Pre-Feasibility Study

Transcription

1 (Marble Mosaic Development Center) Small and Medium Enterprises Development Authority Ministry of Industries & Production Government of Pakistan HEAD OFFICE 4th Floor, Building No. 3, Aiwan-e-Iqbal Complex, Egerton Road, Lahore Tel: (92 42) , Fax: (92 42) REGIONAL OFFICE Punjab 3 rd Floor, Building No. 3, Aiwan-e-Iqbal Complex, Egerton Road Lahore, Tel: (042) Fax: (042) helpdesk.punjab@smeda.org.pk REGIONAL OFFICE Sindh 5TH Floor, Bahria Complex II, M.T. Khan Road, Karachi. Tel: (021) Fax: (021) helpdesk-khi@smeda.org.pk REGIONAL OFFICE Khyber Pakhtunkhwa Ground Floor State Life Building The Mall, Peshawar. Tel: (091) Fax: (091) helpdesk-pew@smeda.org.pk REGIONAL OFFICE Balochistan Bungalow No. 15-A Chaman Housing Scheme Airport Road, Quetta. Tel: (081) , Fax: (081) helpdesk-qta@smeda.org.pk Note: All SMEDA Services / information related to PM's Youth Business Loan are Free of Cost December, 2013

2 Table of Contents 1. DISCLAIMER PURPOSE OF THE DOCUMENT INTRODUCTION TO SMEDA INTRODUCTION TO SCHEME EXECUTIVE SUMMARY BRIEF DESCRIPTION OF PROJECT AND PRODUCT CRITICAL FACTORS INSTALLED AND OPERATIONAL CAPACITY GEOGRAPHICAL POTENTIAL FOR INVESTMENT POTENTIAL TARGET MARKETS PRODUCTION PROCESS FLOW PROJECT COST SUMMARY ) PROJECT ECONOMICS ) PROJECT FINANCING ) PROJECT COST ) SPACE REQUIREMENT ) MACHINERY AND EQUIPMENT ) OFFICE EQUIPMENT ) RAW MATERIAL REQUIREMENTS ) HUMAN RESOURCE REQUIREMENT ) REVENUE GENERATION ) OTHER COSTS CONTACT DETAILS OF EXPERTS / CONSULTANTS ANNEXURES ) INCOME STATEMENT (WITH10 YEARS PROJECTIONS) ) CASH FLOW STATEMENT (WITH 10 YEARS PROJECTIONS) ) BALANCE SHEET (WITH10 YEARS PROJECTIONS) ) USEFUL PROJECT MANAGEMENT TIPS ) USEFUL LINKS KEY ASSUMPTIONS... 16

3 Marble Mosaic Development Center 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 exercised 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 to carry 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 visit our website: SMEDA Services / Information related to PM s Youth Business Loan are FREE OF COST - 2

4 Marble Mosaic Development Center 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 concept development, start-up, production, marketing, finance and business management. The purpose of this document is to facilitate potential investors in Marble Mosaic Development Centerbusiness 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 & error and certain industrial norms that become a guiding source regarding various aspects of business set-up and it s successful management. Apart from carefully studying the whole document, one must consider critical aspects provided later on, which form basis of any investment decisions. 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 the 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. SMEDA Services / Information related to PM s Youth Business Loan are FREE OF COST - 3

