ups & stabilizer

Power Plus Electronics

Project ReportOn Ups and Stabilizers

Submitted to: Mr.javed Iqbal Sb.Submitted by:

Sohail Ahmad Mohammad Sajjad Mohammad Waqas

06 18

19

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Alif Laam Raa. A book which we have revealed to you (Muhammad) so that You may lead the people from out of the dark nesses into the light by their Lords leave to the path of the All-Might, the Praiseworthy.(Al- Quran)

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DEDICATIONDedicated

To

To Our Parents And Teachers Who Helped And Guided Us Against Any Odds.

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PrefaceProject is a fundamental part of M.Sc (A/F) program because it gives us practical knowledge of what we have learnt during our study period. This report is written to fulfill the requirement of our degree. Research project provides opportunities to have been scrutiny and experience. This report process is valuable in course of learning. This report is also a step of some chance of practical experience form. In this report will be covering all vital information and heir scanning exposures in the form of our observation. In this report we have tried our levels best efforts to cover and elaborate necessary inferences suitable to enhance the knowledge. We hope our efforts of transfer of knowledge through this report will be information gaining for readers.

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AcknowledgementThis work would not have been possible without the support and encouragement of my Teacher, Javid Iqbal under whose supervision. We chose this topic and began the Project. We cannot end without thanking of our all teachers, on whose constant encouragement and love. we have relied throughout our time at the University We are very grateful also to the examples of our other friends, their unflinching courage and conviction will always inspire us, and we hope to continue, in our own small way, the noble mission to which they gave their lives. It is to them that I dedicate this work.

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Executive summationName of the Project:

Ups and Stabilizer assembling unit Location of the project: Ups and stabilizer assembling unit which name is power plus electronics is located in industrial triangle kahutta road in Rawalpindi. Reason for this location is that this place is industrial ZONE most OF suppliers are clustered around it. Raw material is easily available and moreover the market is suitable for this unit. Address Office: Msc A/F 3rd


145 industrial triangle kahutta road Rawalpindi.

Product Ranges: Ups ranges: Stabilizer ranges: 500v, 800, and 1000. 500v, 800, and 1000.

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Installed Capacity of the project:The installed capacity of the project is approximately 35000 ups and stablizer units per year.

Production Capacity for Routine working400 Units 06-working days* Skilled Technicians 16 Diploma Engineers 12 Transformer Technicians 12 Mechanical Technicians 12

Estimated capacity: Msc A/F 3rd


2011: 2012: 2013:

16800units 18500units 20000units

Estimated Cost of the Capital: (RS :)Fixed Cost 61427499.67

Initial Working Capital 8,572,500

Total 70000000 Means of Finance: Msc A/F 3rd


Debt: Equity:

40% 60%

Name of the Lenders:Silk Bank limited Islamabad

SPONSORS.The sponsors of the project are professionally qualified and have valuable and extensive experience of business management regarding. They have got good trading contacts and market reputations in the city. The project faces not problems in terms of marketing its product. The sponsors experience would assist the firm in its smooth and profitable operation. The sponsors are financially sound and capable to contribute their part of the equity in the proposed scheme. The managing

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partner of the firm has vast experience in the managing of this industrial organization.

Name of Sponsors: 1Mohammad Waqas 2 Mohammad Sajjad 3 Mohammad Sohail

Name Of Civil contractors: Bajwa enterprises Islamabad Agah estate Islamabad Islamabad Apco group builders Islamabad

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Name of suppliers Irfan electronics Lahore A ONE industry Gujranwala Dynamic engineering Lahore KB sons electronics store Lahore Elite screener Karachi Modern screener Karachi Modern battery centre Islamabad Icon power system Islamabad Pakistan steel corporation Rawalpindi

IMPLEMENTAION SCHADULEThe project is expected to be implemented within 6 months from the date of the submission of the proposal to the bank. The details of the activities along with time required are given as under: TASK Bank approval Purchase of land July Augu MONTHS 2010 2010

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Construction of building Arrival of machinery at site Installation completed Trial run Commercial operation started

August October October

2010 2010 2010

December 2010 January 2011

Date of Commercial Production:Commercial production will start in January 2011.

