Pre-Feasibility Study

Prime Ministers Small Business Loan Scheme Cut Flower Farm

(Gladiolus, Marigold, Statice and Chrysanthemum)

Small and Medium Enterprises Development Authority Ministry of Industries & Production
Government of Pakistan
www.smeda.org.pk
HEAD OFFICE
4th Floor, Building No. 3, Aiwan e Iqbal Complex, Egerton Road, Lahore Tel 92 42 111 111 456, Fax 92 42 36304926-7 helpdesk@smeda.org.pk REGIONAL OFFICE PUNJAB 3rd Floor, Building No. 3, Aiwan e Iqbal Complex, Egerton Road Lahore, Tel: (042) 111-111-456 Fax: (042)6304926-7 helpdesk.punjab@smeda.org.pk REGIONAL OFFICE SINDH 5TH Floor, Bahria Complex II, M.T. Khan Road, Karachi. Tel: (021) 111-111-456 Fax: (021) 5610572 helpdesk-khi@smeda.org.pk REGIONAL OFFICE KPK Ground Floor State Life Building The Mall, Peshawar. Tel: (091) 9213046-47 Fax: (091) 286908 helpdesk-pew@smeda.org.pk REGIONAL OFFICE BALOCHISTAN Bungalow No. 15-A Chaman Housing Scheme Airport Road, Quetta. Tel: (081) 831623, 831702 Fax: (081) 831922 helpdesk-qta@smeda.org.pk

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Table of Content 1 2 3 4 5 6 7 8 9 Disclaimer.........................................................................................................1 Purpose of the document ............................................................................2 Introduction to SMEDA .................................................................................2 Introduction to Scheme ................................................................................3 Executive Summary.......................................................................................3 Brief Description of the project ..................................................................3 Critical Factors................................................................................................4 Installed and Operational Capacity ...........................................................4 Geographic Potential for Investment........................................................5

10 Potential Target Markets / Cities ................................................................6 11 Process Flow:..................................................................................................6 12 Project Cost Summary ..................................................................................6
12.1 12.2 12.3 12.4 12.5 12.6 12.7 12.8 12.9 12.10 Project Economics ..................................................................................................... 6 Project Financing ....................................................................................................... 7 Project Cost ................................................................................................................ 8 Space Requirement ................................................................................................... 8 Machinery and Equipment ........................................................................................ 8 Furniture ...................................................................................................................... 8 Raw Material Requirements ..................................................................................... 9 Human Resource Requirement ............................................................................... 9 Revenue Generation ............................................................................................... 10 Other Costs ............................................................................................................... 10

13 Contacts - Suppliers, experts/consultants, Dev. Institutions ..........10 14 Annexure ........................................................................................................13

14.1 14.2 14.3 14.4 14.5 Income Statement ....................................................................................................... 13 Project Balance Sheet ................................................................................................. 14 Cash Flow Statement .............................................................................................. 15 Useful Project Management Tips .......................................................................... 13 Useful Links .............................................................................................................. 14

15 Key Assumptions .........................................................................................15

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1 DISCLAIMER
This information memorandum is to introduce the subject matter and provide a general idea and information on the said matter. Although, the material included in this document is based on data/information gathered from various reliable sources; however, it is based upon certain assumptions which may differ from case to case. The information has been provided on as is where is basis without any warranties or assertions as to the correctness or soundness thereof. 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, its employees or agents do not assume any liability for any financial or other loss resulting from this memorandum in consequence of undertaking this activity. The contained information does not preclude any further professional advice. The prospective user of this memorandum is encouraged to carry out additional diligence and gather any information which is necessary for making an informed decision, including taking professional advice from a qualified consultant/technical expert before taking any decision to act upon the information. For more information on services offered by SMEDA, please contact our website: www.smeda.org.pk

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2 PURPOSE OF THE DOCUMENT

The objective of the pre-feasibility study is primarily to facilitate potential entrepreneurs in project identification for investment. The project pre-feasibility may form the basis of an important investment decision and in order to serve this objective, the document/study covers various aspects of project concept development, start-up, and production, marketing, finance and business management. The purpose of this document is to facilitate potential investors in Cut Flower Farm by providing them with a general understanding of the business with the intention of supporting potential investors in crucial investment decisions. The need to come up with pre-feasibility reports for undocumented or minimally documented sectors attains greater imminence as the research that precedes such reports reveal certain thumb rules; best practices developed by existing enterprises by trial and error, and certain industrial norms that become a guiding source regarding various aspects of business set-up and its successful management. Apart from carefully studying the whole document one must consider critical aspects provided later on, which form basis of any Investment Decision.

