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Pak Thermal Power

Anum Khan
Kiran Idrees
Maha Farooq
Muhammad Zain Ul Abideen
Zoiya Hafeez

Introduction
Business name: Pak Thermal Power Plant
Total project cost: Rs. 5,391,932,391
(approximately)
Proposed business venture for the thermal power
plant capacity : 60 MW
Project Location: Wazirabad, district Gurjranwala,
Punjab, Pakistan

Reasons For land


Infrastructure

Labor
Availability

Water Supply

Industrial
Hub

Energy Crisis

The total power generation capacity of Pakistan is about 23,538MW.

Energy consumption increase by about 80 percent in the last 15 years.


countrys electricity demand will increase to around 40,000MW by
2020.(WAPDA)
The demand for energy has been increasing at a rate of 4.8% during
the last five years
The following is a breakup of the total power production in Pakistan:
fossil fuel 13,637 MW 65% of total
hydro 6,654 MW 31% of total
nuclear 812 MW 4% of total

Producers
There are four major power producers in
country:
WAPDA
KESC
IPPs
PAEC

Cost of engines

Dollars

Rate

Rs

Quanti Total Cost


ty

Caterpillar
6,500,000 108
Engines
10MW power

7,020,000,000 6

4,212,000,000

Import
duty(approx.
6%)

108

42,120,000

252,720,000

108

2,106,000

12, 636,000

Insurance(app
rox. 0.3 %
Total cost

390,000

Rs.4,477,356,000

Total cost of project

Caterpillar Engine 10MW Power

4,212,000,000
252,720,000

Import duty (Approximately 6%)


12, 636,000
Insurance (Approximately 0.3%)
24,000,000.00
Building Cost (30% of Land Cost)
80,000,000.00
Land Cost (40 acrs)
7,200,282.00

Spares and tools


2,052,081
Chemicals inventory
291,251,407
Fuel inventory
9,964,266.00
Cash in Hand
33,500,000.00
Company vehicles
5,000,000.00
Storage containers
800,000.00
Furniture
350,000,000
Installations
80,000,000.00
Gas connection

10,000,000.00
Electricity connection
1,000,000.00
Telephone License
Environmental License
IPP License

Total Plant Cost

10,000,000.00
9,808,354.00
Rs. 5,391,932,391

Capital Structure

Debt

Equity

Total

60

40

100%

amount

3,235,159,434

2,156,772,956

Rs.5,391,932,391

Profit & Loss Statement


Year 1 (Rs.)
Sales
COGS
Gross Profit
Operating Expenses
Salaries
Transportation
Vehicles depreciation
building depreciation
furniture depreciation
Amort. of import duty & insurance
Amort. of Utilities connections
Amort. of Environmental License
Amort. of IPP license
Commission (1.5% of Sales)
Admin Expenses (0.5% of Sales)
Miscellaneous Expenses (5 % of CGS)
EBIT
Interest Payment
EBT
Tax Rate 30%
Net Profit

Year 2 (Rs.)

Year 3 (Rs.)

Year 4 (Rs.)

Year 5 (Rs.)

6,912,270,720 7,188,761,549

7,476,312,011

7,775,364,491

8,086,379,071

5,003,131,677 5,196,119,872 5,396,827,595 5,605,563,627 5,822,649,100


1,909,139,043 1,992,641,677 2,079,484,416 2,169,800,864 2,263,729,970

5,977,080
6,216,163
1,000,000
1,040,000
1,256,250
1,256,250
900,000
900,000
30,000
30,000
13,649,448
13,649,448
4,550,000
4,550,000
500,000
500,000
490,418
490,418
103,684,061
107,831,423
34,561,354
35,943,808
279,731,406
290,920,662
1,462,809,027 1,529,313,504
404,394,929
341,368,322
1,058,414,097 1,187,945,182
317,524,229
356,383,555
740,889,868
831,561,628

6,464,810
1,081,600
1,256,250
900,000
30,000
13,649,448
4,550,000
500,000
490,418
112,144,680
37,381,560
302,557,489
1,598,478,161
270,463,388
1,328,014,773
398,404,432
929,610,341

6,723,402
1,124,864
1,256,250
900,000
30,000
13,649,448
4,550,000
500,000
490,418
116,630,467
38,876,822
314,659,788
1,670,409,404
190,695,338
1,479,714,066
443,914,220
1,035,799,846

