Pre-Feasibility Study

Transcription

1 Pre-Feasibility Study () 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 5 th 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 Cut flower Farm Table of Content 1 Disclaimer Purpose of the document Introduction to SMEDA Introduction to Scheme Executive Summary Brief Description of the project Critical Factors Installed and Operational Capacity Geographic Potential for Investment Potential Target Markets / Cities Process Flow: Project Cost Summary Project Economics Project Financing Project Cost Space Requirement Machinery and Equipment Furniture Raw Material Requirement Human Resource Requirement Revenue Generation Other Costs Contacts - Suppliers, experts/consultants, Dev. Institutions Annexure Income Statement Project Balance Sheet Cash Flow Statement Useful Project Management Tips Useful Links Key Assumptions...16

3 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 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 contact our website: SMEDA Services / Information related to PM s Youth Business Loan are FREE OF COST - 2

4 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 by providing them with a general understanding of the business with the intention of supporting potential investors in crucial investment decisions. The pre-feasibility reports builds upon best practices developed by enterprises through trial and error and industrial norms that provide practical guidance on various aspects of starting and managing a successful business. Apart from carefully studying the whole document one must consider critical aspects provided later on, which form 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 sectorial research to identify policy, access to finance, business development services, strategic initiatives and institutional collaboration and networking initiatives. Preparation and dissemination of pre-feasibility studies in key areas of investment has been a hallmark of SME facilitation by SMEDA. Concurrent to the pre-feasibility 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. 4 INTRODUCTION TO SCHEME Prime Minister s Youth Business Loan program, 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) SMEDA Services / Information related to PM s Youth Business Loan are FREE OF COST - 3

5 beneficiaries, through designated financial institutions, initially through the National 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 is proposed to be located at favorable flower growing areas in Pakistan including Pattoki, Khaniwal, Faisalabad, Dadu, Sukkur, Peshawar, Swat, Quetta, Kalat, Ziarat, Pishin, Khanozai, Killa Saifullah etc. The varieties included are Gladiolus, Mari Gold, Statice and Chrysanthemum. Production Capacity of Gladiolus, Statice, Chrysanthemum and Marigold is 150,000 Kg, having first year production capacity of 60,000 Kg at initial utilization of 40% in year -01. Total Cost Estimate is Rs Million with fixed investment of Rs Million and working capital of Rs Million. Given the cost assumptions IRR and payback are 71% and 2.04 years, respectively. The most critical considerations or factors for success of the project are: One of the major competitive advantages of Balochistan is the tenure of production. In Balochistan, flower plants can be produced for 8 months while in other provinces of Pakistan, such period is for 4 months only. Balochistan s dry and cold climate offers better opportunities for growth of cut flower. Quetta, Mastung, Kalat, Pishin, Killa Saifullah and Ziarat are some of the areas recommended for starting such a farm in Balochistan. 6 BRIEF DESCRIPTION OF THE PROJECT Following have been addressed as per pre-feasibility study for a five acre farm: Location: The is proposed to be located at favourable flower growing areas in Pakistan and particularly in Balochistan including District Quetta, Kalat, Ziarat, Pishin / Khanozai, Killa Saifullah and any other temperate area. Product: The farm would produce cut flowers to fulfil the local demand of cut flower varieties including Gladiolus, Mari Gold, Statice and Chrysanthemum. SMEDA Services / Information related to PM s Youth Business Loan are FREE OF COST - 4