Financial ratios;RATIOS - Gross Margin (%) - Operating Margin (%) - Net Margin (%) 2011 23.5% 9.0% 8.6% 2012 39.1% 35.9% 34.1% 2013 48.5% 35.7% 34.0%

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Debt/equity ratio Sponsors stake ratioR A T I O S: Current Ratio Debt as %-age of total captlsn. 0 1.65 30%

IRR Pay back period

Introduction of the company:The name of our company is power plus electronics. Our company is mainly engaged to produce the ups and stabilizer. UPS & stabilizer provide the required backup and control power [voltage] fctuation respectively. The business facility will maintain inventory consisting of accessories like transformers, transfer Msc A/F 3rd


switches, printed circuit board and housing used to assemble UPS & Stabilizer to meet the market requirement and orders effectively. The company will divide the store into two parts: one side will be used to store accessories and the other finished products respectively.

PROJECT BRIIEF

The goal for companies today is to attain and sustain business continuity. Devices like UPS & stabilizer provide the required backup and control power [voltage] fluctuation, respectively. The escalating demand of alternate power devices induce people to think of this successful business venture. Uninterrupted power supply (UPS) & Stabilizer production is a capital intensive business and requires huge investment depending upon the technology and methodology employed for the processing of these power machines. However, UPS & Stabilizer assembling unit generally requires comparatively less investment and can be considered by the Small and Medium scale investors. The proposed project envisages setting up of a UPS & Stabilizer assembling unit and their distribution to the target market. UPS & Stabilizer assembling unit business means setting up a workshop where assembling takes place and an office area for carrying out general administrative and marketing work. The business facility will maintain inventory consisting of accessories like transformers, transfer switches, printed circuit board and housing used to assemble UPS & Stabilizer to meet the market requirement and orders effectively. The company will divide the store into two parts: one side will be used to store accessories and the other finished products respectively.

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OPPORTUNIITY RATIIONALE

Globally, a power crisis is spreading which has compelled the consumers to fulfill their basic electricity need through some alternative sources of power. In Pakistan, public and private power generation units fail to meet the increasing electricity requirements of population. Currently, out of 2,600 mega watts load requirement, 2100 mega watts are provided to the public connected to K.E.S.C network1. Even then there are frequent disruptions of electricity which vary with seasonal demand. Major slump is observed in summer season where sale of alternative power sources like generators and UPS increase substantially, while the existing producers / assemblers are constrained to maintain equilibrium in demand and supply. This clearly indicates the strong demand for UPS and stabilizer products. The major two types of UPS generally used in the Pakistani market are, online and stand by, while relay and servo are the most reliable type amongst stabilizers brands which cater to the needs of the local market. Ideally, the most common and ultimate alternative power source is generator available with different specification and usage criterion, usually used in industries where load is comparatively much higher than households due to light and heavy machines. UPS (stand-by) is the preferred option in the industries like health care where the management cannot afford power break down in their production. UPS is not only gaining popularity in urban areas, but developed suburbs are also tuned towards this new alternative power source. There are many households and offices in Karachi and other parts of the country which use UPS is being increasingly used as an alternate source of electricity. The demand of UPS in Karachi is consistent throughout the year and increases during summer in the urban areas of Pakistan. UPS is the abbreviation of Un-interrupted Power Msc A/F 3rd


