BAHRIA

UNIVERSITY
Bahria Institute of Management & Computer
Sciences

Course : ENTREPRENEURSHIP

Submitted by : DANIA MIRZA, ALEENA

WASI, HINA FAZAL, ADNAN IQBAL, SYED
SAAD HASSAN
Submitted to : SIR KHAWAJA TARIQ
Submitted on : 31ST DEC 2010
Class : BBA - 6
Section: E
 INTRODUCTION

A. WATER FIESTA…….an experience like never before!

20-C, Main Khayaban-e-Ittehad road

Karachi

www.waterfiesta.com.pk

B. Owners: Ms. Dania Mirza, Ms. Aleena Wasi, Ms. Hina Fazal, Mr. Adnan Iqbal and Mr.
Syed Saad Hassan

C. This business will provide stimulating water sports to the entertainment starved residents
of Karachi. The target audience is the young and happening population of Karachi.
However, the focus will also be on children and adults. To begin with, WATER FIESTA
will introduce Jet Ski and Paragliding. The idea is to make good use of the marine belt of
Karachi touching the Ittehad area. At present, very few, if any such sports are being
offered in Pakistan. There are a few in the northern areas but none what so ever in
Karachi. So, we as budding entrepreneurs would like to indulge in this area.

D. Initial financing requested is a Rs. 45,000,000 loan to be paid off in five years. This debt
will cover land cost and the cost of Jet Ski and speed boat. The other expenses will be
met by our equity. Our company is form with 20 % equity and 80% debt.

This report is purely confidential and is the property of the owners. It is intended only for
use by the persons to whom it is transmitted; reproduction of any of its content is strictly
prohibited without the prior written consent of the company.
 EXECUTIVE SUMMARY
Water Fiesta is a partnership formed under the laws of Karachi, Pakistan.
This business plan has been prepared to provide the reader with information about our company,
including business structure, company goals, projected growth, venture capital requirements,
start-up costs, an investment analysis and the industry trends.
Water Fiesta’s primary interest is to provide entertainment to the people of Karachi and will
hopefully expand all over Pakistan.
Focused on individual, family and friends entertainment, water fiesta is a project primed to take
advantage of an expanding and profitable industry.
Entertainment has become a buzzword of the new millennium. People have become bored and
want to experience something new, fun and exciting. People of Pakistan especially Karachi
people loves to spend and they will spend it on entertaining themselves.
Quality entertainment is the focus of Water Fiesta. The project, water fiesta will be designed to
provide the type of entertainment and adventure the current market demands.
The proposed site is a 75 yard land touching the marine belt of Ittehad, and the expansion of the
project in the first five years.
In addition to other funding and capitalization efforts detailed herein, the Company anticipates
that it will seek funds from the Government which may assist in the purchasing of land.

Based on current pricing structure of the water sports industry we can expect revenue after the
first year of its launch.
With our strong management team and our aggressive marketing plan, we project a consistent
growth.
Objectives
The company's objective is to build quality, full-service water sports entertainment that will
command the approval of the people of Karachi.
Our goals include:
1. As we are the first movers to open water sports activity for public, we would like to
capture at least 20% of the market share.
2. A modest increase in our gross margins within the second year of operation
3. An increase in our market share by a minimum of 10% for each of our first five years.
Currently, there is no quality entertainment provided in Karachi, Pakistan. The company believes
that by entering the marketplace first and by establishing quality facilities, it will become, and
remain, a leader in the water sports/entertainment industry.
Our fundamental objective is to realize how we impact the community that we do business in,
knowing that we will stand the test of time if the local residents approve and support our project.
Mission
Water Fiesta’s sole purpose is to establish a profitable leisure, while at the same time creating an
atmosphere of fun and excitement for the entire family, with activities designed to please the
local residents.
Keys to Success
Based on our research, our primary targeted market is the youth mainly; however, anyone who
loves water sports is always welcome (ages 12 to 55). Thus with this in mind, we start with our
two main water sports activities Jet ski and paragliding and then later in the second year we will
bring in more variety of sports.
We believe that our main keys to success include:
• Providing popular and wide-ranging entertainment activities
• The use of state-of-the-art technology
• Easy access
• Design facilities to curb overcrowding
• Seasoned management team
We believe that we can minimize certain risk factors by:
• Initial capitalization of the company to sustain operations through year one
 • Low overhead through the use of multi-skilled employees and continual training
• Strong customer base through aggressive marketing
• Strong community ties and involvement
• Eliminate collection costs by establishing cash/credit/debit card only facilities

ENVIRONMENTAL AND INDUSTRY ANALYSIS

Economy
Pakistan’s GDP per capita (PPP) Purchasing Power Parity is 2400 US $, the Pakistan’s
population is 176,245 (in thousands of people) and its keeps on increasing by 3.0 %. However,
the population in 2025 is projected to be 250,981 (in thousands of people).