3 INTRODUCTION TO SMEDA
The Small and Medium Enterprises Development Authority (SMEDA) was established in October 1998 with an objective to provide fresh impetus to the economy through development of Small and Medium Enterprises (SMEs). With a mission "to assist in employment generation and value addition to the national income, through development of the SME sector, by helping increase the number, scale and competitiveness of SMEs" , SMEDA has carried out sectoral research to identify policy, access to finance, business development services, strategic initiatives and institutional collaboration and networking initiatives. Preparation and dissemination of prefeasibility studies in key areas of investment has been a successful hallmark of SME facilitation by SMEDA. Concurrent to the prefeasibility studies, a broad spectrum of business development services is also offered to the SMEs by SMEDA. These services include identification of experts and consultants and delivery of need based capacity building programs of different types in addition to business guidance through help desk services.

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4 INTRODUCTION TO SCHEME
Prime Ministers Small Business Loans Scheme, for young entrepreneurs, with an allocated budget of Rs. 5.0 Billion for the year 2013-14, is designed to provide subsidised financing at 8% mark-up per annum for one hundred thousand (100,000) beneficiaries, through designated financial institutions, initially through National Bank of Pakistan (NBP) and First Women Bank Ltd. (FWBL). Small business loans with tenure up to 7 years, and a debt : equity of 90 : 10 will be disbursed to SME beneficiaries across Pakistan, covering; Punjab, Sindh, Khyber Pakhtunkhwah, Balochistan, Gilgit Baltistan, Azad Jammu & Kashmir and Federally Administered Tribal Areas (FATA).

5 EXECUTIVE SUMMARY
Cut Flower Farm is proposed to be located at favorable growing areas in Balochistan including District Quetta, Kalat, Ziarat, Pishin/Khanozai, Killa Saifullah and any other temperate areas. The varieties included Gladiolus, Mari Gold, Statice and Chrysanthemum. Production Capacity of Gladiolus, Statice, Chrysanthemum and Marigold is 150,000 Kgs. having first year production capacity of 60,000 Kgs. at initial utilization of 40% in year -01. Total Cost Estimate is Rs. 1.88 Million with fixed investment of Rs. 1.53 Million and working capital of Rs. 0.35 Million. Given the cost assumptions IRR and payback are 62% and 2.21 years, respectively. The most critical considerations or factors for success of the project are: One of the major competitive advantages of Balochistan is the tenure of production. In Balochistan, flower plants can be in production for 8 months while in other provinces of Pakistan, such period is for 4 months only. Balochistans dry and cold climate offers better opportunities for growth of cut flower. Quetta, Mastung, Kalat, Pishin, Killa Saifullah and Ziarat are some of the areas recommended for starting such a farm in Balochistan.

6 BRIEF DESCRIPTION OF THE PROJECT

Following key parameters must be addressed as per pre-feasibility study: Technology: This proposed farm will cultivate and produce Gladiolus, Statice, Chrysanthemum and Marigold varieties and will generate revenues from sale of
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these varieties. Additional revenues will be generated from the sale of Gladiolus Corms which will start from third year. Location: The Cut Flower Farm is proposed to be located at favourable growing areas in Balochistan including District Quetta, Kalat, Ziarat, Pishin/Khanozai, Killa Saifullah and any other temperate areas. Product: The farm would produce cut flowers to fulfil the local demand of cut flower varieties including Gladiolus, Mari Gold, Statice and Chrysanthemum. Target Market: The target market for the Cut Flower Farm is local. Major buyers of the cut flower are in larger cities such as Karachi, Peshawar, Lahore and Islamabad and domestic market is Quetta, whereas, other potential areas of Balochistan can also be targeted upon demand. Employment Generation: The proposed project will provide direct employment to 06 people. Financial analysis shows the unit shall be profitable from the very first year of operation.

