Hookah Bar

‘Business Plan – Hookah Bar ’

Cdr Sangram Dey

National Institute of Financial Management 1

EXECUTIVE SUMMARY

A business plan is a formal statement of a set of business goals, the

reasons why they are believed attainable and the plan for reaching those

goals. Business plans are decision-making tools and it represents all

aspects of business planning process; declaring vision and strategy

alongside sub-plans to cover marketing, finance, operations, human

resources as well as a legal plan, when required.

Opening a Hookah Bar is a fresh concept which centres around the

community aspect of smoking hookah pipes. The bar will be named as

‘Fag End’ and will be managed by its founders. The product will include

flavoured tobaccos, alcoholic and non-alcoholic drinks and appetizers. The

customers are expected to be those of urban niche customers and young

(22-35 year old) urbanites interested in a community-oriented experience

that is an alternative to bars and ‘thekas’. The aim of ‘Fag End Hookah

Bar’ is to provide a comfortable environment, sometimes relaxing and

sometimes energetic and stimulating, around which those who love

hookah smoking, as well as new converts, can come together.

While the owners will invest substantially in the company, the bulk

of the start-up funding will be provided primarily by outside investors,

with an additional long-term loan against the assets of the bar. The

business is expected to grow significantly in its first three years as it

meets the market need for an alternative to bars and one of its kind in

this region. Growth to a second location will occur in the fourth year,

financed by the cash reserves of the business. Long-term debt will be paid

over the first three years of operation with a grace period for the first six

months. Short-term borrowings will be paid over the first year of

operations.


Cdr Sangram Dey


THE BACK DROP

1.1 Mission. The mission of ‘Fag End Hookah Bar’

is to provide a comfortable environment, sometimes

relaxing and sometimes energetic and stimulating,

around which those who love hookah smoking, as

well as new converts, can come together. The

environment will draw on elements of mature, cool

and poised ethnic culture as well as the culture of the urban environment.

1.2 Objectives. This can be achieved through:

Create a comfortable environment through apt ambience.

Provide high quality tobacco, food, drinks, hookah equipment

combined with personalized and professional service.

Establish a loyal core following.

Expand the market of hookah smokers in the Faridabad area.

To become profitable in its second year through the sale of tobacco,

food and drinks.

To establish a franchisable model for hookah bars and initiate

fundraising and planning for franchising by its fifth year of operation.

Energize the customer base to generate their own culture and

events at ‘Fag End’ Hookah Bar

To maintain a Facebook Fan page of 15,000 individuals by the end

of its third year as a sign of its community.


Cdr Sangram Dey


THE COMPANY

2.1 ‘Fag End’ Hookah Bar is a new concept for a

hookah lounge which centres around the community

aspect of smoking hookah pipes. The business will

launch its first hookah lounge in Faridabad city within

six months and endeavour to create a scalable model

which can be franchised in additional urban locations.

The business will earn revenues through the sale of

tobacco (multiple flavours), drinks (alcoholic and non alcoholic) and food

(North Indian and Continental requiring light preparation). The customers

are expected to be those of urban niche customers and young (22-35

year old) urbanites interested in a community-oriented experience that is

an alternative to bars and ‘thekas’.

2.2 Company Ownership. ‘Fag End’ Hookah Bar will be owned and

established by the husband and wife team of Sangram Dey and Jeeta

Dey. The business will be established as a registered firm to allow for

additional investors to join. In the second year of operation a general

manager will be hired to take over staff supervision, staff training,

procurement and inventory management. Sayed Batroun will continue to

serve as head cook but will work on a more strategic level in other areas.

Additional staff will include kitchen staff and wait staff.


Cdr Sangram Dey


START UP

3.1 Start up Expenses. The start-up expenses for

‘Fag End’ Hookah Bar include legal consultation and

permit fees as a retail and food service establishment,

as well as a special permit for the lounge to allow

smoking within. Stationery includes business cards,

letterhead, and business brochures.

