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Fax: (091) 286908
helpdesk.NWFP@smeda.org.pk
June, 2011
Pre-feasibility Study
EXECUTIVE SUMMARY................................................................................................................. 4
STRENGTHS .................................................................................................................................. 7
WEAKNESSES ............................................................................................................................... 7
OPPORTUNITIES ............................................................................................................................ 7
THREATS ...................................................................................................................................... 8
PRODUCTION PROCESS.............................................................................................................. 10
9.1
PRODUCTION PROCESS FLOW ..................................................................................................... 10
9.1.1
Parts of Footwear................................................................................................................. 10
9.1.2
Shoe making process ............................................................................................................ 11
9.2
PROPOSED PRODUCT MIX .......................................................................................................... 12
10
11
12
MACHINERY REQUIREMENT.................................................................................................... 14
13
14
15
PROJECT ECONOMICS................................................................................................................ 17
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PREF-114/June, 2011
Pre-feasibility Study
15.1
16
PROJECT INVESTMENT................................................................................................................ 17
FINANCIAL ANALYSIS................................................................................................................. 18
16.1
16.2
16.3
16.4
16.5
16.6
16.7
16.8
17
18
ANNEXURE...................................................................................................................................... 27
18.1
18.2
18.3
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PREF-114/June, 2011
Pre-feasibility Study
DISCLAIMER
The purpose and scope of this information memorandum is to introduce the subject
matter and provide a general idea and information on the said area. All the material
included in this document is based on data/information gathered from various sources and
is based on certain assumptions. Although, due care and diligence has been taken to
compile this document, the contained information may vary due to any change in any of
the concerned factors, and the actual results may differ substantially from the presented
information. SMEDA does not assume any liability for any financial or other loss
resulting from this memorandum in consequence of undertaking this activity. The
prospective user of this memorandum is encouraged to carry out additional diligence and
gather any information he/she feels necessary for making an informed decision.
For more information on services offered by SMEDA, please contact our website:
www.smeda.org.pk
DOCUMENT CONTROL
Document No.
PREF-114
Prepared by
SMEDA-Punjab
Issue Date
June 2011
Issued by
Library Officer
3
PREF-114/June, 2011
Pre-feasibility Study
EXECUTIVE SUMMARY
4
PREF-114/June, 2011
Pre-feasibility Study
INTRODUCTION TO SMEDA
The Small and Medium Enterprises Development Authority (SMEDA) was established
with the objective to provide fresh impetus to the economy through the launch of an
aggressive SME support program.
Since its inception in October 1998, SMEDA had adopted a sectoral SME development
approach. A few priority sectors were selected on the criterion of SME presence. In depth
research was conducted and comprehensive development plans were formulated after
identification of impediments and retardants. The all-encompassing sectoral development
strategy involved recommending changes in the regulatory environment by taking into
consideration other important aspects including finance, marketing, technology and
human resource development.
SMEDA has so far successfully formulated strategies for industries such as horticulture,
including export of fruits and vegetables, marble and granite, gems and jewellery, marine
fisheries, leather and footwear, textiles, surgical instruments, transport, dairy etc.
Whereas the task of SME development at a broader scale still requires more coverage and
enhanced reach in terms of SMEDAs areas of operation.
Along with the sectoral focus a broad spectrum of business development services is also
offered to the SMEs by SMEDA. These services include identification of viable business
opportunities for potential SME investors. In order to facilitate these investors, SMEDA
provides business guidance through its help desk services as well as development of
project specific documents. These documents consist of information required to make
well-researched investment decisions. Pre-feasibility studies and business plan
development are some of the services provided to enhance the capacity of individual
SMEs to exploit viable business opportunities in a better way.
This document is in the continuation of this effort to enable potential investors to make
well-informed investment decisions.
Pre-feasibility Study
PROJECT PROFILE
http://en.wikipedia.org/wiki/Demographics_of_Pakistan
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PREF-114/June, 2011
Pre-feasibility Study
1. The key to success of this project is in manufacturing good quality ladies shoes.
Quality standards should be followed strictly.
2. Strong presence in the domestic market. Traders/Wholesalers are already present in
the local market.
3. Tools & equipments locally available at low price.
4. Raw materials are available in sufficient quantity.
5. Availability of other inputs like Adhesives, chemicals, last, punch, mould, grinderies
and packing materials (boxes) etc.
6. Vast pool of skilled labour.
7. Stable business environment till today and growing day by day.
6
6.1
SWOT ANALYSIS
Strengths
1. Strong presence in the domestic market. Traders/Wholesalers are present in the local
market.