7 CRITICAL FACTORS
Establishment of the farms in areas where basic infrastructure including water and electricity are available. Farming should be done on scientific grounds, taking care of the input requirements and pest management techniques. Well-trained/experienced staff will add to the efficiency of the farm. Producer should be aware of ever-changing fashion in terms of flower color and varieties. Special attention to healthy and certified seeds/ bulbs, land preparation, sowing pattern, water management, fertilizer application and marketing is required.

8 INSTALLED AND OPERATIONAL CAPACITY

Total farm area is assumed to be five (05) Acres. Cultivation of Gladiolus, Statice, Chrysanthemum and Marigold will be distributed on the farm area respectively. Table 1: Production at 40% Capacity Production Capacity (Units) Initial capacity utilization Production per year
4

150,000 40% 60,000

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Production lost to Petals Production quantity sold (Flowers) Production quantity sold (Flowers in kgs. for petals)

12,000 48,000 30

The proposed project is for the farming of Gladiolus, Statice, Chrysanthemum and Marigold varieties and will generate revenues from sale of these varieties. Additional revenues will be generated from the sale of Gladiolus Corms which will start from the third year.

Product Gladiolus, Statice, Chrysanthemum and Mari Gold

Table 2: Product Mix Production Capacity Per Year @ 100 % 150,000

Sales Price (Rs.) 20 - 35

9 GEOGRAPHIC POTENTIAL FOR INVESTMENT

Pakistan is a country conducive to small scale farming where floriculture provides an opportunity for enhancing income of under privileged. Floriculture is an upcoming opportunity in Balochistan since it requires less water and more per acre income then traditional crops. It can play a major role in the economy of Balochistan and can become an important sector such as Horticulture, Livestock & Fisheries. Favorable growing areas in Balochistan include Dist. Quetta, Kalat, Ziarat, Pishin/Khanozai, Killa Saifullah and any other temperate areas. One of the major competitive advantages of Balochistan is the tenure of production. In Balochistan, flower plants can be in production for 8 months while in other provinces of Pakistan, such period is for 4 months only. With the use of controlled environment sheds, academia, other support industry interface, a round the year productivity can be ensured for national & international markets.

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10 POTENTIAL TARGET MARKETS / CITIES

Major buyers of cut flowers are in large cities such as Karachi, Peshawar, Lahore, and Islamabad. Main local target market is Quetta, whereas, other potential areas of Balochistan can also be targeted upon demand.

11 PROCESS FLOW:
The Flower process will be as under:

Land Leveling

Sowing

Watering

Early Stage Plants

Visual Inspection

Plucking

Packing & Distribution

12 PROJECT COST SUMMARY

A detailed financial model has been developed to analyze the commercial viability of Cut Flower Farm - Gladiolus, Mari Gold, Statice and Chrysanthemum under the Prime Ministers Small Business Loan Scheme. Various cost and revenue related assumptions along with results of the analysis are outlined in this section. The projected Income Statement, Cash Flow Statement and Balance Sheet are attached as appendix. 1 2 .1 Project Economics

The total project investment is Rs. 1.88 Million which includes Capital Cost of Rs. 1.53 Million and Working Capital of Rs. 0.35 Million. The project is assumed to be financed through 10% equity and 90% debt. All the figures in this financial model have been calculated for a total farm area assumed to be Five (05) Acres. Cultivation of the cut flowers is expected to yield 150,000 Gladiolus, Statice, Chrysanthemum and Marigold over a distributed area of 05 Acres, respectively. Whereby, yield covered by Cut Flower Farm of Gladiolus, Statice, Chrysanthemum and Marigold in year one will be 60,000 at initial capacity of 40%. The following table shows internal rates of return and payback period.

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Table 3 - Project Economics

Description Internal Rate of Return (IRR) Payback Period (yrs)

Details 62% 2.21

Since the floriculture sector in Pakistan is not highly developed there are great variations in the production and consumption cycle of cut flowers. The production cycle is especially dependent upon the natural environment and weather. Similarly, the consumption cycle is determined by the marriages, religious (URS) and political occasions. Due to these reasons it is difficult to forecast the actual requirements for cut flowers. Similarly, due to the perishable nature of the product appropriate infrastructure and transportation also plays an important role in the marketing and profitability of cut flowers. Focus on healthy and certified seeds/ bulbs, land preparation, sowing pattern, water management, fertilizer application, hiring of skilled personal, pest management, ever-changing fashion in terms of flower color and varieties along with marketing is required to avoid project losses. 1 2 .2 Project Financing

