rose water (rs. 0.86 million)

8/21/2019 Rose Water (Rs. 0.86 Million)

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Pre-Feasibility Study

(Rose Water)

Small and Medium Enterprises Development Authority

Ministry of Industries & ProductionGovernment 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

[email protected]

REGIONAL OFFICE

PunjabREGIONAL OFFICE

SindhREGIONAL OFFICE

Khyber PakhtunkhwaREGIONAL OFFICE

Balochistan3rdFloor, Building No. 3,Aiwan-e-Iqbal Complex,

Egerton Road Lahore,

Tel: (042) 111-111-456Fax: (042) 36304926-7

[email protected]

5thFloor, BahriaComplex II, M.T. Khan Road,

Karachi.

Tel: (021) 111-111-456Fax: (021) 35610572

[email protected]

Ground FloorState Life Building

The Mall, Peshawar.

Tel: (091) 111-111-456Fax: (091) 5286908

[email protected]

Bungalow No. 15-AChaman Housing Scheme

Airport Road, Quetta.

Tel: (081) 2831623, 2831702Fax: (081) 2831922

[email protected]

Note: All SMEDA Services / information related to PM's Youth Business Loan areFree of Cost

May, 2014
mailto:[email protected]:[email protected]:[email protected]://../Downloads/[email protected]://../Downloads/[email protected]://../Downloads/[email protected]://../Downloads/[email protected]://../Downloads/[email protected]://../Downloads/[email protected]:[email protected]:[email protected]


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Pre-Feasibility Studies Rose Water Processing Unit (Rs. 0.86 Million)

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 ............................................................ 5

9.GEOGRAPHICAL POTENTIAL FOR INVESTMENT .................................................. 5

10. POTENTIAL TARGET MARKETS / CITIES ........................................................... 6

11. PRODUCTION PROCESS FLOW .......................................................................... 6

12. PROJECT COST SUMMARY ................................................................................ 712.1. PROJECT ECONOMICS............................................................................................ 712.2. PROJECT FINANCING.............................................................................................. 712.3. PROJECT COST...................................................................................................... 812.4. SPACE REQUIREMENT............................................................................................ 812.5. MACHINERY AND EQUIPMENT.................................................................................. 812.6. FURNITURE,FIXTURE AND EQUIPMENT.................................................................... 912.7. RAW MATERIAL REQUIREMENTS............................................................................ 1012.8. HUMAN RESOURCE REQUIREMENT........................................................................ 1012.9. REVENUE GENERATION........................................................................................ 1112.10. OTHER COSTS.................................................................................................... 11

13. CONTACT DETAILS OF SUPPLIERS, EXPERTS/CONSULTANTS DEV.INSTITUTIONS ..................................................................................................... 11

14. ANNEXURE ......................................................................................................... 12

14.1. INCOME STATEMENT............................................................................................. 1214.2. BALANCE SHEET.................................................................................................. 1314.3. CASH FLOW STATEMENT....................................................................................... 1414.4. USEFUL PROJECT MANAGEMENT TIPS................................................................... 1514.5. USEFUL LINKS...................................................................................................... 16

15. KEY ASSUMPTIONS ........................................................................................... 17


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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 tocarry 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

SMEDA Services / Information related to PMs Youth Business Loan are FREE OF COST - 2
http://www.smeda.org.pk/http://www.smeda.org.pk/http://www.smeda.org.pk/


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2. PURPOSE OF THE DOCUMENT

The objective of the pre-feasibility study is primarily to facilitate potential

entrepreneurs in project identification for investment. The project pre-feasibility

may form the basis of an important investment decision and in order to serve this

objective, the document / study covers various aspects of project conceptdevelopment, start-up, production, marketing, finance and business

management.

The purpose of this document is to facilitate potential investors in Rose Water

Processing 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 imminence as the research that precedes

such reports reveal certain thumb rules; best practices developed by existing

enterprises by trial and error, and certain industrial norms that become a guidingsource 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 the basis of any investment decision.

3. INTRODUCTION TO SMEDA

The Small and Medium Enterprises Development Authority (SMEDA) was

established in October 1998 with an objective to provide fresh impetus to the

economy through development of Small and Medium Enterprises (SMEs).

With a mission "to assist in employment generation and value addition to the

national income, through development of the SME sector, by helping increase

the number, scale and competitiveness of SMEs", SMEDA has carried out

sectoral research to identify policy, access to finance, business development

services, strategic initiatives and institutional collaboration and networking

initiatives.

