Professional Documents
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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) 36304926-7 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) 35610572 helpdesk-khi@smeda.org.pk REGIONAL OFFICE Khyber Pakhtunkhwa Ground Floor State Life Building The Mall, Peshawar. Tel: (091) 111-111-456 Fax: (091) 5286908 helpdesk-pew@smeda.org.pk REGIONAL OFFICE Balochistan Bungalow No. 15-A Chaman Housing Scheme Airport Road, Quetta. Tel: (081) 2831623, 2831702 Fax: (081) 2831922 helpdesk-qta@smeda.org.pk
Note: All SMEDA Services / information related to PM's Youth Business Loan are Free of Cost December, 2013
Table of Contents
1. DISCLAIMER .......................................................................................................................................... 2 2. PURPOSE OF THE DOCUMENT ......................................................................................................... 3 3. INTRODUCTION TO SMEDA .............................................................................................................. 3 4. INTRODUCTION TO SCHEME ........................................................................................................... 4 5. EXECUTIVE SUMMARY ...................................................................................................................... 4 6. BRIEF DESCRIPTION OF PROJECT & PRODUCT ........................................................................ 4 7. CRITICAL FACTORS ............................................................................................................................ 5 8. INSTALLED & OPERATIONAL CAPACITIES................................................................................. 6 9. GEOGRAPHICAL POTENTIAL FOR INVESTMENT ..................................................................... 6 10. 11. 12. 12.1 12.2 12.3 12.4 12.5 12.6 12.7 12.8 12.9 12.10 12.11 13. 14. 14.1 14.2 14.3 14.4 15. POTENTIAL TARGET MARKETS ............................................................................................... 6 PRODUCTION PROCESS FLOW .................................................................................................. 7 PROJECT COST SUMMARY ......................................................................................................... 7 PROJECT ECONOMICS .................................................................................................................... 7 PROJECT FINANCING....................................................................................................................... 8 PROJECT COST ............................................................................................................................... 9 SPACE REQUIREMENT..................................................................................................................... 9 MACHINERY & EQUIPMENT ............................................................................................................. 9 MACHINE MAINTENANCE ............................................................................................................... 10 FURNITURE .................................................................................................................................... 10 OFFICE EQUIPMENT ...................................................................................................................... 11 RAW MATERIAL REQUIREMENTS .................................................................................................. 12 HUMAN RESOURCE REQUIREMENT .............................................................................................. 15 REVENUE GENERATION AND PRODUCTION MIX ........................................................................... 15 CONTACTS SUPPLIERS, EXPERTS / CONSULTANTS....................................................... 17 ANNEXURE 1 .................................................................................................................................. 18 INCOME STATEMENT ..................................................................................................................... 18 BALANCE SHEET ........................................................................................................................... 19 CASH FLOW STATEMENT .............................................................................................................. 20 USEFUL LINKS ............................................................................................................................... 21 KEY ASSUMPTIONS ..................................................................................................................... 22
1.
DISCLAIMER
This information memorandum is to introduce the subject matter and provide a general idea and information on the subject. 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.
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, production, marketing, finance and business management. The purpose of this document is to facilitate potential investors in establishing Wooden Furniture Manufacturing Unit 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 importance, 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, institutional collaboration and networking initiatives. Preparation and dissemination of pre-feasibility studies in key areas of investment has been a successful hallmark of SME facilitation by SMEDA. Concurrent to the pre-feasibility studies, a broad spectrum of business development services is also offered to 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 Youth Business Loan 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 by the National Bank of Pakistan (NBP) and the First Women Bank Ltd. (FWBL). Loans from Rs. 0.1 million to Rs. 2.0 million with tenure up to 8 years inclusive of 1 year grace period, and a debt: equity of 90: 10 will be disbursed to SME beneficiaries+ across Pakistan, covering; Punjab, Sindh, Khyber Pakhtunkhwa, Balochistan, Gilgit Baltistan, Azad Jammu & Kashmir and Federally Administered Tribal Areas (FATA).
5.