The percentage of population age wise is:

Under age 14, (2002): 41%

15-64 (2002): 55%
Over age 65, (2002): 4%

Hence, our target market consists of the age group from 12 to 60.

Technological
Our equipment will be the state of the art equipment. There is less risk in technology being
updated. However, the maintenance cost is enormous.

Political/Legal Aspects
Acquiring land from the said authorities (DHA) will not be an easy task. A lot of complex
procedures will have to be carried out, before we are granted access to the acquired land whether
on rental basis/lease or on ownership basis.

Moreover, the unstable condition of our economy is a big threat for us. The ongoing suicide
bombing and security problem is definitely going to have an impact on water fiesta. The weather
condition in Karachi is also going to have a blow on the demand.

Furthermore, we will have to get insurance coverage for property; in case of fire, and casualties
like product damage.

Industry demand
Water fiesta is going to be the first mover of launching the water sports for public. The industry
demand according to the informal survey that we carried out by just asking people around, if
they would love to have a water sports activity in Karachi and within the city; the majority of
them said, they were waiting for such an activity to transpire.

Competition
Our competitors at the moment are water sports at Marina Club and Creek Club; however, those
sports are restricted to the members only and are not available for the general public. Our future
competitor is going be at DHA phase 8, Zone F, owned by the DHA.

DESCRIPTION OF VENTURE
The company anticipates that its first “Water Fiesta” will be located in Karachi, Pakistan on the
coastal belt of the Ittehad area. The Water Fiesta will be the most modern in Karachi.
Our company anticipates that its facility will have a positive impact on the local environment and
economy.
We the entrepreneurs are about to complete our Bachelors of Business Administration. With the
urge to effectively utilize the marine belt of Karachi we like minded wanting-to-be entrepreneurs
came up with this idea of starting water sports in Karachi. Due to the lack of enough finance,
initially, we will just indulge in two of the water sports. Later, when the business goes under way
and there is steady cash flow, we will for into not just market penetration in the form of opening
more such places in Karachi but also market development in the form of taking the business to
other metropolitan cities of Pakistan. Right now, our focus is on hiring the appropriate personnel,
training them for the very purpose. Initial office equipment required would be furniture and
fittings for a reception area, stationery, and security paraphernalia and so on.

Initial financing will come from a venture capital and also from our pooled money

Mission
Water Fiesta’s sole purpose is to establish a profitable leisure, while at the same time creating an
atmosphere of fun and excitement for the entire family, with activities designed to please the
local residents.

Company Ownership
Water Fiesta is a Partnership and a private limited company which will operate in the ownership
of Ms. Dania Mirza, Ms. Aleena Wasi, Ms. Hina Fazal, Mr. Adnan Iqbal and Mr. Syed Saad
Hassan
 Use of Funds

Amount
Use
Phase 1 Construction Cost Breakdown Rs. 0
Property cost (Rs 500,000/sq yard) Rs. 37,500,000
Speed boat Rs.16,600,000
Jet ski (3 pieces) Rs. 1,800,000
Fire Insurance (1% of value) Rs. 375,000
Product Insurance (5% of value) Rs. 920,000
Desks Office supplies Rs. 15,000
Life Jackets (10) Rs. 10,000

Company Locations and Facilities

The first proposed site / property is:
1. We purchase a 75 square yard plot and construct our center.