Supply and mainly consists of a transformer, printed circuit board, switches and casing/housing whereas stabilizer is a simple support machine used to regulate the voltage. There are many ways to commence a full production unit which needs comparatively much higher fixed investment. The best and the simple way is to purchase parts/accessories, assemble and distribute. This would likely decrease the chance of losses in case of exit and provide a save door to close down the business. In addition, it may help entrepreneur to manage the stock and fulfill the orders in a timely fashion. There are many brands available in the market including local and multinational companies named as Phillips, Digi-tech, Sys-tech and soft-tech in UPS. Universal, Stabimatic and National are the well-known brands in stabilizer. The parameters to gauge UPS efficiency are back-up time, load capacity and sign waves, where as stabilizer performance is based on load capacity and the response time of regulations of voltage. Given the power crises, the demand of UPS is persistent throughout the year which justifies the entrance of a new entrant in this potential market. The acceptability of UPS is much higher than generators in domestic markets because of noise and cumbersome on/off procedure. Besides that, generators manufacturers are also limited in numbers and almost all are Msc A/F 3rd


multinational ventures. These factors strengthen the UPS assembling & distribution units locally in order to cater the local market through indigenous products. As far as UPS and Stabilizer market is concerned, the size vis--vispotential is undoubted showing an enormous increasing trend that aspire the attention people to enter into this business.

MARKET ENTRY TIIMIINGThere is no specific time for the entry in UPS & stabilizer assembling business. But the peak selling time starts from May and continues for another six months. A UPS assembling unit can commence its operations immediately as demand is constant across Pakistan.

The goal for company : Today is to attain and sustain business continuity.COMPANY DESCRIPTION:

This is basically an assembling unit which will purchase parts and accessories from Market vendors, assemble it and sell with their own brand name. Process flow can be Divided into three steps Msc A/F 3rd


Legal Status:The legal status of business tends to play an important role in any setup. The proposed UPS & Stabilizer assembling business is assumed to operate on partnership basis. Ups and stabilizer company is a partnership company. It is formed under the partnership act 1972. It is also registered under the partnership act. It will follow the partnership rules and regulation.

Market analysis:BRIEF DESCRIPTION: In Pakistan, publican private power generation units fail to meet the increasing Requirements of electricity of population. Currently, out of 2,600 mega watts load requirement, only 2100 mega watt are provided to the public connected to K.E.S.C network. Even then there are frequent disruptions of electricity which vary with seasonal demand. Major slump is observed in summer season where sale of alternative power sources like generators and UPS increase substantially, while the existing producers / Msc A/F 3rd


assemblers are constrained to. Present demand of ups and stabilizer: There are frequent disruptions of electricity which vary with seasonal demand. Major slump is observed in summer season where sale of alternative power sources like generators and UPS Increase substantially, while the existing producers / assemblers are constrained to maintain equilibrium in demand and supply. This clearly indicates the strong demand for UPS and stabilizer products.

NEED HAVE TODAY:Machines like generators using petrol/diesel and gas as a fuel were the only alternatives To fulfill the market requirements. Owing to the increasing demand and as a result, a Vacuum on micro level, such as, households, induced companies to introduce other Affordable devices to tap this segment. UPS can be easily transported and installed from one place to other, does not require Fixed under ground lines, meter and there is not any rent charged to it. Its an automatic Charged device which Msc A/F 3rd


Export of ups and stabilizer in last five years:Export of ups and stabilizer and power related items is equal to none in the last five years unfortunately.

Import of power generating items in last three years:VALUE IN '000' DOLLARS JULY-JUNE ITEMS Power Generating Mach. 2005-2006 511,584 JULY-JUNE 2006-2007 740,207JULY-JUNE 2007-2008 1,177,722

52%

Demand and supply gap:

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Demand today of electricity and energy is more than 2600 mega watt. While the supply is less than 2100 mega watt. the present demand of ups and stabilizer is very much. because the supplely of electricity is so much poor in pakistan.