2. Local availability of raw materials, machinery and parts.
3. Easy availability of low cost skilled and unskilled labour
4. Presence of qualified leather technologists in the field.
5. Stable business environment till today and increasing day by day.
6.2
Weaknesses
1.
2.
3.
4.
5.
6.
Opportunities
1.
2.
3.
4.
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PREF-114/June, 2011
Pre-feasibility Study
6.4
Threats
INDUSTRY ANALYSIS2
Pakistan Footwear industry has shown good progress in terms of production and exports.
Footwear industry has increased its exports at large extent since 2003.
Pakistan is one of the most populous countries in the World and according to an estimate
with an average population growth of approximately 1.6 %.The population of Pakistan is
estimated about 187 million in the year 20113. Keeping in view the growth in population,
the growth in the demand of footwear industry is also anticipated. Though, significant
growth has taken place in the Shoe Industry of Pakistan, but there is a view that it has not
been up to the mark and the industry has suffered due to a growing and fierce competition
of the emerging economies like India and China. There is a general perception that after
suffering from the cut-throat competition especially with China, the footwear industry is
doing better especially in the previous two years and it is regaining the strength to fulfil
the local demand as well as compete efficiently in the world market.
This sector has pivotal importance in terms of providing and creating jobs, earning of
foreign exchange with the help of exports and fulfilling the local consumption
requirements. Yet, according to the Leather Sector Strategy report by J.E. Austin, no new
manufacturing unit has been established in Pakistans organized sector for the last
decade.
MARKET ANALYSIS
The leather footwear industry is concentrated in and around the cities of Lahore, Kasur
and Charsadda. Other footwear centres are Lahore, Karachi, Faisalabad, Hyderabad,
Sahiwal, Gujranwala and Rawalpindi. The Pakistan footwear sector produces 150
million pairs annually which accounts for 1% of global production. Footwear sector
exports add a meagre US$ 110 million to the export earnings of the country and Pakistan
holds a market share of 0.1% of the world footwear market. In Charsadda, 2,500 workers
produce over a million pairs of shoes annually. The Charsadda cluster is composed of
500 workshops. Besides the local manufacturing of shoes, the markets are flooded with
2
3
PREF-114/June, 2011
Pre-feasibility Study
Chinese shoes which are available at very low price. A high level of employment in
footwear manufacturing exists in small scale businesses and the informal sector.4
The shoe manufacturers in Pakistan are not organized with the exception of some big
manufacturers like Bata and Servis shoes. Therefore, the exact figures regarding number
of units, production and consumptions (of ladies shoes) are not available. The last
footwear industry survey carried out in Pakistan was in 1996; therefore, updated
information is unavailable. However some estimates of overall shoe industry are
available. The major players of the Pakistani Footwear industry are5:
1. Service Industries
2. Bata Pakistan
3. Firhaj Footwear
4. EPCT (Pvt) Ltd
5. Elegant (Pvt) Ltd
6. Footlib Ltd
7. Shafi (Pvt) Ltd
8. Starlet Innovations
9. Brothers Associates
10. Simba Enterprises
During the year 2000, a nominal growth of 0.2% and 0.6% was recorded in the
production and consumption of shoes respectively.
8.1 Market Demand
According to the estimates by SATRA Technology Centre United Kingdom, per capita
consumption of footwear in Pakistan is 1.5 pair per annum. The consumption of footwear
during the year 2000 was 234 million pairs6. The following table shows the consumption
from 1996 to 2000:
Table 8-1 Market Demand6
Year
1996
1997
1998
1999
2000
Percentage Increase
3.68%
10.91%
6.41%
0.65%
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PREF-114/June, 2011
Pre-feasibility Study
Percentage Increase
4.1%
10.6%
6.0%
0.2%
PRODUCTION PROCESS
Servis Industries
World Footwear Markets 2002 - (Global Statistics for 1996-2000) by SATRA Technology Centre 2002,
UK
8
10
PREF-114/June, 2011
Pre-feasibility Study
5. Upper: The upper part of a shoe that helps in holding the shoe onto the foot is the
vamp or simply called the upper. This part is often embellished or given different
styles to make shoes attractive.
9.1.2 Shoe making process
A footwear unit has mainly four departments in which a progressive route is followed for
producing finished shoes. These departments are: Clicking or Cutting Department,
Closing or Machining Department, Lasting & Making Department and Finishing
Department. Following is the process of footwear manufacturing.