Therefore, within this business plan we will present a primary look at the possibility, including
the basic business structure, the start-up cost, the company's projected growth, the market, the
local demographics, the economic impact, the industry trends, the construction costs, the
development of the land, the oversight of operations during the development of the infrastructure
and the companies future management and marketing team.
Our proposed site is a 75 square yard land at the marine belt of the Ittehad road.
We can incorporate with the government to provide us funding of the land.
Location
We believe the location at the marine belt of main Ittehad is the perfect location as it lies in the
middle of the city and is easily accessible to the citizens. Furthermore, it gives a mesmerizing to
the citizens of Karachi, Pakistan.
Equipment
As stated above we will only start with two water sports activity, that is, jet skiing and
paragliding. We will be leasing the equipment; the lease will be of two years.
Financing
Our financing will be 20% equity and 80% debt.
Services
Our project “Water Fiesta” will provide customers with a wholesome environment that provides
amusement, entertainment, excitement, and competition; all while forming lasting memories at
affordable prices.
Although there is currently no serious competition in Karachi, where we plan to establish our
water fiesta, we believe that because the water sports activity is going to be in great demand,
sooner or later competition will encroach.
To that end, the company plans to become profitable and retain a solid leadership position in the
marketplace by providing:
• Year round competitions – For encouraging the young, the active to become
competitive.
• Year round play with a wide variety of activities - Our season never stops.
• Seasoned, successful management team.
• Family-oriented - Partnership-operated center gives the company local insight.
• Aggressive marketing.
• Customer Incentive Program – Reward/Discounts to frequent visitors/customers.
• Easy access and exposure.

Future Services
Water Fiesta will expand its water sports activities during its second year of operation, by adding
snorkeling, water skiing, surfing, banana boating and a sea food cafe and other attractions.
SWOT Analysis
STRENGTHS:

• First of its kind in Pakistan

• Large water surface area

• Scenic views and geologic formations

• Easily accessible from all parts of the city

WEAKNESSES:

• Short warm season January to June

• Lack of on-site boat storage

 • Not much experience.

• Lack of Finances.

OPPORTUNITIES:

• Expansion in other metro cities of Pakistan

• Developing interest of water sports in Pakistan

THREATS:

• Unstable political and economic situation of Pakistan

• Lack of funding for new facilities and maintenance (materials and labour).

• Utility costs

• Security problems

• Govenrment red-tapism hinders sound decision making

• Keeping up with inflation

MARKETING PLAN
We are introducing water sports in Pakistan for the first time. Although, entertainment and theme
parks do offer water sports, what we have on offer is different. Initially, we plan to introduce jet
skiing and paragliding. This will be available on the marine belt of Karachi, touching the main
khayaban-e-ittehad road. Since this venture is first of its kind in Pakistan, this is treated as both
strength and a weakness. Strength, because we do not have any direct completion and weakness
because of the lack of experience we have. However, we are all geared up to make our
weaknesses our strength in a relatively short span of time.

Once the project goes underway and the hurdles have been dealt with and if the response is
worthwhile we plan on to penetrate in other cities of Pakistan too.

Research has indicated that the prime market for “Water Fiesta” is in urban areas close to
neighborhoods with large concentrations of upper- to middle-income bracket population.

The Karachi City Government, Census 2007 provides us with the following demographic
information about the Karachi area.
YEAR Urban Population
 1856 56,875
1872 56,753
1881 73,560
1891 105,199
1901 136,297
1911 186,771
1921 244,162
1931 300,799
1941 435,887
1951 1,068,459
1961 1,912,598
1972 3,426,310
1981 5,208,132
1998 9,269,265
2006 13,969,284
2007 14,500,000

Karachi’s population is a cosmopolitan mix of people from all regions of Pakistan and abroad.
The majority of the inhabitants are descendents of the migrants from the time of partition of
Pakistan. These people make up 48% of the city’s population and are primarily educated
urbanites who speak Urdu as their native language. The other 52% of the population is made up
of Punjabis (14%), Pushtuns (11%), Sindhis (7%), Balochis (4%) and other ethnic groups
including Afghan refugees. Iranians, Bengalis, Arabs and people from other areas of the world
can also be seen living and working here. This mix of people gives Karachi a reputation of being
the melting pot of Pakistan.