EXECUTIVE SUMMARY
The proposed project is for setting up a Wooden Furniture Manufacturing Unit. This unit will be capable of integrated wooden furniture manufacturing from sourcing and cutting of wood, to retailing of product to the end customer. The project will focus and cater to the growing needs of domestic wooden furniture market. Housing and construction industry has seen a steady growth over the last many years due to a number of factors. These include; development of new housing schemes, introduction of housing finance schemes / loans by different banks, increased urbanization, a growing middle class and enhanced purchasing power of the public. All these factors have contributed directly and indirectly towards an increased demand for wooden furniture. The wooden furniture business venture entails a total investment of about Rs. 2.12 million. This includes a capital investment of Rs.1.10 million and a sum of Rs. 1.02 million as initial working capital. The project is financed through 90% debt and 10% equity. The Net Present Value (NPV) of the project is around Rs.43.25 million with an Internal Rate of Return (IRR) of 77% and a payback period of 2.12 years. Higher return on investment and a steady growth of business is expected if the entrepreneur has some prior experience / education in the related field of business. The project will generate direct employment opportunity for 21 persons.
6.
This unit is capable of producing different sort of wooden furniture i.e. bed sets, dinning sets, sofa sets, centre tables, tables for sofa set and office furniture. The entire finished product depends on the quality of wood. Detailed technical know-how about the quality of wood and the use of seasoned / dry wood plays a
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vital role in the manufacturing of quality furniture. Wood obtained from the forest is of prime quality. Therefore, it is recommended to use dry wood, from forests for manufacturing quality wooden furniture. Forest reserves like Changa Manga, Pakhowal, Kundian, Chicha watni, Bahawalpur and other forests are potential sources. Furniture manufacturing units in Pakistan mostly use Sheesham wood. Other types of woods used in manufacturing furniture are; Teak wood, Walnut wood and Keekar wood. Besides this, substitute material like lasani and vinboard are also used in the manufacturing of furniture. Other materials used in furniture manufacturing process are nails, screws, glue/solution, spirit, lakh, thiner, lacquer, sealer, hardener etc. These raw materials are easily available in the market. The demand for wooden furniture in the domestic market is consistent throughout the year, however, it significantly increases during the period of October to March due to wedding season. The demand for furniture almost doubles during this period and is a good time to enter the market. Since strong competition already exists in the domestic market, manufacturing of high quality trendy designs and aggressive marketing is essential to get a prominent place in the market. Despite the introduction of new/alternative materials in furniture manufacturing, wooden furniture is still preferred in the domestic market, as well as in the international market due to its traditional appeal and durability. Over the years, entry into the global market has also become more competitive, due to demanding factors like green furniture, multi-functionality, simplicity and neutral colors, Ready-toassemble (RTA) and Do-it-yourself (DIY) furniture. Malaysia, Philippines, Indonesia and China have established strong brand names and have emerged as key market players.
7.
CRITICAL FACTORS
Ensuring availability of seasoned (dry) wood for high quality furniture manufacturing. Seasoned (dry) wood minimizes deforming that may occur due to dampness in wood. Selection of skilled and responsible labor is an important factor, as it can improve quality of finished product by better craftsmanship & lower wastage. It is recommended that specialized labor is hired for this business. New designs and styles can build brand equity for the business. Creation of new designs and styles is vital for setting new trends as the market is quite competitive.
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Aggressive virtual marketing needs to be undertaken in the absence of a physical showroom. Though skilled labor is available in the market, additional manufacturing workload can be sub-contracted to save time and resources. The manufacturing unit will require selling directly to showrooms and direct clients, for which the owner would need to develop extensive knowledge of the market. Higher return on investment and a steady growth of business is expected with the entrepreneur having some prior experience/education in the related field of business. Easy access to raw material should be ensured.
8.
The proposed project is capable of manufacturing complete range of wooden furniture and other allied products to meet the demand of domestic market. The Unit will work on 8 hours shift for 300 days. This unit is capable of producing different types of wooden furniture i.e. bed sets, dinning sets, sofa sets, centre tables, tables for sofa set and office furniture. Total number of furniture items produced in year 1 would be 202 i.e. 60% of total production capacity.
9.
The demand for wooden furniture is higher in densely populated cities of Pakistan i.e. Lahore, Multan, Karachi, Peshawar, Rawalpindi and Islamabad, making all these options viable. However, establishment of the unit in the vicinity of established wooden furniture clusters i.e. Lahore, Chiniot or Gujrat gives the added advantage of easy availability of skilled labor.
