Project Title:

Dastkaar - The Craftsmen (Online Shoe Store)

Introduction:

There are various brands local and international that are selling formal shoes for men made with
original leather both online and in stores. The brand value that they have built in the price is so high
that it simply goes out of budget for middle class people and students. Having suffered from all these
situations several times and in search of low priced genuine leather shoes we decided to bring
something more economical solution affordable for all everyone can go formal in style with comfort.

Before launching the product, an extensive market survey was required that has to be done to
actually asses feasibility of the whole project. This was to be used as reference to start the business
and later on for investors showing its sustainability. So we started with leather; the main component.
There are many markets in Pakistan that are producing leather for different items for clothing,
footwear, furniture etc. We visited majority markets mainly Shah Alam shoe market and Mochi Gate
Lahore along with leather tanneries in Kasur and Sialkot. In the vicinity of these markets there were
items available that has to be used further to complete the shoes that mainly includes paint, polish,
glue, nails, leather sole, welts etc. After material search, we had to find skilled labor to complete the
job in time and also knowing each labor productivity in his particular domain like designing, cutting,
sewing and painting for estimating average time required to complete a pair of shoes. While
conducting research on materials you have to keep in my mind and note the prices of every material
so that you can later on work out an estimated cost of the product. In parallel we were also doing
competition analysis for an introductory price at launch. The whole process took around 1 year to
compete including making samples of shoes and trying them ourselves and among some friends and
family members to have feedback before officially launching the product.

Link to the pages of the business are:

Facebook

Instagram

Option 1

Dastkaar is an online shoe selling store which sells handmade genuine leather formal men shoes.
Dastkaar expects to sell 1200 units of its shoes articles in the first year. Sales volume is expected to
increase by 20% in Year 1 and 30% in Year 3, and then be the same in year 4 as year 3, as the
business reaches to the end of its useful life. The initial selling price is expected to be 3500 per unit
and will increase at rate of 15.5% in 4 years.

The variable cost of each unit is expected to be PKR. 413.24 in year 1, rising by the rate of inflation
in subsequent years annually. Fixed costs are expected to be PKR. 2,990,000 in year 1, rising by the
rate of inflation in subsequent years annually.

The initial investment in non-current asset PKR. 1,240,000. Dastkaar will also need working capital
of PKR. 455,130 in working capital. The working capital will be increased annually at the start of
Year 2 to 4 by the increase in selling price and will be fully recoverable at the end of the project.

Datkaar pays company tax on profits at an annual rate of 17%. Tax allowable depreciation is
available at 15% on the investment in non-current asset on straight line basis, the realizable value of
investment at the end of 4 year period would be PKR. 450,000.

The expected annual rate of inflation in the country 14.5% in year 1 and 15% in year 2 to 4.

The cost of capital/discount factor for this investment is 16%

Option 2

Dastkaar expects to sell 1200 units of its shoes articles in the first year. Sales volume is expected to
increase by 20% in Year 1 and 30% in Year 3, and then be the same in year 4 as year 3, as the
business reaches to the end of its useful life. The initial selling price is expected to be PKR. 3500 per
unit, before increase with 14% year 2 and 15.5% in 3rd and 4th year.

The variable cost of each unit is expected to be PKR. 3089 in year 1, rising by the rate of inflation in
subsequent years annually. Fixed costs are expected to be PKR. 462,000 in year 1, rising by the rate
of inflation in subsequent years annually.

There will be no initial investment as the business will run by buying shoes from a manufacturer and
selling it online. Dastkaar will also need working capital of PKR. 859,750 in working capital. The
working capital will be increased annually at the start of Year 2 to 4 by the increase in selling price
and will be fully recoverable at the end of the project.
Datkaar pays company tax on profits at an annual rate of 17%. Tax allowable depreciation is
available at 15% on the investment in non-current asset on straight line basis, the realizable value of
investment at the end of 4 year period would be PKR. 450,000.

The expected annual rate of inflation in the country 14.5% in year 1 and 15% in year 2 to 4.

The cost of capital/discount factor for this investment is 16%