COMMUNITY BASED LIVELIHOODS RECOVERY PROGRAM (CBLRP)

FOR EARTHQUAKE AFFECTED AREAS OF AZAD JAMMU AND KASHMIR

AND NWFP

CBLRP-UNIDO

INVESTMENT OPPORTUNITY PROFILE

FOR
MARBLE PROCESSING PLANT
IN
NWFP

SEPTEMBER 2007

SUBMITTED TO
AYESHA KHAN
CHIEF TECHNICAL ADVISOR
Community Based Livelihood Recovery Program (CBLRP)
United National industrial Development Organization (UNIDO)

BY
Sardar Shahid Farid
Chartered Accountant

Disclaimer

All material included in this document is based on data/information gathered from various sources and certain
assumption. Due care and diligence has been taken to compile this document. The document may contain human,
mechanical error or non accuracy of the information at the source. No liability for error, or omission or unintentional
misrepresentation will be accepted. We reserve the right to make correction and changes wherever desired in this
document or its subsequent versions.
1. PROJECT EXECUTIVE SUMMARY

1.1 PROJECT BRIEF

The project objective is to setup a marble processing plant in Manshera. The plant would
process (cut to predefined sizes and polish) raw marble blocks and produce marble
strips/tiles and slabs. The project would not only focus the construction industry and
demand for marble within the area, but other parts of NWFP as well as Rawalpindi and
Islamabad.

Marble and Granite is included in the list of largest minerals extracted among chromite,
coal, rock salt, lime stone, china clay, dolomite, fire clay, gypsum, silica sand etc.. In
Manshera, there is a great demand for a fully equipped marble processing plant. The new
plant could not only explore the construction industry within the area which is on a boom
since past 5 years, but could also fulfill the orders from the adjoining areas. Finished goods
include tiles, slabs and strips. The unit would have the100% capacity to process around
370,260 sq.ft. of marble

The total capital cost of the project is Rs 18.410 Million. The main raw material is raw
marble in the form of huge blocks or big rock. Raw granite is also processed. These are
available in abundance in the N.W.F.P. The NWFP marble reserves constitute about 77%
of the country’s total deposits. Out of 160 million tons of country reserve 158 million tons
are in NWFP. 15 employees will be employed directly on the project. The civil works and
installation of plant is estimated to complete in 06 months.

1.2 FINANCIAL SUMMARY

• Sales Rs 21Million
• Gross Profit Margin 60%
• Net Profit Margin 45%
• Internal Rate of Return 30%
• Pay back period 3 years
Foreign collaboration sought Joint – Venture Management expertise
Loan Technical expertise
Market access Marketing expertise
Sub contracting Technology transfer
Buy – back arrangement Joint R&D
Equipment purchase Other :-

Studies Available Feasibility study Project description

Other Specify

Date: 25 October 2007

1
2. PROJECT RATIONALE
The plant would process (cut to predefined sizes and polish) raw marble blocks and produce
marble strips/tiles and slabs. The project would not only focus the construction industry and
demand for marble within Manshera city, but also in other parts of the province and the
country. Once the facility starts at its full capacity, it could also supply marble steps, strips,
tiles, and slabs to other parts of the region as well . Marble is included in the list of largest
minerals extracted among chromate, coal, rock salt, lime stone, china clay, dolomite, fire
clay, gypsum, silica sand etc. Since 1990 mining &quarrying has consistently contributed
0.5 percent to the Gross Domestic Product (Source Economic Survey).

Marble processing is gaining popularity due to increase in its usage in construction industry.
Today almost all the modern architectural designs of houses and plazas include the final
touch of beautiful shades of marble in exterior as well as interior portions. There are large
deposits of superior quality marble and granite in the area. There is also the possibility of
getting the marble in block forms which will reduce the wastage and improve the
profitability. The area is under the process of rehabilitation, in which large quantity of
marble tile could be used. Possibility of exports as the quality is very good. The marketing
of marble is reduced/ restricted due to incapability of meeting consistent supply, due to non
employment of modern techniques. Comparatively low exports are due to improper
marketing. The roads infrastructure of the province does not fully supports the
transportation of heavy marble blocks from quarries to processing plants but this soon going
to change as road infrastructure is improving .

3. MARKET OPPORTUNITY

Due to modern architectural designs, use of marble steps/strips/tiles and slabs in the
Construction industry of the province is increasing; additionally there is huge demand in
other parts of the country. Pakistan’s marble export is estimated at $20-30 million, which
can be enhanced many fold if standardized production measures are ensured. Initially the
supply will be targeted in the province and in the later years export potential will also be
profited. There is no problem in the access to the potential market.

The growing housing industry in Manshera, Abbottabad, Islamabad, increases the marketing
potential of the project. Housing industry in the region is estimated to be growing at the
pace of 7% . Major categories for usage of dimensional stones are architectural works,
funeral trade and sculptures etc. In the architectural work that include construction and
structural works the total share of the dimensional stone is 70% while in the decorative,
sculptures and memorial art etc. its share is 30%. According to their peculiar characteristics,
including weather effects, color fading, load tolerance, edge cuts, water absorption, color
choice, hygienic factor, hardness etc; various type of dimensional stones are used in
different locations and places.

