Pre-Feasibility Study

SALT PRODUCTS

Small and Medium Enterprise Development Authority

Government of Pakistan
www.smeda.org.pk
HEAD OFFICE 6th & 8th Floor LDA Plaza, Egerton Road, Lahore. Tel: (92 042) 111-111-456 Fax: (92 042) 6304926-7 Helpdesk@smeda.org.pk
REGIONAL OFFICE PUNJAB 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 NWFP 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

8th Floor LDA Plaza, Egerton Road, Lahore. Tel: (042) 111-111-456 Fax: (042) 6304926-7 helpdesk@smeda.org.pk

April, 2006

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1. 2. 3.

INTRODUCTION TO SMEDA.................................................................................................... 5 PURPOSE OF THE DOCUMENT ............................................................................................... 5 CRUCIAL FACTORS & STEPS IN DECISION MAKING FOR INVESTMENT..................... 6 3.1. 3.1.1. 3.1.2. 3.1.3. 3.1.4. SWOT ANALYSIS ................................................................................................................... 6 STRENGTHS ............................................................................................................................ 6 WEAKNESSES.......................................................................................................................... 6 OPPORTUNITIES ...................................................................................................................... 7 THREATS ................................................................................................................................ 7

4.

PROJECT PROFILE.................................................................................................................... 7 4.1. 4.2. 4.3. 4.4. 4.5. 4.6. 4.7. 4.8. 4.9. 4.10. OPPORTUNITY RATIONALE ...................................................................................................... 7 PROJECT BRIEF ....................................................................................................................... 8 MARKET ENTRY TIME ............................................................................................................. 8 PROPOSED BUSINESS LEGAL STATUS ....................................................................................... 8 PROJECT CAPACITY................................................................................................................. 9 PROJECT INVESTMENT ............................................................................................................. 9 RECOMMENDED PROJECT PARAMETERS ................................................................................... 9 PROPOSED LOCATION .............................................................................................................. 9 OTHER FIXED ASSETS REQUIREMENT .................................................................................... 10 MACHINERY REQUIREMENT .................................................................................................. 10

5. 6.

LAND & BUILDING REQUIREMENT .................................................................................... 11 MARKET INFORMATION ABOUT ROCK SALT.................................................................. 11 6.1. 6.1.1. 6.1.2. 6.1.3. 6.1.4. 6.2. 6.3. 6.4. 6.5. 6.6. 6.6.1. 6.6.2. 6.6.3. 6.6.4. 6.6.5. SALT MINES IN PAKISTAN ..................................................................................................... 11 KHEWRA SALT MINES ........................................................................................................... 11 WARCHA SALT MINES .......................................................................................................... 12 KALABAGH SALT MINES ....................................................................................................... 12 JATTA/BAHADURKHEIL SALT MINES ..................................................................................... 13 THE HEALING EFFECT OF SALT .............................................................................................. 13 WHERE DO SALT LAMPS COME FROM?.................................................................................. 14 THE BENEFICIAL EFFECTS OF SALT CRYSTAL LAMPS ON OUR HEALTH .................................. 14 IONS AND HEALTH ................................................................................................................ 14 SALT CRYSTAL LAMPS AND COLOR THERAPY ........................................................................ 15 RED (BRIGHT RED) ............................................................................................................... 16 ORANGE ............................................................................................................................... 16 YELLOW ............................................................................................................................... 16 AROMA THERAPY ................................................................................................................. 16 LIGHT THERAPY.................................................................................................................... 16

7.

HUMAN RESOURCE REQUIREMENT................................................................................... 17 7.1.1. HUMAN RESOURCE REQUIREMENTS....................................................................................... 17

8.

KEY ASSUMPTIONS................................................................................................................. 19 8.1.1. 8.1.2. 8.1.3. 8.1.4. 8.1.5. 8.1.6. 8.1.7. 8.1.8. 8.1.9. 8.1.10. PROJECT ASSUMPTIONS ......................................................................................................... 19 OPERATING ASSUMPTIONS .................................................................................................... 19 DEPRECIATION RATE ASSUMPTION ........................................................................................ 19 REVENUE ASSUMPTIONS ....................................................................................................... 19 LONG TERM SECURITY DEPOSITS .......................................................................................... 20 WORKING CAPITAL TURNOVER ............................................................................................. 20 COST OF SALES ..................................................................................................................... 20 PACKING MATERIAL & STORES AND SPARES.......................................................................... 21 SALARIES WAGES AND OTHER BENEFITS ............................................................................... 21 ADMINISTRATIVE E XPENSE ASSUMPTIONS ........................................................................ 22

Pre-feasibility
8.1.11. 9. 9.1. 9.2. 9.3.

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MARKETING EXPENSES ASSUMPTIONS .............................................................................. 22

FINANCIAL STATEMENTS ..................................................................................................... 24 INCOME STATEMENT ........................................................................................................ 24 BALANCE SHEET................................................................................................................. 25 CASH-FLOW STATEMENT................................................................................................ 26

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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. Prepared by Issue Date Issued by PREF-92 SMEDA-Punjab May 2006 Library Officer

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1. INTRODUCTION TO SMEDA
The Small and Medium Enterprise 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 sectors including, Fruits and Vegetables, Marble and Granite, Gems and Jewelry, Marine Fisheries, Leather and Footwear, Textiles, Surgical Instruments, Transport and Dairy. 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 Scientific/Structured way. This document is in the continuation of this effort to enable potential investors to make well-informed Investment Decisions.