3.2 Insurance. Insurance includes initial general and product

liability premiums as well as renter's and key-employee insurance. Rent

covers one month's security and two month's rent for the initial location

to allow for build out of the space before opening. Start-up marketing

covers the marketing campaign before launch, as described in the

marketing plan. The website is a significant expense. It offers basic

information on the business as well as a scalable social networking

component to allow for the organizing of hookah groups and the planning

of events.

3.3 Start up Assets. The cash required will see the business

through until cash flow break even is achieved. Current assets will include

lounge furniture (Rs 4,00,000), tables (Rs 4,00,000), kitchen supplies and

tools (Rs 4,00,000), silverware, plates, glassware, and hookahs (Rs

4,00,000). Long-term assets include basic improvements to the space

(Rs12,00,000 for additional plumbing, electrical work, taking down and

putting up walls where needed, painting, refinishing floors), lighting

fixtures (Rs 4,00,000), sound system (Rs 4,00,000), POS sales system

and wireless devices (Rs 8,00,000), kitchen equipment (Rs 8,00,000 for

stoves, refrigerator, and warming units), office equipment (Rs 2,00,000

for computer, printer, fax, telephones). The detail break down is placed at

Appendix A.


Cdr Sangram Dey


3.4 Products and Services. ‘Fag End’ Hookah Bar will specialize in

alcoholic, non-alcoholic, organic drinks and healthy appetizers and snacks

of both North Indian and Continental. The food will have a natural smoked

flavour and minimum usage of fat will be the USP. Prices for drinks will

range from Rs 30 for simple teas or small coffees to Rs 200 for certain

juices and mocktails. Alcoholic drinks will be priced as per the quality and

brand keeping at least 30 – 37 % profit margin. Prices for appetizers will

range from Rs 200 to Rs 500 for single servings and Rs 1000 to Rs 2500

for group dishes (serving 4-6 people). Flavoured tobacco for hookah pipes

will be sold as well for Rs 500 for the first round and Rs 400 for

subsequent rounds.

3.5 Menu. The initial menu will include:

Assortment of organic teas

Assortment of organic coffees

Fruit juices and juice blends

"Mocktails" featuring fruit juices and fresh fruit

Alcoholic beverages

Cocktails

Continental Salads

Crudite and dips

Smoked Chicken


Cdr Sangram Dey


Smoked Fish

Barbequed chicken / fish / vegetable

Tikkas

Pita or pita chips and hummus/other dips

Falafel

Spinach fatayer

Onion rings

Dry fruits

Fried fava beans

Olives

Flavoured tobacco (flavours include: Cherry, Strawberry,

Blackberry, Mixed Fruit, Apple, Liquorice, Candy, Jasmine, Banana, Rose,

Grape, Pistachio, Lemon, Cola, Mint, Orange, Peach, Vanilla, Mango)

3.6 Facility. The facility will include a stage area where

performances, talks, and films can be presented. These will be organized

by customer groups who will book the space free of charge for events that

are acceptable to ‘Fag End’ Hookah Bar management.


Cdr Sangram Dey


MARKET ANALYSIS

4.1 The market for hookah bars in the India has

grown significantly in the past decade. Hookah-

bars.com reports that, as of October 2008, there were

at least 1470 hookah bars in the U.S. and an average

of five new hookah bars were opening every month.

From these numbers, it can be estimated that between

5-7 million current hookah smokers live in the India. Of these hookah

smokers, approximately 30% are of North Indian origin and the remaining

groups are from all parts of the country. In Faridabad, ‘Fag End’ Hookah

Bar will focus on locals and people from other NCR region.

4.2 Market Segmentation. ‘Fag End’ Hookah Bar has determined

the following market segmentation for potential customers:

North Indian Upper Class: Area residents who value the

connection that hookah bars provide with their culture and traditional

elements. They do not feel alienated in hookah bars, which they

sometimes do in bars where smoking is prohibited. They appreciate being

able to meet other like minded people at hookah bars, both for friendship

and for dating. While this is a small market segment in Faridabad, they

use hookah bars more frequently than other groups.

