roof tiles manufacturing unit - light weight (rs. 2.15 million).pdf

Pre-Feasibility Study (Roof Tiles Manufacturing Unit – Light Weight)

Small and Medium Enterprises Development Authority

Ministry of Industries & Production Government 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 Punjab

REGIONAL OFFICE Sindh

REGIONAL OFFICE Khyber Pakhtunkhwa

REGIONAL OFFICE Balochistan

3rd Floor, Building No. 3, Aiwan-e-Iqbal Complex,

Egerton Road Lahore, Tel: (042) 111-111-456 Fax: (042) 36304926-7

[email protected]

5th Floor, Bahria Complex II, M.T. Khan Road,

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

[email protected]

Ground Floor State Life Building

The Mall, Peshawar. Tel: (091) 111-111-456

Fax: (091) 5286908 [email protected]

Bungalow No. 15-A Chaman Housing Scheme

Airport Road, Quetta. Tel: (081) 2831623, 2831702

Fax: (081) 2831922 [email protected]

Note: All SMEDA Services / information related to PM's Youth Business Loan are Free of Cost December, 2013

mailto:[email protected]

mailto:[email protected]

Light Weight Roof Tiles

Table of Contents 1 DISCLAIMER .......................................................................................... 2

2 PURPOSE OF THE DOCUMENT ....................................................... 3

3 INTRODUCTION TO SMEDA .............................................................. 3

4 INTRODUCTION TO SCHEME ........................................................... 3

5 EXECUTIVE SUMMARY ...................................................................... 4

6 BRIEF DESCRIPTION OF THE PROJECT ...................................... 4

7 CRITICAL FACTORS ............................................................................ 5

8 INSTALLED AND OPERATIONAL CAPACITY............................... 5

9 GEOGRAPHIC POTENTIAL FOR INVESTMENT ........................... 5

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

11 PRODUCTION PROCESS FLOW ...................................................... 7

12 PROJECT COST SUMMARY .............................................................. 8

12.1 Project Economics ............................................................................................... 9 12.2 Project Financing ................................................................................................. 9 12.3 Project Cost ........................................................................................................ 10 12.4 Space Requirement ........................................................................................... 10 12.5 Machinery and Equipment ................................................................................ 11 12.6 Office Equipment................................................................................................ 12 12.7 Raw Material Requirements ............................................................................. 12 12.8 Human Resource Requirement ....................................................................... 13 12.9 Revenue Generation ......................................................................................... 13 12.10 Other Costs ......................................................................................................... 13

13 Contact Details of Suppliers, Experts and Government institutions .......................................................................................................14

14 ANNEXURE ..........................................................................................15

14.1 Income Statement .............................................................................................. 15 14.2 Projected Balance Sheet .................................................................................. 16 14.3 Cash Flow Statement ........................................................................................ 17 14.4 Useful Project Management Tips .................................................................... 18 14.5 Useful Links ........................................................................................................ 18

15 KEY ASSUMPTIONS ..........................................................................20


1 DISCLAIMER This information memorandum is to introduce the subject matter and provide a general idea and information on the said 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 contact our website: www.smeda.org.pk

SMEDA Services / Information related to PM’s Youth Business Loan are FREE OF COST - 2

http://www.smeda.org.pk/


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 Roof Tiles Manufacturing Unit (Light Weight) 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 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 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, 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.

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 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 National Bank of Pakistan (NBP) and First Women Bank Ltd. (FWBL).

Loans from Rs.0.1 million to Rs.2.0 million with tenure upto 8 years inclusive of grace period of 1 year 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 Light Weight Roof Tiles Manufacturing Unit is proposed to be located in adjoining areas and major towns of any of the major cities of Balochistan.

Roof tiles used in Balochistan are generally available in the size 12”x12” (one Sft.) However, on demand, roof tiles of different specifications can also be manufactured.

Installed capacity of the proposed unit is 288,000 tiles and its initial utilization will be 230,400 tiles at 80% in year 1.

Total Cost Estimates is Rs. 2.15 Million with fixed investment Rs. 1.69 Million and working capital Rs. 0.46 Million.

Given the cost assumptions, internal rate of return (IRR) and payback are 33% and 3.97 years respectively.

6 BRIEF DESCRIPTION OF THE PROJECT Key parameters pertaining to the proposed project are briefly described as under:

• Technology: Traditional moulds (known as “firma” by the local industry) and simple masonry equipment would be required to produce light weight roof tiles for the use of construction industry.