Following table provides details of the equity required and variables related to bank loan:
Table 4: Project Financing

Description Total Equity (10%) Bank Loan (90%) Annual Markup to the Borrower Tenure of the Loan (Years)

Details Rs.187,911 Rs.1,691,195 8% 7

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1 2 .3

Project Cost

Following requirements have been identified for operations of the proposed business.
Table 5: Capital Investment for the Project

Capital Investment Land Machinery & equipment Land tillage and saplings Furniture & fixtures Pre-operating costs Total Capital Costs Working Capital Raw material inventory Upfront land lease rent Cash Total Working Capital Total Investment 1 2 .4 Space Requirement

Rs. On lease 20,000 1,063,000 20,000 430,514 1,533,514 Rs. 20,592 125,000 200,000 345,592 1,879,106

Total required land for this project is five (05) acre, most of which will be used for farming. Land would be leased out for the project, however investors with own land can generate more income from the project. 1 2 .5 Machinery and Equipment

Following table provides a list of equipment required for planting, managing and harvesting the farm.
Table 7: List of Machinery & Equipment

Items Shovels, pickaxes, Cutters , Cart & Misc tools etc Total 1 2 .6 Furniture

Total Cost Rs 20,000 20,000

Since it is a field oriented project, therefore, no office equipment will be required, however, there is a provision for purchase of rudimentary furniture.
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Table 8: Furniture Cost

Description Furniture Total 1 2 .7 Raw Material Requirements

Total Cost (Rs.) 20,000 20,000

Cost is determined for different cut flower varieties by adding their seed/ bulb cost with labour, pesticides, fertilizer etc.
Table 9: Cost of Material

Material Pesticide Sprays Fertilizers Water Weeding Total 1 2 .8

Cost (Rs.) 20,000 25,000 25,000 25,000

Unit 5 5 5 5

Total Cost (Rs.) 100,000 125,000 125,000 125,000 475,000

Human Resource Requirement

Table 10: Human Resource Requirement Description No. of Employees 1 5 6 Salary/month

Supervisor / Marketing Officer Farm Worker (Mali) Full Time

Total Staff

20,000
50,000 70,000

Supervisor/Marketing Officer will be responsible for overseeing on-farm activities and marketing/sales of the cut flower. Semi skilled workers are required to look after the plants, watering, fertilizer application, de-weeding, insecticide use, planting and harvesting at the farm.

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1 2 .9

Revenue Generation

Table 11: Revenue Assumptions

Product

Unit

Sales Price (Rs./Unit) 20 - 35

First Year Production @ 40% 60,000

Gladioli, Statice, Chrysanthemum and Mary Gold Total Sales Revenue

150,000

First Year Sales Revenue (Rs) 1,680,600

1,680,600

Price range for cut flower is Rs. 20 -35. Sales price growth rate is assumed to increase at 10% per annum. Increase in cost of goods sold is assumed to be 12%, as it is anticipated that some of the bulbs will be available for re-use within two years. Project starting capacity is assumed that 40% of total available capacity and the growth in capacity utilization will be 25% per annum. 12.10 Other Costs
Table 12: Misc Expenses

Operating Expense / annum Administration Expense / annum Land lease/rental expense / annum Travelling expense Communication expense Depreciation expense Amortization expense Subtotal

(Rs.) 240,000 125,000 50,418 24,000 110,300 43,051 592,769

13 CONTACTS - SUPPLIERS, EXPERTS/CONSULTANTS, DEV. INSTITUTIONS

Mr. Fahim Ahmed Malghani
Horticulturist/Cold Chain Specialist Vegetable Botanist Agriculture Research Institute, Quetta. Agriculture & Cooperatives Department, Government of Balochistan Cell: 0334 4058071
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14 ANNEXURE
14.1 Income Statement
SMEDA
Rs. in actuals Year 10 7,430,188 2,038,137 5,392,051