5 Marble Mosaic Development Center 4. INTRODUCTION TO SCHEME Prime Minister s Youth Business Loan scheme, for young entrepreneurs, with an allocated budget of Rs. 5.0 Billion for the year , is designed to provide subsidised financing at 8% mark-up per annum for one hundred thousand (100,000) beneficiaries, through designated financial institutions, initially bythenational Bank of Pakistan (NBP) and thefirst Women Bank Ltd. (FWBL). Youth business loans from Rs. 0.1 million to 2.0 million with a tenure upto 8 years, inclusive of 01 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 Marble Mosaic Development Centeris proposed to be located at or near the marble processing clusters and in areas where basic infrastructure is available for easy transportation of raw material and finished goods. The products include Field Tiles, Split Face Tiles and Artisan Mosaic etc. The proposed project will have installed capacity of 23,088 sq. ft/ year on the basis of a daily shift of 8 hours, whereas,the operational capacity will be 19,856 sq. ft/year. The total Project Cost is Rs million, including the Capital Cost of 0.18 millionand the Working Capital of 1.99 million. Given the cost assumptions, IRR and payback are 82% and 1 year respectively. 6. BRIEF DESCRIPTION OF PROJECT AND PRODUCT Technology: This proposed unit will require split face machine for stone splitting and hand tools like tile nippersto producemarble Mosaic, Field Tiles and Split Face Tiles. Location: The centerwill be located at or near marble processing clusters at Gujranwala, Lahore, Lasbela, Multan,Karachi, Peshawar, Rawalpindi, Rawat, Risalpur, Quettaor in areas where basic infrastructure is available for easy transportation of raw material and finished goods. Product: Initially, the center will process Field Tiles, Split Face Tiles, Artisan Mosaics (Borders, Medallions, Carpets and Rugs, Frames, and Kitchen Backsplash. Target Market: All major cities across Pakistan. Employment Generation: The proposed project will provide direct employment to 04 persons. Profitability:Financial Analysis shows that the center will be profitable from the very first year of the operation. SMEDA Services / Information related to PM s Youth Business Loan are FREE OF COST - 4

6 Marble Mosaic Development Center 7. CRITICAL FACTORS The following factors should be considered thoroughly: Efficient and cost effective procurement system of raw material. Market knowledge and trends about the international and domestic market. Availability, training, and retention of skilled labour. Availability of electricity, water supplyand proximity to variety of supply sources and markets. Know-how about mesh mounted products. Effective marketing campaign. 8. INSTALLED AND OPERATIONAL CAPACITY Installed capacity of the project will be 23,088 sq. ft/ year on the basis of daily shift of 8 hours, whereas the production capacity of year 01will be19,856 sq. ft./year. 9. GEOGRAPHICAL POTENTIAL FOR INVESTMENT The Marble and Granite industry of Pakistan has a total estimated reserve of around 160 million tons.the marble and onyx mines of Pakistan are mainly located in Balochistan (Chaghi, Lasbela, Loralai, Mastong, and Naal),Khyber Pakhtunkhwah /FATA (Bunair, Mardan, Mohamand and Swat), Chitral, and Sindh (Dadu, Johi range). The major marble processing clusters are concentrated in Gujranwala, Islamabad,Rawalpindi, Karachi, Lasbela, Lahore, Peshawar, Swat, Buner, NowsheraandRisalpur. As the production is dependent upon the easy availability of marble and onyx, therefore, the project should be established in or aroundmarble and onyx mines. Resources like skilled labour, utilities, infrastructure and transportationare also easily available in these cities. 10. POTENTIAL TARGET MARKETS Marble mosaic products are famous worldwide for their application in construction industry as well as for decorative purposes. Promising export markets for onyx mosaic are Central Asian Republics, United States of America, and Australia. Domestic market also carries a great untapped potential for marble mosaicwith a target market comprising architects, builders, corporate customers, domestic consumers and exporters of Faisalabad, Gujranwala, Hyderabad, Islamabad/Rawalpindi, Karachi, Kohat, Lahore, Lasbela, Nowshehra, Peshawar, Sargodha, Sialkot, and Quetta. SMEDA Services / Information related to PM s Youth Business Loan are FREE OF COST - 5