6,992,338
1,169,859
1,256,250
900,000
30,000
13,649,448
4,550,000
500,000
490,418
121,295,686
40,431,895
327,246,180
1,745,217,896
100,956,281
1,644,261,615
493,278,484
1,150,983,130

Cost of Goods Sold (Year 1)


Rs.
Direct Material:
Fuel cost
Lubrication costs
Chemicals costs

Depreciation of engines
Depreciation of storage containers

4,688,247,653
21,600,846
8,208,321

165,114,296
187,500

4,896,483,616

Direct Labour:

mechanics

414,000

shift engineers

648,000

chief electrical engineer

420,000

plant workers

432,000

supervisor

960,000

lift driver

90,000

Factory Overheads (1.5% of sales)

Total COGS

2,964,000
103,684,060
5,003,131,676

Depreciation Schedule
Scrap Value
(25% of value)

Years

Depreciation

Engines

0.25

20

157,950,000

Installations

0.25

20

13,125,000

Storage Containers

0.25

20

187,500

Building

0.25

20

900,000

Company Vehicles

0.25

20

1,256,250

Furniture

0.25

20

30,000

Amortization Schedule
Cost of Asset
(Rs.)

Number of
Years

Ammortization (Rs.

Import Duty

252,720,000

20

12,636,000

Insurance

12,636,000

2,527,200

Gas Connection

80,000,000

20

4,000,000

Electricity Connection

10,000,000

20

500,000

Telephone Connection

1,000,000

20

50,000

Environmental License

10,000,000

20

500,000

IPP License

9,808,354

20

490,418

Asset

Loan Amortization Schedule


Year

Payment (Rs.)

Interest payment (Rs.)

Principal Decreased
(Rs.)

Principal Amount
(Rs.)

908,607,790

404,394,929.29

504,212,860.71

2,730,946,573.59

908,607,790

341,368,321.70

567,239,468.30

2,163,707,105.29

908,607,790

270,463,388.16

638,144,401.84

1,525,562,703.45

908,607,790

190,695,337.93

717,912,452.07

807,650,251.38

908,607,790

100,956,281.42

807,651,508.58

(7.20)

DEPRECIATION
Scrap Value (25% of value)

Years

Depreciation

Engines

0.25

20.00

157,950,000.00

Installations

0.25

20.00

13,125,000.00

Storage Containers

0.25

20.00

187,500.00

Building

0.25

20.00

900,000.00

Company Vehicles

0.25

20.00

1,256,250.00

Furniture

0.25

20.00

30,000.00

Balance Sheet
year 1

year 2

year 3

year 4

year 5

current assets
cash

410,847,112.99

fuel inv

291,251,407.50

302,901,463.80

315,017,522.35

327,618,223.25

340,722,952.18

lubrication fuel inv

1,800,071.00

1,872,073.84

1,946,956.79

2,024,835.07

2,105,828.47

spares and tools inv

7,200,282.00

7,488,293.28

7,787,825.01

8,099,338.01

8,423,311.53

chemcials inv
accounts rec (10% of
sales)