EXFactor y Price

15739. 18370. 65 8

8663.625

9802.3 5

Retail Price

16000

18500

9000

10000

CHANNELS OF DISTRIBUTION:The final product of ups and stabilizer supplied Distribution to will directly wholesaler network of

eliminating role of agencies. product is illustrated below:

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Technical analysis:BRIEF DISCRIPTION OF TECHNICAL ASPECTS:Machinery is available. Most Vendors are local. Raw material is also available. Technology required for ups and stabilizer is cheaper and locally available Msc A/F 3rd


Production detail of Stabilizer (Model F-EAVR) (Total Time with phases)

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RAW MATERIAL:Raw material for ups is following:

Transfarmers Transister Circuit Boxes Heating Plates Others

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Raw material for stabilizer is following

Transfarmers Transister Circuit Boxes Heating Plates Others

List of machinery:The list of machinery which is necessary for making the ups and stabilizer is the following: Cost per unitTechnology Quantity Rs. Local Msc A/F 3rd

Items variac

Total cost

8 20,000 160,000


Electric winding Machine Bench wising Machine power press Ac delta drive Disc Basics plc training kit desoldring station power supply Electric Motors Others

Imported Local imported Imported Imported Imported Local Imported Local Local

5 44,000 220,000 6 2,500 15,000

4 25,000 100,000 2 90,000 180,000 2 45,000 90,000 200,00 1 0 200,000 5 5,000 25,000

4 30,000 120,000 10 20,000 200,000 15 300,000

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ElectricityIt is assumed that the Electricity charges will be on average 60000________70000Rs per month. Rs 40000 have been deposited in wappda which is non refund able.

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Technology involved:Msc A/F 3rd


Latest technology will be used for manufacturing the ups and stabilizer. Most of the technology is locally but the foreign technology is also hired in order to make the quality up to the customers satisfaction.

Personnel analysis:Brief description of personnel: A team of approximately 120 staff members would need to be hired for establishing and Running UPS and Stabilizer assembling and distribution business. the personnel is required both technical and non technical for the ups and stabilizer assembly unit.

REQUIRREMENT OF STAFF:The following staff is required for power plus ups and stabilizer industry. Different staff will perfume the different functions.

Category

Nos

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Technical Manager Production Manager SKILLED TECHNICIANS DIPLOMA ENGINEERS TRANSFORMER TECHNICIANS MECHANICAL TECHNICIANS Chief Executive Financial Controller Purchase Manager Computer Manager Assistants Clerks and Typists Driver and Peons Sweepers

5 5 16 12 12 12 3 5 1 1 5 4 5 2

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COST OF THE PROJECT - Project Land & Its Development - Building & Civil Works -Foreign Machinery - Local Machinery - Engineering /Technical Fees - Erection & Installation - Furniture & Fixture - Vehicles - Mark-up during Construction - Pre-production Expenses - Contingencies TOTAL FIXED COST: - Initial Net Working Capital TOATL COST OF THE PROJECT:

LOCAL 31,525,00 0 20000000

FRGN

1006600 700000 201, 20% 320 50 ,000 111, 500 4500712 2,499, 288 200000 633080 60420899.67 8,572,500 68993399.67 1006600

1006600

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MEANS OF FINANCE:The main means of finance of power plus ups and stabilizer industry are the sponsors and the bank.

REQUIREMENT OF INITIAL WORKING CAPITAL:The requirement of initial working capital is 8572500. this capital will be used for the day to day needs of the business.

Assumptions underlying financial statements:1A 10% increase is being assumed every year 2We are taking 290ys a year Msc A/F 3rd


3Data of 2010as been taken as a base for cost and we are taking 10% increase 4There will be load shedding problem from august and we are starting from 1st July, 2011. 5After 1 year there will be load shedding in the year 2010 6 We are assuming a 10 % increase in wages every year. 7Overheads are .5% of sales 8Erection for improved machinery is 5% and that of local machinery is 3%. 9Prices of the machinery will increase in the future 10It is also assumed that the need of ups and stabilizer will be more in the future. 11Imported machinery will be purchased on loan from silk bank limited 12@17% 13There will be an increase of 3% in interest rate every year. 14We are using straight line method for depreciation. 15Income tax will be charged at 35%. 16The Debt to equity ratio will be 60:40 respectively. 17. Debtors will be recovered within 1 year.