• Location: The unit would be located in urban and rural areas of Pakistan, where access of buyers is easy and all raw materials are easy available.

• Product: The unit would produce light weight roof tiles to fulfil the local housing construction demand of tiles of different sizes and strengths depending upon the individual requirements of the customer.

• Target Market: Main target market for the proposed project is the local industry. However customers from neighbouring country Afghanistan can also be targeted since reconstruction of the country is in progress.

• Employment Generation: The proposed unit will provide direct employment to 04 people. Financial analysis shows the unit shall be profitable from the very first year of operation.



7 CRITICAL FACTORS • Establishment of the unit in areas where basic facilities including water and

electricity are available. • Material procurement skills. • Training of staff to increase efficiency. • Effective distribution networks.

8 INSTALLED AND OPERATIONAL CAPACITY The financial statements for this project are based on the production of 900 tiles/ day. However, the project can be initiated with the production of 300 tiles / day in smaller towns and other areas where the demand is comparatively lower. Initial production capacity of unit is assumed to be 80% which will increase @ 10% annually and attain maximum capacity of 95 %.

Table 1: Production Capacity

Average Daily

Production / person

No. of Labou

r

Total Daily Productio

n

Annual Productio

n (320 days/Yr)

@ 100% capacity

Capacity Utilization in Year-

1 80%

Finished Tiles

Inventory

Tiles availabl

e for Sale

(Year-1)*

300 3 900 288,000 230,400 9,600 220,800

9 GEOGRAPHIC POTENTIAL FOR INVESTMENT Construction activities and its output is an integral part of a country’s economy and industrial development. The construction industry is often seen as a driver of economic growth especially in developing countries. This industry can mobilize and effectively utilize local human and material resources in the development and maintenance of housing and infrastructure to promote local employment and improve economic efficiency.

There are different types of roof options including reinforced concrete structure, clay bricks, metal roof etc. Due to the soaring construction costs, low cost roof options are in high demand in most of the rural and urban areas of the country. The tiles are used in a large number of construction projects including non-traditional / traditional housing, community centres, warehouses and factories etc. It is also suitable for schools and other public buildings especially in the rural areas.

Demand for such type mainly exists for housing projects in towns and smaller cities. Additionally, in larger cities the low cost roofs are used in suburban housing schemes, warehouses and factories. The production unit can be established in cities



and towns where access to basic raw materials including cement, sand and water is easily available, like Lahore, Faisalabad, Gujranwala, Rawalpindi, Karachi, Hyderabad, Sukkur, Peshawar, Charsaddah, Quetta, Sibbi, Naseerabad, Pashin, Zhob etc.

10 POTENTIAL TARGET MARKETS / CITIES Market for the light weight roof tiles exists in all major cities where construction activities are advancing day by day. Besides the housing sector, tiles can be marketed to corporate customers for construction of warehouses, factories, schools and hospitals etc. District Quetta, Mastung, Kalat, Sibi, Pishin, Killa Saifullah, Ziarat and other cities and towns of the country including Lahore, Karachi, Multan, Faisalabad, Peshawar, Rawalpindi etc. are the potential localities. The tiles can also be sold to customers from Afghanistan where construction industry is in boom.



11 PRODUCTION PROCESS FLOW Major raw materials used in the manufacturing of roof tiles include cement, sand and gravel mixture which is reinforced with steel wires.

Steps required for the manufacturing of these tiles comprise of mixing, moulding, de-moulding & curing, storage and distribution. Production flow diagram is given below:

Following steps describe the process flow for the production of light weight roof tiles in detail:

Step 1: Ordering & Stockpiling of Raw Materials • Raw materials required for the production of light weight roof tiles include

sand, cement, iron wires and crushed gravel and are ordered and stored as per the production requirement.

• It is recommended to store raw materials for at least one week’s production requirements for efficient running of project and orders fulfillment on time.

Molding (1 Day)

Ordering & Stockpiling of Raw Materials

Mixing (1 Day)

De-molding and Curing (2 -10 Days)

Storage / Sale & Distribution



Step 2: Mixing • Cement aggregates while mixing in the foremost step. Sand is pre-washed to

remove dirt contaminants. When the aggregate are mixed thoroughly, water is added to the mixture.

• In the local roof tile industry, mixing is performed manually, however, for higher production requirements aggregate mixer machine may also be used when producing large quantity of tiles.

Step 3: Moulding • The mold is lubricated with a thin layer of used motor oil and kerosene

mixture. It prevents sticking and allows the tile to be easily removed from the mold after setting. The lubrication is applied by using a paint brush.

