Setup SSC for Housing Construction Business in London - Article Example

A Proposal to Setup SSC For Housing Construction Business in London March 2008, London. Sam Sons Constructions (UK) Key Executives Business Profile Market Sales Key Competitors Sam Sons Constructions 112, Roth Line Street London UK Key Executives Mr SV Rao, Chairman and Managing Director Mr K S N Rao, Director and President (Business Operations) Mr George Peter, Director (Sales and Marketing) Mr V N N Patil, Chief General Manager (Operations) Ms Sheetal, Chief Manager (Finance) Mr Venu P K, Chief Manager (Design) Mr Indrajit R, General Manager (Project Implementation) Business Profile Sam Sons Constructions (SSC), a new enterprise, would be setup in central London to cash in on the booming housing construction business in central London. SSC would focus on flourishing housing construction business. The new unit would be setup with an initial capital of £500 million. The company staged a decision to mobilize required funds from the central bank of London. The new unit is expected to be operational by end 2008. The company intends to carry out its business by efficiently utilizing the men and material. The company would be setup in a central location to carry out its tasks effectively. The company would procure the necessary raw materials for construction including bricks, machinery, cement and other materials locally. The company would recruit cheap labor from foreign countries such as India, China, Pakistan and Bangladesh. The company aims to employ talented, hardworking and best among the industry. Salary is not a constraint for the right candidate. The company proposes to offer timely promotions to its employees, who strive hard for the company, to boost their morale and thereby to improve production. The company will also offer stock plan options to its employees to get more production. The company will appoint a committee to oversee the work progress. The company will install inventory packages to effectively monitor the inventory level and to take procurement actions. SSC would seek the assistance of consultants in the local market to ascertain the needs of local customers. In general, the people in London prefer spacious houses with garden. They also prefer well-furnished houses. The company will tie up with the local merchants and furnishing industries to source best furniture for the houses. A well-planned and furnished house is preferred by every one. The customers don’t need to run for furniture for their new houses. The company also offers houses on installment basis. The company will also establish relations with a local bank to offer finance support for needy persons at an affordable interest rate. SSC would come up with an initial public offering (IPO) to mobilize additional resources if necessary in the near future. The company also staged a decision to create an insurance fund to cater for any unexpected events. The company will also setup a welfare fund for the benefit of its employees. SSC would engage a research team to gather information about consumers’ preferences for houses. The design team will consider all these factors when designing the houses to meet the consumers’ needs. The company would obtain approvals from the local authorities for its projects. The company will construct its projects as per international standards strictly adhering to quality standards. Safety is the top most priority of the company. SSC would also setup a corpus fund to meet any exigencies such as sub-prime crisis and unexpected events in the company. The company would pass on the profits generated to its stakeholders apart from keeping for project expansions. The company would also repay the loans monthly once it becomes operational. SSC would participate in the industrial exhibitions to gain popularity and to woo customers. Market The market for residential houses in central London is growing at an annual growth rate of 14%. The demand for expensive properties in central London is growing at a fast pace particularly in the £4 million price band. The property prices in the £4 million price band registered a growth of 5.9% in September 2005 (knight frank research, London, Retrieved from ). The average price of a house is estimated at £1,260,014 in February 2008 in greater London (Retrieved from http://www.foxtons.co.uk/sell/London-house-prices.html). There are excellent prospects for the company in the near future as many foreign nationals are seeking houses for residential purpose in London. SSC would utilize the expertise of its knowledgeable promoters in constructing the new houses. The company would tie up local players to effectively showcase/market its products. The company will also build a new website to promote its products. The negative factors include anticipated price fall in view of sub prime crisis, which is plaguing the housing market worldwide. However, the company is well positioned to tackle these challenges. The company will meet these challenges with its well-planned finances and experienced design professionals. Implementation Strategies SSC assigns the responsibility of project implementation to the general manager (project implementation). A team of experienced persons will be recruited to this group. The general manager will oversee the project implementation during various stages of construction. He will schedule a meeting of the concerned engineers in all the locations in central London to verify the progress of project implementation every fortnight. He will initiate necessary