2. PURPOSE OF THE DOCUMENT

The objective of this proposed Pre-feasibility study is primarily to facilitate potential entrepreneurs with the Investment information and provide an overview about the "Salt Lamp Manufacturing Business". The proposed Pre-feasibility may form the basis of an important investment decision and in order to serve this objective, the document covers various aspects of Salt Lamp Manufacturing Business Concept Development, Start-up, Production, Marketing, Finance and Business Management. This document also provides Sectoral Information, brief on Government Policies and International Scenario, which have some bearing on the Project itself. The pre-feasibility is based on the information obtained from various industry sources as well as discussions with businessmen. For financial model, since the forecast/projections relate to the future periods, actual results are likely to differ because of the events and circumstances that dont occur frequently as expected. PREF-92/April, 2006/ Rev 1 5

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Whilst due care and attention has been taken in performing the exercise, no liability can be inferred for any in-accuracy or omissions reported from the results thereof. It is essential that our report be read in its entirety with financial model in order to fully comprehend the impact of key assumptions on the range of values determined. This particular Pre-feasibility is regarding "Salt Lamp Manufacturing Unit ". Before studying the whole document one must consider following critical aspects, which forms basis of any Investment Decision

3. CRUCIAL FACTORS & STEPS IN DECISION MAKING FOR INVESTMENT

Before making the decision, whether to invest in setting up the salt lamp manufacturing business or not, one should carefully analyze the associated risk factors. A SWOT analysis can help in analyzing these factors, which can play important role in making the decision. 3.1. SWOT Analysis Before making the decision, whether to invest in the Salt Lamp Manufacturing or not, one should carefully analyze the associated risk factors. A SWOT analysis can help in analyzing these factors, which can play important role in making the decision. 3.1.1. Strengths Continuous availability and easy access to Raw Material. 100% of the raw material that mainly comprises rock salt is available in the Khewra, District Jhelum. ii- Availability of Cheaper Labor. iii- Tariff cuts under Trade Agreements are anticipated which may result in increase in the Export market of the Salt lamps. iv- The life style of the people is improving and they are getting more quality conscious as they are willing to spend on unique and decorative items. v- The main competitors in the Salt Lamp manufacturing industry with respect to the market share is the supply from un-organized sector but the permanent industry has an edge over these supplies because of quality & standard, which is almost doubled as compared to un-organized supplies. Market of un-organized sector can be accessed and captured through automated marketing techniques. vi- Serving tough competition in the market through low prices and high quality. vii- Setting up of a sales point in the export markets. viii- Own designers and R&D Department. 3.1.2. Weaknesses iStrict controls over the Labor efficiency need to be observed to reduce the Waste Production at the minimum level. i-

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ivviiiiiiiv-

The production process is highly manual and requires high involvement of man power thus strong controls over the man power is required. Expected loss at the initial stages of the project as both the local & export market needs to be captured and considering the nature of the products manufactured it requires heavy promotional charges. Weak design protection. High employment turnover rate. Increasing preference for the high quality products unique in nature. Increasing share of developing countries in Salt lamp imports of France, Belgium & UK and other countries of European union. The salt rock crystal is known for its ability to ionize the air thus enhancing the well being and improving the health of human being. The crystal salt is believed to help in the cure of many diseases. Bioenergetics therapists and homeopaths in Western Europe have recommended crystal salt lamps for long time to support treatment of allergies, respiratory system and blood system diseases. They are often used in the treatment of rheumatism. Due to its beautiful and rich colors, salt lamps can also be used in color therapy. i.e. chromo therapy. The soothing light of the lamp helps neurotic person and people suffering from insomnia. Low saving and low holding capacity of General Public as a result of which there is increasing level of poverty. Quality and design of the Salt Lamps need to be considered very closely as the lifestyle of people is improving. Trends in lamp design change quickly. Salt has hygroscopic properties, which means that it draws water from the surrounding atmosphere. Salt Rock Lamps should, therefore, never be placed in a humid room or outdoors. In humid conditions, the lamp surface may be slightly damp to the touch. Turning on the lamp for a few hours dries it very quickly.

3.1.3. Opportunities

vvi-

3.1.4. Threats iiiiiiiv-

4. PROJECT PROFILE
4.1. Opportunity Rationale This sector is in immaturity, going through birth pains. This is not a good sign considering the years this sector has been around with abundance of cheap rock salt. The major reason for this slow development process has been the lack of local education, motivation and mobilization to the relevant stakeholders to enter this field. The credit goes to local residents who have kept on going without much technical or financial support in the past. Majority of the industry is un-organized despite great potential for making better livelihood for those who comes into this field and do it on progressive basis. PREF-92/April, 2006/ Rev 1 7

