
opportunity
increase in digitalal system
New technology.
piracy of CDs
high competition.

4
1.12.1 Strength

It comes from internal environment. It is under the control of management team. The strength of
Anisha Music Company is its strong management team who makes the strategic plan of
company.

1.12.2 Weakness

It also comes from internal environment. And it is also under the control of management. The
main weakness of Anisha Music Company is less market research and less product available in
the market.

1.12.3 Opportunity

It is comes from external environment. And it is outside side the organization. So we cannot
control it but we are able to manage it. The main opportunity of Anisha Music Company is
technological advantage.

1.12.4 Threats

Threats come from external environment. It is also out of control but it is manageable. The main
threats of company are increase in digital market and piracy of CDs.

5
 CHAPTER II

ORGANIZATION AND MANAGEMENT TEAM

2.1 MANAGEMENT SUMMARY

Anisha Music Company is one of the profit oriented music company. its main function is
promotion and distribution of music CDs in the market which is previously recorded by other
recording studios. The owner of the company is Mr. Rupesh Nyaupane with MBA graduate and
five years experience in related field. And Mr. Dhruba Nyaupane, three years experience in
related field

Manager should formulate all the plans, polices, missions and visions of the company and also
should work with the accountant to visual the daily works.

Management teams are responsible for doing all the works. Marketing manager looks all
promotion and distribution activities of the company and financial manager or accountant
calculate the all cost and revenue of the company. Financial manager also make financial plan.

2.2 ORGANIZATION STRUCTUIRE

There are total five members in our company. Mr. Rupesh Nyaupane is managing director of the
company, who has five years experience in related field. Mr. Bishall Malla is marketing manager
of the company, MBA graduate and specialized in marketing and one years of experience in Ads
Company. Mr. Dhruba Nyaupane is accountant of the company and Prakash Pandey is an
operation manager who has five years of experience in the Music Company.

6
 Managing Director
(Rupesh Nyaupane)

Marketing Manager
(Bishal malla)

Accountant Operating incharge Helper

(Dhruba Nyaupane) (Prakash Pandey) (Bikash Nyaupane)

Fig: organization structure of Anisha Music Company

2.3 BUSINESS MODEL

To established music company is easy task but to running its in long run is very difficult.
Because there is many music company are established in Nepali music industry. Some music
company is profitable but maximum are difficult to sustain. Anisha music company purchase the
blank CDs from market and it copied the music from original CDs which is recorded by recorded
company. Its main function is to promote and distribute the music CDs in market. We promote
songs through the local median and television. We design the cover of music CDs as per the
requirement of CDs owner.

7
 CHAPTER III

PRODUCTE AND SERVICES

3.1 PRODUCT

Anisha Music Company produces the music CDs. Therefore it is only one product. It provides
audio CDs and video CDs. Audio CDs are that CDs which used only for listening objectives and
video CDs are used for listening music by looking the video. Main products are:

I. Audio CDs
II. Video CDs

3.2 SERVICES

The services provided by Anisha music company is different from others music company in
Nepal. It provides discount if there is direct demand from company with huge demand. It
distributes the product in different cassettes center.

8
 CHAPTER IV

MARKET AND COMPETITION

4.1 MARKET SEGMENTATION AND TARGETING

Anisha Music Company is segmented its market on the basis of geographical. Hence our main
target is music lovers who live in Kathmandu. First we target cassette center of Kathmandu
based on demand of customer then expand in future in national as well as international market.
Our main focus will be directed towards the singer who wants to promote and distribute their
music albums. We support them by distributing their albums to those retailers who are in regular
contact with the music lovers.

4.2 COMPETITION

Competitors have both types of impact in company. It means there is opportunity as well as
threats. There are more than 50 music companies in Kathmandu valley. There for they all are
main competitor. But we are going to establish our company in Manamaiju VDC Kathmandu. In
around Manamaiju area there are 3 major music companies, which make them our main
competitor. They are:

 Jharana Music Company.

 Triveni Music Company.
 Sarangi Music Company.