Preparation and dissemination of prefeasibility studies in key areas of investment

has been a hallmark of SME facilitation by SMEDA.

Concurrent to the prefeasibility 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 theNational 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

Cultivation of ornamental flowers including rose flower is concentrated around bigcities such as Rawalpindi, Faisalabad, Lahore, Multan, Hyderabad and Karachi.

Accordingly, these cities present an opportunity for establishment of Rose Water

Processing Unit due to easy sourcing of rose petals.

The proposed project is a small sized simple steam distillation unit which would

take approximately 8 hours to complete a production cycle, from rose petal input

to rose water extraction.

The project will be producing rose water packed in pet bottles of 750 ml and 250

ml with a ratio of 60% and 40% respectively. Total installed production capacity

of rose water is 49,500 liters from 4.95 ton rose petals and 99,000 liters of water.

The total project cost for setting up a Rose Water Processing Unit is estimated at

Rs. 0.86 million out of which Rs. 0.63 million is capital cost and Rs. 0.23 million is

working capital. The project is proposed to be financed through 90% debt and

10% equity. The NPV is projected around Rs. 4.67 million, with an IRR of 57%

and a payback period of 2.51 years. The legal business status of this project is

proposed as a Sole Proprietorship.

6. BRIEF DESCRIPTION OF PROJECT & PRODUCT

This project is about processing rose petals to extract water and its packing in

pet bottles of 750 ml and 250 ml.

The processing unit will have a capacity to process 4.95 tons of rose petals,

extracting 49,500 liters of rose water annually. The plant will operate on 70%

capacity in the first year and achieve maximum capacity utilization of 95% in the



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6th year. The business will provide employment opportunity to 05 individuals

directly.

Keeping in view the scope and volume of Prime Ministers Youth Business Loan

scheme, the proposed model for processing of rose water is based on purchase

of rose petal from the market instead of self cultivation / harvest of rose plants.

All the expenditures that are required to be incurred for setting up of rose water

processing unit and purchase of raw material for start-up are included in the

capital cost of the project.

7. CRITICAL FACTORS

Following factors play a critical role in the successful execution of the business

operations and impact profitability:

Entrepreneurs background and technical know-how of the business.

Contract sourcing of good quality rose-petals on reasonable prices. Ensure the quality of the finished product.

Effective marketing and distribution of the product particularly to the

wholesale buyers.

8. INSTALLED & OPERATIONAL CAPACITIES

Following table provides details of installed capacities and capacity utilization for

the first year of operations @ of 70%:

Product Unit Installed Capacity First Year Production

750 ml Packing Bottles 39,600 27,720

250 ml Packing Bottles 79,200 55,440

9. GEOGRAPHICAL POTENTIAL FOR INVESTMENT

The industry of growing flowers and other ornamental crops is mainly

concentrated around big cities like Karachi, Hyderabad, Lahore, Rawalpindi,Islamabad, Multan, Faisalabad, and Quetta along with Pattoki, Sahiwal and

Hyderabad.



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10. POTENTIAL TARGET MARKETS / CITIES

Rose water is used in many medical, cosmetic and culinary products. Large

herbal medicine companies and pharmaceutical businesses are major buyers of

rose water. Additionally, due to traditional consumption of rose water for

household use, there is also a significant consumer market all across Pakistan.

11. PRODUCTION PROCESS FLOW

Raw MaterialSteam

Distillation

Water

Accumulation

Bottling and

Packing

Marketing &

Distribution



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12. PROJECT COST SUMMARY

A detailed financial model has been developed to analyze the commercial

viability of the Rose Water Processing Unit under the Prime Ministers Youth

Business Loan scheme. Various cost and revenue related assumptions along

with results of the analysis are outlined in this section.The projected Income Statement, Cash Flow Statement and Balance Sheet are

attached as appendix.

12.1. Project Economics

All the figures in this financial model have been calculated for a target production

of 49,500 liters, whereby; 34,650 liters of rose water will be produced in year one

at 70% of capacity.

The following table shows internal rate of return, payback period and Net Present

Value.

Table 1: Project Economics

Description Details

Internal Rate of Return (IRR) 57%

Payback Period (yrs) 2.51

Net Present Value (NPV) Rs. 4,665,191

Returns on the business and its profitability are highly dependent on the

efficiency in sourcing of good quality rose petal for extraction of fine rose water.Rose water distribution is also very important in this regard, adequate marketing

with strong distribution network is required for its sale.