Market Segmentation
“Water Fiesta’s” primary targeted market consists of two main groups. These categories are: 12
to 24 year old and 25 to 55 years old. To better understand the size and breakdown of the local
population see the following table and chart.
Age group12 to 24: 30%
Age group25 to 55: 45%
Target Market Segment Strategy
A full-time public relations coordinator is a vital part of “Water Fiesta” management team. The
job will require this person to be responsible for assuring customer satisfaction, generating public
awareness for the types of entertainment offered at our "Water Fiesta," and attractively
promoting the various activities to the public.
Even though, our customers can be considered all age groups, both sexes, all races, a higher level
income group, local residents or tourist to the area. The most important factor behind our
success is simply, THAT A PERSON CAN ENJOY THEMSELVES, while participating in the
activity they choose.

Market Growth
As the population ages the potential market size increases and with the type of entertainment offered at
our facilities, we are confident that our customer base will continue to grow and remain stable for the
foreseeable years to come.

Population Growth

Karachi’s population is now growing at 3%

Competition and Buying Patterns

Water Fiesta is a business focusing on family entertainment where there will be water sports and
activities that all ages can participate in and enjoy as individuals or as a group. It makes a great
day for family and friends altogether.
The simplicity of the activities enables anyone to experience excitement without having to know
how to play like a pro. No experience is required in any of the sport and one can enjoy the water
sports with thrill.
Competition in the Water sports activity in Karachi is considered mild at best and most venues
are remotely located. Our first choice of locations is superior and offers us an edge
against future competition or similar services.
Experts say, "If you require a big grand opening or spend a ton on advertising your center, then
you are not in the right location. The public just needs to be able to see your location make it
look fun and they will know where you are and when to come."
Main Competitors

Looking at the industry, there are no serious competitors in Karachi offering water sports to its
residents. The only competitors at the moment are Marina Club and Creek Club which
only offers water sports for its members.
We will be entering the market place as the leading company for amusement and entertainment
to the area.
Water Fiesta will be the first of its kind in the area to address our underserved market,
understanding that price is not the public’s only buying criterion. We at Water Fiesta believe that
customers want to feel a holistic process of having fun and they expect prompt service. Combine
that with a clean environment, trained workers, safety and properly working equipment and we
are ensured that our customers will come back again and again.

STRATEGY AND IMPLEMENTATION SUMMARY

Our services will be positioned to provide our customers with a premium amusement and
entertainment experience.
Thus our pricing strategy will be to charge a premium price as per industry standards.
The following subtopics will present our sales strategy, marketing strategy, pricing strategy,
daily customer projections and promotion strategy.

Competitive Edge
The high standards set by our company and our location is going to make it very difficult for
competitors to enter and survive in the market area.
Water Fiesta research shows that the opportunity exists to provide a high-quality service, where
we can offer competitive pricing to our customers and still make an outstanding profit in this
demanding market.
The keys to our competitive edge
there are several critical issues based on the lifestyles of the area for our business to be accepted
and survive.
• Produce maximum profits, but still able to offer affordable entertainment
• Provide the best water sports
• Repeat customers/tournaments/enjoyment
 • Provide activities for a large range of age groups
• Exciting work environment

Marketing Strategy
Our customers can come from all age groups, male and female, all races, and high level income
group and can be local residents or tourists to the area. That is why our marketing plan started at
the construction phase; by keeping in mind, if it looks fun people will come.
Our full-time public relations manager is a vital part of our management team, by assuring that
customer satisfaction is provided and gathering information from the public about the types of
entertainment most desired. This can provide our company with the means to stay in touch with
the community and ready to meet their desires.
Pricing Strategy
To establish the following detailed chart, we referred to several factory-pricing recommendations
and the local competition.
The following details our pricing and the # of customers per month that we used for our cash
flow projections.

Price

Jet Skiing Rs. 2000/ hr.

Para gliding Rs. 5000/ hr

Snorkeling Rs. 800/ hr.

Water Skiing Rs.2000/hr.

Surfing Rs.1000/hr.

Banana boating Rs.1500/hr

All business expenses are detailed in the financials topics. All other direct cost were pre-
calculated and added into the Sales Forecast table.
Promotion Strategy
Water Fiesta’s first objective in promoting our center will be to capitalize on the power of the
WORD OF MOUTH.
In every business it is a well-known fact that word-of-mouth advertising is any businesses' best
friend or worst enemy. Yet, this does not preclude the fact that announcements, placing
advertisements in the local newspapers and our future planned website are not just as important
in reaching new customers and will be employed as follows:
Advertising
Our first and foremost objective will be to make the public aware of the venture. Getting our
positioning message to the public, “an experience like never before,” where fun and
customer service is paramount. Generally, this can be done via brochures, pamphlets, flyers and
other medium. More specifically, we will do promotion via social networking websites such as
Facebook, MySpace and twitter. This will give us exposure to approximately 250 million users.