9
 CHAPTER V

MARKETING AND SALES PLAN

5.1 CURRENT SCENERIO OF THE COMPANY

Before developing the marketing plan, we should analysis the current scenario of the Music
Company in Nepal. Marketing forces are changeable and need of the customer or consumer is
changeable. So, if we are able to change with changing environment the company is able to
achieved competitive advantage. There are main two forces which directly affected the company
performance. One is micro and another is macro forces. Micro forces are related to suppliers,
competitors, organization structure, media etc. And macro forces are political, social economic,
technological etc. CD and its objectives are the customer satisfaction with the quality of CDs not
the songs itself. We know that there are many music companies available in the Nepal. If we are
unable to thinking differently then there is very difficult to sustain. Hence Anisha music
company try to developed new ideas to achieved competitive advantage.

5.2 TARGET MARKET

Anisha Music Company targets the singers and the cassette center which are available in
Kathmandu.

5.3 MARKETING PLAN

Marketing plan is the one of the key factors which helps to organization achieved competitive
advantage. Anisha Music Company also develops different marketing strategy. The marketing
manager of the company try to developed different types of strategy. Marketing plan of company
is the overall marketing strategy should be competitive, strong and unique in the market.

10
5.4 POSITIONING

Branding is the customer’s psychological perception towards the product helps to better position
any product or services in the mind of the individual for better positioning of the company in the
mind of the individual.

The positioning strategy of Anisha music company is “Music for PLEASURE”.

5.5 MARKETING STRATEGY

For any business company marketing is very crucial to reach to the ultimate consumers.
Marketing makes the product reach to the people by knowing that the product is available in the
market.

Anisha Music Company also makes some marketing strategy. We make marketing strategy
based on its product, place, price, promotion. Anisha Music Company recognizing the fact that
the value in the label is instinctually based on the reputation within the company. The company
needs to be known as a premier label.

5.5.1 Product

The main product of the company is music CDs. There is two types of CDs one is audio CDs and
another is audio video.

5.5.2 Price

Price is computed on the basis of competitor pricing based. Our price range from Rs 100 to Rs
150. And there is a discount of huge demand that is 500 CDs at a time.

5.5.3 Place

Our company is located in Manamaiju, Kathmandu. the causes behind the selection of that
location is there is our own building. And we placing the product in different cassette center

11
located in Kathmandu. There are many cassette center located in new bus park Kathmandu. And
our company is nearby Bus Park. It saves our transportation cost.

5.5.4 Promotion

We used T.V., radio, local media and concert programmers for the promotion. We provide track
of CDs for singer and they sing a songs in different music programs. It is cost free promotion
technique.

5.6 SALES STRATEGY:

We sales the product in music concert also. First our songs sung by singer then we sell it in to
that programmers. We sell the CDs at competitive price with quality. We also used to singer of
related song for increase the sales. We do not sales on credit.

12
 CHAPTER VI

LEGAL FRAMEWORK, ENVIRONMENT AND SOCIAL

FACTOR

6.1 LEGAL FRAMEWORK

It is very necessary to be clear about the legal procedures within the business. If the Company
can’t fulfill the legal requirements, then it will be very difficult for Company to run business
properly. So, I have to fulfill all the legal requirements. The company will be registered in
Company registrar office, which is located in Tripureshwor, kathmandu. The legal charge for the
registration is Rs 4500 and it will be renew yearly. The renewal must be done within 35 days of
fiscal year completion. We have to fulfill the necessary document for the registration which is as
follows.

 The nature of business

 The full name of the Company
 The principal place of business of the Company
 The objectives of the company and company intention to run the business.
 The full name, surname and permanent address of the partners, with photos and
photocopies of citizenship
 The legal contract with the Banks must be clear etc.

6.2 SOCIAL FACTOR:

We should be aware about the affect of the music towards the society. Our music does not affect
the true picture of society and its does not provides negative meaning in the society. There is a
different meaning of music itself, so we careful about the meaning of the music. Therefore, we
sensor the song before distribution the song.

13
6.3 ENVIRONMANTAL ANALYSIS:

Business sector affected from the environment. It is external factors which provide the
opportunity as well as threats to the company. If we are able to manage that factors effetely then
threats becomes opportunity for us. Environmental analysis consists of analysis of political
factors, legal factors, socio cultural factors, technological factors, economic factors and legal
factors. All factors provide opportunity as well as threats for our company. In Nepal, there is a
direct threat of political instability. In the current situations, the impact of blocked is directly
affect the company performance.