12.2. Project Financing

Following table provides details of the equity required and variables related to

bank loan:

Table 2: Project Financing

Description Details

Total Equity (10%) Rs. 86,518

Bank Loan (90 %.) Rs. 778,659

Markup to the Borrower (%age/annum) 8%

Tenure of the Loan (Years) 8

Grace Period (Year) 1



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12.3. Project Cost

Following requirements have been identified for operations of the proposed

business:

Table 3: Capital Investment for the Project

Capital Investment Amount (Rs.)Plant and Machinery 253,000

Furniture & Fixture 50,000

Office Equipment 36,000

Office Vehicle 250,000

Pre-operating Cost 46,743

Total Capital Costs 635,743

Working Capital

Equipment Spare Part Inventory 3,163

Raw Material Inventory 16,239

Upfront Building Rent 84,000

Cash 126,031

Total Working Capital 229,433

Total Project Cost 865,176

12.4. Space Requirement

A total of 700 square feet area is required to start this business. Space for the

processing unit has been calculated on the basis of space required for production

area, management building, and store. However, the units operating in the

industry do not follow any set pattern. Following table shows calculations for

project space requirement.

Table 4: Space Requirement

Space Requirement Sq. ft

Production Hall 400

Store 300

Total Area 700

Rental expense for the space required is assumed at Rs. 28,000 per month.

12.5. Machinery and Equipment

Following table provides list of machinery and equipment required for an average

150 liters / shift of rose water.



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Table 5: List of Machinery and Equipment

DescriptionCapacity

Units/8 HrQuantity Cost

Rs/unitTotalRs.

Plant 150 Liter 1 120,000 120,000

Extraction Pot 150 Liter 1 35,000 35,000

Burner and OtherAccessories

- 1 18,000 18,000

Packing Cone 150 Liter 150 Liter 1 80,000 80,000

Total 253,000

Main equipment for this project is its extraction plant along with its accessories.

This Pre-feasibility study proposes 1 plant, with a capacity to produce 150 liters

of rose water per shift, from 300 liters of water and 15 kg rose petals input.

Extraction plant is locally manufactured and available in the market.

12.6. Furniture, Fixture and Equipment

Following Furniture, Fixture and Office Equipment are proposed to be required to

establish a proper set-up:

Table 6: Furniture and Fixture

Quantity Cost Amount (Rs.)

Furniture set for Office 1 15,000 15,000

UPS (1500 Watts) 1 35,000 35,000

Total 50,000

Table 7: Office Equipment Costs

Quantity Cost Amount (Rs.)

Computer 1 25,000 25,000

Printer 1 10,000 10,000

Telephone and Connection 1 1,000 1,000

Total 36,000

Office vehicle required for the project is as follows:

Table 8: Office Vehicles

Number Cost Amount (Rs.)

3 Wheel Vehicle 1 250,000 250,000

One 3-wheel vehicle with carriage box would be sufficient for distribution of rosewater bottles in the market.



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12.7. Raw Material Requirements

Following table shows raw material cost per bottle.

Table 9: Cost per Bottle

Unit Unit Cost (Rs.) Qty Cost (Rs.)

750 ml BottleRose Petals Kg 45 0.075 3.375

Pet Bottle No. 10.50 1 10.500

Total 13.875

250 ml Bottle

Rose Petals Kg 45 0.025 1.125

Pet Bottle No. 7.30 1 7.300

Total 8.425

Table 10: Cost of Material

Product BottlesCost (Rs.

/ Unit)

First YearProduction @70% capacityexcl. Finished

Goodsinventory

First YearCost (Rs.)

750 ml Packing 39,600 13.875 27,181 377,136

250 ml Packing 79,200 8.425 54,362 458,000

Total 835,136

12.8. Human Resource Requirement

Table 11: Human Resource Requirement

Description No. of Employees Salary perEmployee per

month

Owner / Manager 1 25,000

Helper 2 10,000

Salesman 1 15,000Security Guard 1 10,000

Total 5

The above table provides details of human resource required to run the proposed

unit. Owner / Manager will look after the financial, marketing and distribution



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matters. Salesman will distribute rose water in the market under the supervision

of the owner. Salaries of all employees are estimated to increase at 10%

annually.

12.9. Revenue Generation

Table 12: First Year Revenue

Product BottlesSalesPrice

(Rs./Unit)

First YearProduction @70% capacityexcl. Finished

Goodsinventory

First YearSales

Revenue (Rs)

750 ml Packing 39,600 58 27,181 1,576,498

250 ml Packing 79,200 30 54,362 1,630,860

Total Sales Revenue 3,207,358

12.10. Other Costs

An essential cost to be borne by the unit is the marketing and office vehicle

running expenses, which are 10% and 7.5% of sales respectively.