1. Product Development: Product development is the process of designing new styles
of shoes or existing ones and then specifying the materials and components, detailing
the materials and the processes that are to be followed in order so that the styles of
shoes can be produced in bulk.
2. Designing and Pattern Cutting: According to the samples of shoes, design or
requirement of the customer the model last is selected by the shoe designers then
patterns are developed and sample shoe is manufactured in under the supervision of
the shoe designer by the craftsmen/artisan. When the samples are approved the
patterns are graded by hand or machines in required sizes and handed over to the
production division for manufacturing the shoes. The designers also specify the
materials required for making the shoes.
3. Clicking/ Components Division: The components are clicked by hand or machine
by the clicker then checked and marked by hand or by stamping machine. The upper
and lining components are skived according to the manufacturing process.
4. Closing or Machining: The component pieces are sewn together by skilled
machinists so as to produce the completed upper. The work is divided in stages. In
early stages, the pieces are sewn together on the flat machine. In the later stages,
when the upper is no longer flat and has become three-dimensional, the machine
called post machine is used. The sewing surface of the machine is elevated on a
position to enable the operative to sew the three dimensional upper. Various edge
treatments are also done for giving an attractive look to the finished upper. At this
stage only, the eyelets are also inserted in order to accommodate the laces in the
finished shoes.
5. Lasting, Making and Finishing: The completed uppers are moulded into a shape of
foot with the help of a "Last". Last simulates the foot shape. It is later removed from
the finished shoe to be used further in making other shoes. Soles can also be premoulded as a separate component out of various synthetic materials and again glued
to the lasted upper to complete the shoe.
6. Packing: The shoe lift is inserted in the shoes to maintain the shape of the finished
shoes. After this operation the finished shoes are kept in the boxes.
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PREF-114/June, 2011
Pre-feasibility Study
Designing
Packing
Upper Cutting
Lasting
Upper Cleaning
Sole Attaching
Pre-feasibility Study
13
PREF-114/June, 2011
Pre-feasibility Study
No.
1
Salary/Month (Rs.)
50,000
1
1
2
1
1
25,000
20,000
15,000
12,000
7,000
300,000
240,000
360,000
144,000
84,000
1
1
1
1
1
2
14
15,000
12,000
12,000
10,000
7,000
8,500
180,000
144,000
144,000
120,000
84,000
204,000
2,604,000
12 MACHINERY REQUIREMENT
The organized units comprise only 2.3%9 of the total shoe manufacturing units.
Therefore, because of low demand of new shoe manufacturing machinery, brand new
machinery for shoe manufacturing is not available in the local market. Second hand and
refurbished machinery of UK and German origin is mostly used for any new shoe
manufacturing unit. Cutting press, skiving and stitching machines, sole attaching press
and sole activator machine are the main machinery that will be required for a shoe
manufacturing unit. Apart from these machines certain locally manufactured tools for
upper, bottom and finishing, lasts, cutting tables and boards are easily available in the
local market.
Following table shows the machinery and tools required for setting up a Ladies
Manufacturing Unit.
Table 12-1 Machinery Details
Machinery
Qty
1
2
2
4
Unit Price
(Rs.)
150,000
50,000
25,000
20,000
PREF-114/June, 2011
Total Amount
(Rs.)
150,000
100,000
50,000
80,000
Pre-feasibility Study
2
1
1
3
1
1
1
1
25,000
40,000
230,000
15,000
400,000
20,000
20,000
40,000
50,000
40,000
230,000
45,000
400,000
20,000
20,000
40,000
1
1
2
1
1
1
50,000
50,000
15,000
50,000
50,000
50,000
100,000
500,000
282,000
50,000
50,000
30,000
50,000
50,000
50,000
100,000
500,000
282,000
500,000
1
1
2,887,000
Qty
3
3
1
2
1
Cost/Unit (Rs.)
25,000
7,500
12,000
1,000
12,000
Qty
1
7
Cost/Unit (Rs.)
20,000
8,000
15
PREF-114/June, 2011
Pre-feasibility Study
Sofa
Store racks/Shelves
Chairs
Stools
Work Tables
File cabinets
Fans and Lights
Fire extinguishers
Air conditioners
Total Cost
1
5
14
3
2
3
12,000
10,000
2,200
800
5,000
5,000
50,000
2,500
35,000
3
2
12,000
50,000
30,800
2,400
10,000
15,000
50,000
7,500
70,000
323,700
200
3,000
500
500
50
250
4,500
16
PREF-114/June, 2011
Pre-feasibility Study
15 PROJECT ECONOMICS
15.1 Project Investment
The total investment in this project is been estimated at Rs.7.801 million. The estimated
capital cost is Rs. 3.904 million and the estimated working capital of Rs. 3.897 million.