The unit is capable of producing different type of wooden furniture. As this project predominantly involves craftsmanship of skilled labor, different types of products can be manufactured. However, this particular pre-feasibility focuses on manufacturing of bed sets, dinning sets, sofa sets, office furniture and miscellaneous furniture (centre table & tables for sofa set). Details of proposed production mix offered by the project are provided in table below:
Table 1 - Proposed Production Mix
Description Bed Set Dinning Set Sofa Set Misc. Furniture Office Furniture
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Total
Table 2 - Proposed Production Mix Details
100% Bed Set Dinning Set 20% 30% 50% 100% Sofa Set 20% 30% 50% 100% Misc. Furniture 20% 30% 50% 100% Office Furniture 20% 30% 50% 100%
The following table shows internal rate of return, payback period and net present value:
Table 3 - Project Economics
Description Internal Rate of Return (IRR) Payback Period (Yrs) Net Present Value (NPV)
Returns on investment and profitability depend upon the entrepreneurs practical knowledge about furniture manufacturing, quality of wood, skilled labor and design & style of furniture manufactured. 12.2 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%.) Markup to the Borrower (%age/annum) Tenure of the Loan (Years) Grace Period (Year)
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12.3
Project Cost
Following requirements have been identified for operations of the proposed business:
Table 5 - Capital Investment for the Project
Capital Investment Furniture & fixtures Machinery & Equipment Office Equipment Pre-operating Cost Total Capital Cost Initial Working Capital Total Project Cost 12.4 Space Requirement
2 kanals (7,200 sq. ft) land is sufficient for setting up the proposed wooden furniture manufacturing unit. The land would be acquired on lease, preferably in the outskirts of the city. Covered area details of the manufacturing unit are as follows:
Table 6 - Factory (Covered Area)
Description Factory Main Hall Carving Room Polish Room Store for un-finished products Store for finished product Office for factory admin officer & CAD operator Rooms for Labour Kitchen & Washrooms Total
Area (Sq. ft) 2,000 750 1,000 1,000 1,500 300 500 150 7,200
It is recommended to set-up the proposed business on rental premises at cost of approximately Rs. 50,000 per month, hence, total rent of set-up Unit during year 1 would be approximately Rs. 600,000. 12.5 Machinery & Equipment
Machinery & equipment required for Wooden Furniture Manufacturing Unit can be easily purchased locally. Following table provides list of machinery required for the factory:
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Machinery Description Saw 18 Saw 27 Saw 30 Cutter sliding Cutter round Gauge 14 Gauge 18 Planer / Shaper 12 Spindle Moulder Machine Chapaka Hand Chapaka (jug saw) Grinder Drill machine Compressor Miscellaneous Tools (Hand Tools, Paint Gun etc.) Installation costs for machines Total Machinery and Equipment 12.6 Machine Maintenance
Unit 1 1 1 1 1 1 1 2 2 2 2 2 10 2 1 1
Unit Price 42,000 70,000 80,000 20,000 15,000 60,000 110,000 70,000 50,000 15,000 15,000 6,500 3,500 16,000 20,000 30,000
Total Cost 42,000 70,000 80,000 20,000 15,000 60,000 110,000 140,000 100,000 30,000 30,000 13,000 35,000 32,000 20,000 30,000 827,000
Technically advanced machines are not required in the manufacturing process. Therefore, machine maintenance cost is also expected to be on lower side. The major maintenance cost will be of oiling and greasing of machines. 12.7 Furniture
Description Office Table Set for CAD Operator Visitors Chairs Table & Chair set for admin, store & production Fire Extinguishers Total Furniture & Fixtures
Unit 1 4 3 2
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10
12.8
Office Equipment
Description Computer with LCD Printer UPS 1.5 KW Telephone Sets Fax Machine Generator 6 KVA Total Office Equipment
Unit 1 1 1 2 1 1
Total Cost (Rs) 40,000 15,000 30,000 3,000 10,000 70,000 168,000
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11
Pre-Feasibility Study
12.9