13. CONTACT DETAILS OF SUPPLIERS,

EXPERTS/CONSULTANTS DEV. INSTITUTIONS

University of Agriculture, Horticulture

Department, Faisalabad

www.uaf.edu.pk

Tel: +92-41-9200161-70

Fax: +92-41-9200764

Hanif & Sons, 384 D, Salamat Pura, GT

Road, Lahore. Telephone: 042-

3654006, Fax: 042-36543084

PAMICO Technologies, P-124, Street No. 2,Shahad Colony, Jhang Road, Faisalabad.Tel: 041-2551911Web:www.pamicotechnologies.com

http://www.pamicotechnologies.com/http://www.pamicotechnologies.com/http://www.pamicotechnologies.com/http://www.pamicotechnologies.com/


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Pre-Feasibility Studies Rose Water Processing Unit (Rs.0.86 Million)

14. ANNEXURE

14.1. Income Statement

Calculations SMED

Income Statement

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year

Revenue 3,207,358 3,850,063 4,517,773 5,280,526 6,150,650 7,141,995 7,864,243 8,650,667 9,515,734 10,467,

Cost of sales

Cost of goods Sold 835,136 1,002,485 1,176,344 1,374,950 1,601,515 1,859,642 2,047,702 2,252,472 2,477,720 2,725,

Operation costs 1 (direct labor) 240,000 264,000 290,400 319,440 351,384 386,522 425,175 467,692 514,461 565,

Operating costs 2 (machinery maintenance) 12,650 13,915 15,307 16,837 18,521 20,373 22,410 24,651 27,116 29,

Operating costs 3 (Electricity, Gas and Water Expense) 319,200 376,200 441,408 515,896 600,867 697,673 767,440 844,184 928,603 1,021,

Total cost of sales 1,406,986 1,656,600 1,923,458 2,227,123 2,572,286 2,964,211 3,262,727 3,589,000 3,947,900 4,342,

Gross Profit 1,800,372 2,193,463 2,594,315 3,053,402 3,578,364 4,177,784 4,601,515 5,061,667 5,567,834 6,124,

General administration & selling expenses

Administration expense 600,000 660,000 726,000 798,600 878,460 966,306 1,062,937 1,169,230 1,286,153 1,414,

Building rental expense 336,000 369,600 406,560 447,216 491,938 541,131 595,244 654,769 720,246 792,

Office Vehicle Running Expenses 240,552 288,755 338,833 396,039 461,299 535,650 589,818 648,800 713,680 785,

Communications expense (phone, fax, mail, internet, etc.) 30,000 33,000 36,300 39,930 43,923 48,315 53,147 58,462 64,308 70,

Legal & Professional Charges - - - - - - - - -

Office expenses (stat ionary, entertai nment, j anit or ial ser vices, etc. ) 18,000 19,800 21,780 23,958 26,354 28,989 31,888 35,077 38,585 42,

Marketing Expenses 320,736 385,006 451,777 528,053 615,065 714,200 786,424 865,067 951,573 1,046,

Depreciation expense 62,500 62,500 62,500 62,500 62,500 64,489 64,489 64,489 64,489 64,

Amortization of pre-operating costs 9,349 9,349 9,349 9,349 9,349 - - - -

Amortization of legal, licensing, and training costs - - - - - - - - -

Bad debt expense 16,037 19,250 22,589 26,403 30,753 35,710 39,321 43,253 47,579 52,

Subtotal 1,633,173 1,847,260 2,075,688 2,332,047 2,619,640 2,934,790 3,223,269 3,539,147 3,886,613 4,268,

Operating Income 167,199 346,203 518,627 721,355 958,724 1,242,994 1,378,246 1,522,520 1,681,221 1,855,

Gain / (loss) on sale of office equipment - - - - 14,400 - - - -

Earnings Before Interest & Taxes 167,199 346,203 518,627 721,355 973,124 1,242,994 1,378,246 1,522,520 1,681,221 1,855,

Interest expense on long term debt (Project Loan) 64,628 59,168 51,991 44,219 35,801 26,685 16,812 6,119 -

Subtotal 64,628 59,168 51,991 44,219 35,801 26,685 16,812 6,119 -

Earnings Before Tax 102,570 287,035 466,636 677,137 937,323 1,216,310 1,361,435 1,516,401 1,681,221 1,855,