14
 CHAPTER VII

FINANCIAL PLANNING AND ANALYSIS

7.1 ASSUMPTION

 Total sealing price per CDs = 150

 Our revenue per CDs = 80 ( out of 150 Rs 70 goes to owner of CDs)
 We accept only 10 offers in each year.
 Sales 1000 CDs for one type of songs
 A total sale of the year is 10000.
 Revenue from CRBT = Rs 5

. working note
CRBT tone of 1 songs = 3000
one
3000*10 = 30000 years
30000*5 = 150000 0
20000*5 = 100000 1
15000*5 = 75000 2
30000*5 = 150000 3
25000*5 = 125000 4

 Tax is assumed to 25%.

 Sales increase by 10% each year.
 Depreciate of computer and furniture by 25%
 Bank loan is 8%.
 Working capital loan 13%.
 COGS is 20 % of total sales.
15
  Others expenses remain same
 Gross profit is 80% of sales.
 Salary is increase by 10%.
 Inventory is based on 10% of next years.
 Dividend is 5 %.

7.2 FINANCIAL DETAILS OF SETUP EXPENSES

Total startup cost of Anisha Music Company is Rs 327102. Out of total setup cost Rs 202602 is
working capital cost and remaining is fixed assets and preliminary expenses. The fund is
financed from equity and debt. 30% of total cost is from equity and 70% from debt. The startup
of company is calculated based on total fixed assets, total preliminary expenses and working
capital requirement. The detail calculation is in annex.

7.3 SALES FORECAST AND COST OF GOODS SOLD

The sale revenue is comes from total number of CDs sales and number of CRBT sold. The sales
of the upcoming years are expected to increase by 10%. And cost of goods sold is 20% of total
sales. The detail calculation is in Annex.

7.4 BUDGET LOAN AND REPAYMENT

Our total setup cost of company is Rs 124500. Out of that 70% is long term loan. The amount of
Rs 87150 is long term loan. Interest rate of long term debt is 8%. We will paid all loan with in
the life of project. The detail about the amortization is in Annex.

7.5 PRO FORMA (PROJECTED) INCOME STATEMENT

Pro forma income statements are an important tool for planning future business operations. If the
projections show a downturn in profitability, we can make operational changes such as
increasing prices or decreasing costs before these projections become reality. The pro forma
income statement of Anisha Music Company shows appropriate profit in increasing for the
periods of projection. The detail of pro forma statement of this store is shown in Annex.
16
7.6 PRO FORM BALANCE SHEET STATEMENT

Balance sheet consists of liability and equity and total assets. The total assets of the company are
Rs 712058. The detail about the all items in balance sheet is available in Annex.

7.7 PRO FORMA CASH FLOW STATEMENT

A pro forma cash flow statement shows the total net cash inflow or outflow at a specific point of
time. It shows the cash generated from operating, investing and financing activities. The opening
cash flow of Anisha music company shows the net cash balance of Rs.723291.and balance of Rs.
2369356 at the end of year 5. The pro forma cash flow statement of Anisha music company is
disclosed in Annex.

7.8 BUSINESS FINANCIAL RATIOS

Business Financial Ratios are related to liquidity ratio, asset management ratio, debt management
ratio and profitability ratio..

7.8.1 Current Ratio

The current ratio of a firm measures short term solvency. The higher the current ratio, the larger
the amount of rupees available per rupee of current liability. The current ratio of Anisha music
company is 1.31, it represent that there is not sufficient current assets in the company. The
calculation is disclosed in Annex.

7.8.2 Quick Ratio

A low quick ratio implies that the company has difficulty meeting its current liabilities.
Generally quick ratio of 1:1 is considered satisfactory as a company can easily meet all current
liabilities. The quick ratio of Anisha music company is 1.3, it means the company is able to pay
current liabilities from its current assets. The calculation is disclosed in Annex.