6 Target Market: The target market for the is local. Major buyers of cut flower are in larger cities such as Karachi, Peshawar, Lahore and Islamabad and domestic market is Quetta, whereas, other potential areas of Balochistan can also be targeted based upon demand. Employment Generation: The proposed project will provide direct employment to 06 people. Financial analysis shows the unit shall be profitable from the very first year of operation. 7 CRITICAL FACTORS Establishment of the farms in areas where basic infrastructure including water and electricity are available. Farming should be done on scientific grounds, taking care of input requirements and pest management techniques. Well-trained / experienced staff will add to the efficiency of the farm. Producer should be aware of ever-changing fashion in terms of flower color and varieties. Special attention towards healthy and certified seeds / bulbs, land preparation, sowing pattern, water management, fertilizer application and marketing is required. 8 INSTALLED AND OPERATIONAL CAPACITY Total farm area is assumed to be five (05) Acres. Cultivation of Gladiolus, Statice, Chrysanthemum and Marigold will be distributed on the farm area respectively. Table 1: Production at 40% Capacity Production Capacity (Units) 150,000 Initial capacity utilization 40% Production per year 60,000 Production lost to Petals 12,000 Production quantity sold (Flowers) 48,000 Production quantity sold (Petals) 30 The proposed project is for farming of Gladiolus, Statice, Chrysanthemum and Marigold varieties and will generate revenues from sale of these varieties. Additional revenues will be generated from the sale of Gladiolus Corms which will start from the third year. SMEDA Services / Information related to PM s Youth Business Loan are FREE OF COST - 5

7 Product Gladiolus, Statice, Chrysanthemum and Mari Gold Table 2: Product Mix Production Capacity Per Sales Price (Rs.) 100 % 150,000 kg 20 35/kg 9 GEOGRAPHIC POTENTIAL FOR INVESTMENT Pakistan is a country conducive to small scale farming where floriculture provides an opportunity for enhancing income from available land resources. Floriculture is an upcoming opportunity in the country since it requires less water and provides more per acre income than traditional crops. It can play a major role in the economy. It can become an important sector such as Horticulture, Livestock & Fisheries. Favorable growing areas particularly including Pattoki, Khaniwal, Faisalabad, Dadu, Sukkur, Peshawar, Swat, Quetta, Kalat, Ziarat, Pishin, Khanozai, Killa Saifullah etc. One of the major competitive advantages of Balochistan is the tenure of production. In Balochistan, flower plants can be in produced for 8 months while in other provinces of Pakistan, such period is for 4 months only. 10 POTENTIAL TARGET MARKETS / CITIES Major buyers of cut flowers are in large cities such as Karachi, Peshawar, Lahore, and Islamabad. Main local target market is Quetta, whereas, other potential areas of Balochistan can also be targeted based on demand. 11 PROCESS FLOW: The Flower process will be as under: Land Leveling Sowing Watering Early Stage Plants Visual Inspection Plucking Packing & Distribution 12 PROJECT COST SUMMARY A detailed financial model has been developed to analyze the commercial viability of - Gladiolus, Mari Gold, Statice and Chrysanthemum under the SMEDA Services / Information related to PM s Youth Business Loan are FREE OF COST - 6

8 Prime Minister s Youth Business Loan. 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 Project Economics The total project investment is Rs Million which includes Capital Cost of Rs Million and Working Capital of Rs Million. All the figures in this financial model have been calculated for a total farm area assumed to be Five (05) Acres. Cultivation of the cut flowers is expected to yield 150,000 Gladiolus, Statice, Chrysanthemum and Marigold over a distributed area of 05 Acres, respectively. Yield covered by of Gladiolus, Statice, Chrysanthemum and Marigold in year one will be 60,000 at initial capacity of 40%. The following table shows internal rates of return and payback period. Table 3 - Project Economics Description Details Internal Rate of Return (IRR) 71% Payback Period (Yrs) 2.04 Net Present Value NPV (Rs.) 4,196,607 Since floriculture sector in Pakistan is not highly developed there are great variations in the production and consumption cycle of cut flowers. The production cycle is especially dependent upon the natural environment and weather. Similarly, the consumption cycle is influenced by marriages, religious (URS) and political occasions. Due to these reasons it is difficult to forecast the actual requirement for cut flowers. Similarly, due to the perishable nature of the product, appropriate infrastructure and transportation also plays an important role in marketing and profitability of cut flowers. Focus on healthy and certified seeds/ bulbs, land preparation, sowing pattern, water management, fertilizer application, hiring of skilled personal, pest management, ever-changing fashion in terms of flower color and varieties, along with marketing is required to avoid project losses. SMEDA Services / Information related to PM s Youth Business Loan are FREE OF COST - 7