College Age Residents: College students who seek an alternative

to bars and parties on their campuses seek out different experiences.

Hookah bars provide such an experience because of their exotic

ambiance, colourful atmosphere, focus on group dynamics, and the

element of danger/risk provided by smoking.

Young Professionals: 22-35 year-old professionals who are tired

with bar culture sometimes react against it by looking for other activities.


Cdr Sangram Dey


They seek locations where they can congregate with friends, talk, and

share a new experience. However, they are turned off by hookah bars

with a high percentage of college age customers. The details about

growth of customers over the period of five years as well as CAGR to this

effect is placed at Appendix B.

4.3 Target Market Segment Strategy. By seeking the target

market segments described here, ‘Fag End’ Hookah Bar intends to

establish a base of loyal devotees who will serve to give the bar credibility

and authenticity. These devotees will feel comfortable bringing their own

niche culture to ‘Fag End’ Hookah Bar. These markets exist in Metros and

Faridabad location will serve as a proving ground for the ‘Fag End’ Hookah

Bar model.

4.4 Service Business Analysis. Over 1470 hookah bars are in

existence in India, spread throughout the country with some

concentration in cities. From 2000 to 2004, at least 200-300 new hookah

bars opened for business, according to the web news. Generally, as long

as 80% of sales are derived from tobacco, smoking within hookah

establishments can be permitted by law.

4.5 The hookah bar industry is highly fragmented, with most bars being

independent establishments. A small percentage open a second or third

location. There are currently no national hookah bar franchises. Indirect

competitors to hookah bars are coffee shops, bars that serve liquor, and

cigar stores/tobacconists.

4.6 Typically, hookah tobacco is sold and pipes are provided to

customers in hookah bars. Tobacco is sold in rounds which serves a group

of four to six for about an hour. Food and drinks are sold via waiter or bar

service while customers sit in groups and smoke. While some attend


Cdr Sangram Dey


hookah bars alone, customers typically attend with groups and sit at

round tables with their group.

4.7 Competition and Buying Patterns. Hookah bar customers in

India judge between establishments based on location (they will not be

willing to travel too far out of their way for a hookah bar) the variety of

flavours served, the atmosphere, and the additional food and drink

options served.

4.8 Specific competitors for ‘Fag End’ Hookah Bar include two Hookah

bars located at Gurgaon and one in Basant Vihar.

4.9 Web Plan. The website for ‘Fag End’ Hookah Bar will offer a

standard "brochure-style" presentation with details on the products,

services, location, and concept of the bar, as well as an extended social

community component, tied in to Facebook. The website will serve casual

customers interested in the bar as well as fans who become involved in

creating cultural events and groups at ‘Fag End’ Hookah Bar through the

social portal, which will include a basic calendar visible to all users and

extended features reserved for members who log-in.

4.10 Website Marketing Strategy. The website for ‘Fag End’

Hookah Bar will be promoted through PR, direct advertising, search

engine optimization, and the growing community of customers.

PR efforts will include promotion to blog writers for the Faridabad

area and hookah bars and guest posts by the owners to these blogs. PR

will also focus on the notable social media component of the website as it

ties in to developing programming for ‘Fag End’ Hookah Bar.


Cdr Sangram Dey


Direct advertising will include Google ads, Facebook ads, and

targeted ads on a few area websites. Rs 25,000 a month will be devoted

to this type of advertising in the first year.

Search engine optimization will begin during the development of the

website through its initial design and will continue with an outsourced firm

retained to continue SEO work for Rs 25,000 a month.

The community of customers will generate word-of-mouth and

online referrals by inviting friends to the ‘Fag End’ Hookah Bar website

through Facebook or ‘Fag End’ Hookah Bar's social network component.