17
7.8.3 Inventory Turnover Ratio

Increasing ratio is favorable which shows that the firm is very efficient on inventory
management. The inventory turnover of company is 24 times in beginning of the year and it is
increasing order and at the end of five years it is 75 times. It means the company is able to well
inventory management. The calculation is disclosed in Annex.

7.8.4 Fixed Assets Turnover Ratio

High fixed assets ratio shows that the firm is very efficient on fixed assets management and low
ratio indicates that the poor utilization of fixed assets. The fixed assets ratio of company is 12.66
times in the beginning of the year and it is increasing order. At the end of the year it is 99.44
times. It means the company is good in fixed assets management. The calculation is disclosed in
Annex.

7.8.5 Total Assets Turnover Ratio

Low ratios indicate that the company is not generating an adequate volume of business for the
size of its assets investment. In the beginning of the year it is 1.15 times and it is increase in year
two but after year two it is decreasing order. It means in first two year the company is able to
effective management of total assets but after second its performance is poor in total assets
management because of its current assets management. The calculation is disclosed in Annex.

7.8.6 Debt Ratio

A higher ratio generally means that the firm must pay a higher interest on its borrowing. Hence
creditors prefer a low debt ratio. The debt ratio of the company is 1 at year one and it is
decreasing others years. It means company is able to pay interest timely. The calculation is
disclosed in Annex.

18
7.8.7 Debt Equity Ratio

It is used to measures the financial risk of the firm and creditors. High debt equity ratio of a firm
is riskier to them. The debt equity ratio of company is 2.27 in year one and 2.23 in year two and
it is decreasing order. It means the company is able to manage its risk properly. The company is
financially sound. The calculation is disclosed in Annex.

7.8.8 Gross Profit Margin

It shows how well the purchase or production cost of goods sold is controlled. The increasing
ratio shows that the gross profit is increasing so the increasing ratio is good for a company. The
gross profit ratio of the company is 81%. It is fixed in all years. It is good for company. The
calculation is disclosed in Annex.

7.8.9 Net Profit Margin

The increasing ratio shows that the net profit is maximizing and operating cost is decreasing so
the increasing ratio is good for the company. The net profit of the company in year one is 12%
and it is increasing order. Hence, company is good in terms of net profit. The calculation is
disclosed in Annex.

7.8.10 Operating Profit Margin

This ratio measures the effectiveness of production and sales of the company. Hence the higher
the operating profit ratio is better for the company. The operating profit margin of the company
is 12% in year one and 22% in year two and it is increasing order. At the end of year five is 52%.
So company is good. The calculation is disclosed in Annex.

7.8.11 Basic Earning Power

The increasing ratio is favorable for the company. This ratio shows operating profit per rupee
invested in total assets. The basic earning power of the company in year one is 14% then it is
increasing up to three years then it is slightly decreases. Overall is good. The calculation is
disclosed in Annex.
19
7.8.12 Return on total assets

Increasing ratio is favorable. The return on total assets of the company in year one is 4% and it is
increasing order up to three years then slightly low in others years. The calculation is disclosed
in Annex.

7.8.13 Return on Common Equity

Increasing ratio is favorable for a company which shows that the net profit is increasing. The
ROE of the company is 16.4% in year one and it is increasing order. It is good for company. The
calculation is disclosed in Annex.

7.9 NPV and IRR

NPV can be described as the “difference amount” between the sums of discounted: cash inflows
and cash outflows. It compares the present value of money today to the present value of money
in the future, taking inflation and returns into account. It is the present value of the future cash
flow. The NPV of Anisha music company is Rs 1111808. It means there is good for investment
in Anisha Music Company. Positive NPV is acceptable for the company.

IRR is the discount rate at which the present value of all future cash flow is equal to the initial
investment or in other words the rate at which an investment breaks even. The IRR of the anisha
music company is 70%. It means if we invest in bank which provides only 10% return but
investment in Anisha Music Company provides 70%. So company is attractive for investment.
The calculation is disclosed in Annex.

7.10 PAY BACK PERIOD

Payback period is the time requirement of covered its initial investment from its future expected
cash flow. The PBP of Anisha Music Company is 2.96 years. It means company is able to
recover its investment within 2.96 years. The calculation is disclosed in Annex.