2
 The target customers for processed marble steps/strips/tiles and slabs include individuals
and construction companies. There is great potential for the manufacturing of decorative
items including marble handicrafts, Fire places, office table sets, sculptures etc. Pakistan’s
marble export is around estimated $20-30 million, which can be enhanced many folds if
standardized production measures are ensured. There are large deposits of superior quality
marble and granite in the area. There is also possibility of getting the marble in block forms
which will reduce the wastage and improve the profitability. The area is under the process
of rehabilitation, in which large quantity of marble tile could be used. There is also a good
possibility of exports as the quality of marble is quite superior.

The marketing of marble is reduced/ restricted due to incapability of meeting consistent

supply, largely due to non-employment of modern techniques. Comparatively low exports
are due to quality control in the production processes and improper marketing. The roads or
physical infrastructure of the province does not fully support the transportation of heavy
marble blocks from quarries to processing plants but this is soon going to change as road
infrastructure is visibly improving .

4. BUSINESS PLAN

The project will be run to produce the best quality marble products. Special care and
quality control will be observed in finishing the marble products, so that the export targets
can be achieved. This will maximize the profits. The selection/purchase of raw marble is
of immense importance. Expertise will be employed in the purchase of best quality raw
marble stone so that there is minimum wastage.

4.1 PRODUCT SALES

The plant can process 370,360 Sq ft of marble at 100 % capacity. The sale price is Rs 57 per
Sq ft.

Capacity % 100%
Marble processed Sq ft 370,260
Sale price Rs 57
Sale revenue Rs 21,104,820

4.2 RAW MATERIALS

The cost of marble rock is Rs 23 sq ft, the prices slightly change with the color. The price
of marble block is also higher. The total requirement of marble is around 400,000 Sq ft

4.3 PRODUCT MANUFACTURING PROCESS

Slabs
Slabs are large semi processed sheets of marble stone with varied sizes and thickness of 2
inches. They are further processed in the local industry or exported to the international
markets. Slabs are cut on gang saws from large blocks of marble and granite.
Unpolished Tiles
These are processed and sold by units normally lacking machinery to finish and section the
material. These are available in different sizes, colors and shades. These tiles are polished
either at the factory or after application at the desired surface.

3
 Polished Tiles
These are the fully processed tiles sold in the market at competitively higher prices, which
depend on vein structure color & shades.
Decorative Items
Decorative items including, pillars, fire places, railings, sculpture, flower vase, ashtrays,
tabletops, office table sets and many other similar items are produced in many countries of
the world.
Marble Chips
Marble Chips are tiny pieces normally of crushed marble used in flooring and facing in the
construction industry. These are processed on completely different machinery set up that
includes stone crushers of various grades. They vary in size from large grains of 1 inch to
0.5 centimeter, depending on the choice of the consumer.

4.4 PRODUCT DISTRIBUTION

The final product will be directly supplied to wholesaler eliminating role of the middleman.
Distribution network of the product is illustrated below:

The marketing of the project will be based on the following strong grounds:

• Contacts with end users and Contractor

• Advertisement
• Promotion schemes
• Point of purchase displays

4
4.5 HUMAN RESOURCE REQUIREMENT
The total human resource required for this project with their proposed/estimated monthly
salaries is shown in the table

4.6 PROJECT FINANCIALS

4.6.1 OPERATIONAL DATA

The plant can process 370,360 Sq ft of marble at 100 % capacity, however the production
in the first year is estimated at 70 %. Which will increase at 10% per year. The production,
sales data is depicted below.

Year 1 Year 2 Year 3 Year 4 Year 5

Capacity % 70% 80% 90% 100% 100%

Marble processed Sq ft 259,182 296,208 333,234 370,260 370,260

Sale price Rs 57 57 57 57 57

Sale revenue Rs 14,773,374 16,883,856 18,994,338 21,104,820 21,104,820

4.6.2 FIXED COST

The land, building/infrastructure other fixed assets costs is detailed below.

Project Investments
Land 4,500,000
Construction 1,197,650
Plant & Machinery 12,570,000
Furniture & Fixtures & Office Equipment 27,000
Vehicles 43,200
Pre-Operating Costs 72,500
Total Fixed Assets 18,410,350

5
4.6.3 WORKING CAPITAL

The investment in the initial working capital is worked out Rs 1,796,549, as detailed below.

AMOUNT IN RS
First three months salaries 321,000
Misc expenses 100,000
Inventories 875,549
Cash requirements ,500,000
Initial Working Capital 1,796,549

4.6.4 OVERHEAD COSTS

Following Overheads are assumed to occur in the first year of production.

Expense Year amount

Depreciation 1,323,903
Insurance 628,500
Selling and Distribution 441,000
Miscellaneous 14,447
Total 2,407,850