4.11 Web Development Requirements. Development of the

website requires an experienced Web development firm with past success

in developing social networking components for businesses. The website

will include the following in its basic, front end:

About Us - background on the business and its concept and mission

FAQs about hookah smoking and ‘Fag End’ Hookah Bar

Menu of food, drinks, and tobacco

Photo gallery

Contact page

Location and Directions page with connection to maps from Google

Maps or MapQuest.

4.12 The social portal of the site will include:


Cdr Sangram Dey


Membership sign-up and log-in pages

Social calendar for ‘Fag End’ Hookah Bar

Step-by-step instructions for creating an event, discussion group, or

throwing a party at ‘Fag End’ Hookah Bar

Individual pages for user-created events

Account page for each user showing events they are signed up for

or have created

Sharing buttons to make it easy for users to send event information

via Facebook, MySpace, Twitter.

Automated tie-ins between the site and the Facebook Fan Page to

minimize changes that must be made in two places

4.13 Furthermore, the developer will create a Facebook Fan Page, and a

back end for the site including form to allow management to make

changes to menu offerings and prices without the need to use HTML. The

management will be able to add or remove photos from photo gallery and

to organize them into albums

4.14 Development of the website will occur over a three month period.

The first two months will produce a beta version which will be tested by

management, with revisions given to developers, for one month after

that. It is expected that additional changes will extend over the first few

months of operation and Rs 10,000/month of the marketing budget is

devoted to ongoing maintenance and development in the first year.


Cdr Sangram Dey


STRATEGY AND IMPLEMENTATION

5.1 The focus for implementation will be on

establishing the quality of the offering, its suitability for

the 22+ target market, and the infrastructure to allow

for community-driven culture. The fostering of the ’Fag

End’ Hookah Bar community will be important to the

growth of the business and its proof as a franchisable

model.

5.2 Competitive Edge. ‘Fag End’ Hookah Bar's competitive edge will

be established through its community organizing ability via its website.

This website will present an interface for users to:

Connect with each other and ‘Fag End’ Hookah Bar after they have

left the establishment.

Organize groups to attend ‘Fag End’ Hookah Bar together.

Plan events to propose for the ‘Fag End’ Hookah Bar calendar.

Send out invites for these events.

5.3 The party-like atmosphere at other hookah bars does not allow for

easy conversation and for performances and events of the type expected

at ‘Fag End’ Hookah Bar. To that end, the following tactics will be

employed:

Seeking mention in blogs for the local area.


Cdr Sangram Dey


Pitching the story of its concept and opening to Middle Eastern

cultural and language publications specifically, and area newspapers and

magazines in general.

Advertising with posters and flyers in the Faridabad area.

5.4 The bar's grand opening will be marked by an event featuring live

music, free food and drink offers, and door prizes. After the launch,

promotional incentives for customers will be advertised in newspaper

advertisements, on the website, and in the store for:

Group discounts

Free prizes for winners of business card drawing (to encourage

target market of young professionals)

Incentives to organize the first events via the website (such as free

rounds of tobacco for the organizers at a later date)

5.5 These expenses are included in the Profit and Loss statement for

‘Fag End’ Hookah Bar as marketing expense.

5.6 Sales Strategy. ‘Fag End’ Hookah Bar will sell its products

through attentive wait staff and bar counter staff. They will be

compensated through base hourly wages and tips and will work to provide

the best customer service possible. Wait staff will use wireless tablets to

place orders which are sent over the bar's wireless network to kitchen

staff and bar staff to prepare dishes and drinks.

5.7 Sales Forecast. Sales will be predominantly through tobacco

revenues, which also has a relatively low cost of sales. Secondary

revenue streams are food and drinks. Sharp growth is expected over the


Cdr Sangram Dey


first three years of operation as the community aspect of ‘Fag End’

Hookah Bar is developed and customer-directed programming begins to

take place.