20
7.11 EXIT STRATEGY

The overall performance of Anisha Music Company is good. It is able to earn profit in every year
and profit of the company is increasing order. NPV, IIR, PBP and all ratios shows good
performance of the company. The environment is not in our control and future is uncertain,
hence if company is unable to fulfill its objectives we can seals the all assets in to others music
company and used that amount for payment of debt.

21
 REFERENCE

 bplan.com

22
 ANNEX

Annex 1
Start Up Summary
Particulars Amount
Fixed Asset
Furniture 55,000
Equipments 45,000
Total Fixed Asset 100,000
Pre operating Expenses 24,500
Total 124,500
Current Asset
Initial working capital 202,602
Total Current Asset 202,602
Total Start Up Cost 327,102

Annex 2
REVINUE Year 1 Year 2 Year 3 Year 4 Year 5
Sales of
CDs 800000 1012000 1396560 1766648 2234810
From
CRBT 150000 100000 75000 150000 125000
Total 950000 1112000 1471560 1916648 2359810

23
 Annex 3

COGS Year 1 Year 2 Year 3 Year 4 Year 5

160000 202400 279312 353329.68 446962.0452

Annex 4

Stock Year 1 Year 2 Year 3 year 4 year 5

6667 6000 6667 5333 6000

24
 Annex 5
Particular Year 1 Year 2 Year 3 Year 4 Year 5
Revenue:

Total sales revenue 950,000 1,112,000 1,471,560 1,916,648 2,359,810

less: cost of goods sold 160,000 202,400 279,312 353,330 446,962

Gross profit 790,000 909,600 1,192,248 1,563,319 1,912,848

Less: Operating
expenses 644,340 645,140 670,020 654,988 656,053

EBITDA 145,660 264,460 522,228 908,331 1,256,795

Less : Depn 25,000 18,750 14,063 10,547 7,910

EBIT 120,660 245,710 508,166 897,784 1,248,885

less: Interest 67,992 66,773 3,998 2,570 1,025

EBT 52,668 178,937 504,167 895,214 1,247,860

less: tax(25%) 13,167 44,734 126,042 223,803 311,965

Net Income 39,501 134,203 378,126 671,410 935,895

25
Particular Year 1 Year 2 Year 3 Year 4 Year 5

Beginning Retained
Earning - 37,526 165,019 524,238 1,162,078

Add: Net income 39,501 134,203 378,126 671,410 935,895

Less: Dividend (5%) 1,975 6,710 18,906 33,571 46,795

Closing retained
earning 37,526 165,019 524,238 1,162,078 2,051,178

26
 Annex:5

Cash Flow Statement

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
A. Cash Flows From Operating Activities
Net Income before tax 52,668 178,937 504,167 895,214 1,247,860
Preliminary expenses written off (24,500) 4,900 4,900 4,900 4,900 4,900
Depreciation 25,000 18,750 14,063 10,547 7,910
(Increase)/Decrease in inventory (6,667) 667 (667) 1,333 (667)
Tax (paid)\saving (13,167) (44,734) (126,042) (223,803) (311,965)
Total Cash generated from operating activities (24,500) 62,735 158,519 396,421 688,190 948,039
B. Cash Flow From Investing Activities
Purchase of Furniture (55,000)
Purchase of Computer (45,000)
Total Cash Flow From Investing Activities (100,000)
C. Cash flows from financing activities
long-term bank loan 87,150
Working Capital Loan 472,738
Dividend Paid (1,975) (6,710) (18,906) (33,571) (46,795)
Capital 239,952
Loan Payment (14,783) (16,002) (17,321) (18,749) (20,294)
payment of short term loan (472,738)
Total Cash generated from financing activities 327,102 455,980 (495,450) (36,227) (52,319) (67,089)
Total Cash Flows 202,602 518,714 (336,931) 360,194 635,871 880,950
opening balance - 202,602 721,316 384,385 744,579 1,380,450
ending balance 202,602 721,316 384,385 744,579 1,380,450 2,261,400