7 Marble Mosaic Development Center 11. PRODUCTION PROCESS FLOW Tesserae Procurement Tesserae Sorting Colors Dimensions Tesserae Storage Split Face Quality Inspection Drying Pasting on Mesh in Grids Tesserae Splitting Packing Filed Tiles Quality Inspection Drying Pasting on Mesh in Grids Checking in Grids Artisan Products Quality Inspection Drying Pasting on Mesh as per Designs Cutting and Shaping as per Design Designs The Tesserae will be a combination of various colors and types of stones cut into different finishes and dimensions. The project will utilize four main types of finishes as per requirement i.e., tumbled, polished, unpolished, and split. Though the dimensions of Tesserae are demanded as per product design, but the recommended dimensions for this project are limited to the following: Tesserae of 1 length x 1 width x 1 cm thickness for Field Tiles. Tesserae of 1 length x 1 width x 1 cm thickness split into two for Split Face Tiles. For Artisan Mosaic, the common dimension of 1cm Length x 1 cm Width x 1cm thickness, however, dimension of 1.5cm, and 2cm are also used as per design requirement. SMEDA Services / Information related to PM s Youth Business Loan are FREE OF COST - 6

8 Marble Mosaic Development Center 12. PROJECT COST SUMMARY A detailed financial model has been developed to analyze the commercial viability of the Marble Mosaic Development Center.Various costs and revenue related assumptions along with results of the analysis are outlined in this section. 12.1) Project Economics All the figures in this financial model have been calculated for installed capacity of 23,088 sq. ft/ year with initial capacity utilizationat 19,856 sq.ft in year 0, reaching 20,779 sq. ft from the second year of operation. The following table shows internal rates of return and payback period. Table 1: Project Economics Description Details Internal Rate of Return (IRR) 82% Payback Period (yrs) 1 Net Present Value (NPV) Rs.32,576, ) 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. 216,852 Bank Loan (90 %.) Rs. 1,951,664 Markup to the Borrower (%age/annum) 8% Tenure of the Loan (Years) 8 Grace period (year) ) Project Cost Following requirements have been identified for operations of the proposed business. Table 3: Project Cost Project Cost Amount (Rs.) Furniture & fixtures 30,000 Office equipment / Machinery & Equipment 152,500 Total Capital Cost 182,500 Initial Working Capital 1,986,016 Total Project Cost 2,168,516 SMEDA Services / Information related to PM s Youth Business Loan are FREE OF COST - 7

9 Marble Mosaic Development Center 12.4) Space Requirement Following table shows total rental space requirement for the project on the basis of Rs 15/sq. ft. Table 4: Space Requirement Space Requirement (in ft.) Sq. ft Management building 100 Production Area 450 Store 150 Grounds 300 Total 1,000 Total investment in building and infrastructure rent is calculated to be approximately Rs.180,000 per annum, which is reflected in the working capital. 12.5) Machinery and Equipment Following table provides list of machinery and equipment Table 5: List of Machinery and Equipment Description Quantity Cost Total Rs/unit Rs. Split Face Machine(Local) , ,000 Tile Nippers (Imported) 02 10,000 20,000 Grids 05 2,500 12,500 Total ,500 Split face machine will be operated manually for splitting the Tesserae into required sizes. Tile nippers are required to shape the Tesseraes as per the basic designs for Artesian Mosaic, whereas the Field Tiles will be pasted into the grades for 05 basic shapes. 12.6) Office Equipment The only office equipment required is a basic specifications computer to study and review different designs of mosaic. Table 6: Office Equipment Cost Quantity Cost Amount (Rs.) Computers 01 10,000 10,000 Total 10,000 SMEDA Services / Information related to PM s Youth Business Loan are FREE OF COST - 8

10 Marble Mosaic Development Center 12.7) Raw Material Requirements Following table shows raw material requirements: Table 7: Cost of Raw Material Description Unit Rate Qty Rs./Month Tesserae Sq. Ft 287 1, ,985 Glue Sq Ft ,655 23,998 Mesh Sq Ft ,655 23,998 Others 1,761 Total Cost of Material Per Month 524,742 Table 8: Unit Cost of Goods Sold Description Unit Rate (Rs) Artisan Mosaic sq. ft Split Face sq. ft. 320 Field Tiles sq. ft. 310 Average Cost per Unit sq. ft ) Human Resource Requirement Table 9: Human Resource Requirement Description No. of Employees Skilled Labor 04 44,000 Salary per month (Rs.) The abovetable provides details of human resource required to run such a project on the basis of 312 days of operation per annum.salaries of all employees are estimated to increase at 10% annually. 12.9) Revenue Generation Table 10: Revenue Generation Product Unit Sales Price First Year First Year Sales (Rs./Unit)* Production Revenue (Rs) Artisan Mosaic Sq. Ft 2,000 2,780 5,560,000 Split Face Sq. Ft 500 8,538 4,269,000 Field Tiles Sq. Ft 350 8,538 1,684,800 Total Sales Revenue 19,948 12,817,300 Note: Figures are rounded off to the nearest decimal place SMEDA Services / Information related to PM s Youth Business Loan are FREE OF COST - 9