The total cost, project returns and financial plan are given in the tables below.
Table 15-1 Total Project Cost
Account Head
Total Capital Cost
Total Working Capital
Total Project Cost (Rs)
The proposed pre-feasibility is based on the assumption of 50% debt and 50% equity.
However, this composition of debt and equity can be changed as per the requirement of
the investor
Table 15-2 Financing Plan
Financing
Ratio
Equity
Debt
50%
50%
Rs
3,900,759
3,900,759
IRR
NPV (Rs)
Payback Period (Years)
17
PREF-114/June, 2011
Pre-feasibility Study
16 FINANCIAL ANALYSIS
16.1 Project Detail
Initial Investment
Capital Investment
Machinery & equipment
Furniture & fixtures
Office equipment
Pre-operating costs
Training costs
Total Capital Costs
Working Capital
Equipment spare part inventory
Raw material inventory
Upfront building rent
Upfront insurance payment
Cash
Total Working Capital
Rs. in actuals
2,887,000
323,700
123,500
520,047
50,000
3,904,247
Rs. in actuals
2,977,920
675,000
144,350
100,000
3,897,270
Total Investment
Initial Financing
Debt
Equity
7,801,517
50%
50%
Rs. in actuals
3,900,759
3,900,759
Project Returns
Net Present Value (Rs.)
Internal Rate of Return
Payback Period (Yrs)
EQUITY
41,998,408
85%
3.04
18
PREF-114/June, 2011
PROJECT
56,885,908
56%
3.60
Pre-feasibility Study
Revenue
Year 1
32,733,960
Year 2
56,651,573
Year 3
73,837,844
Year 4
93,014,081
Year 5
115,231,931
Year 6
127,780,403
Year 7
140,622,916
Year 8
162,662,614
Year 9
179,572,295
Year 10
197,570,166
Cost of sales
Cost of goods sold 1
Transportation cost
Operation costs 1 (direct labor)
Operating costs 2 (machinery maintenance)
Operating costs 3 (direct electricity)
Operating costs 4 (direct water)
Operating costs 5 (generator diesel)
Total cost of sales
Gross Profit
25,143,690
180,000
1,104,500
476,044
518,400
27,422,633
5,311,327
41,932,176
193,500
1,232,666
523,648
570,240
44,452,230
12,199,343
53,325,311
208,013
1,353,623
576,013
627,264
56,090,224
17,747,620
65,466,103
223,613
1,486,154
633,614
689,990
68,499,474
24,514,607
79,078,466
240,384
1,631,456
696,976
758,989
82,406,271
32,825,660
85,637,211
258,413
1,790,816
766,673
834,888
89,288,003
38,492,401
92,099,327
277,794
1,967,573
843,341
918,377
96,106,412
44,516,504
104,050,567
298,629
2,161,508
927,675
1,010,215
108,448,594
54,214,020
112,221,681
321,026
2,371,956
1,020,442
1,111,236
117,046,341
62,525,954
120,661,422
345,103
2,602,893
1,122,486
1,222,360
125,954,264
71,615,902
1,476,000
73,800
1,350,000
168,100
18,000
6,000
29,520
29,520
29,520
818,349
144,350
163,670
333,420
104,009
5,000
327,340
5,076,598
234,729
1,619,705
80,985
1,485,000
184,910
19,800
6,600
32,394
32,394
32,394
1,416,289
129,915
283,258
333,420
104,009
5,000
566,516
6,332,590
5,866,753
1,777,402
88,870
1,633,500
203,401
21,780
7,260
35,548
35,548
35,548
1,845,946
115,480
369,189
333,420
104,009
5,000
738,378
7,350,280
10,397,340
1,950,453
97,523
1,796,850
223,741
23,958
7,986
39,009
39,009
39,009
1,395,211
101,045
465,070
333,420
104,009
5,000
930,141
7,551,434
16,963,173
2,140,351
107,018
1,976,535
246,115
26,354
8,785
42,807
42,807
42,807
1,728,479
86,610
576,160
333,420
104,009
5,000
1,152,319
8,619,576
24,206,084
2,348,739
117,437
2,174,189
270,726