Pre-feasibility 4.2. Project Brief

Salt Products

The project will be producing rock salt crystal products from highest quality of crystallized salt rocks. The rock salt crystal products discussed in this pre-feasibility includes;- salt lamps, salt soaps, salt candle stands, salt tiles and other decoration pieces including rabbits, camels and cats etc. This pre-feasibility is however mainly focusing on the Salt lamp manufacturing. A salt lamp is simply a chunk of mined salt that has been hollowed out to allow room for a light bulb or tiny candle. The light glows through the medium of the salt crystal, which can range in color from a dark salmon pink to a pale orange. Salt crystals for salt lamps are mined in Russia and central Europe as well as in the Himalayas. Salt lamps make attractive accent lights. Their main attraction, however, is that the heating of the salt causes the crystal to release negative ions (often called simply 'ions'). Negative ions have long been considered healthy; the sea air, mountain air and the air around swiftly running water is high in negative ions. Indoor air, recirculated air, and air around electronic equipment is very low in negative ions. Many office workers who suffer health complaints around fluorescent lighting and computer monitors report considerably less fatigue and headaches if the concentration of negative ions in the air is increased. Why negative ions may be beneficial is only partially understood. It has been shown that negative ions in the air bind with airborne pollutants, making them heavier so that they fall to the ground, and therefore are unavailable to be inhaled. Many modern air purifiers - the so-called 'ionic air cleaners' - use this technique to provide cleaner indoor air for allergy sufferers. Some studies seem to indicate that an increase in negative ions in the air increases blood flow to the brain, which would have the effect of improved concentration. The salt lamp is an attractive alternative to the utilitarian look of an air purifier. The amount of negative ions a salt lamp can release depends on its size and how warm the candle or light bulb can make it. The larger the crystal, obviously, the more expensive the lamp, but the larger area it can provide with negative ions. 4.3. Market Entry Time The proposed business do not get affected with seasons, changing trends and emerging attributes therefore the proposed business can be started any time during the year. However at the commencement of the proposed business, it is important that the entrepreneur must have good public relations in the market and should have some orders in hand. 4.4. Proposed Business Legal Status The proposed business do not get affected with seasons, changing trends and emerging attributes therefore the proposed business can be started any time during the year. However at the commencement of the proposed business, it is important that the entrepreneur must have good public relations in the market and should have some orders in hand.

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The said project can be a sole proprietorship or a partnership and even it can be registered under the Companies Ordinance, 1984 with the Securities & Exchange Commission of Pakistan. The selection totally depends upon the choice of the entrepreneur. This pre-feasibility assumes the legal status of a sole proprietorship. 4.5. Project Capacity Selection of Project Size is really critical. After doing thorough Market Research, it is decided that the proposed Pre-feasibility will be based upon the Production Capacity of 300 pieces per day. As it is evident that the standard of living is rising steadily and the society is getting increasingly brand loving and design conscious, high grade producers will have heyday in the Salt Lamp market in future. This particular Prefeasibility study is however based on the maximum production capacity of 170 pieces per day which is the minimum viable size for a Salt lamp manufacturing unit with a growth rate of 5% per annum. Table 1: Production Capacity Hours utilized one day Production Capacity in pieces per day 4.6. Project Investment Total Project cost is Rs. 15,879,181. Details are worked out in the table below:Table 2: Project Cost (Rs.) Capital Investment Working Capital Requirement Total Investment Table 3: Project Viability IRR % - age NPV @ 20 % Pay Back Period 9,014,500 6,864,681 15,879,181 8 110

41.60% Rs. 65,997,134 2.26-Years

4.7. Recommended Project Parameters Table 4: Project Parameters Capacity per day Human Resource 110 pieces 66 4.8. Proposed Location The said project can be started in any Industrial Area. It is recommended to establish the Project in an area where Raw Material is easily available. It may have any Industrial Area of Lahore, Gujranwala or Sargodha. The location of this proposed PREF-92/April, 2006/ Rev 1 9 Technology/Machinery Local Location Sargodha

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Pre-feasibility is recommended at Sargodha. The availability of main raw material in the region considerably increases the scope for establishment of the proposed project in the said region. 4.9. Other Fixed Assets Requirement Following additional fixed assets are required for factory and management offices. Table 5: Fixed Assets Items No. Cost/Item (Rs.) Total Cost (Rs.)

Office Equipments Computers Printers Fax Machine Telephone Exchange Telephone Sets Fittings & Installations Air Conditioners Generator 165 KVA - Local Electric Installations and Heating System Water Pump ( 2.0 H.P ) including boring 150 ft Furniture & Fixtures Office Furniture TOTAL 4. 10. Machinery Requirement Make No. of Units 1 1 2 8 2 10 4 Cost per unit Rs. 100,000 60,000 110,000 2,500 30,000 3,000 1,500 Total Cost Rs. 100,000 60,000 220,000 20,000 60,000 30,000 6,000 2 1 1 1 25,000 50,000 100,000 15,000 50,000 50,000 100,000 15,000 215,000 250,000 712,500 6 3 1 1 5 25,000 25,000 10,000 10,000 500 150,000 75,000 10,000 10,000 2,500 247,500

250,000

Table 6: Plant & Machinery Machine Description

Cutter 32 Inches Cutter 18 Inches Lathe Machines Grinders Drill Machines 8 Fit with special Bit Hand Drills Blowers PREF-92/April, 2006/ Rev 1

Local Local Local Local Local Local Local 10

Pre-feasibility TOTAL

Salt Products 496,000

5. LAND & BUILDING REQUIREMENT

Building for the proposed business will be built on the land which will be purchased in Sargodha as. Total Land Cost including acquisition & documentation charges for land are. Table 7: Land Cost Total Area (Kannals) 5 Cost per Kannal (Rs.) 300,000 Total Land Cost (Rs.) 1,500,000

Following Table shows the detailed building requirements for the Project. The break - up of the required area and construction cost of relevant department is produced below: Table 8: Construction Cost Building & Civil works Space Construction Required Cost / sq. ft. (sq. ft.) (Rs.) 2,500 500 1,500 550 4,500 75 1,000 700 350 550 400 550 2,250 50 10,000 100 22,500 780 350