9 12.2 Project Financing Following table provides details of the equity required and variables related to bank loan: Total Equity (10%) Bank Loan (90%) Table 4: Project Financing Description Details Rs.187,911 Rs.1,691,195 Annual Markup to the Borrower 8% Tenure of the Loan (Years) 8 Grace Period (Years) Project Cost Following requirements have been identified for operations of the proposed business. Table 5: Capital Investment for the Project Capital Investment Rs. Land On lease Machinery & equipment 20,000 Land tillage and saplings 1,063,000 Furniture & fixtures 20,000 Pre-operating costs 430,514 Total Capital Costs 1,533,514 Working Capital Rs. Raw material inventory 20,592 Upfront land lease rent 125,000 Cash 200,000 Total Working Capital 345,592 Total Investment 1,879, Space Requirement Total required land for this project is five (05) acres, most of which will be used for farming. Land would be leased for the project, however, investors with own land can generate more income from the project. SMEDA Services / Information related to PM s Youth Business Loan are FREE OF COST - 8

10 12.5 Machinery and Equipment Following table provides a list of equipment required for planting, managing and harvesting the farm Furniture Table 7: List of Machinery & Equipment Items Total Cost Rs Shovels, pickaxes, Cutters, Cart 20,000 & Misc tools etc Total 20,000 Since this is a field oriented project, therefore, no office equipment will be required. However, there is a provision for purchase of rudimentary furniture Raw Material Requirement Table 8: Furniture Cost Description Total Cost (Rs.) Furniture 20,000 Total 20,000 Cost is determined for different cut flower varieties by adding their seed / bulb cost with labour, pesticides, fertilizer etc. Table 9: Cost of Material Material Cost (Rs.) Unit Total Annual Cost (Rs.) Pesticide Sprays 20, ,000 Fertilizers 25, ,000 Water 25, ,000 Weeding 25, ,000 Total 475, Human Resource Requirement Table 10: Human Resource Requirement Description No. of Employees Salary/month Supervisor / Marketing 1 20,000 Officer Farm Worker (Mali) Full Time 5 50,000 SMEDA Services / Information related to PM s Youth Business Loan are FREE OF COST - 9

11 Total Staff 6 70,000 Supervisor / Marketing Officer will be responsible for overseeing on-farm activities and marketing / sales of the cut flower. Semi-skilled workers are required to look after the plants, watering, fertilizer application, de-weeding, insecticide use, planting and harvesting at the farm Revenue Generation Table 11: Revenue Assumptions Product Unit Sales Price (Rs./Unit) First Year Sales Revenue (Rs) Gladiolus, Statice, 48, ,680,000 Chrysanthemum and Marigold Petals (Kg.) Total Sales Revenue 1,680,600 Price range for cut flower is Rs per kg. Sales growth rate is assumed to increase at 10% per annum. Increase in cost of goods sold is assumed to be 12%, as it is anticipated that some of the bulbs will be available for re-use within two years. Initial capacity of project is assumed at 40% of total available capacity and growth in capacity utilization is projected at 25% per annum Other Costs Table 12: Misc Expenses Operating Expense / annum (Rs.) Administration Expense / annum 240,000 Land lease/rental expense / annum 125,000 Travelling expense 50,418 Communication expense 24,000 Depreciation expense 110,300 Amortization expense 43,051 Subtotal 592,769 SMEDA Services / Information related to PM s Youth Business Loan are FREE OF COST - 10

12 13 CONTACTS - SUPPLIERS, EXPERTS/CONSULTANTS, DEV. INSTITUTIONS Mr. Fahim Ahmed Malghani Horticulturist/Cold Chain Specialist Vegetable Botanist Agriculture Research Institute Agriculture & Cooperatives Department, Government of Balochistan Quetta Cell: SMEDA Services / Information related to PM s Youth Business Loan are FREE OF COST - 11