28,989
9,663
46,975
46,975
46,975
1,916,706
72,175
638,902
333,420
5,000
1,277,804
9,334,675
29,157,726
2,577,416
128,871
2,391,607
297,799
31,888
10,629
51,548
51,548
51,548
1,406,229
57,740
703,115
333,420
5,000
1,406,229
9,504,588
35,011,916
2,828,357
141,418
2,630,768
327,579
35,077
11,692
56,567
56,567
56,567
1,626,626
43,305
813,313
333,420
5,000
1,626,626
10,592,882
43,621,138
3,103,729
155,186
2,893,845
360,337
38,585
12,862
62,075
62,075
62,075
1,795,723
28,870
897,861
333,420
5,000
1,795,723
11,607,365
50,918,590
3,405,913
170,296
3,183,229
396,370
42,443
14,148
68,118
68,118
68,118
1,975,702
14,435
987,851
333,420
5,000
1,975,702
12,708,863
58,907,039
33,125
267,854
5,866,753
174,731
10,572,071
875,941
17,839,114
2,292,580
26,498,663
4,347,151
33,504,877
6,951,250
41,963,166
10,300,015
53,921,153
14,529,030
65,447,620
20,847,882
79,754,921
386,504
331,861
172,981
891,346
(623,492)
536,994
284,550
821,544
5,045,209
150,490
229,195
379,685
10,192,385
164,431
164,431
17,674,683
88,656
88,656
26,410,007
33,504,877
41,963,166
53,921,153
65,447,620
79,754,921
Tax
NET PROFIT/(LOSS) AFTER TAX
(623,492)
1,261,302
3,783,907
2,548,096
7,644,289
4,418,671
13,256,012
6,602,502
19,807,505
8,376,219
25,128,658
10,490,791
31,472,374
13,480,288
40,440,865
16,361,905
49,085,715
19,938,730
59,816,191
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PREF-114/June, 2011
Pre-feasibility Study
Year 1
Year 2
Year 3
Year 4
Year 5
(3,234,770)
(623,492)
333,420
104,009
5,000
(1,345,231)
(583,460)
(2,064,071)
(11,250)
14,435
1,247,905
(2,922,735)
3,783,907
333,420
104,009
5,000
516,748
(491,458)
(346,503)
(1,597,681)
(12,375)
14,435
756,151
3,065,654
7,644,289
333,420
104,009
5,000
(844,600)
(242,655)
(1,925,505)
(13,613)
14,435
547,938
5,622,719
13,256,012
333,420
104,009
5,000
(747,175)
(258,714)
(2,311,259)
(14,974)
14,435
594,561
10,975,316
19,807,505
333,420
104,009
5,000
(850,563)
(289,948)
(1,400,341)
(16,471)
14,435
617,650
18,324,696
Financing activities
Project Loan - principal repayment
Working Capital Loan - principal repayment
Short term debt principal repayment
Additions to Project Loan
Additions to Working Capital Loan
Issuance of shares
Cash provided by / (used for) financing activities
1,952,124
1,948,635
3,900,759
7,801,517
(278,302)
(1,948,635)
(2,226,937)
(325,614)
(4,487,173)
(4,812,786)
(380,968)
(1,747,133)
(2,128,101)
(445,733)
(445,733)
(521,507)
(521,507)
Investing activities
Capital expenditure
Cash (used for) / provided by investing activities
(3,904,247)
(3,904,247)
NET CASH
(2,977,920)
(112,500)
(144,350)
662,500
(5,149,673)
(1,747,133)
3,494,618
20
PREF-114/June, 2011
10,529,583
17,803,189
Year 6
25,128,658
333,420
5,000
(72,175)
(714,376)
(143,203)
(1,580,635)
(18,118)
14,435
335,236
23,288,241
Year 7
31,472,374
333,420
5,000
(72,175)
(521,733)
(139,932)
(2,653,117)
(19,930)
14,435
375,395
28,793,738
Year 8
40,440,865
333,420
5,000
(72,175)
(716,758)
(254,931)
(2,125,731)
(21,923)
14,435
579,362
38,181,564
Year 9
49,085,715
333,420
5,000
(72,175)
(800,330)
(179,120)
(2,399,418)
(24,115)
14,435
435,326
46,398,738
Year 10
59,816,191
333,420
5,000
(72,175)
(717,278)
(185,582)
21,035,678
265,269
14,435
(516,652)
79,978,306
23,288,241