Statement Summaries
Income Statement
Year 1 Revenue Cost of goods sold Gross Profit General administration & selling expenses Administration expense Rental expense Utilities expense Travelling & Comm. expense (phone, fax, etc.) Office vehicles running expense Office expenses (stationary, etc.) Promotional expense Insurance expense Professional fees (legal, audit, etc.) Depreciation expense Amortization expense Property tax expense Miscellaneous expense Subtotal Operating Income Other income Gain / (loss) on sale of assets Earnings Before Interest & Taxes Interest expense Earnings Before Tax Tax NET PROFIT/(LOSS) AFTER TAX Balance brought forward Total profit available for appropriation Dividend Balance carried forward 1,680,600 763,100 917,500 Year 2 3,004,073 1,083,040 1,921,033 Year 3 3,812,861 1,167,016 2,645,845 Year 4 4,194,147 1,256,248 2,937,900 Year 5 4,613,562 1,355,101 3,258,461 Year 6 5,074,918 1,464,702 3,610,216 Year 7 5,582,410 1,586,311 3,996,099 Year 8 6,140,651 1,721,337 4,419,314 Year 9 6,754,716 1,871,357 4,883,359

240,000 125,000 74,418 110,300 43,051 592,769 324,731 324,731 128,509 196,222 12,217 184,005

244,800 137,500 114,602 110,300 43,051 650,254 1,270,779 1,270,779 112,921 1,157,858 151,178 1,006,679 184,005 1,190,685 1,190,685

249,696 151,250 139,355 110,300 43,051 693,653 1,952,192 1,952,192 96,040 1,856,153 255,923 1,600,230 1,190,685 2,790,915 2,790,915

254,690 166,375 151,293 110,300 43,051 725,710 2,212,190 2,212,190 77,757 2,134,433 297,665 1,836,768 2,790,915 4,627,683 4,627,683

259,784 183,013 164,385 110,300 43,051 760,533 2,497,928 2,497,928 57,957 2,439,971 343,495 2,096,476 4,627,683 6,724,159 6,724,159

264,979 201,314 178,745 110,300 43,051 798,390 2,811,826 2,811,826 36,514 2,775,312 393,797 2,381,516 6,724,159 9,105,675 9,105,675

270,279 221,445 194,500 110,300 43,051 839,576 3,156,523 3,156,523 13,291 3,143,233 448,985 2,694,248 9,105,675 11,799,923 11,799,923

275,685 243,590 211,788 110,300 43,051 884,414 3,534,901 3,534,901 3,534,901 507,735 3,027,166 11,799,923 14,827,088 14,827,088

281,198 267,949 230,761 110,300 43,051 933,260 3,950,099 3,950,099 3,950,099 570,015 3,380,085 14,827,088 18,207,173 18,207,173

286,822 294,743 251,588 110,300 43,051 986,505 4,405,546 4,405,546 4,405,546 638,332 3,767,214 18,207,173 21,974,387 21,974,387

184,005 184,005

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14.2

Project Balance Sheet

SMEDA
Rs. in actuals Year 10

Statement Summaries
Balance Sheet
Year 0 Assets Current assets Cash & Bank Accounts receivable Finished goods inventory Equipment spare part inventory Raw material inventory Pre-paid annual land lease Pre-paid building rent Pre-paid lease interest Pre-paid insurance Total Current Assets Fixed assets Land Building/Infrastructure Saplings & Land Tillage Machinary & Equipment Furniture & fixtures Office vehicles Office equipment Total Fixed Assets Intangible assets Pre-operation costs Legal, licensing, & training costs Total Intangible Assets TOTAL ASSETS Liabilities & Shareholders' Equity Current liabilities Accounts payable Export re-finance facility Short term debt Other liabilities Total Current Liabilities Other liabilities Lease payable Deferred tax Long term debt Total Long Term Liabilities Shareholders' equity Paid-up capital Retained earnings Total Equity TOTAL CAPITAL AND LIABILITIE Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9