27
 Annex: 6

BALANCE SHEET
year 0 year 1 year 2 year 3 year 4 year 5
Assets
Current Assets
cash 202,602 721,316 384,385 744,579 1,380,450 2,261,400
Inventory - 6,667 6,000 6,667 5,333 6,000
Total current Asset 202,602 727,983 390,385 751,246 1,385,783 2,267,400
Fixed Assets 100,000 75,000 56,250 42,188 31,641 23,730
Preoperating Expenses 24,500 19,600 14,700 9,800 4,900 -
Total Fixed Assets 124,500 94,600 70,950 51,988 36,541 23,730

Total Assets 327,102 822,583 461,335 803,233 1,422,324 2,291,130

Liabilities & Equity

Current Liabilities
working capital loan 472,738
Total Current Liability 472,738
longterm loan 87,150 72,367 56,365 39,043 20,294
Equity 239,952 239,952 239,952 239,952 239,952 239,952
Retained earning 37,526 165,019 524,238 1,162,078 2,051,178

Total liability & Equity 327,102 822,583 461,335 803,233 1,422,324 2,291,130
Difference - - - - - -

28
 Annex:7

Ratio analysis Year 1 Year 2 Year 3 Year 4 Year 5

Current ratio 1.539928476
Quick ratio 1.525826232
Inventory turnover ratio 24 34 41.8968 66.249315 74.4936742
Fixed assets turnover ratio 12.66666667 19.76888889 34.88142222 60.57555437 99.4422087
Total Assets Turnover Ratio 1.154899065 2.410394951 1.832045499 1.347546934 1.029976505
Debt Ratio 1 0.122176977 0.048607806 0.014268523 0
Debt Equity Ratio 2.271723443 0.234899222 0.162713415 0.084577177 0
Gross Profit Margin 0.831578947 0.817985612 0.810193264 0.815652323 0.810594072
Net Profit Margin 0.041580193 0.120685841 0.256955576 0.350304297 0.396597714
OPerating Profit Margin 0.127010526 0.22096223 0.34532435 0.468413427 0.529231211
Basic Earning Power 0.146684338 0.532606244 0.632649921 0.631209077 0.545095713
Return On Total Assets 0.048020926 0.290900542 0.470754307 0.472051481 0.408486327
Return On Comman Equity 0.164621188 0.559289588 1.575838282 2.798101995 3.900343992

29
 Annex:8

PBP
Cumulative cash
Years Cash flow flow
0 -327102 -327102
1 69401.18341 -257701
2 157852.6551 -99848
3 397088.0475 297240
4 686857.0448 984097
5 948705.4978 1932802

PBP 2.962695027

Annex 9
NPV
Years cash flow
0 -327102
1 69401.18341
2 157852.6551
3 397088.0475
4 686857.0448
5 948705.4978
NPV $1,111,808.12

30
 Annex 10

Years cash flow

0 -327102
1 69401.18341
2 157852.6551
3 397088.0475
4 686857.0448
5 948705.4978
IRR 70%

Annex 11

year 0: quarter 1 Period Opening Balance Payment Interest Principal Closing

quarter 2 1 87,150 5,330 1,743 3,587 83,563
qr 3 2 83,563 5,330 1,671 3,659 79,905
qr 4 3 79,905 5,330 1,598 3,732 76,173
year 1:qr 1 4 76,173 5,330 1,523 3,806 72,367
qr2 5 72,367 5,330 1,447 3,882 68,484
qr3 6 68,484 5,330 1,370 3,960 64,524
qr4 7 64,524 5,330 1,290 4,039 60,485
year 2: qr1 8 60,485 5,330 1,210 4,120 56,365
qr2 9 56,365 5,330 1,127 4,203 52,162
qr3 10 52,162 5,330 1,043 4,287 47,875
qr4 11 47,875 5,330 958 4,372 43,503
year 3: qr1 12 43,503 5,330 870 4,460 39,043
qr2 13 39,043 5,330 781 4,549 34,494
qr3 14 34,494 5,330 690 4,640 29,855
qr4 15 29,855 5,330 597 4,733 25,122
year4: qr1 16 25,122 5,330 502 4,827 20,294
qr2 17 20,294 5,330 406 4,924 15,371
qr3 18 15,371 5,330 307 5,022 10,348
qr4 19 10,348 5,330 207 5,123 5,225
20 5,225 5,330 105 5,225 (0)

31