28,793,738
38,181,564
46,398,738
79,978,306
Pre-feasibility Study
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 10
662,500
1,836,689
929,963
6,639,672
136,125
115,480
9,657,929
3,494,618
2,681,289
1,172,618
8,565,176
149,738
101,045
16,164,484
14,024,201
3,428,464
1,431,332
10,876,436
164,711
86,610
30,011,754
31,827,390
4,279,028
1,721,280
12,276,777
181,182
72,175
50,357,832
55,115,631
4,993,404
1,864,483
13,857,412
199,301
57,740
76,087,970
83,909,369
5,515,137
2,004,415
16,510,529
219,231
43,305
108,201,985
122,090,933
6,231,894
2,259,346
18,636,259
241,154
28,870
149,488,457
168,489,671
7,032,224
2,438,465
21,035,678
265,269
14,435
199,275,742
248,467,977
7,749,503
2,624,047
258,841,527
Assets
Current assets
Cash & Bank
Accounts receivable
Finished goods inventory
Raw material inventory
Pre-paid building rent
Pre-paid insurance
Total Current Assets
2,977,920
112,500
144,350
3,897,270
1,345,231
583,460
5,041,991
123,750
129,915
7,224,347
Fixed assets
Machinery & equipment
Furniture & fixtures
Office equipment
Total Fixed Assets
2,887,000
323,700
123,500
3,334,200
2,598,300
291,330
111,150
3,000,780
2,309,600
258,960
98,800
2,667,360
2,020,900
226,590
86,450
2,333,940
1,732,200
194,220
74,100
2,000,520
1,443,500
161,850
61,750
1,667,100
1,154,800
129,480
49,400
1,333,680
866,100
97,110
37,050
1,000,260
577,400
64,740
24,700
666,840
288,700
32,370
12,350
333,420
Intangible assets
Pre-operation costs
Legal, licensing, & training costs
Total Intangible Assets
TOTAL ASSETS
520,047
50,000
570,047
7,801,517
416,038
45,000
461,038
10,686,165
312,028
40,000
352,028
12,677,317
208,019
35,000
243,019
18,741,443
104,009
30,000
134,009
32,146,284
25,000
25,000
52,049,932
20,000
20,000
77,441,650
15,000
15,000
109,217,245
10,000
10,000
150,165,297
5,000
5,000
199,614,162
258,841,527
1,247,905
4,487,173
2,004,055
1,747,133
2,551,993
-
3,146,554
-
3,764,204
-
4,099,440
-
4,474,835
-
5,054,197
-
5,489,523
-
4,972,871
-
5,735,077
3,751,188
2,551,993
3,146,554
3,764,204
4,099,440
4,474,835
5,054,197
5,489,523
4,972,871
1,673,821
1,673,821
516,748
1,348,208
1,864,956
516,748
967,240
1,483,988
516,748
521,507
1,038,255
516,748
516,748
444,573
444,573
372,398
372,398
300,223
300,223
228,048
228,048
155,873
155,873
3,900,759
(623,492)
3,277,266
10,686,165
3,900,759
3,160,415
7,061,173
12,677,317
3,900,759
10,804,703
14,705,462
18,741,443
3,900,759
24,060,716
27,961,474
32,146,284
3,900,759
43,868,221
47,768,980
52,049,932
3,900,759
68,996,879
72,897,637
77,441,650
3,900,759
100,469,253
104,370,012
109,217,245
3,900,759
140,910,118
144,810,877
150,165,297
3,900,759
189,995,833
193,896,592
199,614,162
3,900,759
249,812,024
253,712,783
258,841,527
1,952,124
1,948,635
3,900,759
3,900,759
3,900,759
7,801,517
21
PREF-114/June, 2011
Pre-feasibility Study
1,000
14 Sq.ft
Rs.
71.43
Rs.
169.64
Material Requirements:
Material
required
Size categories
Cost of
material
6-7
2.00 / Sq.ft
Rs.
142.86
2.25 / Sq.ft
Rs.
160.71
2.50 / Sq.ft
Rs.
178.57
10-11
2.75 / Sq.ft
Rs.
196.43
7.5%
Capacity Utilization
No. of Pairs / day
Annual Production
Design and Development Cost:
No. of Designs per year
Cost of Cutting Dies per design (Rs.)
Annual cost of cutting dies (Rs.)
Per Pair
Req.