As variety of material is used for the manufacturing of each type of furniture. Following table shows raw material requirement for each type of furniture:
Table 10 Bed Set Cost
Costing Bed Set Superior Quality Raw Material Cost Description Wood (Cubic ft) Nails/Screws Glue/Solution Spirit (in Ltr.) Lakh (in kgs) Thinner (in Ltr.) Lacquer (in Ltr.) Wooden Frame for Matress Sealer (in Ltr.) Dressing Set Glass Tapestry Dressing St. (in Meters) Foam Channels, Handles Thinner (Butyl) Thinner (imported) Total No. of Unit 15 1 1 20 1.5 8 2 1 3 16 0.5 1 1 1 1 Rate / Total Unit Amount 2,000 30,000 350 350 300 300 60 1,200 350 525 120 960 300 600 5,000 5,000 285 855 200 3,200 250 125 150 2,500 160 240 150 2,500 160 240 46,165 Raw Material Cost Description Wood (Cubic ft) Nails/Screws Glue/Solution Spirit (in Ltr.) Lakh (in kgs) Thinner (in Ltr.) Lacquer (in Ltr.) Sealer (in Ltr.) Wooden Frame for Matress Dressing Set Glass Tapestry Dressing St. (in Meters) Foam Channels, Handles Thinner (Butyl) Thinner (imported) Total Costing Bed Set Fine Quality No. of Unit 12 1 1 15 1 4 2 2 1 16 0.5 1 1 1 1 Rate / Total Unit Amount 1,500 18,000 350 350 300 300 60 900 350 350 120 480 300 600 285 570 4,000 4,000 200 3,200 250 125 150 2,000 160 240 150 2,000 160 240 31,425 Raw Material Cost Description Wood (Cubic ft) Lasani Nails/Screws Glue/Solution Paint (in Ltr.) Thinner (in Ltr.) Lacquer (in Ltr.) Wooden Frame for Matress Dressing Set Glass Tapestry Dressing St. (in Meters) Foam COB (alternate for Hardner) Thinner (Butyl) Thinner (imported) Channels, Handles Total Costing Bed Set Normal Quality No. of Unit 3 5 1 1 1 10 1 1 16 0.5 1 1 1 1 1 Rate / Total Unit Amount 1,500 4,500 2,250 11,250 350 350 300 300 1,500 1,500 120 1,200 300 300 4,000 4,000 150 2,400 250 125 150 150 450 160 240 2,000 450 160 240 2,000 28,925
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Pre-Feasibility Study
Total
30,300
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13
Pre-Feasibility Study
Total
17,360
Total
34,410
Total
25,550
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Pre-Feasibility Study
12.10
The labor required for manufacturing process is easily available on daily wages and on per unit basis. It is recommended that only selective skilled labor be employed permanently, while others should be hired on temporary basis. Following permanent human resource is required at the factory.
Table 15 Factory Staff requirement details
Description Production supervisor Carpenter Machine man Polish man Carving Helpers Factory admin officer Draftsman / CAD Operator Purchaser/Store Officer Gate Keeper Total Production Staff
No. 1 8 1 3 2 2 1 1 1 1 21
Monthly Salary (Rs) 30,000 16,000 16,000 16,000 18,000 10,000 15,000 15,000 15,000 10,000
Total Annual Salary (Rs) 360,000 1,536,000 192,000 576,000 432,000 240,000 180,000 180,000 180,000 120,000 3,996,000
One production supervisor is sufficient for 30 laborers. Salaries of all employees are estimated to increase at 10% annually. 12.11 Revenue Generation and Production Mix
Expected production figures of proposed product mix during year 1 are given in table below:
Table 16 Number of Furniture Sale during Year 1
Description Bed Set Superior Fine Normal Dinning Set Superior Fine Normal Sofa Set Superior Fine
Product Mix 20% 30% 50% 20% 30% 50% 20% 30%
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Pre-Feasibility Study
Normal Misc. Furniture Superior Fine Normal Office Furniture Superior Fine Normal Total Furniture Units
23 6 14 30 5 11 23 202
Revenue from selling to other Showrooms in (Rs) Bed Sets Dinning Sets Sofa Sets Misc. furniture Office furniture Total Revenue from selling to other Showrooms Revenue from selling to own Customers in (Rs) Bed Sets Dinning Sets Sofa Sets Misc. furniture Office furniture Total Revenue from selling to own Customers Total Revenue in (Rs) Bed Sets Dinning Sets Sofa Sets Misc. furniture Office furniture Total Revenue from selling to own Customers and other Showrooms
25% 3,292,753 761,869 1,754,664 1,326,553 1,493,095 8,628,935 40% 1,229,295 284,431 655,075 495,247 557,422 3,221,469
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Pre-Feasibility Study
13.
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Pre-Feasibility Study
14.