11 Marble Mosaic Development Center 12.10) Other Costs Table 11: Utilities Product Rs./Month Electricity 15,000 Water 6,000 Communication 3,000 Total Cost 24, CONTACT DETAILS OF EXPERTS / CONSULTANTS Majoka Traders Business: Blades for Marble Machinery, Air Compressors, and Generator Contact Person: Mr. Waseem Chiragh Contact Detail: House No. 31, Asad Park, Phase II, Ahmed Block, Chuk No. 50, Shumali, Sargodha, Punjab. Cell No: Sohb Marble Mosaic Training Centre For Women Business: Marble Mosaic, Tesserae, and Trainings on Mosaic Contact Person: Mr. Abdul Nasir Contact Detail: Street No. 5, Akram Colony, Hub, Lasbela, Balochistan. Cell No: Mr. Mehtab Afridi Dimension Stone Center PCSIR Labs University Road, Peshawar N-Traders Business: Marble Machinery, and Marble Stone Supply Contact Person: Mr. Ilyas Contact Detail: Plot No , Sector B, Street No. 2, Marble City Gadani, Lasbela, Balochistan. Cell No Mr. Toufique Ahmad Pakistan Stone Development Company, Islamabad Islamabad Chamber of Commerce & Industry Building, Islamabad SMEDA Services / Information related to PM s Youth Business Loan are FREE OF COST - 10