200,000 20,592 125,000 345,592

272,668 23,022 50,769 137,500 483,958

1,130,247 32,087 62,926 151,250 1,376,511

2,510,206 46,691 77,525 166,375 2,800,798

4,095,991 54,843 95,511 183,013 4,429,357

5,903,378 60,327 117,670 201,314 6,282,689

7,950,300 66,359 144,969 221,445 8,383,074

10,259,709 72,995 178,602 243,590 10,754,896

13,175,232 80,295 220,038 267,949 13,743,514

16,410,712 88,324 271,087 294,743 17,064,866

20,640,431 97,157 20,737,588

1,063,000 20,000 20,000 1,103,000

956,700 18,000 18,000 992,700

850,400 16,000 16,000 882,400

744,100 14,000 14,000 772,100

637,800 12,000 12,000 661,800

531,500 10,000 10,000 551,500

425,200 8,000 8,000 441,200

318,900 6,000 6,000 330,900

212,600 4,000 4,000 220,600

106,300 2,000 2,000 110,300

430,514 430,514 1,879,106

387,463 387,463 1,864,121

344,411 344,411 2,603,322

301,360 301,360 3,874,258

258,309 258,309 5,349,466

215,257 215,257 7,049,446

172,206 172,206 8,996,480

129,154 129,154 11,214,951

86,103 86,103 14,050,217

43,051 43,051 17,218,218

0 0 20,737,588

12,241 12,241

25,347 25,347

28,832 28,832

32,649 32,649

37,007 37,007

41,989 41,989

47,695 47,695

54,240 54,240

61,762 61,762

56,696 56,696

1,691,195 1,691,195

(23,428) 1,503,392 1,479,964

(100,621) 1,300,001 1,199,380

(213,129) 1,079,729 866,600

(339,951) 841,174 501,223

(482,450) 582,819 100,369

(642,116) 303,021 (339,094)

(820,578) (820,578)

(1,019,023) (1,019,023)

(1,238,628) (1,238,628)

(1,481,406) (1,481,406)

187,911 187,911 1,879,106

-

187,911 184,005 371,916 1,864,121

-

187,911 1,190,685 1,378,595 2,603,322

-

187,911 2,790,915 2,978,825 3,874,258

-

187,911 4,627,683 4,815,594 5,349,466

-

187,911 6,724,159 6,912,069 7,049,446

-

187,911 9,105,675 9,293,585 8,996,480

-

187,911 11,799,923 11,987,833 11,214,951

-

187,911 14,827,088 15,014,999 14,050,217

-

187,911 18,207,173 18,395,084 17,218,218

-

187,911 21,974,387 22,162,298 20,737,588

-

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1 4 .3

Cash Flow Statement

-

Statement Summaries
Cash Flow Statement
Year 0 Operating activities Net profit Add: depreciation expense amortization expense Deferred income tax Accounts receivable Finished good inventory Equipment inventory Raw material inventory Pre-paid building rent Pre-paid lease interest Advance insurance premium Accounts payable Other liabilities Cash provided by operations Financing activities Change in long term debt Change in short term debt Change in export re-finance facility Add: land lease expense Land lease payment Lease principal repayment Issuance of shares Purchase of (treasury) shares Cash provided by / (used for) financing a Investing activities Capital expenditure Acquisitions Cash (used for) / provided by investing a NET CASH Cash balance brought forward Cash available for appropriation Dividend Cash carried forward Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9

SMEDA
Rs. in actuals Year 10

(20,592) (20,592)

184,005 110,300 43,051 (23,428) (23,022) (30,177) 12,241 272,971

1,006,679 110,300 43,051 (77,193) (9,065) (12,158) 13,105 1,074,720

1,600,230 110,300 43,051 (112,508) (14,605) (14,599) 3,486 1,615,356

1,836,768 110,300 43,051 (126,822) (8,151) (17,986) 3,817 1,840,977

2,096,476 110,300 43,051 (142,499) (5,484) (22,159) 4,358 2,084,043

2,381,516 110,300 43,051 (159,666) (6,033) (27,299) 4,982 2,346,851

2,694,248 110,300 43,051 (178,462) (6,636) (33,633) 5,706 2,634,575

3,027,166 110,300 43,051 (198,445) (7,300) (41,436) 6,545 2,939,882

3,380,085 110,300 43,051 (219,605) (8,029) (51,049) 7,522 3,262,274

3,767,214 110,300 43,051 (242,778) (8,832) 271,087 (5,066) 3,934,976

1,691,195 (125,000) 187,911 1,754,106

(187,803) 125,000 (137,500) (200,303)

(203,391) 137,500 (151,250) (217,141)

(220,272) 151,250 (166,375) (235,397)

(238,555) 166,375 (183,013) (255,192)

(258,355) 183,013 (201,314) (276,656)

(279,798) 201,314 (221,445) (299,929)

(303,021) 221,445 (243,590) (325,166)

243,590 (267,949) (24,359)

267,949 (294,743) (26,795)