5.8 It is expected that a customer will return to ‘Fag End’ Hookah Bar

on average 15 times a year, taking part in 20 rounds of tobacco in that

time. Therefore, this projection represents 1,000 customer groups in the

first year, 2,500 customer groups in the second year and 3,500 customer

groups in the third year. Sales forecast is placed at Appendix C.

5.9 Campaign. The Rs 5,00,000 in start-up marketing will be

spent on the local ad campaign (design and production of posters and

flyers, as well as purchasing ad space), PR campaign (creation and

mailing of press kit), and the grand opening event (live music, door

prizes, decorations, free food and drink offers). After the launch, the

business will hold a series of promotions - first the business card drawing

and then event incentives - to initiate programming at ‘Fag End’ Hookah

Bar.

5.10 Personnel Plan. Staff will include one Finance Manager, one

Floor manager, four bartenders, six wait staff and four kitchen staff

initially. This will grow to 10 bartenders, 15 wait staff and 7 kitchen staff.

Wages for bartenders and wait staff are lower as they are significantly

augmented by tips. These personnel assumptions are based on the bar

being open 80 hours per week. Personal plan and proposed pay roll is

placed at Appendix D.

5.11 Financial Plan. The business is expected to grow significantly in

its first three years as it meets the market need for an alternative to local

youth-oriented hookah bars. Growth to a second location will occur in the

fourth year, financed by the cash reserves of the business.


Cdr Sangram Dey


5.12 Start-up Funding. While the owners will invest

substantially in the company, the bulk of the start-up funding will be

provided primarily by outside investors, with an additional long-term loan

against the assets of the bar. Investors will be provided with 40% of

shares for their investment, as the current partners are contributing

considerable sweat and financial equity of their own. Detailed break down

on start up funding is placed at Appendix E.

5.13 Important Assumptions. We assume that the growth in hookah

bar popularity will continue and that the country is ready for a national

chain. We assume that anti-smoking lobbyists will not damage the

reputation and image of hookah bars.

5.14 Projected Profit and Loss. Key expenses will include the cost of

sales attributed to supplies and raw materials, payroll for the growing

staff, marketing to promote the bar in the community, and the bar's rent

and depreciation. The bar will show a profit in the first year which will

continue to grow. This is expected due to the high gross margins of

selling tobacco through hookahs and the type of food and drinks sold. Pro

Forma Profit and Loss statement is placed at Appendix F.

5.15 Projected Cash Flow. The cash flow table and chart shown at

Appendix G that the business becoming cash flow positive within six

months of operation. Cash will be retained in the business and invested in

short-term holdings in preparation for expansion of the franchise after the

third year of operation.

5.16 Long-term debt will be paid over the first three years of operation

with a grace period for the first six months. Short-term borrowings will be

paid over the first year of operations.


Cdr Sangram Dey


5.17 Some current assets must be replenished each year, and long-term

assets must be replaced beginning in the second year as some equipment

ages.

5.18 Projected Balance Sheet. The net worth of ‘Fag End’ Hookah Bar

will grow significantly due to relatively low liabilities and high cash

reserves as the business prepares for future self-financed expansion. Pro

Forma Balance sheet is placed at Appendix H.

5.19 Valuation. 40% of equity will be awarded to investors for their

cash contribution, 22% to founders for their cash contribution, and the

remaining 38% to owners for their sweat equity.

5.20 Assuming valuations at either a multiple of earnings (10 is

reasonable for this industry), or a multiple of sales (2 is reasonable for

this industry), the valuation at the end of year 3 of the entire company is

around Rs 3.385 million (an average of the two methods of valuation).

This yields a significant, 121% internal rate of return for investors. An exit

event will be possible when the company raises money for franchising or

sells to an existing franchisor at the point of expansion. The Investment

Analysis that includes calculation of Net Present Value and Internal Rate

of Return is placed at Appendix J.