Main Hall Finished Goods Store Raw Material Store - Open Plot Area Management Office Accessories Store Toilets Loading, unloading Bay - Open Area Grounds & Tracks - - Open Area Total Space Requirement (sq. ft) Boundary wall (R. ft) Total Infrastructure Cost

Total Cost (Rs.) 1,250,000 825,000 337,500 700,000 192,500 220,000 112,500 1,000,000 4,637,500 273,000 4,910,500

6. MARKET INFORMATION ABOUT ROCK SALT

6.1. Salt Mines in Pakistan 6.1.1. Khewra Salt Mines Situated at the foothills of the Salt Range, Khewra Salt Mines are the oldest in the salt mining history of the sub-continent. Salt occurs in the form of an irregular dome like structure. There are seven thick salt seams with cumulative thickness of about 150 meters. At places rock salt is 99% pure. Salt is transparent, white, pink, reddish to beef-color red. In certain horizons it is crystalline. Inside the mine there are beautiful alternate bands of red and white color salt. There are 18 working levels. Cumulative length of all driveges is more than 40 km

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Pre-feasibility Table 9: Salt Mines - Khewra Contact Project manager 092-458-211137 Khewra salt Mines Khewra, Distt. Jhelum Location 160km south of Islamabad Leased area 3,398.53 acres Geological Horizon Pre-Cambrian Commercial salt Average 96% Shades of salt White, Pink and Red Mining method Room and Pillar Rock Saly Resources 6.687 Billion Tons Production (2003-04) 318,000 tons 6.1.2. Warcha Salt Mines

Salt Products

Warcha salt Mines are located 276km from Islamabad. The salt occurs in the form of an irregular and broken salt dome. Its white salt is well demanded by the manufacturers of kitchen-flow salt. The pure white salt is transparent and crystalline. Other Features are as follows: Table 10: Salt Mines - Warcha Contact Project Manager Tel: 092-4528-770315 Warcha Salt Mines Warcha, Distt. Mianwali Location 276km south of Islamabad Leased Area (Two) 3,601.17 acres Geological Horizon Pre-Cambrian Commercial salt Average 98% Shades of salt Generally white and pink Mining method Room and Pillar Total Resources Over one Billion tons Production (2003-04) 332,555 tons 6.1.3. Kalabagh Salt Mines Kalabagh Salt Mines are located on the bank of the Indus River. Salt is excavated by Room and Pillar method. Some of the chambers are more than 80 meters deep where the salt is still mined manually. There are 13 different kinds of salt seams with different shades of color. Actual old mines are located near the village known as Wanda Kukranwala.

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Pre-feasibility Table 11: Salt Mines - Kalabagh Contact Project Manager Office Tel: 092-4529-395704 Kalabagh Salt Mines Kalabagh, Distt. Mianwali Location 296km from Islamabad or 50km from Mianwali Leased Area 3,837.81 acres (Two Leases) Geological Horizon Pre-Cambrian Purity of Salt (NaCl) Average 96% Shades of salt White and Pink Rock Salt Resources Over One Billion tons Production (2003-04) 52,995 tons

Salt Products

6.1.4. Jatta/Bahadurkheil Salt Mines Table 12: Salt Mines - Jatta / BahadurKheil Contact Project Manager PMDC Jatta/BahadurKhel Salt Mines Jatta, Distt. Karak Office Tel: 092-922-550020 Location Leased Area Geological Horizon Purity of salt (NaCl) Shades of salt Total Resources Production (2003-04) 217km from Islamabad or 35 km from Kohat 8,449.92 acres Tertiary (?) Average 92% White, light to dark grey Over few Billion tons 52,563 tons

6.2. The Healing Effect of Salt For thousands of years salt has been known as a panacea. Alchemists called it "the fifth element" besides water, earth, air and fire- because its qualities were comparable only to ether, the actual fifth element. Why are we so drawn to the ocean? Because our subconscious mind instinctively wants to return to the specific vibrational state of the ocean from which we once emerged. This is where we can return to recharge our batteries and regenerate. It was only one hundred years ago with the advent of industrialization, that we initiated our disconnection from nature and her ways. Fortunately, we are witnessing a trend to return back to natural, holistic methods for living and caring for our body, including a shift back to utilizing natural