13 14 ANNEXURE 14.1 Income Statement Statement Summaries Income Statement SMEDA Rs. in actuals Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Revenue 1,680,600 3,004,073 3,812,861 4,194,147 4,613,562 5,074,918 5,582,410 6,140,651 6,754,716 7,430,188 Cost of goods sold 763,100 1,083,040 1,167,016 1,256,248 1,355,101 1,464,702 1,586,311 1,721,337 1,871,357 2,038,137 Gross Profit 917,500 1,921,033 2,645,845 2,937,900 3,258,461 3,610,216 3,996,099 4,419,314 4,883,359 5,392,051 General administration & selling expenses Administration expense 240, , , , , , , , , ,822 Rental expense 125, , , , , , , , , ,743 Utilities expense Travelling & Comm. expense (phone, fax, etc.) 74, , , , , , , , , ,588 Office vehicles running expense Office expenses (stationary, etc.) Promotional expense Insurance expense Professional fees (legal, audit, etc.) Depreciation expense 110, , , , , , , , , ,300 Amortization expense 43,051 43,051 43,051 43,051 43,051 43,051 43,051 43,051 43,051 43,051 Property tax expense Miscellaneous expense Subtotal 592, , , , , , , , , ,505 Operating Income 324,731 1,270,779 1,952,192 2,212,190 2,497,928 2,811,826 3,156,523 3,534,901 3,950,099 4,405,546 Other income Gain / (loss) on sale of assets Earnings Before Interest & Taxes 324,731 1,270,779 1,952,192 2,212,190 2,497,928 2,811,826 3,156,523 3,534,901 3,950,099 4,405,546 Interest expense 140, , ,921 96,040 77,757 57,957 36,514 13, Earnings Before Tax 184,362 1,142,270 1,839,271 2,116,150 2,420,171 2,753,869 3,120,010 3,521,610 3,950,099 4,405,546 Tax 11, , , , , , , , , ,332 NET PROFIT/(LOSS) AFTER TAX 173, ,430 1,585,881 1,821,228 2,079,646 2,363,289 2,674,508 3,015,869 3,380,085 3,767,214 Balance brought forward 173,035 1,166,465 2,752,346 4,573,574 6,653,220 9,016,509 11,691,017 14,706,886 18,086,971 Total profit available for appropriation 173,035 1,166,465 2,752,346 4,573,574 6,653,220 9,016,509 11,691,017 14,706,886 18,086,971 21,854,185 Dividend Balance carried forward 173,035 1,166,465 2,752,346 4,573,574 6,653,220 9,016,509 11,691,017 14,706,886 18,086,971 21,854,185 SMEDA Services / Information related to PM s Youth Business Loan are FREE OF COST - 11