Cdr Sangram Dey


Start up Requirements

Appendix A

(Refer to para 3.3)

Start-up Expenses

Legal Help and Permits Rs 2,00,000

Stationery etc. Rs 80,000

Insurance Rs 80,000

Rent Rs 2,40,000

Start-up Marketing Rs 6,00,000

Website Rs 10,00,000

Total Start-up Expenses Rs 22,00,000

Start-up Assets

Cash Required Rs 1,60,000

Other Current Assets Rs 1,60,000

Long-term Assets Rs 38,00,000

Total Assets Rs 41,20,000

Total Requirements Rs 63,20,000


Cdr Sangram Dey


Market Analysis

Appendix B

(Refer to para 4.2)

Particulars Year 1 Year 2 Year 3 Year 4 Year 5

Potential Customers Growth

CAGR

North Indian Upper Class 3% 500 515 530 546 562 2.97%

College Age Residents 3% 15,000 15,450 15,914 16,391 16,883 3.00%

Young Professionals 3% 30,000 30,900 31,827 32,782 33,765 3.00%

Total 3% 45,500 46,865 48,271 49,719 51,210 3.00%


Cdr Sangram Dey


Sales Forecast

Appendix C

(Refer to para 5.8)

Particulars Year 1 Year 2 Year 3

Unit Sales

Tobacco 20,000 50,000 70,000

Drinks 25,000 60,000 80,000

Food 15,000 30,000 50,000

Total Unit Sales 60,000 140,000 200,000

Unit Prices Year 1 Year 2 Year 3

Tobacco Rs 500 Rs 500 Rs 500

Drinks Rs 200 Rs 200 Rs 200

Food Rs 800 Rs 800 Rs 800

Sales

Tobacco Rs 100,00,000 Rs 250,00,000 Rs 350,00,000

Drinks Rs 50,00,000 Rs 120,00,000 Rs 160,00,000

Food Rs 120,00,000 Rs 240,00,000 Rs 400,00,000

Total Sales Rs 270,00,000 Rs 610,00,000 Rs 910,00,000

Direct Unit Costs Year 1 Year 2 Year 3

Tobacco Rs 200 Rs 200 Rs 200

Drinks Rs 80 Rs 80 Rs 80

Food Rs 300 Rs 300 Rs 300

Direct Cost of Sales

Tobacco Rs 40,00,000 Rs 100,00,000 Rs 140,00,000

Drinks Rs 20,00,000 Rs 48,00,000 Rs 64,00,000

Food Rs 45,00,000 Rs 90,00,000 Rs 150,00,000

Subtotal Direct Cost of Sales Rs 105,00,000 Rs 238,00,000 Rs 354,00,000


Cdr Sangram Dey


Pay Roll

Appendix D

(Refer to para 5.10)

Staff Year 1 Year 2 Year 3

General Manager - Rs 10,00,000 Rs 10,00,000

Floor Manager Rs 7,00,000 Rs 7,00,000 Rs 7,00,000

Bar Staff Rs 20,00,000 Rs 40,00,000 Rs 60,00,000

Wait Staff Rs 20,00,000 Rs 40,00,000 Rs 60,00,000

Kitchen Staff Rs 15,00,000 Rs 30,00,000 Rs 45,00,000

Finance Manager Rs 7,00,000 Rs 7,00,000 Rs 7,00,000

Total People 16 35 42

Total Payroll Rs 62,00,000 Rs 134,00,000 Rs 189,00,000


Cdr Sangram Dey


Start up Funding

Appendix E


Start-up Expenses to Fund Rs 22,00,000

Start-up Assets to Fund Rs 41,20,000

Total Funding Required Rs 63,20,000

Assets

Non-cash Assets from Start-up Rs 39,60,000

Cash Requirements from Start-up Rs 1,60,000

Additional Cash Raised Rs 0

Cash Balance on Starting Date Rs 1,60,000

Total Assets Rs 41,20,000

Liabilities

Current Borrowing Rs 3,20,000

Long-term Liabilities Rs 20,00,000

Accounts Payable (Outstanding Bills) Rs 0

Other Current Liabilities (interest-free) Rs 0

Total Liabilities Rs 23,20,000

Capital (Planned Investment)