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salts in this process. People everywhere are reconsidering the healing effects of natural crystal salt. We can find it in skin care lotions, for use as bath salts and is even used in inhalation or cleansing treatments for illnesses of the respiratory system and for a variety of other indications. 6.3. Where Do Salt Lamps Come From? Salt Electrical Lamps are manufactured from crystals of rock salt which has been deposited in earth for 260 million years and is mined bye means of traditional mining methods from the depths reaching 700-1100 meters which allows fully maintain the natural benefits of slats created by natural with guarantee that there is no toxic contamination 6.4. The Beneficial Effects Of Salt Crystal Lamps On Our Health Science decades the beneficial effects of negative ions in the treatment of many illnesses has been known, such as rheumatism, allergies, respiratory diseases, sleeplessness, migraine high blood pressure, physical disorders, disorders declination in performance e.t.c, Salt crystal lamps are additional instruments in the treatment of such disorders. Salt lamps strong and negatively ionize the air counteracting detrimental positive ionization. Owing to their nice and delicate light they create a unique atmosphere. When placed by a television set, computer etc. They absorb detrimental electromagnetic radiation. 6.5. Ions and Health We spend most of our lives in enclosed places. Our frame of mind and physical condition depend on the composition of the air that we breath. Air is electrically charged, which means it contains in definite proportions, positively charged molecules (positive ions) and negatively charge molecules (negative ions). Scientific research has shown that their balance is required to create a good mood. Computers screens, air-conditioning, and TV sets are sources of surplus positive ions in the air. These devices make electrical smog that can lead to bad moods, weakness and sleeplessness. We must add negative ions to the atmosphere to achieve a balance in the air and neutralize the electrical smog around our homes and work places. The environment we live in is full of positive ions, which makes the air more polluted. Electrical appliances are discharging these positive ions, high voltage networks, heating and cooling plants, radio and television transmitters, radar systems, tobacco, computers and TV sets. Rock Salt crystal is known to be one of the most efficient emitters of negative ions that improve the air quality. Salt lamps create a microclimate that is similar to the air after a light spring storm. In the high country and near the waterfalls, fresh air carries around 4000 negative ions per cubic centimeter whereas in big cities, during rush hours and traffic jams, the negative ions do not exceed more than 100 to 120 ions per cubic centimeter. The presences of negative ions in the atmosphere create a state of well-being. Salt crystal, thanks to its chemical composition, is an ideal source of negative ions. Negative ions clean the air of: PREF-92/April, 2006/ Rev 1 14

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Dust Pollen (grass, weed and tree pollen) Dust mites Animal dander Smoke Odor Mold spores

The impact of negative ions is powerful. Originally they were found to help asthma patients. Later they were discovered to affect Serotonin levels in the bloodstream, stabilize alpha rhythms and to positively affect reactions to sensory stimuli. The attendant greater level of alertness can translate into improved learning, improved well-being and enhanced performance of mental tasks. Rock Salt Crystal Lamps are highly suitable for daily use near Televisions, and Computers around smokers, in office with air-conditioning, during massage therapy, in mediation rooms and anywhere else you want to restore or preserve the natural air quality. Ionizing machines emit negative electric charges into the air, and this supposedly causes airborne allergens to cluster and fall to the ground. These machines have been claimed to help hay fever and asthma sufferers by decreasing the allergen load on the nasal mucosa and lungs. Many people, who can't go to the salt mines, use salt crystal lamps to create those ions. They buy salt crystal lamps made from the same salt mines used the speleotherapic clinics. These lamps are reported to provide relief the same was people are relieved at the salt mines. 6.6. Salt Crystal Lamps and Color Therapy The beautiful and rich color of the Salt Crystal Lamps has been known to be useful in color therapy. THE THEORY BEHIND COLOR THERAPY is that when you absorb color energy it travels, via the nervous system, to the part of the body that needs it. Each body has its own optimum state of well-being and is constantly seeking ways to maintain or restore a balanced state. Utilizing COLOUR is one way you can help yourself to harmony. Some of the colors that occur in many of the Salt Crystal Lamps when they are illuminated with an ordinary "white" light globe range from the original off white of pure salt through various degrees of yellows, peach, orange and shades of red to deep red. The natural variations in the color of the Salt Crystal come from the Iron Oxides in the soil above the salt crystal deposits that leach down over hundreds of millions of years. The colors and combinations of colors are made up from the different density of iron oxides left on the salt crystal veins. The patterns and combinations of colors naturally occur in much the same way as an iron pipe leaves varied, abstract and totally unique rust stains on a wall over time.

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Pre-feasibility 6.6.1. Red (Bright Red)

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Warm and stimulating. Use in anemia, or whenever you are feeling cold and pale, with chilled extremities; also useful for ultraviolet and X-ray burns and frostbite; red is a liver stimulant and counter-irritant (to bring internal inflammations to the surface). Nutrients: vitamin B12, acidity. 6.6.2. Orange A respiratory stimulant; useful for weak lungs, asthma, consumption, emphysema; also for overweight and under-active people with an under-active thyroid (energizes thyroid, sedates parathyroid). Orange relieves spasms and cramps, increases milk secretion, corrects rickets and soft bones, osteoporosis; stimulates stomach and digestion, and relieves flatulence and distension; also stimulates the bladder, kidneys, liver and pancreas, try with epilepsy. It is valuable for chronic kidney disease and gallstones; arthritis, gout and rheumatism during non-painful periods. Minerals: boron, calcium, copper, selenium, silicon. 6.6.3. Yellow The most luminous color. A strong stimulant and energizer for muscles and nerves: use in all cases of paralysis and muscle disorders, for nerve building, and in nervous exhaustion. Yellow energizes the alimentary tract and stimulates digestion, flow of bile, gastric juices, pancreas activity, lymphatic system, heart, eyes and ears. It generally activates all bodily functions except those of the spleen, which is sedated; use for indigestion, constipation, diabetes, and depression for skin cleansing and to destroy intestinal worms. Minerals: magnesium, molybdenum, sodium. 6.6.4. Aroma Therapy Alternative medical techniques can help you avoid the discomfort and side effects that come with prescription drugs. And depending on the technique used, psychiatrists say that elderly patients can very well tolerate them. "Aromatherapy and bright light treatment seem to be safe and effective and may have an important role in managing behavioral problems in people with dementia". Light therapy entails sitting in front of bright and colored lights in order to alleviate restlessness, behavioral and sleeping problems. The salt lamps are particularly effective for aromatherapy. Not only do these aromatic dispensers disperse the compounds that help your body, they give triple benefits. They give off light that is necessary to avoid depression and create a pleasant surroundings, they give off ions that create a healthy microclimate and they disperse healthy aromas into the atmosphere. 6.6.5. Light Therapy Light is important to mental well-being. Light therapy is a common treatment in the North Countries where one finds high rates of depression that doctors have