14 14.2 Project Balance Sheet Statement Summaries Balance Sheet SMEDA Rs. in actuals 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 200, ,929 1,544,354 3,256,238 5,224,427 7,469,604 10,015,072 12,889,647 16,124,686 20,070,823 25,093,541 Accounts receivable - 23,022 32,087 46,691 54,843 60,327 66,359 72,995 80,295 88,324 97,157 Finished goods inventory Equipment spare part inventory Raw material inventory 20,592 50,769 62,926 77,525 95, , , , , ,087 - Pre-paid annual land lease 125, , , , , , , , , ,743 - Pre-paid building rent Pre-paid lease interest Pre-paid insurance Total Current Assets 345, ,219 1,790,618 3,546,830 5,557,793 7,848,915 10,447,846 13,384,834 16,692,968 20,724,978 25,190,698 Fixed assets Land Building/Infrastructure Saplings & Land Tillage 1,063, , , , , , , , , ,300 - Machinary & Equipment 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 - Furniture & fixtures 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 - Office vehicles Office equipment Total Fixed Assets 1,103, , , , , , , , , ,300 - Intangible assets Pre-operation costs 430, , , , , , , ,154 86,103 43,051 0 Legal, licensing, & training costs Total Intangible Assets 430, , , , , , , ,154 86,103 43,051 0 TOTAL ASSETS 1,879,106 2,072,382 3,017,429 4,620,290 6,477,902 8,615,672 11,061,251 13,844,888 16,999,670 20,878,329 25,190,698 Liabilities & Shareholders' Equity Current liabilities Accounts payable - 12,241 25,347 28,832 32,649 37,007 41,989 47,695 54,240 61,762 56,696 Export re-finance facility Short term debt Other liabilities Total Current Liabilities - 12,241 25,347 28,832 32,649 37,007 41,989 47,695 54,240 61,762 56,696 Other liabilities Lease payable Deferred tax - 8, , , , ,361 1,232,024 1,615,245 2,050,633 2,541,686 3,091,907 Long term debt 1,691,195 1,691,195 1,503,392 1,300,001 1,079, , , , Total Long Term Liabilities 1,691,195 1,699,195 1,637,707 1,651,201 1,683,768 1,737,535 1,814,843 1,918,266 2,050,633 2,541,686 3,091,907 Shareholders' equity Paid-up capital 187, , , , , , , , , , ,911 Retained earnings - 173,035 1,166,465 2,752,346 4,573,574 6,653,220 9,016,509 11,691,017 14,706,886 18,086,971 21,854,185 Total Equity 187, ,946 1,354,376 2,940,257 4,761,485 6,841,131 9,204,419 11,878,928 14,894,796 18,274,881 22,042,095 TOTAL CAPITAL AND LIABILITI 1,879,106 2,072,382 3,017,429 4,620,290 6,477,902 8,615,672 11,061,251 13,844,888 16,999,670 20,878,329 25,190, SMEDA Services / Information related to PM s Youth Business Loan are FREE OF COST - 12

15 14.3 Cash Flow Statement Statement Summaries Cash Flow Statement SMEDA Rs. in actuals 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 - 173, ,430 1,585,881 1,821,228 2,079,646 2,363,289 2,674,508 3,015,869 3,380,085 3,767,214 Add: depreciation expense - 110, , , , , , , , , ,300 amortization expense - 43,051 43,051 43,051 43,051 43,051 43,051 43,051 43,051 43,051 43,051 Deferred income tax - 8, , , , , , , , , ,221 Accounts receivable - (23,022) (9,065) (14,605) (8,151) (5,484) (6,033) (6,636) (7,300) (8,029) (8,832) Finished good inventory Equipment inventory Raw material inventory (20,592) (30,177) (12,158) (14,599) (17,986) (22,159) (27,299) (33,633) (41,436) (51,049) 271,087 Pre-paid building rent Pre-paid lease interest Advance insurance premium Accounts payable - 12,241 13,105 3,486 3,817 4,358 4,982 5,706 6,545 7,522 (5,066) Other liabilities Cash provided by operations (20,592) 293,429 1,264,979 1,930,400 2,205,098 2,502,034 2,823,953 3,176,518 3,562,419 3,972,932 4,727,975 Financing activities Change in long term debt 1,691,195 - (187,803) (203,391) (220,272) (238,555) (258,355) (279,798) (303,021) - - Change in short term debt Change in export re-finance facility Add: land lease expense - 125, , , , , , , , , ,743 Land lease payment (125,000) (137,500) (151,250) (166,375) (183,013) (201,314) (221,445) (243,590) (267,949) (294,743) - Lease principal repayment Issuance of shares 187, Purchase of (treasury) shares Cash provided by / (used for) financ 1,754,106 (12,500) (201,553) (218,516) (236,910) (256,856) (278,486) (301,943) (327,380) (26,795) 294,743 Investing activities Capital expenditure (1,533,514) Acquisitions Cash (used for) / provided by invest (1,533,514) NET CASH 200, ,929 1,063,426 1,711,884 1,968,189 2,245,178 2,545,467 2,874,575 3,235,039 3,946,137 5,022,718 Cash balance brought forward 200, ,929 1,544,354 3,256,238 5,224,427 7,469,604 10,015,072 12,889,647 16,124,686 20,070,823 Cash available for appropriation 200, ,929 1,544,354 3,256,238 5,224,427 7,469,604 10,015,072 12,889,647 16,124,686 20,070,823 25,093,541 Dividend Cash carried forward 200, ,929 1,544,354 3,256,238 5,224,427 7,469,604 10,015,072 12,889,647 16,124,686 20,070,823 25,093,541 SMEDA Services / Information related to PM s Youth Business Loan are FREE OF COST - 13