12 Marble Mosaic Manufacturing Facility 14. ANNEXURES Income Statement (With10 Years Projections) YEAR- 1 YEAR- 2 YEAR- 3 YEAR- 4 YEAR- 5 YEAR- 6 YEAR- 7 YEAR- 8 YEAR- 9 YEAR- 10 SALES Artisan Mosaic 5,559,590 6,115,549 6,727,104 7,399,815 8,139,796 8,953,776 9,849,154 10,834,069 11,917,476 13,109,223 Split Face 4,268,971 4,695,868 5,165,455 5,682,001 6,250,201 6,875,221 7,562,743 8,319,017 9,150,919 10,066,011 Field Tiles 2,988,280 3,287,108 3,615,819 3,977,400 4,375,141 4,812,655 5,293,920 5,823,312 6,405,643 7,046,208 Total Sales 12,816,841 14,098,526 15,508,378 17,059,216 18,765,138 20,641,651 22,705,816 24,976,398 27,474,038 30,221,442 COST OF SALES Artisan Mosaic 918, , ,938 1,032,656 1,073,962 1,116,921 1,161,597 1,208,061 1,256,384 1,306,639 Split Face 2,732,142 2,841,427 2,955,084 3,073,288 3,196,219 3,324,068 3,457,031 3,595,312 3,739,124 3,888,689 Field Tiles 2,646,762 2,752,633 2,862,738 2,977,247 3,096,337 3,220,191 3,348,998 3,482,958 3,622,277 3,767,168 Total Cost of Goods Sold 6,296,931 6,548,808 6,810,761 7,083,191 7,366,519 7,661,179 7,967,627 8,286,332 8,617,785 8,962,496 OPERATING EXPENSES Electricity Expense 180, , , , , , , , , ,431 Payroll Expenses 528, , , , , , , , , ,010 Deprecition Expense 9,125 8,669 8,235 7,824 7,432 7,061 6,708 6,372 6,054 5,751 Machine Maintenance Expense 3,650 3,468 3,294 3,129 2,973 2,824 2,683 2,549 2,421 2,300 Rent Expense 50,000 52,500 55,125 57,881 60,775 63,814 67,005 70,355 73,873 77,566 Communication Charges 36,000 37,800 39,690 41,675 43,758 45,946 48,243 50,656 53,188 55,848 Water Charges 72,000 75,600 79,380 83,349 87,516 91,892 96, , , ,696 Amortization of Preliminary Expenses 4,500 4, Total Operating Expenses 883, , , , ,998 1,029,435 1,068,013 1,110,020 1,155,768 1,205,602 EARNINGS BEFORE INTEREST & TAXES 5,636,635 6,641,180 7,766,091 9,014,584 10,404,621 11,951,037 13,670,176 15,580,046 17,700,485 20,053,344 FINANCIAL EXPENSES Financial Charges on Long term loan 156, , , ,158 91,381 71,101 49,200 25, Total Financial Expenses 156, , , ,158 91,381 71,101 49,200 25, Profit Before Tax 5,480,502 6,497,537 7,638,547 8,904,426 10,313,240 11,879,936 13,620,976 15,554,500 17,700,485 20,053,344 Tax 1,166,651 1,496,638 1,895,991 2,339,049 2,832,134 3,380,477 3,989,842 4,666,575 5,417,670 6,241,170 PROFIT AFTER TAX 4,313,852 5,000,899 5,742,555 6,565,377 7,481,106 8,499,458 9,631,135 10,887,925 12,282,815 13,812,173 Retained Earnings at the beginning of year 0 4,313,852 7,157,825 10,399,931 14,094,030 18,292,448 23,051,353 28,432,758 34,505,116 41,343,969 Dividend 2,156,926 2,500,450 2,871,278 3,282,688 3,740,553 4,249,729 4,815,567 5,443,963 6,141,408 Retained Earnings at the end of year 4,313,852 7,157,825 10,399,931 14,094,030 18,292,448 23,051,353 28,432,758 34,505,116 41,343,969 49,014,735 SMEDA Services / Information related to PM s Youth Business Loan are FREE OF COST - 11

13 Marble Mosaic Manufacturing Facility 14.2) Cash Flow Statement (With 10 Years Projections) 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 0 5,480,502 6,497,537 7,638,547 8,904,426 10,313,240 11,879,936 13,620,976 15,554,500 17,700,485 20,053,344 Add: Depreciation 0 9,125 8,669 8,235 7,824 7,432 7,061 6,708 6,372 6,054 5,751 Amortization (Pre-operational Expenses) -9,000 4,500 4, Net profit before working capital changes -9,000 5,494,127 6,510,706 7,646,782 8,912,250 10,320,673 11,886,996 13,627,684 15,560,873 17,706,539 20,059,095 Working Capital changes -1,590, ,797-24,842-25,835-26,869-27,944-29,061-30,224-31,433-32,690-33,998 Raw materials stock -1,590, ,797-24,842-25,835-26,869-27,944-29,061-30,224-31,433-32,690-33,998 W.I.P 0-20, ,004-1,044-1,086-1,130 Finished goods stock 0-141,277-5,651-5,877-6,112-6,357-6,611-6,875-7,150-7,436-7,734 Accounts payable 0 524,744 20,990 21,829 22,703 23,611 24,555 25,537 26,559 27,621 28,726 Accounts receivable 0-1,068, , , , , , , , , ,950 Working capital changes -1,590, , , , , , , , , , ,085 Cash provided by/ used in operations -1,599,840 4,583,036 4,896,933 5,622,561 6,432,793 7,334,760 8,338,060 9,453,263 10,692,014 12,067,141 13,574,839 FINANCING ACTIVITIES Long term loan 1,951, , , , , , , , , Owner equity 216,852 Dividend paid 0-2,156,926-2,500,450-2,871,278-3,282,688-3,740,553-4,249,729-4,815,567-5,443,963-6,141,408 Cash provided by/ used in Financing activities 2,168, ,133-2,358,155-2,717,777-3,105,992-3,536,180-4,014,324-4,545,401-5,134,893-5,443,963-6,141,408 INVESTING ACTIVITIES Capital Expenditure -182, Cash provided by/ used in Investing activities -182, Net Cash Flow 386,176 4,426,902 2,538,777 2,904,784 3,326,801 3,798,581 4,323,736 4,907,861 5,557,120 6,623,178 7,433,431 Cash balance B/ F 0 386,176 4,813,078 7,351,856 10,256,640 13,583,441 17,382,021 21,705,758 26,613,619 32,170,739 38,793,918 Cash balance C/ F 386,176 4,813,078 7,351,856 10,256,640 13,583,441 17,382,021 21,705,758 26,613,619 32,170,739 38,793,918 46,227,349 SMEDA Services / Information related to PM s Youth Business Loan are FREE OF COST - 12