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found are related to the long winter nights experienced by the people who live there. Salt lamps can be used for light therapy and they can be used to adjust our emotional conditions. Salt comes in a very useful spectrum of colors that create different moods. So you can choose one or more to fit your current condition. Red is the provocative color that boosts your vital forces and gives you an energetic outlook on life. Apricot is said to help you overcome over come emotional blocks, improve open mindedness and increase vital energy. Orange is supposed to aid relaxation and improve body harmony. It is also said to be very helpful in overcoming stress, and nervous shock. It also is supposed to increase creativity and your outlook on life. White brightens your outlook and has a calming effect that helps you concentrate and enrich your emotional life.

7. HUMAN RESOURCE REQUIREMENT

7.1.1. Human Resource Requirements Following table shows the requirements of Human. Salaries and wages are assumed to grow at 10% per annum. Table 13: Human Resource Requirement Description No. of Shifts PRODUCTION STAFF Production Manager Quality In charge Store Supervisor Cutter Operator Lathe Machine Operator Grinder Operators Drill Machine Operator Small Hand drill operator Un-skilled Labor ( helpers ) Total Direct Labor ADMINISTRATIVE COST Admin. & Finance Manager Accounts Officer Purchase Officer Office Boys Driver Security Guard, Gate Keepers Number of Employees Per Month Salary Annual Salary (Rupees) 420,000 300,000 84,000 312,000 600,000 504,000 360,000 420,000 720,000 3,720,000 420,000 120,000 120,000 36,000 54,000 162,000

1 1 1 1 1 1 1 1 1

1 1 1 4 2 12 4 10 20

35,000 25,000 7,000 6,500 25,000 3,500 7,500 3,500 3,000

1 1 1 1 1 3

1 1 1 1 1 1

35,000 10,000 10,000 3,000 4,500 4,500

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Pre-feasibility Sweeper Total Administrative Salaries MARKETING & SELLING COST Marketing Manager in EU Countries Export Manager Sales Officer Total Marketing Salaries Direct Production Cost Factory Wages *Other Benefits Administrative Cost Other Benefits Marketing Cost Other Benefits 1 2 3,000

Salt Products 72,000 912,000

1 1 1

1 1 1

175,000 30,000 15,000

2,100,000 360,000 180,000 2,640,000 3,720,000 930,000 4,650,000 912,000 228,000 1,140,000 2,640,000 660,000 3,300,000

PREF-92/April, 2006/ Rev 1

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Pre-feasibility

Salt Products

8. KEY ASSUMPTIONS
8.1.1. Project Assumptions 10 50% 50% 14% 5 5% Projected Life of The Project in Years Sponsors' Equity Debt Financing Annual Mark Up Rate (Short Term & Long Term) Debt Tenure in Years General Inflation Rate 8.1.2. Operating Assumptions 365 12 300 8 1 5%

Total No. of Days in One Year Total No. of Months in One Year No of Working Days in One Year No. of Working hours/day No. of Shift Expected Production Growth Rate 8.1.3. Depreciation Rate Assumption

Land Buildings Plant & Machinery Fittings & Installations Office Equipments Furniture & Fixtures Vehicles 8.1.4. Revenue Assumptions Per day Production in pieces Lamps ( 2 - 4 kg ) Lamps ( 4 - 6 kg ) Lamps ( 6 - 8 kg ) Lamps ( 8 - 10 kg ) 20% 25% 25% 10% 80 65 60 50 Ex-Factory Price excl. sales tax
$

0% 5% 10% 10% 10% 10% 20%

Ex-Factory Price excl. sales tax

Rupees

10 15 20 25

600 900 1,200 1,500

PREF-92/April, 2006/ Rev 1

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Pre-feasibility candle stands ( 1 - 2 kgs) Salt Soaps ( 0.4 - 0.6 kgs) Other Decoration Pieces ( 8 - 12 kg) Lamps ( 10 - 12 kg ) Lamps ( 12 - 14 kg ) Lamps ( 14 - 16 kg ) Exchange Rate Sales Tax Rate on supply Estimated margin on Sales Price 8.1.5. Long Term Security Deposits 2 months bill 5% 5% 10% 45% 30% 25% 120 150 5 60 40 25 60 0% 50%

Salt Products 6 2 50 25 30 35 360 120 3,000 1,500 1,800 2,100

Electricity

8.1.6.

Working Capital Turnover 30 Days Raw Material Consumption 15 Days expected Production

Raw Material Inventory Work - in - Process (60% Complete as to material and conversion Cost) Finished Goods Packing Material Stores and Spares Accounts Receivable - credit policy Accounts Payable Purchases Expenses 8.1.7. Cost of Sales

30 Days Goods available for sale 30 Days Goods available for sale 30 Days Stores & Spares Consumption 45 Days

0 Days of Raw Material, Packing Material & Stores & spares purchase 30 Days of Total Annual Expenditure

Raw Material Standard Raw Material wastage Machine made (% age of Material usage) Natural Shape (% age of Material usage) Rock Salt (Rs.) PREF-92/April, 2006/ Rev 1 20 Finished item weight 50% 70% Wastage 50% 30% 12.00

Pre-feasibility Wooden Base (Rs.) Leads & Holder (Rs.) Bulbs (Rs.)