16 14.4 Useful Project Management Tips Technology Quality Assurance Equipment & Standards: Products quality standards/check need to be defined. Marketing Product Development & Packaging: Experts may be engaged for product / service and packaging design & development. Ads & Point of Sale Promotion: Business promotion and dissemination through banners and launch events is highly recommended. Product brochures from good quality service providers can be developed. Sales & Distribution Network: Expert's advice and distribution agreements are required. Price - Bulk Discounts, Cost plus Introductory Discounts: During the introductory phase price may be lower and used as a promotional tool. Product cost estimates should be carefully documented before price setting. Government controlled prices shall be displayed, where applicable. Human Resources List of Human Resource (As per Section 12.8) Adequacy & Competencies: Recruitment of skilled and experienced staff should be considered an investment. Performance Based Remuneration: Performance based remuneration should be offered to incentivize workers. Training & Skill Development: Training and skill development of employees and exposure to best practices should be undertaken. Least cost options for Training and Skill Development (T&D) may be linked with compensation benefits and awards Useful Links Prime Minister s Office Small & Medium Enterprises Development Authority (SMEDA) National Bank of Pakistan (NBP) SMEDA Services / Information related to PM s Youth Business Loan are FREE OF COST - 14

17 First Women Bank Limited (FWBL) Government of Pakistan Ministry of Industries & Production Government of Punjab Government of Sindh Government of Khyber Pakhtunkhwa Government of Balochistan Government of Gilgit Baltistan Government of Azad Jammu & Kashmir Trade Development Authority of Pakistan (TDAP) Securities & Exchange Commission of Pakistan (SECP) Federation of Pakistan Chambers of Commerce and Industry (FPCCI) State Bank of Pakistan (SBP) SMEDA Services / Information related to PM s Youth Business Loan are FREE OF COST - 15

18 15 KEY ASSUMPTIONS Production Related Assumptions Production Capacity (Units) 150,000 Initial capacity utilization 40% Production per year 60,000 Production lost to Patel 20%) 12,000 Production quantity sold (Flowers) 48,000 Production quantity sold (Flowers in kgs. for petals) 30 Revenue Assumption Production Capacity 50, ,000 Sale price per Flower in year 1 Rs. 35 Sale price per Kg. petals Rs. 20 Sale price growth rate 10% Production capacity utilization - Year 1 40% Production capacity utilization growth rate 25% Maximum capacity utilization 75% Financial Assumptions Description 90 % Equity 10 % Debt 90% Debt Tenure (Years) 8 Interest Rate / annum 8% Grace Period (Years) 1 Depreciation Rates Furniture 10 % Machinery and Equipment 10 % Cash Flow Assumptions Accounts Receivables Cycle (days) 5 Accounts Payable Cycle (days) 15 Cash in Hand Rs. 200,000 Economy Related assumptions SMEDA Services / Information related to PM s Youth Business Loan are FREE OF COST - 16

19 Inflation rate 10 % Electricity growth rate 10 % Water price growth rate 2 % Wage growth rate 2 % SMEDA Services / Information related to PM s Youth Business Loan are FREE OF COST - 17