ICICI Bank Rs 14,00,000

HDFC Bank Rs 14,00,000

Other Investors Rs 50,80,000

Additional Investment Requirement Rs 0

Total Planned Investment Rs 78,80,000

Loss at Start-up (Start-up Expenses) (Rs 22,00,000)

Total Capital Rs 46,80,000

Total Capital and Liabilities Rs 41,20,000

Total Funding Rs 63,20,000


Cdr Sangram Dey


Pro Forma Profit and Loss

Appendix F



Sales Rs 270,00,000 Rs 610,00,000 Rs 910,00,000

Direct Cost of Sales Rs 105,00,000 Rs 238,00,000 Rs 354,00,000

Other Costs of Sales Rs 6,36,000 Rs 19,36,000 Rs 20,52,000

Total Cost of Sales Rs 111,36,000 Rs 257,36,000 Rs 374,52,000

Gross Margin Rs 158,64,000 Rs 352,64,000 Rs 535,48,000

Gross Margin % 69.67% 68.98% 69.81%

Expenses

Payroll Rs 62,00,000 Rs 134,00,000 Rs 189,00,000

Marketing/Promotion Rs 17,60,000 Rs 22,00,000 Rs 30,00,000

Depreciation Rs 6,72,000 Rs 8,00,000 Rs 9,60,000

Rent Rs 2,40,000 Rs 2,75,000 Rs 3,00,000

Utilities Rs 1,44,000 Rs 1,60,000 Rs 1,80,000

Insurance Rs 80,000 Rs 1,00,000 Rs 1,20,000

Payroll Taxes Rs 3,50,000 Rs 5,20,000 Rs 6,10,000

Permit Renewals Rs 1,00,000 Rs 1,25,000 Rs 1,50,000

Supplies Rs 2,50,000 Rs 3,10,000 Rs 4,20,000

Total Operating Expenses Rs 97,96,000 Rs 178,90,000 Rs 246,40,000

Profit Before Interest and Taxes Rs 15,60,080 Rs 138,34,000 Rs 192,24,000

EBITDA Rs 22,32,080 Rs 146,34,000 Rs 201,84,000

Interest Expense Rs 2,13,640 Rs 1,28,000 Rs 56,000

Taxes Incurred Rs 4,03,920 Rs 41,11,800 Rs 57,50,400

Net Profit Rs 9,42,480 Rs 95,94,200 Rs 134,17,600

Net Profit/Sales 4.72% 19.82% 19.62%


Cdr Sangram Dey


Pro Forma Cash Flow

Appendix G



Cash Received

Cash from Operations

Cash Sales Rs 270,00,000 Rs 610,00,000 Rs 910,00,000

Subtotal Cash from Operations Rs 270,00,000 Rs 610,00,000 Rs 910,00,000

Additional Cash Received

Sales Tax, VAT, HST/GST Received Rs 17,95,400 Rs 43,56,000 Rs 61,56,000

New Current Borrowing Rs 0 Rs 0 Rs 0

New Other Liabilities (interest-free) Rs 0 Rs 0 Rs 0

New Long-term Liabilities Rs 0 Rs 0 Rs 0

Sales of Other Current Assets Rs 0 Rs 0 Rs 0

Sales of Long-term Assets Rs 0 Rs 0 Rs 0

New Investment Received Rs 0 Rs 0 Rs 0

Subtotal Cash Received Rs 287,95,400 Rs 653,56,000 Rs 971,56,000

Expenditures Year 1 Year 2 Year 3

Expenditures from Operations

Cash Spending (Pay Roll) Rs 62,00,000 Rs 134,00,000 Rs 189,00,000

Bill Payments Rs 91,30,360 Rs 243,70,040 Rs 339,02,680

Subtotal Spent on Operations Rs 153,30,360 Rs 377,70,040 Rs 528,02,680

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out Rs 17,95,400 Rs 43,56,000 Rs 61,56,000