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WORKING DAYS:Power plus industry will carry operations in 290 days in a year. Precisely it means that the company will work in 42 weeks in a year.

ESTIMATED PROFIT AND LOSS A/C:

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power plus ups and stablizer industry.

Power Plus T E D B A L A N C E E S T I M A Electronics

SHEETS I 9,213,805

As on Sept. 30, Constructn. ASSETS power plus ups and stablizer Cash 1,100,000 industry. ESTIMATED INCOME STA Marketable Securities For the year ending Sept. 30, Accounts Receivables 10% of sale Efficiency Assumed : SALES Goods Finished COST OF GOODS SOLD : Inventory - Raw Materials Raw Material Inventory Labour & Spares Stores - Manufacturing Expenses office quipement -Royalty fee Depostis Advances & - Depreciation Total Current Assets Cost of Goods Manufactured Add: Beginningcost Fixed Assets at Inventory Less: Ending Inv. Dprcn. 10% Accumulated Net Fixed Cost of Goods Sold : Assets: Preliminary GROSS Expenses: P R O F I T OPERATING EXPENSES - Admin & General Expenses Total Assets: - Selling Expenses Total Operating Expenses OPERATING PROFIT LIABILITIES & EQUITY OTHER INCOME Current Liabilities NON OPERATING EXPENSES - Accounts Payable 5% of raw material Fiinancial Expenses - Accrued Expenses 2% of sale workers - Workers Partcpn. participation fund 5% Fund workers welfare -Workers Welfare fund 2% Fund amortization of preliminry exp - Dividends Payable Sub-Total - Taxes Payable PRE-TAX PROFIT - Bank Borrowings Provision for Taxes NCur. Mat. of O T Debt PRL FIT - ET Dividen Total Current Liabilities: d Msc A/F 3rd RETAINED EARNINGS Long-term Liabilities Debt: Silk bank Loan

TEMENTS 0 I 0 6,010,200 60% 121,338,000 182,446,110 0 10,309,357 88,452,000 97,297,200 15,000,000 8,845,200 12,667,200 132,000 13,933,920 120,000 0 4,762,223 700,000 1,400,000 16,920,000 1,974,370 35,910,562 111,906,22 103,093,570 61,227,500 61,227,500 0 10,309,357 10,309,357 675,107 11,190,623 0 111,024,96 61,227,500 60,552,393 92,784,213 200,000 150,000 28,553,787 71,421,149 5,987,300 78,347,500 5,443,000 96,612,955 10% 12,133,800 9,195,879 ====== 17,576,800 ====== 5,987,300 10,976,987 65,433,849 750,000 5,040,000 4,032,000 0 2,426,760 0 548,849 548,849 3,271,692 219,540 219,540 1,308,677 50,000 0 548,849 3,271,692 0 10,428,138 62,162,156 8,347,500 12,239,668 10,428,138 62,162,156 0 5,600,000 8,347,500 21,784,817 0 10,428,138 62,162,156 0

0 28,000,000

Power Plus Electronicspower plus ups and stablizer industry. ESTIMATED S For the year ending Sept. 30, SOURCES Operating Profit Add Back: Depreciation Amortiza tion Funds from Operations - Other Income Total Equity - PICIC FCY Silk Bank Loan - Custom Debentures Increase in Current Liab. Increase in Bank Borrowings TOTAL SOURCES Const. Yr. CASH FLOW

I

0 0 0 0 42,000,000 0 28,000,000 0 0 8,347,500 78,347,500 ======

10,976,987 1,974,370 50,000 13,001,357 0 42,000,000 28,000,000 13,437,317 0 96,438,674