ANNEXURE 1
14.1 Income Statement
Year 1 11,850,404 5,364,197 3,336,000 504,000 9,204,197 2,646,207 660,000 600,000 66,000 53,642 3,300 59,252 25,000 145,600 7,176 1,619,970 1,026,237 1,026,237 158,597 158,597 867,640 52,646 814,994 Year 2 15,451,801 6,912,109 4,365,600 547,800 11,825,509 3,626,292 726,000 660,000 72,600 69,121 3,630 77,259 26,250 145,600 7,176 1,787,636 1,838,657 1,838,657 145,197 145,197 1,693,459 186,192 1,507,268 Year 3 19,291,783 8,994,817 5,114,160 595,485 14,704,462 4,587,321 798,600 726,000 79,860 89,948 3,993 96,459 27,563 145,600 7,176 1,975,198 2,612,123 2,712,923 127,585 127,585 2,585,338 368,834 2,216,504 Year 4 24,022,142 11,835,075 5,625,576 647,406 18,108,057 5,914,085 878,460 798,600 87,846 118,351 4,392 120,111 28,941 154,427 7,176 2,198,303 3,715,782 3,715,782 108,512 108,512 3,607,270 624,317 2,982,953 Year 5 30,412,906 15,755,243 6,188,134 703,948 22,647,325 7,765,581 966,306 878,460 96,631 157,552 4,832 152,065 30,388 154,427 7,176 2,447,835 5,317,746 5,317,746 87,855 87,855 5,229,891 1,091,467 4,138,424 Year 6 39,186,588 21,222,297 6,806,947 765,529 28,794,773 10,391,815 1,062,937 966,306 106,294 212,223 5,315 195,933 31,907 154,427 2,735,341 7,656,474 7,823,563 65,484 65,484 7,758,079 1,937,827 5,820,252 Year 7 51,406,169 28,913,036 7,487,642 832,606 37,233,284 14,172,885 1,169,230 1,062,937 116,923 289,130 5,846 257,031 33,502 164,645 3,099,245 11,073,640 11,073,640 41,256 41,256 11,032,384 3,083,834 7,948,551 Year 8 68,639,336 39,808,460 8,236,406 905,681 48,950,547 19,688,790 1,286,153 1,169,230 128,615 398,085 6,431 343,197 35,178 164,645 3,531,534 16,157,256 16,157,256 15,017 15,017 16,142,239 4,872,283 11,269,956 Year 9 93,202,377 55,330,221 9,060,046 985,299 65,375,567 27,826,810 1,414,769 1,286,153 141,477 553,302 7,074 466,012 36,936 164,645 4,070,368 23,756,442 23,975,068 23,975,068 7,613,773 16,361,295 Year 10 128,522,393 77,537,758 9,966,051 1,072,058 88,575,867 39,946,526 1,556,245 1,414,769 155,625 775,378 7,781 642,612 38,783 176,474 4,767,667 35,178,859 35,178,859 35,178,859 11,535,100 23,643,759
Projected Income Statement Revenue Cost of sales Procurement Cost Direct Labor (Production Staff) Direct Electricity Total cost of sales Gross Profit General administration & selling expenses Administration expense Building rental expense for Factory Communications expense (phone, fax, mail, internet, etc.) Transportation cost Office expenses (stationary, entertainment, janitorial services, etc.) Marketing expense Professional fees (legal, audit, consultants, etc.) Depreciation expense Amortization of pre-operating costs Subtotal Operating Income Earnings Before Interest & Taxes Interest expense on long term debt (Debt facility : Bank 1) Subtotal Earnings Before Tax Tax NET PROFIT/(LOSS) AFTER TAX
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Pre-Feasibility Study
14.2
Balance Sheet
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Projected Balance Sheet Assets Current assets Cash & Bank Accounts receivable Finished goods inventory Raw material inventory Pre-paid building rent Total Current Assets Fixed assets Machinery & equipment Furniture & fixtures Office equipment Total Fixed Assets Intangible assets Pre-operation costs Total Intangible Assets TOTAL ASSETS Liabilities & Shareholders' Equity Current liabilities Accounts payable Other liabilities Total Current Liabilities Other liabilities Deferred tax Long term debt (Debt facility : Bank 1) Total Long Term Liabilities Shareholders' equity Paid-up capital Retained earnings Total Equity TOTAL CAPITAL AND LIABILITIES
250,000
623,254 150,000 1,023,254 827,000 69,000 168,000 1,064,000 35,878 35,878 2,123,132
683,145 138,255 191,754 975,046 181,500 2,169,699 744,300 62,100 112,000 918,400 28,702 28,702 3,116,801