Tax - - 6,664 27,714 63,098 104,946 126,715 150,780 183,744 218,

NET PROFIT/(LOSS) AFTER TAX 102,570 287,035 459,972 649,423 874,225 1,111,363 1,234,720 1,365,621 1,497,477 1,637,



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Pre-Feasibility Studies Rose Water Processing Unit (Rs.0.86 Million)

14.2. Balance Sheet

Calculations SMEDA

Balance Sheet

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Current assets

Cash & Bank 126,032 244,052 495,836 907,226 1,496,238 2,296,548 3,315,080 4,444,642 5,690,154 7,200,546 9,223,185

Accounts receivable 26,362 29,003 34,388 40,267 46,977 54,627 61,669 67,869 74,656 82,122

Finished goods inventory 27,901 32,253 37,446 43,355 50,071 57,696 63,442 69,786 76,765 84,441

Equipment spare part inventory 3,163 3,653 4,219 4,873 5,628 6,500 7,508 8,672 10,016 11,568 -

Raw material inventory 16,239 21,442 27,677 35,584 45,593 58,236 70,537 85,350 103,274 124,961 -

Pre-paid building rent 84,000 92,400 101,640 111,804 122,984 135,283 148,811 163,692 180,061 198,068 -

Total Current Assets 229,433 415,809 690,628 1,131,322 1,754,065 2,593,615 3,654,260 4,827,468 6,121,161 7,686,565 9,389,749

Fixed assetsMachinery & equipment 253,000 227,700 202,400 177,100 151,800 126,500 101,200 75,900 50,600 25,300 -

Furniture & fixtures 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 -

Office vehicles 250,000 225,000 200,000 175,000 150,000 125,000 100,000 75,000 50,000 25,000 -

Office equipment 36,000 28,800 21,600 14,400 7,200 45,946 36,757 27,568 18,378 9,189 -

Total Fixed Assets 589,000 526,500 464,000 401,500 339,000 322,446 257,957 193,468 128,978 64,489 -

Intangible assets

Pre-operation costs 46,743 37,395 28,046 18,697 9,349 - - - - - -

Legal, licensing, & training costs - - - - - - - - - - -

Total Intangible Assets 46,743 37,395 28,046 18,697 9,349 - - - - - -

TOTAL ASSETS 865,176 979,704 1,182,674 1,551,519 2,102,414 2,916,061 3,912,217 5,020,935 6,250,139 7,751,054 9,389,749

Current liabilities

Accounts payable 11,957 14,360 16,878 19,767 23,079 26,823 29,646 32,745 36,183 37,744

Total Current Liabilities - 11,957 14,360 16,878 19,767 23,079 26,823 29,646 32,745 36,183 37,744

Other liabilities

Deferred tax - - - - - - - - - -

Long term debt (Project Loan) 778,659 778,659 692,190 598,545 497,128 387,292 268,341 139,517 - - -

Total Long Term Liabilities 778,659 778,659 692,190 598,545 497,128 387,292 268,341 139,517 - - -

Shareholders' equity

Paid-up capital 86,518 86,518 86,518 86,518 86,518 132,464 132,464 132,464 132,464 132,464 132,464

Retained earnings 102,570 389,606 849,578 1,499,001 2,373,226 3,484,589 4,719,309 6,084,930 7,582,407 9,219,541

Total Equity 86,518 189,088 476,123 936,096 1,585,519 2,505,690 3,617,053 4,851,773 6,217,394 7,714,871 9,352,004

TOTAL CAPITAL AND LIABILITIES 865,176 979,704 1,182,674 1,551,519 2,102,414 2,916,061 3,912,217 5,020,935 6,250,139 7,751,054 9,389,749

Liabilities & Shareholders' Equity

Assets



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Pre-Feasibility Study Rose Water Processing Unit (Rs. 0.86 Million)

14.3. Cash Flow Statement

Calculations SMEDA

Cash Flow Statement

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Operating activities

Net profit 102,570 287,035 459,972 649,423 874,225 1,111,363 1,234,720 1,365,621 1,497,477 1,637,134

Add: depreciation expense 62,500 62,500 62,500 62,500 62,500 64,489 64,489 64,489 64,489 64,489

amortization of pre-operating costs 9,349 9,349 9,349 9,349 9,349 - - - - -

amortization of training costs - - - - - - - - - -

Deferred income tax - - - - - - - - - -

Accounts receivable (26,362) (2,641) (5,385) (5,879) (6,710) (7,650) (7,042) (6,200) (6,787) (7,466)