Principal Repayment of Current

Borrowing

Rs 3,20,000 Rs 0 Rs 0

Other Liabilities Principal Repayment Rs 0 Rs 0 Rs 0

Long-term Liabilities Principal

Repayment

Rs 3,60,000 Rs 7,20,000 Rs 7,20,000

Purchase Other Current Assets Rs 96,000 Rs 1,20,000 Rs 1,40,000

Purchase Long-term Assets Rs 0 Rs 4,00,000 Rs 4,00,000

Dividends Rs 0 Rs 0 Rs 0

Subtotal Cash Spent Rs 179,01,760 Rs 433,66,040 Rs 602,18,680

Net Cash Flow Rs 108,93,640 Rs 219,89,960 Rs 369,37,320

Cash Balance Rs 110,53,640 Rs 330,43,600 Rs 699,80,920


Cdr Sangram Dey


Pro Forma Balance Sheet

Appendix H



Assets

Current Assets

Cash Rs 110,53,640 Rs 330,43,600 Rs 699,80,920

Other Current Assets Rs 16,96,000 Rs 18,16,000 Rs 19,56,000

Total Current Assets Rs 127,49,640 Rs 348,59,600 Rs 719,36,920

Long-term Assets

Long-term Assets Rs 38,00,000 Rs 42,00,000 Rs 46,00,000

Accumulated Depreciation Rs 6,72,000 Rs 14,72,000 Rs 24,32,000

Total Long-term Assets Rs 31,28,000 Rs 27,28,000 Rs 21,68,000

Total Assets Rs 158,77,640 Rs 375,87,600 Rs 741,04,920

Liabilities and Capital Year 1 Year 2 Year 3

Current Liabilities

Accounts Payable Rs 18,60,080 Rs 20,15,800 Rs 28,55,520

Current Borrowing Rs 0 Rs 0 Rs 0

Other Current Liabilities Rs 0 Rs 0 Rs 0

Subtotal Current Liabilities Rs 18,60,080 Rs 20,15,800 Rs 28,55,520

Long-term Liabilities Rs 16,40,000 Rs 9,20,000 Rs 2,00,000

Total Liabilities Rs 35,00,080 Rs 29,35,800 Rs 30,55,520

Paid-in Capital Rs 78,80,000 Rs 78,80,000 Rs 78,80,000

Retained Earnings (Rs 32,00,000) (Rs 22,57,520) Rs 73,36,680

Earnings Rs 9,42,480 Rs 95,94,200 Rs 134,17,600

Total Capital Rs 56,22,480 Rs 152,16,680 Rs 286,34,280

Total Liabilities and Capital Rs 11,22,560 Rs 181,52,520 Rs 316,89,840

Net Worth Rs 56,22,480 Rs 152,16,680 Rs 286,34,280


Cdr Sangram Dey


Investment Analysis

Appendix J


Particulars Start Year 1 Year 2 Year 3

Initial Investment

Investment Rs 78,80,000 Rs 0 Rs 0 Rs 0

Dividends Rs 0 Rs 0 Rs 0 Rs 0

Ending Valuation Rs 0 Rs 0 Rs 0 Rs 848,16,000

Combination as Income Stream (Rs 78,80,000) Rs 0 Rs 0 Rs 848,16,000

Percent Equity Acquired 62%

Net Present Value (NPV) Rs 507,66,840

Internal Rate of Return (IRR) 121%

Assumptions

Discount Rate 10.00%

Valuation Earnings Multiple

10 10 10

Valuation Sales Multiple

2 2 2

Investment (calculated) Rs 78,80,000 Rs 0 Rs 0 Rs 0

Dividends

Rs 0 Rs 0 Rs 0

Hookah Bar

Documents

Transcript of Hookah Bar