Salt Products 15.00 25.00 10.00

8.1.8.

Packing Material & Stores and Spares Cost per unit rate per unit rate per unit Cost per item 5% of Raw Material consumption 30 7 6

Packing Material Costs during the 1st Year of Operation Cartons Small Boxes *Other Packing Materials Stores & Spares

The standard packing per Carton is assumed to be as follows: Lamps (2-4)Kg Lamps (4-6)Kg Lamps (6-8)Kg Lamps (8-10)Kg Candle Stand (1-2) Kg Salt Soaps(.4-0.60) Kg Other Decoratrion Pieces (8-12) Kg Lamps (10-12)Kg Lamps (12-14)Kg Lamps (14-16)Kg 8.1.9. Salaries Wages and Other Benefits

No. of pieces per carton

20 16 12 8 40 200 8 12 12 8

Salaries, Wages & other benefits Salaries & Wages Other Benefits & Perquisites Inflation Rate for Salaries & Wages Research & Development Cost Research Cost

Section 8.11 of this prefeasibility report 25% of the Salaries & Wages 10% 2.5% of the Turnover in the 1st year.

PREF-92/April, 2006/ Rev 1

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Pre-feasibility

Salt Products

Carriage & Freight Inward Repair & Maintenance Machinery, building and fittings & installations Machinery & equipment insurance rate Other Overhead Charges

10% of cost of Raw Material consumed. 10% of the Cost. 2% of Written down value of the Machinery & Equipments. 2% of Total Cost of Goods Manufactured excluding overhead cost.

8.1.10.

Administrative Expense Assumptions 10% 1% .5% 75,000 10,000 100,000 35,000 10% .5% .75% .4% 4% 3.5% 10%

Salaries & Wages Inflation Rate for Salaries & Wages Traveling & Conveyance Printing & Stationary Audit Fee Out of Pocket Expenses Policy Mannual(cost from 1st Year onward) Income Tax & Sales Tax Consultancy Inflation rate of Consultancy charges Entertainment Telephone Fax and Postage Utility Charges Office vehicles insurance rate Insurance rate of Raw Material, Work - in - process & Finished goods Repair & Maintenance

8.1.11.

Marketing Expenses Assumptions 10% cost per 20 ft. No. of Containers container Total Amount 2,400,000

Salaries & Wages Inflation Rate for Salaries & Wages

carriage Outward

100,000

24

PREF-92/April, 2006/ Rev 1

22

Pre-feasibility ( Carriage includes inland freight, sea freight, insurance and other expenses ) Vehicle Running Expenses Price/Liter 1 Car 2 Motorcycles Sale Point Expenses ( In EU Countries) Per Month Rupees Sale office rent 40,000 Other Over head Charges 30,000 Traveling per day 35 300 Km per day 57 50 Km per day

Salt Products

Annual Tours 100 300

Annual Rupees 480,000 360,000 840,000

Promotional Expenses book lets Web site Expenses Newspaper Advertisements Other Income - includes profit on Bank deposits, and scrap of spare parts & salt scrape Bank Charges Other Charges - WPPF Income Tax Rate Quantity Per unit 1,500 350 1 50,000 24 50,000 1% of turnover

.1% of turnover 5% of the profit before tax 1.5% of Total annual Turnover

PREF-92/April, 2006/ Rev 1

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Pre-feasibility

Salt Products

9. FINANCIAL STATEMENTS 9.1. INCOME STATEMENT

(Million Rupees)
Year - I Sales - Net of Sales Tax Cost of Sales Gross Profit Administrative Expenses Marketing & Selling Expenses Total Administrative & Selling Exp Operating Profit Other Income 35.66 13.06 22.60 2.41 7.79 10.21 12.39 0.36 12.75 Mark up on Long Term Loans Bank Charges Other Charges Financial & Other Charges Profit before Taxation Taxation Profit after Taxation Retained Earnings 0.04 0.64 0.67 12.08 0.53 11.54 Year - 2 42.39 16.33 26.06 2.49 8.32 10.81 15.25 0.42 15.68 1.06 0.04 0.73 1.83 13.85 0.64 13.21 11.54 Year - 3 47.00 17.98 29.02 2.65 8.88 11.52 17.50 0.47 17.97 0.83 0.05 0.85 1.73 16.23 0.71 15.53 24.76 Year - 4 51.84 19.62 32.23 2.82 9.48 12.30 19.92 0.52 20.44 0.61 0.05 0.99 1.65 18.79 0.78 18.01 40.29 Year - 5 57.16 21.44 35.72 3.03 10.13 13.16 22.56 0.57 23.13 0.39 0.06 1.13 1.58 21.55 0.86 20.69 58.30 Year - 6 63.02 23.44 39.58 3.28 10.83 14.11 25.48 0.63 26.11 0.17 0.06 1.29 1.52 24.58 0.95 23.64 78.99 Year - 7 69.48 25.64 43.84 3.55 11.58 15.13 28.71 0.69 29.41 0.07 1.47 1.54 27.87 1.04 26.83 102.63 Year - 8 76.60 28.05 48.55 3.86 12.40 16.25 32.29 0.77 33.06 0.08 1.65 1.73 31.33 1.15 30.19 129.45 Year - 9 84.45 30.71 53.74 4.20 13.27 17.47 36.27 0.84 37.11 0.08 1.85 1.94 35.18 1.27 33.91 159.64 Year - 10 93.11 33.63 59.48 4.58 14.22 18.80 40.68 0.93 41.61 0.09 2.08 2.17 39.44 1.40 38.04 193.55