65,433,849

66,158,956 42,000,000 28,000,000 16,464,912

152,623,86 ===== ====== =

APPLICATION OF FUNDS Investment in Fixed Assets: -Preliminary Exp Financial Expenses Repayment of : Debt: Silk Bank - Custom Debentures - ST TFCs Workers Partcpn. Fund -Workers Wel. Fund Msc A/F 3rd Dividen d Increase in current Assets: TOTAL

61,227,500 200,000 0 0

61,227,500 50,000 5,040,000 0 5,600,000

61,227,500 4,032,000

5,600,000

0 0 15,820,000 77,247,500

548,849 219,540 0 15,638,980 88,324,869

3,271,692 2,397,814 15,234,189 91,813,195


Financial ratios: The different ratios and their interpretation is following

RATIOS - Gross Margin (%) - Operating Margin (%) - Net Margin (%)

2011 23.5% 9.0% 8.6%

2012 39.1% 35.9% 34.1%

2013 48.5% 35.7% 34.0% 0

0 R A T I O S: 1.65 Current Ratio 30% Debt as %-age of total captlsn.

2.93 13%

3.87

1.65 5% 30%

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Interpretations1Current ratio is continuously increasing it means that current assets of the company are increasing continuously or there is a decrease in the current liabilities. A good company has a good ratio of at least 1.25 The power plus industry has above this standard which shows a good financial position 2Quick ratio is also increasing which means power plus industry has high liquidity 3Debt is also very low hence there is very low risk involved in the business. The company can easily cover the debts. 4The equity ratio shows that company is earning good on its equity however a decrease is very dangerous. 5There is a huge sales being earned on the assets which shows assets are being utilized in a good manner. 6Gross profit is also increasing which show company is easily covering its direct cost 7The net profit margin shows that power plus industry industry has a good growth rate now-a-days hence it will good in the future Msc A/F 3rd


8Sales is also increasing continuously which shows that customers are increasing and capacity of the machine is being utilized in a mechanical manner But a decrease in % age is a dangerous signal it means company is not covering its costs. 9A continuous increase in net income shows that company is easily covering its manufacturing cost as well as operating expenses.

SWOT Analysis

Strengths: Continuous availability & easy access of the raw material, which mainly comprise ups and stabilizer. Availability of skilled and non skilled workers.. Latest technology of manufacturing ups and stabilizer with high working efficiency and trouble free operations. Easy availability of spare parts. Own Research & Development department for new design creations. Ups and stabilizer are the substitute of energy. Ups and stabilizers are light in weight. Msc A/F 3rd


Ups and stabilizer can be move from one place to another places easily. Different ranges are available of ups and stabilizers.

WEAKNESSES: Strict controls over the Labor efficiency need to be observed to reduce the risk the minimum level Heavy investment in the working capital Ups and stabilizer are dependent on electricity. OPPORTUNITIES: The demand for ups and stabilizer remains alive and cant end. Increasing preference for the high quality of UPS AND STABLIZER is increasing time to time.

THREATS: Quality & design of the ups and stabilizer needs to be considered very closely. Msc A/F 3rd


Strict internal control and quality control procedures required. Established competitors in Ups and stabilizer market.. Promotional activities are required for this industry. Need a large amount.

CONCLUTION ANDRECOMMENDATIONS:The project is technically and financially sounds with ample market justification. The sponsors are experienced businessmen and enjoy high credit worthiness. Based on this analysis it may be conducted that the project is financially and economically via ble and suitable proposition for DEMAND\LEASE FINANCING BY THE BANK. The business of the company will flourish in the future because now-a-days ups and stabilizer have the very high demand.

Competitive EnvironmentMsc A/F 3rd


For a newly established firm it is imperative to face a competitive environment in the market as competition enhances a companys ability to strive for continuous improvement. In the field of manufacturing ups and stabilizer new entity will be competing with a number of competitors, some of which are listed below:

Electronics creative in Islamabad Stabic electronics in Islamabad Hamza ups and stabilizer in Bahawalpur

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ups & stabilizer

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