294,743 294,743

(1,533,514) (1,533,514) 200,000

72,668 200,000 272,668 272,668

857,579 272,668 1,130,247 1,130,247

1,379,959 1,130,247 2,510,206 2,510,206

1,585,785 2,510,206 4,095,991 4,095,991

1,807,387 4,095,991 5,903,378 5,903,378

2,046,922 5,903,378 7,950,300 7,950,300

2,309,409 7,950,300 10,259,709 10,259,709

2,915,523 10,259,709 13,175,232 13,175,232

3,235,479 13,175,232 16,410,712 16,410,712

4,229,720 16,410,712 20,640,431 20,640,431

200,000 200,000

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1 4 .4

Useful Project Management Tips

Technology List of Machinery & Equipment (As per Section 12.5)

Required spare parts & consumables: Suppliers credit agreements and availability as per schedule of maintenance be ensured before start of operations. Energy Requirement: Should not be overestimated or installed in excess and alternate source of energy for critical operations to be arranged in advance. Machinery Suppliers: Should be asked for training and after sales services under the contract with the machinery suppliers. Quality Assurance Equipment & Standards: Products quality standards/check need to be defined on the packaging, to improve credibility.

Marketing Product Development & Packaging: Experts may product/service and packaging design & development. be engaged for

Ads & P.O.S. Promotion: Business promotion and dissemination through banners and launch events is highly recommended. Product brochures from good quality service providers. Sales & Distribution Network: Expert's advise and distribution agreements are required. Price - Bulk Discounts, Cost plus Introductory Discounts: During the introductory phase price may be lower and used as a promotional tool. Product cost estimates should be carefully documented before price setting. Government controlled prices shall be displayed.

Human Resources List of Human Resource (As per Section 12.8)

Adequacy & Competencies: Skilled and experienced staff to be considered an investment even to the extent of offering share in business profit. Performance Based Remuneration: Cost should be focused through performance measurement and performance based compensation.

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Training & Skill Development: Training and skill development of employees and exposure of best practices. Least cost options for Training and Skill Development (T&SD) may be linked with compensation benefits and awards. 1 4 .5 Useful Links Prime Ministers Office www.pmo.gov.pk Small & Medium Enterprises Development Authority (SMEDA) www.smeda.org.pk National Bank of Pakistan (SBP) www.nbp.com.pk First Women Bank Limited (FWBL) www.fwbl.com.pk Government of Pakistan www.pakistan.gov.pk Ministry of Industries & Production www.moip.gov.pk Ministry of Education, Training & Standards in Higher Education http://moptt.gov.pk Government of Punjab www.punjab.gov.pk Government of Sindh www.sindh.gov.pk Government of Khyber Pakhtoonkhwa www.khyberpakhtunkhwa.gov.pk Government of Balochistan www.balochistan.gov.pk Government of Gilgit Baltistan www.gilgitbaltistan.gov.pk
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Government of Azad Jammu & Kashmir www.ajk.gov.pk Trade Development Authority of Pakistan (TDAP) www.tdap.gov.pk Security Commission of Pakistan (SECP) www.secp.gov.pk Federation of Pakistan Chambers of Commerce and Industry (FPCCI) www.fpcci.com.pk State Bank of Pakistan (SBP) www.sbp.org.pk Pakistan Institute of Fashion Design (PIFD) www.pifd.edu.pk Pakistan Fashion Design Council (PFDC) www.pfdc.org

15 KEY ASSUMPTIONS
Production Related Assumptions Production Capacity (Units) Initial capacity utilization Production per year Production lost to Patel (@ 20%) Production quantity sold (Flowers) Production quantity sold (Flowers in kgs. for petals) Revenue Assumption Production Capacity Sale price per Flower in year 1 Sale price growth rate Production capacity utilization - Year 1 Production capacity utilization growth rate Maximum capacity utilization
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150,000 40% 60,000 12,000 48,000 30

50,000

3 10% 40% 25% 75%

150,000 20 - 35

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Financial Assumptions Description Equity Debt Debt Tenure (Years) Interest Rate / annum 90 % 10 % 90% 7 8%

Depreciation Rates Furniture Machinery and Equipment Cash Flow Assumptions Accounts Receivables Cycle (days) Accounts Payable Cycle (days) Cash in Hand Rs. Economy Related assumptions Inflation rate Electricity growth rate Water price growth rate Wage growth rate 10 % 10 % 2% 2% 5 15 200,000 10 % 10 %

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