14 Marble Mosaic Manufacturing Facility 14.3) Balance Sheet (With10 Years Projections) YEAR-0 YEAR - 1 YEAR - 2 YEAR - 3 YEAR - 4 YEAR - 5 YEAR - 6 YEAR - 7 YEAR - 8 YEAR - 9 YEAR - 10 ASSETS Current Assets Cash & Bank Balance 215,176 4,978,212 7,779,413 10,656,487 14,002,065 17,820,925 22,166,563 27,098,078 32,179,739 38,802,917 46,236,349 Raw materials stock 1,581, , , , , , , , , , ,937 W.I.P - 20,635 21,461 22,319 23,212 24,140 25,106 26,110 27,155 28,241 29,370 Finished goods stock - 141, , , , , , , , , ,082 Receivables - 1,068,070 1,174,877 1,292,365 1,421,601 1,563,761 1,720,138 1,892,151 2,081,367 2,289,503 2,518,453 Total Current Assets 1,797,016 6,829,237 9,768,563 12,795,696 16,304,385 20,300,633 24,839,285 29,980,918 35,291,421 42,163,949 49,869,191 Fixed Assets At Cost less: Acc. Depreciation 182, , , , , , , , , , ,269 Intangible Assets Up Front Building Rent 180,000 Pre-operational Expenses Worth 9,000 4, TOTAL ASSETS 2,168,516 7,007,112 9,933,270 12,952,167 16,453,032 20,441,848 24,973,440 30,108,364 35,412,496 42,278,969 49,978,461 LIABILITIES AND EQUITY Current Liabilities Current maturity of long term loan 217, , , , , , Accounts Payable - 524, , , , , , , , , ,875 Total Current Liabilities - 524, , , , , , , , , ,875 Non Current Liabilities Long Term Loan 1,951,664 1,951,664 1,795,531 1,533,107 1,298,393 1,044, , , EQUITY Paid up Capital 216, , , , , , , , , , ,852 Retained Earnings - 4,313,852 7,157,825 10,399,931 14,094,030 18,292,448 23,051,353 28,432,758 34,505,116 41,343,969 49,014,735 Total Equity 216,852 4,530,703 7,374,677 10,616,782 14,310,882 18,509,299 23,268,204 28,649,610 34,721,968 41,560,821 49,231,586 TOTAL LIABILITIES & EQUITY 2,168,516 7,007,112 9,933,270 12,952,167 16,453,032 20,441,848 24,973,440 30,108,364 35,412,496 42,278,969 49,978,461 SMEDA Services / Information related to PM s Youth Business Loan are FREE OF COST - 13

15 Marble Mosaic Manufacturing Facility 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 of operations. Energy Requirement: Should not be overestimated or installed in excess and alternate source of energy for critical operations be arranged in advance. Machinery Suppliers: Training and after sales services to be sought under the contract with the machinery suppliers. Quality Assurance Equipment & Standards:Whatever means required 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 Sales & Distribution Network:Strong contacts with the civil works contractors focusing upon house constructions for middle class people and owners of retail shops. Price - Bulk Discounts, Cost plus Introductory Discounts:Price during introductory phase may be lower and used as promotional tool. Product cost estimates should be carefully documented before price setting. Government controlled prices shall be displayed. 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. Training & Skill Development:Encouraging training and skill of self & employees through experts and exposure to best practices is a route to success. Least cost options for Training and Skill Development (T&SD) may be linked with compensation benefits and awards. SMEDA Services / Information related to PM s Youth Business Loan are FREE OF COST - 14