1,644,304 318,526 246,365 1,523,398 219,615 3,952,208 661,600 55,200 56,000 772,800 21,527 21,527 4,746,534
3,187,046 405,342 306,343 2,376,574 265,734 6,541,038 578,900 48,300 194,481 821,681 14,351 14,351 7,377,071
5,254,156 505,329 377,251 3,701,467 321,538 10,159,741 496,200 41,400 129,654 667,254 7,176 7,176 10,834,171
8,162,957 635,076 471,819 5,754,867 389,061 15,413,780 413,500 34,500 64,827 512,827 15,926,607
12,406,258 811,994 599,891 8,931,165 470,764 23,220,072 330,800 27,600 225,136 583,536 23,803,609
18,128,119 1,056,916 775,693 13,835,055 569,625 34,365,407 248,100 20,700 150,091 418,891 34,784,298
26,208,661 1,400,531 1,019,803 21,392,208 689,246 50,710,449 165,400 13,800 75,045 254,245 50,964,694
38,300,620 1,888,153 1,361,991 33,017,531 833,988 75,402,284 82,700 6,900 260,623 350,223 75,752,507
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Pre-Feasibility Study
14.3
Projected Cash Flow Statement Operating activities Net profit Add: depreciation expense amortization of pre-operating costs Deferred income tax Accounts receivable Finished goods inventory Equipment inventory Raw material inventory Pre-paid building rent Accounts payable Cash provided by operations Financing activities Debt facility : Bank 1 - principal repayment Additions to Debt facility : Bank 1 Issuance of shares Cash provided by / (used for) financing activities Investing activities Capital expenditure Cash (used for) / provided by investing activities NET CASH
7,948,551 11,269,956 16,361,295 164,645 164,645 164,645 3,083,834 4,872,283 7,613,773 (244,921) (343,615) (487,622) (175,802) (244,110) (342,188) (4,903,890) (7,557,153) (11,625,324) (98,860) (119,621) (144,742) 264,438 380,530 552,122 6,037,994 8,422,915 12,091,959 (316,133) (316,133) 5,721,861 (342,372) (342,372) 8,080,542 260,623 260,623 (260,623) (260,623) 12,091,959
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Pre-Feasibility Study
14.4
Useful Links Prime Ministers Office, www.pmo.gov.pk Small and Medium Enterprise Development Authority, www.smeda.org.pk National Bank of Pakistan (NBP), 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 Pakhtunkhwa, www.khyberpakhtunkhwa.gov.pk Government of Balochistan, www.balochistan.gov.pk Government of Gilgit Baltistan, www.gilgitbaltistan.gov.pk Government of Azad Jammu & Kashmir, www.ajk.gov.pk Trade Development Authority of Pakistan (TDAP), www.tdap.gov.pk Securities & Exchange 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 Furniture Pakistan, www.furniturepakistan.org Pakistan Institute of Fashion Design (PIFD), www.pifd.edu.pk
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Pre-Feasibility Study
15.
KEY ASSUMPTIONS
Table 18 Operating Assumptions
Factory Hours Operational per day Days operational per month Days operational per year
Table 19 Economy Related Assumptions
Annual Electricity Price Growth Annual Salary Growth Rate Rent Growth Rate Annual Sale Price Growth Rate for own Customers Annual Raw Material Price Growth Rate for Wood Annual Raw Material Price Growth Rate other than Wood
Table 20 Expense Assumptions
10% of Administrative Costs 1% of Material Procurement 0.50% of Revenues Rs. 200,000 7 7 7 120 7 10% 10% 33%
Initial Cash in Bank Accounts Payable Cycle in (Days) Accounts Receivable Cycle in (Days) Finished Goods Inventory in (Days) Raw Material Inventory of Wood in (Days) Raw Material Inventory other than Wood in (Days)
Table 22 Depreciation Expense
Depreciation Rate for Machinery & Equipment (Annual) Depreciation Rate for Furniture & Fixture (Annual) Depreciation Rate for Office Equipments (Annual)
Table 23 Financial Assumptions
Project Life (Years) Debt Equity Ratio Interest Rate on Long Term Debt Long Term Debt Tenure (Years) Number of Payment/Year Income Tax Rates Grace Period (Years)
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