Upper material cost
Sole
Rubber solution
Cement solution
Desmokol for sole
Desmoder
MEK (for cleaning)
EVA sheet
Other chemicals
Wage rate per pair:
Cutting Man
1 Pair
1 Pair
-
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 10
40%
60%
70%
80%
90%
90%
90%
95%
95%
95%
240
72,000
360
108,000
420
126,000
480
144,000
540
162,000
540
162,000
540
162,000
570
171,000
570
171,000
570
171,000
30
30,000
900,000
30
32,250
967,500
35
34,669
1,213,406
35
37,269
1,304,412
35
40,064
1,402,243
35
43,069
1,507,411
35
46,299
1,620,467
35
49,771
1,742,002
35
53,504
1,872,652
35
57,517
2,013,101
151.88
130.00
3.00
3.00
7.00
2.00
2.00
8.00
6.00
163.27
139.75
3.23
3.23
7.53
2.15
2.15
8.60
6.45
175.52
150.23
3.47
3.47
8.09
2.31
2.31
9.25
6.93
188.68
161.50
3.73
3.73
8.70
2.48
2.48
9.94
7.45
202.83
173.61
4.01
4.01
9.35
2.67
2.67
10.68
8.01
218.04
186.63
4.31
4.31
10.05
2.87
2.87
11.49
8.61
234.40
200.63
4.63
4.63
10.80
3.09
3.09
12.35
9.26
251.98
215.68
4.98
4.98
11.61
3.32
3.32
13.27
9.95
270.87
231.85
5.35
5.35
12.48
3.57
3.57
14.27
10.70
291.19
249.24
5.75
5.75
13.42
3.83
3.83
15.34
11.50
2.50
2.50
2.69
2.89
3.11
3.34
3.59
3.86
4.15
4.46
4.79
Upper Man
12.00
12.00
12.90
13.87
14.91
16.03
17.23
18.52
19.91
21.40
23.01
Bottom Man
8.00
8.00
8.60
9.25
9.94
10.68
11.49
12.35
13.27
14.27
15.34
Finishing Man
Factory over heads per pair:
Design & Development Cost
Electricity
Packing
Accessories
Foam Lining
Maintenance
Misc.
-
2.50
2.50
2.69
2.89
3.11
3.34
3.59
3.86
4.15
4.46
4.79
12.50
12.50
18.00
5.00
1.00
1.00
1.00
8.96
19.35
5.38
1.08
1.08
1.08
9.63
20.80
5.78
1.16
1.16
1.16
9.06
22.36
6.21
1.24
1.24
1.24
8.66
24.04
6.68
1.34
1.34
1.34
9.31
25.84
7.18
1.44
1.44
1.44
10.00
27.78
7.72
1.54
1.54
1.54
10.19
29.86
8.30
1.66
1.66
1.66
10.95
32.10
8.92
1.78
1.78
1.78
11.77
34.51
9.59
1.92
1.92
1.92
18.00
5.00
1.00
1.00
1.00
22
PREF-114/June, 2011
Pre-feasibility Study
Capacity Utilization
40%
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 10
600
25
300
Days
15
60%
70%
80%
90%
90%
90%
95%
95%
95%
240
6,000
360
9,000
420
10,500
480
12,000
540
13,500
540
13,500
540
13,500
570
14,250
570
14,250
570
14,250
72,000
72,000
1,680
70,320
70,320
3,516
66,804
108,000
1,680
109,680
2,559
107,121
3,516
110,637
5,532
105,105
126,000
2,559
128,559
3,000
125,559
5,532
131,091
6,555
124,537
144,000
3,000
147,000
3,430
143,570
6,555
150,124
7,506
142,618
162,000
3,430
165,430
3,860
161,570
7,506
169,076
8,454
160,622
162,000
3,860
165,860
3,870
161,990
8,454
170,444
8,522
161,922
162,000
3,870
165,870
3,870
162,000
8,522
170,522
8,526
161,996
171,000
3,870
174,870
4,080
170,790
8,526
179,316
8,966
170,350
171,000
4,080
175,080
4,085
170,995
8,966
179,961
8,998
170,963
171,000
4,085
175,085
4,085
171,000
8,998
179,998
9,000
170,998
Year 2
Year 3
Year 4
Year 5
Year6
Year 7
Year 8
Year 9
Year 10
Cost of Sales
Material Cost
22,527,360
36,325,368
45,558,066
55,971,338
67,690,337
72,767,112
78,224,645
88,763,243
95,420,487
Labor Cost
1,800,000
2,902,500
3,640,219
4,472,269
5,408,650
5,814,299
6,250,371
7,092,435
7,624,368
8,196,195
2,772,000
3,986,100
4,999,234
5,955,571
7,027,239
7,554,282