Finished goods inventory (27,901) (4,353) (5,193) (5,909) (6,716) (7,626) (5,745) (6,344) (6,979) (7,676)

Equipment inventory (3,163) (490) (566) (654) (755) (872) (1,008) (1,164) (1,344) (1,552) 11,568

Raw material inventory (16,239) (5,203) (6,235) (7,908) (10,008) (12,643) (12,302) (14,813) (17,924) (21,687) 124,961

Pre-paid building rent (84,000) (8,400) (9,240) (10,164) (11,180) (12,298) (13,528) (14,881) (16,369) (18,006) 198,068

Accounts payable 11,957 2,403 2,518 2,889 3,312 3,744 2,823 3,100 3,438 1,561

Cash provided by operations (103,401) 118,020 338,252 505,036 690,429 910,145 1,137,483 1,258,387 1,385,029 1,510,392 2,022,639

Financing activities

Project Loan - principal repayment - (86,468) (93,645) (101,418) (109,835) (118,951) (128,824) (139,517) - -

Additions to Project Loan 778,659 - - - - - - - - - -

Issuance of shares 86,518 - - - - 45,946 - - - - -

Cash provided by / (used for) financing activities 865,176 - (86,468) (93,645) (101,418) (63,889) (118,951) (128,824) (139,517) - -

Investing activities

Capital expenditure (635,743) - - - - (45,946) - - - - -

Acquisitions

Cash (used for) / provided by investing activities (635,743) - - - - (45,946) - - - - -

NET CASH 126,032 118,020 251,784 411,390 589,012 800,310 1,018,532 1,129,562 1,245,512 1,510,392 2,022,639



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14.4. Useful Project Management Tips

Technology

Required Spare Parts & Consumables: Suppliers credit agreements and

availability as per schedule of maintenance be ensured before start ofoperations.

Energy Requirement:Should not be overestimated or installed in excess and

alternate source of energy for critical operations are arranged in advance.

Machinery Suppl iers: Training and after sales services should be sought

under the contract with the machinery suppliers.

Quality Assurance Equipment & Standards: Products quality standards

need to be defined on the packaging and a system to check them instituted.

This improves credibility.

Marketing

Product Development & Packaging: Expert's help may be engaged for

product/service and packaging design & development.

Ads & P.O.S. Promotion: Business promotion and dissemination through

banners and launch events is highly recommended. Product brochures from

good quality service providers

Sales & Distribution Network: Expert's advice and distribution agreements

are required with the distribution.

Price - Bulk Discounts, Cost plus Introductory Discounts: Price should

never be allowed to compromise quality. Price during introductory phase may

be lower and used as a promotional tool. Product cost estimates should be

carefully documented before price setting. Government controlled prices

should be displayed, where applicable.

Human Resources

Adequacy & Competencies: Recruitment of skilled and experienced staff.

Performance Based Remuneration:Attempt to manage human resource cost

should be focused through performance measurement and performance based

compensation.



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14.5. 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 and 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

University of Agriculture Faisalabad www.uaf.edu.pk

Barani Agriculture Research Institute, Chakwal, www.barichakwal.org

Pakistan Agricultural Research Council (PARC) www.parc.gov.pk

http://www.pmo.gov.pk/http://www.pmo.gov.pk/http://www.pmo.gov.pk/http://www.smeda.org.pk/http://www.smeda.org.pk/http://www.smeda.org.pk/http://www.nbp.com.pk/http://www.nbp.com.pk/http://www.nbp.com.pk/http://www.fwbl.com.pk/http://www.fwbl.com.pk/http://www.fwbl.com.pk/http://www.fwbl.com.pk/http://www.nbp.com.pk/http://www.smeda.org.pk/http://www.pmo.gov.pk/


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15. KEY ASSUMPTIONS

Table 13: Operating Assumptions

Days Operational per Year (Days) 330

Accounts Payable (Days) 5

Accounts Receivable (Days) 3Raw Material Inventory (Days) 7

Finished Goods Inventory (Days) 7

Table 14: Expense Assumptions

Marketing Expenses 10% of Sales

Vehicle Running Expenses 7.5% of Sales

Bad Debt Expenses 0.50% of Sales

Electricity Expenses @70% capacity (Year 1) Rs. 2,100 per month

Gas Expenses @70% capacity (Year 1) Rs. 21,000 per month

Water Expenses @70% capacity (Year 1) Rs. 3,500 per month


rose water (rs. 0.86 million)

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