Apart from this, advertisement in magazines like Home Xpress, brochures dropped door to door.
All these mediums of promotion chosen are cost effective and do not require too much expense.

Sales Brochure

Informing the public of all the activities found and offered.

Sales Strategy
Our sales strategy is set on the very basics of business, please our customers and they will return
again and again.
Sales Forecast

Karachi’s population is 14,000,000. Using our minimal targeted market population of 900,000
people, we will detail how easily we can reach our projected income goals.
• 10% of 900,000 people = 90,000 customers per year, each spending at least Rs. 2000 per
visit and visiting 8 times a year.
• Or, using our projected average per person expenditures = Rs. 2000 x 150 customers
daily=Rs. 300,000x 200 days = Rs. 60,000,000 per year.
We can meet or exceed our projected income if approximately one out of three possible
customers visits our center once a year and spends a minimum of Rs. 2000 on that visit.
The following chart shows Water Fiesta projected sales for 5 years.

Sales by Year
Sales Forecast
Year 1 Year 2 Year 3 Year 4 Year 5

Sales

Jet Skiing Rs.30,000,000 Rs.20,000,000 Rs.20,000,000 Rs.25,000,000 Rs.26,000,000

Para Gliding Rs.30,000,000 Rs.15,000,000 Rs.17,000,000 Rs.18,000,000 Rs.18,000,000

Snorkeling Rs.0 Rs.20,000,000 Rs.17,000,000 Rs.17,000,000 Rs.18,000,000

Water Skiing Rs.0 Rs.7,000,000 Rs.10,000,000 Rs.10,000,000 Rs.12,000,000

Surfing Rs.0 Rs.0 Rs.5,000,000 Rs.4,000,000 Rs.4,000,000

Banana boating Rs.0 Rs.0 Rs.0 Rs.7,000,000 Rs.10,000,000

ORGANIZATIONAL PLAN
Water Fiesta will be established as a partnership. There will be five partners: Dania Mirza,
Aleena Wasi, Hina Fazal, Adnan Iqbal and Syed Saad Hassan

Each will assume an equal ownership in the business. Back ground and roles of each of the three
partners are described below.

Management team background

All the partners have been born in Karachi, Pakistan and all of us are doing our Bachelors in
Business Administration from Bahria University, Karachi Campus and our major is marketing.

Duties and responsibilities

Hina Fazal & Adnan Iqbal (General Administrator and Manager) : Hina Fazal & Adnan Iqbal
will oversee the daily operations of the business. This includes the hiring and the firing of
employees as well as training and supervising.

Aleena Wasi & Dania Mirza (Marketing and Sales Manager): Aleena & Dania will be
responsible for creating promotional activities, monitoring sales, and establishing effective
strategies for creating awareness of the business. We will be responsible for the design and
distribution of all direct marketing materials.

Syed Saad Hassan (Financial Manager): Saad will be responsible for finance, accounting,
payroll, billing, taxes, and any other matters related to sales and revenue budgets.
 FINANCIAL PLAN
It is anticipated that the multi-million dollar loan that the company will seek to secure will cover
the business start-up costs and provide funds for operating expenses for the first year.
Management projects that it will need to obtain additional investment capital to fund the loan and
long-term assets.

Important Assumptions

NOTES FOR PROJECTIONS

1. The total cost of the project is Rs.5, 750,000.Our finances are divided as 20%
equity[Rs.11,500,000 (3,833,33 by each partner)] and 80% debt that is going to be of Rs.46,
000,000 this is going to be the start-up investment, amortized with 19% interest
rate and paid off in five years.
2. All pricing has been set by industry standards and the local market.
3. Revenues are strictly a projection based on gross possible players per venue
4. Employees needed and wages have been projected for full time and 6 hour shifts. All
payrolls will be done by our financial manager.
5. The income tax rate is estimated before deductions and overhead assumptions are
included.
6. Our finances are divided as 20% equity and 80% debt.