8,120,853
9,118,134
9,801,994
10,537,144
27,099,360
43,213,968
54,197,518
66,399,178
80,126,225
86,135,692
92,595,869
104,973,813
112,846,849
121,310,362
27,099,360
102,577,023
632,318
1,024,011
1,290,294
1,581,588
1,909,197
2,057,722
2,212,185
2,504,827
2,695,923
43,846,286
55,221,529
67,689,472
81,707,814
88,044,889
94,653,591
107,185,997
115,351,675
124,006,285
632,318
1,024,011
1,290,294
1,581,588
1,909,197
2,057,722
2,212,185
2,504,827
2,695,923
2,898,198
26,467,042
42,822,275
53,931,235
66,107,884
79,798,617
85,987,167
92,441,406
104,681,171
112,655,753
121,108,087
1,323,352
2,213,451
2,819,375
3,461,156
4,181,307
4,531,263
4,873,342
5,503,946
5,938,018
26,467,042
44,145,627
56,144,686
68,927,259
83,259,773
90,168,475
96,972,669
109,554,513
118,159,698
127,046,105
1,323,352
25,143,690
2,213,451
41,932,176
2,819,375
53,325,311
3,461,156
65,466,103
4,181,307
79,078,466
4,531,263
85,637,211
4,873,342
92,099,327
5,503,946
104,050,567
5,938,018
112,221,681
6,384,683
120,661,422
23
PREF-114/June, 2011
Pre-feasibility Study
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 10
600
95%
5%
Rs. 500
Rs. 300
10.0%
Capacity Utilization
No. of Pairs / day
Total Pairs Sold
Selling Price
Selling Price for B-Pairs
40%
240 Pairs
66,804
500
300
60%
360 Pairs
105,105
550
330
70%
420 Pairs
124,537
605
363
80%
480 Pairs
142,618
666
399
90%
540 Pairs
160,622
732
439
90%
540 Pairs
161,922
805
483
90%
540 Pairs
161,996
886
531
95%
570 Pairs
170,350
974
585
95%
570 Pairs
170,963
1,072
643
95%
570 Pairs
170,998
1,179
707
Local Sales
Sale of B-Pairs
Total Sales
31,731,900
1,002,060
32,733,960
54,917,342
1,734,232
56,651,573
71,577,502
2,260,342
73,837,844
90,166,711
2,847,370
93,014,081
111,704,423
3,527,508
115,231,931
123,868,758
3,911,645
127,780,403
136,318,133
4,304,783
140,622,916
157,683,146
4,979,468
162,662,614
174,075,184
5,497,111
179,572,295
191,522,100
6,048,066
197,570,166
24
PREF-114/June, 2011
Pre-feasibility Study
17 KEY ASSUMPTIONS
Table 17-1 Operational Assumptions
Maximum capacity utilization
First year capacity utilization
Capacity utilization growth rate
Maximum number of pairs per day at 100% capacity
Maximum number of pairs per year
Percentage of A pair shoes
Percentage of B pair shoes
Hours operational per day
Days operational per year
95%
40%
10%
600
180,000
95%
5%
8
300
10%
10%
10%
10%
10%
15
15
45
15
7
15
500
300
10%
5%
2%
2%
2%
5%
5
Pre-feasibility Study
3
2.5%
1.5%
1.0%
0.5%
1.0%
10
50%
50%
17%
16%
26
PREF-114/June, 2011
Pre-feasibility Study
10%
5
1
10%
10%
10%
10%
18 ANNEXURE
18.1 Machinery Suppliers
Company Name:
Address:
City:
Tel:
Company Name:
Address:
City:
Tel:
Company Name:
Address:
City:
Tel:
Company Name:
Address:
City:
Tel:
PREF-114/June, 2011
Pre-feasibility Study
City:
Tel:
Lahore.
042-36364208
Tax Rate
0.00%
0.50%
1.00%
2.00%
3.00%
4.00%
5.00%
7.50%
10.00%
12.50%
15.00%
17.50%
21.00%
25.00%
100,000 110,000
110,000 125,000
125,000 150,000
150,000 175,000
175,000 200,000
200,000 300,000
300,000 400,000
400,000 500,000
500,000 600,000
600,000 800,000
800,000 1,000,000
1,000,000 1,300,000
1,300,000 and above
28
PREF-114/June, 2011