24

Pre-feasibility

Salt Products

9.2. BALANCE SHEET

(Million Rs.)
Year - I Tangible Fixed Assets Long Term Deposits Electricity Current Assets: Stock in Trade Stores & Spares Advances, Deposits & Other Receivables Accounts Receivable Cash in Hand / Bank Total Current Assets Total Assets Owners Equity: Capital Introduced Accumulated Profits Long Term Loan Current Liabilities: Current Portion of Long Term Loan Accounts Payable Accrued Charges Mark - up payable Sales Tax Payable Provision for Taxation 8.37 0.15 2.20 0.16 1.88 4.40 12.04 20.68 29.20 7.94 11.54 19.48 6.35 1.59 0.06 1.18 0.53 3.36 29.20 Year - 2 7.80 0.15 2.56 0.20 2.06 5.23 23.56 33.61 41.56 7.94 24.76 32.70 4.76 1.59 0.10 1.28 0.50 0.64 4.10 41.56 Year - 3 7.31 0.15 2.79 0.22 2.26 5.79 37.06 48.12 55.58 7.94 40.29 48.23 3.18 1.59 0.10 1.39 0.39 0.71 4.18 55.58 Year - 4 6.86 0.15 3.08 0.24 2.47 6.39 52.90 65.08 72.09 7.94 58.30 66.24 1.59 1.59 0.11 1.52 0.28 0.78 4.27 72.09 Year - 5 6.47 0.15 3.39 0.26 2.71 7.05 71.29 84.69 91.31 7.94 78.99 86.93 1.59 0.12 1.65 0.17 0.86 4.38 91.31 Year - 6 6.12 0.15 3.73 0.28 2.97 7.77 92.48 107.22 113.49 7.94 102.63 110.57 0.13 1.79 0.06 0.95 2.92 113.49 Year - 7 5.80 0.15 4.11 0.31 3.25 8.57 118.35 134.58 140.53 7.94 129.45 137.39 0.14 1.95 1.04 3.14 140.53 Year - 8 5.51 0.15 4.52 0.34 3.57 0.94 155.98 165.34 171.01 7.94 159.64 167.58 0.15 2.13 1.15 3.43 171.01 Year - 9 5.25 0.15 4.98 0.37 3.91 10.41 180.17 199.84 205.24 7.94 193.55 201.49 0.16 2.32 1.27 3.75 205.24 Year - 10 5.01 0.15 5.48 0.40 4.29 11.48 216.81 238.47 243.63 7.94 231.59 239.53 0.18 2.53 1.40 4.10 243.63

25

Pre-feasibility

Salt Products

9.3. CASH-FLOW STATEMENT

(Million Rs.)
Profit before Taxation Depreciation Stock in Trade Stores & Spares Advances, Deposits & Other Receivables Accounts Receivable Accounts Payable Accrued Charges Mark - up payable Sales Tax Payable Cash form other Sources Sponsors' Equity Debt Financing Total Sources Applications: Fixed Assets Long Term Deposits Re -Payment of Loan Taxation 7.94 7.94 15.88 21.20 9.01 0.15 9.17 12.04 12.04 13.65 1.59 0.53 2.12 11.53 12.04 23.56 15.72 1.59 0.64 2.22 13.50 23.56 37.06 18.14 1.59 0.71 2.29 15.84 37.06 52.90 20.75 1.59 0.78 2.37 18.39 52.90 71.29 23.63 1.59 0.86 2.45 21.19 71.29 92.48 26.82 0.95 0.95 25.87 92.48 118.35 30.17 1.04 1.04 29.13 118.35 147.48 33.84 1.15 1.15 32.69 147.48 180.17 37.91 1.27 1.27 36.65 180.17 216.81 Year - I 12.08 0.65 12.72 (2.20) (0.16) (1.88) (4.40) 0.06 1.18 (7.40) Year - 2 13.85 0.57 14.42 (0.36) (0.04) (0.18) (0.83) 0.03 0.10 0.50 (0.77) Year - 3 16.23 0.50 16.73 (0.23) (0.02) (0.19) (0.57) 0.01 0.11 (0.11) (1.01) Year - 4 18.79 0.44 19.23 (0.28) (0.02) (0.21) (0.60) 0.01 0.12 (0.11) (1.09) Year - 5 21.55 0.39 21.94 (0.31) (0.02) (0.24) (0.66) 0.01 0.13 (0.11) (1.19) Year - 6 24.58 0.35 24.94 (0.34) (0.02) (0.26) (0.72) 0.01 0.15 (0.11) (1.30) Year - 7 27.87 0.32 28.19 (0.38) (0.03) (0.29) (0.80) 0.01 0.16 (0.06) (1.37) Year - 8 31.33 0.29 31.62 (0.42) (0.03) (0.31) (0.88) 0.01 0.17 (1.45) Year - 9 35.18 0.26 35.44 (0.46) (0.03) (0.35) (0.97) 0.01 0.19 (1.60) Year - 10 39.44 0.24 39.68 (0.50) (0.03) (0.38) (1.07) 0.01 0.21 (1.76)

Cash Increase/(Decrease) Opening Balance Closing Balance

26

Pre-feasibility

Salt Products

27