Performa Profit and Loss Statement

Pro Forma Profit and Loss

Year 1 Year 2 Year 3 Year 4 Year 5
Sales Rs.60,000,000 Rs.62, 000,000. Rs.69,000,000 Rs.81,000,000 Rs.81,000,000
Fuel Cost Rs.14,831,130 Rs.11,588,242 Rs.12,880,336 Rs.14,807,910 Rs.17,886,997
Operations Payroll Rs.1,800,000 Rs.2,340,000 Rs.2,460,000 Rs.2,820,000 Rs.2,820,000
Maintenance cost Rs.840,000 Rs.1,140,000 Rs.1,150,000 Rs.1,200,000 Rs.1,200,000
Total Cost of Sales Rs.17,471,130 Rs.15,068242 Rs.16,490,336 Rs.18,827,910 Rs.21,906,997

Gross Margin Rs.42,528,870 Rs.46,931,758 Rs.52,509,664 Rs.62,172,090 Rs.66,093,003

Gross Margin % 70.88% 75.69% 76.10% 76.75% 75.11%

Operating Expenses:
Sales and Marketing
Expenses:

Sales and Marketing Payroll Rs.540,000 Rs.540,000 Rs.540,000 Rs.540,000 Rs.540,000

Advertising/Promotion Rs.450,000 Rs.450,000 Rs.450,000 Rs.450,000 Rs.450,000

Miscellaneous Rs.50,000 Rs.50,000 Rs.50,000 Rs.50,000 Rs.50,000
Total Sales and Marketing
Rs.1,040,000 Rs.1,040,000 Rs.1,040,000 Rs.1,040,000 Rs.1,040,000
Expenses
Sales and Marketing % 1.73% 1.73% 1.73% 1.73% 1.73%

General and Administrative

Expenses:
General and Administrative
Rs.1,080,000 Rs.1,080,000 Rs.1,080,000 Rs.1,080,000 Rs.1,080,000
Payroll
Depreciation Rs.235,200 Rs.444,700 Rs.445,500 Rs.517,500 Rs.517,500
Utilities Rs.10,000 Rs.415,000 Rs.80,000 Rs.2,400,000 Rs.2,400,000
Insurance Rs1,295,000 Rs.2,125,000 Rs.2,125,000 Rs.2,245,000 Rs.2,245,000
Telephone Rs.10,000 Rs.12,000 Rs.12,000 Rs.12,000 Rs.12,000
Total General and
Rs2, 630,200. Rs.4,076,700 Rs.3,742,500 Rs.6,254,500 Rs.6,254,500
Administrative Expenses:

General and Administrative % 4.38% 6.58% 5.42% 7.72% 7.72%

Other Expenses:
Office Supplies Rs.15000 Rs.0 Rs.0 Rs.0 Rs.0
Unknown Rs.5,000 Rs.5,000 Rs.5,000 Rs.5,000 Rs.5,000
Business License Rs.300,000 Rs.0 Rs.0 Rs.0 Rs.0
Total Other Expenses: Rs.320,000 Rs.5,000 Rs.5,000 Rs.5,000 Rs.5,000
Other % 0.53% 0.01% 0.01% 0.01% 0.001%

Total Operating Expenses: Rs.3,990,200 Rs.5,121,700 Rs.4,787,500 Rs.7,299,500 Rs.7,299,500

Profit Before Interest and

Rs.38,538,670 Rs.41,810,058 Rs.47,722,164 Rs.54,872,590 Rs.58,793503
Taxes:
Interest Expense Rs.8,740,000 Rs.8,740,000 Rs.8,740,000 Rs.8,740,000 Rs.8,740,000
Corporate Tax at EBIT Rs.7,707,734 Rs.8,362,012 Rs.9,544,433 Rs.10,974,518 Rs.11,758,701
Net Profit: Rs.22,090,936 Rs.24,708,046 Rs.29,437,731 Rs.35,158072 Rs.47,034,802
Net Profit/Sales: 36.82% 39.85% 42.66% 43.40% 53.45%

Pro Forma Balance Sheet

Year 1 Year 2 Year 3 Year 4 Year 5

Assets:

Current Assets:
Cash Rs.60,000,000 Rs.62,000,000 Rs.69,000,000 Rs.81,000,000 Rs.88,000,000

Total Current Assets: Rs.60,000,000 Rs.62,000,000 Rs.69,000,000 Rs.81,000,000 Rs.88,000,000

Long-term Assets:
Long-term Assets Rs.18,800,000 Rs.18,815,000 Rs.18,895,000 Rs.21,295,000 Rs.21,295,000

Accumulated
Rs.235,200 Rs.444,700 Rs.445,500 Rs.517,500 Rs.517,500
Depreciation

Total Long-term
Rs.19,035,200 Rs.19,259,700 Rs.19,340,500 Rs.21,812,500 Rs.21,812,500
Assets:

Total Assets: Rs.79,035,200 Rs.81,259,700 Rs.88,340,500 Rs.102,812,500 Rs.109,812,500

Liabilities and Capital: Year 1 Year 2 Year 3 Year 4 Year 5

Long-term Liabilities Rs.10,948,000 Rs.10,948,000 Rs.10,948,000 Rs.10,948,000 Rs.10,948,000

Total Liabilities: Rs.10,948,000 Rs.10,948,000 Rs.10,948,000 Rs.10,948,000 Rs.10,948,000

Capital Rs.37,500,000 Rs.37,500,000 Rs.37,500,000 Rs.37,500,000 Rs.37,500,000

Owner’s Equity:
Dania & Aleena Rs3,833,334 Rs3,833,334 Rs3,833,334 Rs3,833,334 Rs3,833,334
Hina & Adnan Rs3,833,333 Rs3,833,333 Rs3,833,333 Rs3,833,333 Rs3,833,333
Saad Rs3,833,333 Rs3,833,333 Rs3,833,333 Rs3,833,333 Rs3,833,333
Retained Earnings (Rs.3,003,736) (Rs.3,396,346) (Rs.1,045,231) Rs.7,706428 Rs.2,829,698
Net profit Rs.22,090,936 Rs.24,708,046 Rs.29,437,731 Rs.35,158,072 Rs.47,034,802
Total Capital: Rs.68,087,200 Rs.70,311,700 Rs.77,392,500 Rs.91,864,500 Rs.98,864,500
Total Liabilities &
Rs.79,035,200 Rs.81,259,700 Rs.88,340,500 Rs.102,812,500 Rs.109,812,500
Capital:

Projected Gross Margin

Projected Net Profit

 Break even analysis

We are breaking even in the first year it self because the sales generated are Rs.60, 000,000 and
our the cost that we estimated that would be needed in the first year was Rs.57, 500,000 so from
this we can see we are breaking even in the end of the first year that is in the mid of December.
Earnings per month are 5,000,000 by adding this amount every month it can be seen that at the
end of November the earnings are Rs.55,000,000 and the end of the December it will be Rs.
60,000,000 so it is breaking even in the mid of December.
Rs.60, 000,000
Rs.57, 500,000

Additional information:
• Fuel consumption of jet ski is 8.3L/H and a fuel tank of 50 liters

• Fuel consumption of speed boat is 7.9L/H and a fuel tank of 87 liters

• Fuel price for the first year is taken to be 86 Rs. per liter as on 7th December 09.

• Fuel cost for year 1:

 Jet ski : [ 125,000 (15000x 50 / 6 person per 50 l) x 86 = 10,750,000]
 Speed boat : [47,455 ( 6000 x 87 / 11 person per liter ) x 86 = 4,081,130 ]
o Fuel cost for year 2:
 Jet ski: [ 83,335 (10000 x 50 / 6) x 86* (subjected to change because of
economic condition) = 7,166,810 ]
 Speed boat for paragliding: [ 23,730 (3000x 87 / 11) x 86* = 2,040,780]
 Speed boat for water skiing: [ 27,682 (3500x 87 / 11) x 86* = 2,380,652]

o Fuel cost for year 3:

 Jet ski: [ 83,335 (10000 x 50 / 6) x 86* (subjected to change because of
economic condition) = 7,166,810 ]
 Speed boat for paragliding: [ 26,891 (3400x 87 / 11) x 86* = 2,312,626]
 Speed boat for water skiing: [ 39,545 (5000x 87 / 11) x 86* = 3,400,870]
o Year 4:
 Jet ski: [ 104,167 (12500 x 50 / 6) x 86* (subjected to change because of
economic condition) = 8,958,362 ]
 Speed boat for paragliding: [ 28,473 (3600x 87 / 11) x 86* = 2,448,678]
 Speed boat for water skiing: [ 39,545 (5000x 87 / 11) x 86* = 3,400,870]
 o Year 5:
 Jet ski: [ 108,333 (13000 x 50 / 6) x 86* (subjected to change because of
economic condition) = 9,316,667 ]
 Speed boat for paragliding: [ 28,473 (3600x 87 / 11) x 86* = 2,448,678]
 Speed boat for water skiing: [ 71,182 (9000x 87 / 11) x 86* = 6,121,652]

• Pay rolls for the employees are

o Year 1:
 Driver for speed boat = 30,000 pm
 3 Trainers for jet ski driving = 3 x 30,000 = 90,000 pm
 One for training the parachute control = 30,000 pm
o Year 2:
 2 Driver for speed boats = 30,000 pm
 3 Trainers for jet ski driving = 3 x 30,000 = 90,000 pm
 One for training the parachute control = 30,000 pm
 One trained swimmer for snorkeling = 45,000 pm
o Year 3:
 2 Driver for speed boats = 30,000 pm
3 Trainers for jet ski driving = 3 x 30,000 = 90,000 pm
 One for training the parachute control = 30,000 pm
 One trained swimmer for snorkeling and surfing = 55,000 pm

o Year 4:
 2 Driver for speed boats = 30,000 pm
 3 Trainers for jet ski driving = 3 x 30,000 = 90,000 pm
 One for training the parachute control = 30,000 pm
 One trained swimmer for snorkeling and surfing = 55,000 pm
 One trainer for banana boating = 30,000
o Year 5:
 2 Driver for speed boats = 30,000 pm
 3 Trainers for jet ski driving = 3 x 30,000 = 90,000 pm
 One for training the parachute control = 30,000 pm
 One trained swimmer for snorkeling and surfing = 55,000 pm
 One trainer for banana boating = 30,000

• Maintenance cost:
o Year 1:
 Jet ski = 15000 x 3 = 45000 pm
 Speed boat = 25000 pm
o Year 2:
 Jet ski = 15000 x 3 = 45000 pm
 2 Speed boats = 25000 pm
o Year 3:
 Jet ski = 15000 x 3 = 45000 pm
  2 Speed boats = 25000 pm
 Other maintenances would be around Rs.10, 000 per year.
o Year 4:
 Jet ski = 15000 x 3 = 45000 pm
 2 Speed boats = 25000 pm
 Other maintenances would be around Rs.60, 000 per year
o Year 5:
 Jet ski = 15000 x 3 = 45000 pm
 2 Speed boats = 25000 pm
 Other maintenances would be around Rs.60, 000 per year

• Sales and market cost:

o payroll pm is Rs.45,000
o Advertising and promotion:
 Year 1 = Rs.250,000

• General and administrative expenses:
o Payrolls for Year 1-5 = 30,000 pm per person (3 of us) = 90,000 x 12 =1,080,000

• Depreciation Jet Ski is calculated on 2% of the cost of it and for the speed boat it will be
1.2%and the method that is used is straight line depreciation, for snorkeling gear it would
be 2.5% of the value, for the water skiing equipment it would be 2% at the value., of
surfing board 1% of the value, for banana boats it will be 3% of the value

• Utilities for
o Year 1 include life jackets (10 for Rs.1000) each.
o Year 2 include snorkeling gear set at cost of 100,000 each x 4= 400,000 and water
skiing equipment at cost of 15,000
o Year 3 the utilities were surfing boards which cost Rs.8,000 each x 10 = 80,000
o Year 4 the utilities include banana boats which cost 1,200,000 each x 2 =
2,400,000

• Insurance:
o Fire insurance on property @ 1 % of the value (375,000)
o Product insurance for jet ski @5 % of value (90,000) and for speed boat @ 5% of
value (830,000) and for banana boats @ 5% of value (60,000)

• Interest charged at 19% of the principal amount (46,000,000 @ 19% = 8,740,000)

• Corporate tax is 20% (budget 2009-10).