2,052,081.00

2,134,164.24

2,219,530.81

2,308,312.04

2,400,644.52

691,227,072.00

718,876,154.88

747,631,201.08

777,536,449.12

808,637,907.08

993,530,913.50
total current assets

1,062,785,320.98 1,529,443,691.80 2,022,379,148.17

2,540,608,688.22

1,033,272,150.04 1,074,603,036.04 1,117,587,157.48

1,162,290,643.78

1,404,378,026.49 2,096,057,471.02 2,604,046,727.84 3,139,966,305.65

3,702,899,332.00

fixed assets
caterpillar engines and turbines

4,237,933,600.00

4,079,983,600.00

3,922,033,600.00

3,764,083,600.00

3,606,133,600.00

land

80,000,000.00

80,000,000.00

80,000,000.00

80,000,000.00

80,000,000.00

building

51,208,364.00

50,308,364.00

49,408,364.00

48,508,364.00

47,608,364.00

furniture

770,000.00

740,000.00

710,000.00

680,000.00

650,000.00

company vehicles

20,693,750.00

19,437,500.00

18,181,250.00

16,925,000.00

15,668,750.00

installations

423,793,360.00

410,668,360.00

397,543,360.00

384,418,360.00

371,293,360.00

storage containers

4,812,500.00

5,005,000.00

5,205,200.00

5,413,408.00

5,629,944.32

environmental license

9,500,000.00

9,000,000.00

8,500,000.00

8,000,000.00

7,500,000.00

ipp license

9,317,936.30

8,827,518.60

8,337,100.90

7,846,683.20

7,356,265.50

utilities connections

85,500,000.00

80,950,000.00

76,400,000.00

71,850,000.00

67,300,000.00

insurance

10,108,800.00

7,581,600.00

5,054,400.00

2,527,200.00

import duty

202,176,000.00

189,540,000.00

176,904,000.00

164,268,000.00

151,632,000.00

total fixed assets

5,135,814,310.30

4,744,920,342.60

4,566,318,874.90

4,387,725,415.20

4,209,140,283.82

TOTAL Assets

6,129,345,223.80
PKR
6,540,192,336.79

5,778,192,492.64
PKR
6,840,977,813.62

5,640,921,910.94
PKR
7,170,365,602.74

5,505,312,572.68
PKR
7,527,691,720.85

5,371,430,927.60
PKR
7,912,039,615.82

CURRENT LIABILITIES

accrued exp (10% of gp)

190,913,904.31

198,550,460.48

206,492,478.90

214,752,178.06

223,342,265.18

accounts payable (15% of fuel cost)

720,669,030.77

749,495,792.00

779,475,623.68

810,654,648.63

843,080,834.57

total current liabilities

911,582,935.08

948,046,252.48

985,968,102.58

1,025,406,826.68

1,066,423,099.75

long term debt

2,730,946,573.59

2,163,707,105.29

1,525,562,703.45

807,650,251.38

(1,257.20)

total l.t liabilities

2,730,946,573.59

2,163,707,105.29

1,525,562,703.45

807,650,251.38

(1,257.20)

total liabilities

3,642,529,508.67

3,111,753,357.77

2,511,530,806.03

1,833,057,078.06

1,066,421,842.55

shared capital ( 215677296shs. @


par rs.10)

2,156,772,960.00

2,156,772,960.00

2,156,772,960.00

2,156,772,960.00

2,156,772,960.00

retained earnings

740,889,868.13

1,572,451,495.85

2,502,061,836.72

3,537,861,682.79

4,688,844,813.27

total

PKR
6,540,192,336.79

PKR
6,840,977,813.62

PKR
7,170,365,602.74

PKR
7,527,691,720.85

PKR
7,912,039,615.82

long term liabilities

Liquidity
Year 1

Year 2

Year 3

Year 4

Year 5

Current

1.54

2.21

2.64

3.06

3.47

Quick

1.21

1.88

2.31

2.73

3.14

Profitability
Year 1

Year 2

Year 3

Year 4

Year 5

GP margin

0.28

0.28

0.28

0.28

0.28

Net profit
margin

0.11

0.12

0.12

0.13

0.14

Operating
Profit
margin

0.21

0.21

0.21

0.21

0.22

ROA

0.11

0.12

0.13

0.14

0.15

ROE

0.26

0.22

0.20

0.18

0.17

EPS

3.44

3.86

4.31

4.80

5.34

Assets productivity
Year 1

Year 2

Year 3

Year 4

Year 5

Total Asset
turnover

1.06

1.05

1.04

1.03

1.02

Fixed Assets
Turnover

1.35

1.52

1.64

1.77

1.92

Leverage
Year 1

Debt to
total
Assets
ratio
Debt to
Equity
Times
interest
earned

Year 2

Year3

Year 4

Year 5

0.42

0.32

0.21

0.11

0.94

0.58

0.33

0.14

3.62

4.48

5.91

8.76

17.29

Return on Capital

ROIC

Year 1

Year 2

Year 3

Year 4

Year 5

0.19

0.20

0.21

0.22

0.23

WACC
% change in Kohinoor Stock Prices

% change in KSE-100
prices
24%

19%

-13.6%

13%

1.1%

Average 19%

34%

8.17%

Rm

19%

Covariance

0.00621889

Variance

0.00303333

Beta (levered)

2.05018315

Beta(levered)= bul(1+(1-T)D/OE)
WACC = wc*kc + wd*kd(1-T)
D/OE of Kohinoor= 55/45%
D/OE of Pak Thermal= 60/40%

Beta (unlevered)

1.105

Beta (levered)

2.27

Kc = Rf + (Rm-Rf)bL
kc

31.07%

Kd

12.50%

WACC

17.68%

Free Cash Flow Model

Operating Cash Flows

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