actions to complete the projects in time. He will report to the director (operations). The general manager will also send suitable persons for training for future projects. He will also forward shortfalls if any in the design to the design team to rectify the anomaly in the future projects. Sales SSC is expected to generate sales from November 2008. The company will become fully operational in early 2009. The company staged a decision to generate a sales turnover of £500 million during fiscal year 09. In order to accomplish this target, the company proposes to construct new houses on highly expensive properties for which the demand is huge. The company also staged a decision to seek the advice of other experts in the industry. The company will advertise about its products in prominent newspapers and magazines such as times of London, sun, London daily, financial times, time out London, Sunday mirror and news of the world. The company will also advertise on TV and radio. A cash flow statement is given below: Forecasted Cash Flow Statement – Fiscal year 2008 (Retrieved from: http://www.womensenterprise.ca/resources/downloads/cashflowwithformulas.xls) In £ Jan Feb. Mar Apr May Jun July Aug Sep Oct Nov Dec Total Cash inflows 20000 20000 20000 20000 20000 20000 Cash receipts 20000 20000 20000 20000 20000 20000 Accounts receivable 10000 10000 10000 10000 10000 10000 Loan advances 30000 30000 30000 30000 30000 30000 Loan advances other 5000 5000 5000 5000 5000 5000 Owner investment/other cash received 85000 85000 85000 85000 85000 85000 Total cash inflows 20000 20000 20000 20000 20000 20000 Cash outflows 5000 5000 5000 5000 5000 5000 Cost of materials/inventories 1000 1000 1000 1000 1000 1000 Advertising & promotion 25000 25000 25000 25000 25000 25000 Variable labor (commissions) 1000 1000 1000 1000 1000 1000 Salaries & benefits - management 300 300 300 300 300 300 Salaries & benefits - other 2000 2000 2000 2000 2000 2000 Maintenance & cleaning 1000 1000 1000 1000 1000 1000 Licenses & dues Rental (premises) Rental (other) 200 200 200 200 200 200 Utilities 300 300 300 300 300 300 Telephone Vehicle 2500 2500 2500 2500 2500 2500 Travel 58300 58300 58300 58300 58300 58300 Insurance 5000 5000 5000 5000 5000 5000 VAT 4000 4000 4000 4000 4000 4000 Loan repayment 26700 26700 26700 26700 26700 26700 Total cash outflow Net cash flow 17700 22700 22700 22700 22700 22700 Cash balance at month start 0 17700 40400 63100 85800 108500 Cash balance at month end 17700 40400 63100 85800 108500 131200 Consolidated Profit And Loss Account Unaudited Unaudited half year ended half year ended 30 June 30 June 2008 2007 Total Total £ £ Turnover 311,771 Cost of sales (17,596) Gross profit 141,174 Administrative expenses (121,313) Other operating income – Operating profit 19861 Finance charges (571) Profit on ordinary activities before taxation 19290 Tax on profit on ordinary activities – Profit after taxation, being profit for the period 19290 Dividends paid and proposed as equity shares (2,318) Retained (loss)/profit for the year (1,025) Earnings per share Basic 1.12p Diluted 1.05p Note: since SSC is a startup company, profit and loss figures for the year 2007 are not included. New Product Launches SSC would branch into other areas of London once it completes 1000 housing complexes in central London with new designs. The company would mobilize the necessary funds through initial public offering. The company will also look for strategic partners. Key Competitors SSC’s key competitors are Oorascom construction industries, Regalion, St George plc, Artesian, Peter Chilton & Associates and CIC London. Executive Summary Mr. S V Rao has obtained his masters degree in civil engineering from Indian institute of technology, which is one of the prestigious institutions in India, Chennai. He has got 25 years experience in the construction industry. he worked in well-known companies in India. He also has an overall idea of the construction industry in London. He is also well aware of the consumers’ preferences about housing industry in London. Mr. K S N Rao has obtained his B.Tech (arch) from Indian institute of technology, Kargapur, India. He has got 18 years experience in the construction industry. He worked in well-known industries such as Nagar industries and Tat Construction Company. The company could utilize his expertise in meeting its goals. Mr George Peter has obtained his MBA degree from liver pole Hope University in UK. He is well aware of the marketing trends in the UK market. The company is expected to gain from his expertise in the construction industry. Ms Sheetal has obtained her MBA degree in finance from the prestigious institution – IIMS, Ahmedabad in India. She has got about 15 years experience in managing the finances of a large company. She is able to manage the finances of the company, which is a key to the success of the company. Mr V N N Patil has obtained his B Tech degree in civil engineering from Manipal University, Karnataka, India. He has got 12 years experience in a large construction industry. He has completed many time bound projects in time. He is well disciplined and able to lead the company into profits. Mr Venu P K has obtained his B Tech degree in civil engineering from Andhra University, and master’s degree from Indian Institute of Technology, Chennai, India. He has designed many large complexes without any faults. he worked in well-known companies such as Madhucon industries. He is able, hardworking and strives for the company’s success. 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