16 Marble Mosaic Manufacturing Facility 14.5) Useful Links Prime Minister s Office, Government of Pakistan, Ministry of Industries & Production, Small & Medium Enterprises Development Authority (SMEDA), State Bank of Pakistan (SBP), National Bank of Pakistan (NBP), First Women Bank Limited (FWBL), Pakistan Institute of Fashion Design (PIFD), Government of Punjab, Government of Sindh, Government of KhyberPakhtunkhwa, Government of Balochistan, Government of Gilgit Baltistan, Government of Azad Jamu Kashmir, Trade Development Authority of Pakistan (TDAP), Securities & ExchangeCommission of Pakistan (SECP), Federation of Pakistan Chambers of Commerce and Industry (FPCCI), SMEDA Services / Information related to PM s Youth Business Loan are FREE OF COST - 15

17 Marble Mosaic Manufacturing Facility 15. KEY ASSUMPTIONS PRODUCTION ASSUMPTIONS Maximum Capacity Utilization 100% Maximum Capacity Utilization (Year-1) 86% At 100% capacity, the following will be the per day production break-up; Artisan Mosaic 14.00% Split Face 43.00% Field Tiles 43.00% Total production per day 100% 74 Artisan Mosaic 14.00% 3,232 Split Face 43.00% 9,928 Field Tiles 43.00% 9,928 Total production per year 23,088 OPERATING ASSUMPTIONS Annual Production Capacity(Artisan Mosaic) year 1 2,780 Annual Production Capacity (Split Face) year 1 8,538 Annual Production Capacity (Field Tiles) year 1 8,538 Total Production Capacity (Year 1) 19,856 Growth Rate in Production (3%) OR (times) 1.03 Hours operational per day 8 Days operational per month 26 Days operational per year 312 ECONOMY RELATED ASSUMPTIONS Electricity growth rate (10%) 10% Pay roll growth (10%) 10% CASH FLOW ASSUMPTIONS Accounts receivable cycle (in days) 30 Accounts payable cycle (in days) 30 WIP (Days) 1 Finished Goods (Days) 7 SMEDA Services / Information related to PM s Youth Business Loan are FREE OF COST - 16

18 Marble Mosaic Manufacturing Facility Raw Materials Inventory (Days) 30 Cash on Hand 215,176 REVENUE ASSUMPTION Sales price per unit in year 1 Artisan Mosaic 2,000 Split Face 500 Field Tiles 350 Sale price growth rate (10%) OR (times) 1.1 EXPENSES ASSUMPTIONS Electricity Expenses Per/Year(RS) (15,000/Mont 180,000 h) Water Charges 72,000 Communication Charges 36,000 Machine maintenance Cost /year (% of total machinery cost) 2% Growth in maintenance cost 3 %) OR (times) 1.03 Pre-paid land rent (12 months) 180,000 Tasserae Glue Mesh Others 5 Raw material cost growth rate 5% Rent growth rate 5% Communication Charges Growth Rate 5% Communication Charges Growth Rate 5% SMEDA Services / Information related to PM s Youth Business Loan are FREE OF COST - 17

19 Marble Mosaic Manufacturing Facility COST OF GOODS SOLD ASSUMPTIONS COGS Year 1 Artisan Mosaic 14% Split Face 43% 320 Field Tiles 43% 310 COGS Growth Rate (4%) OR (times) 1.04 FINANCIAL ASSUMPTIONS Project Life (Years) 10 Debt 90% Equity 10% Interest rate on long term loan 8% Debt tenure (years) 8 Grace period (year) 1 Debt payments per year 1 SMEDA Services / Information related to PM s Youth Business Loan are FREE OF COST - 18