• After lubrication the mold is half filled with aggregate mixture. At this point metal wires are placed on the aggregate in a crisscross manner. Six to twelve wires are used depending upon the requirement of the customer. The diameter of wire also varies. After adding the wires the mold is completely filled with the cement aggregate.

• When the moulds are full, the concrete is compacted and the upper surface is made smooth by using masonry tools.

• The size and design of the mold determines the size and design of the finished tile.

Step 4: De-moulding, Setting & Curing • The mold containing the wet concrete tile is moved to the setting area.

Initially, small amount of water is applied to keep the tiles wet. After about one day the tiles are removed from the mold and moved to a water tank where they are kept immersed in water for further two days.

• After being removed from the water tank the tiles are kept in ambient temperature for another seven days to become firm.

Step 5: Storage and distribution • The tiles do not require specific storage requirements; they are normally

stored in open air. The tiles are inspected for defects before shipment.

12 PROJECT COST SUMMARY A detailed financial model has been developed to analyze the commercial viability of “Roof Tiles Manufacturing Unit (Light Weight)”. Various cost and revenue related assumptions along with results of the analysis are outlined in this section.

The projected Income Statement, Balance Sheet and Cash Flow Statement are attached as Appendices.



12.1 Project Economics The total project investment is Rs. 2.15 Million which includes Capital Cost of Rs. 1.69 Million and Working Capital of Rs. 0.46 Million. The project is assumed to be financed through 10% equity and 90% debt basis.

All the figures in this financial model have been calculated for an estimated area of around 10,000 Sqft. The manufacturing unit is expected to produce 900 tiles / day.

Whereby production covered by proposed unit at 100% capacity in year one will be 288,000 tiles.

The following table shows internal rate of return and payback period.

Table 3 - Project Economics

Description Details Internal Rate of Return (IRR) 33% Payback Period (yrs) 3.97 Net Present Value (NPV) Rs.2,599,480

Major portion of the cost of tile is attributed to the quantity of cement and number / diameter of reinforcement wire used in a single tile. There are variations in quantity of cement and the number of reinforcement wires used, additionally; the diameter of reinforcement wire is also reduced by some manufactures. This results in great variation in the production cost of a single tile. Therefore, it is difficult to compete solely on the basis of price in this sector. The entrepreneur can, however, attain competitive edge in this industry by standardizing the production process. Higher strengths can be produced with the addition of supplementary cement and using good quality of reinforcement wires.

Price is normally determined by the amount of cement used and the number of reinforcement wires used in the tile. Owing to the nature of supply and demand, short-term price fluctuations may also occur.

12.2 Project Financing Following table provides details of the equity required and variables related to bank loan:



Table 4: Project Financing Description Details

Total Equity (10%) Rs.215,059 Bank Loan (90%) Rs.1,935,527 Markup to the Borrower (%age/annum) 8% Tenure of the Loan (Years) 08 Grace period (Year) 01

12.3 Project Cost Following requirements have been identified for operations of the proposed business:

Table 5: Capital Investment for the Project Capital Investment Rs. Building/Infrastructure 843,400 Machinery & equipment 750,000 Furniture & fixtures 25,000 Office equipment 20,000 Pre-operating costs 51,681 Total Capital Costs 1,690,081 Working Capital Rs. Upfront Land lease 100,000 Equipment spare part inventory 13,800 Raw material inventory 96,704 Cash 250,000 Total Working Capital 460,504 Total Investment 2,150,585

12.4 Space Requirement Considering the various facilities required including production, storage of raw materials and finished tiles, total land requirement for the project is estimated at 10,000 Sft. The finished product and raw materials (with the exception of cement) does not require covered area, therefore, they can be stored in open air. However, a storage room for cement is required and a small office should also be constructed at the production facility. A detail of covered area required for different facilities is given below:



Table 6: Building Requirement Description Area

(Sft) Unit Cost

(Rs.) Total Cost

(Rs.) Office 224 1,300 291,200 Store 224 1300 291,200 Production Shed 360 600 216,000 Water Tank - - 45,000 Total 808 843,400

Total cost for construction of building and infrastructure is worked out to be approximately Rs. 0.84 million.

12.5 Machinery and Equipment Major cost of the equipment is attributed to the moulds (known as “firma” by the local industry), in addition to the moulds the project requires very simple masonry equipment. (Cement mixer is only feasible to be used if the production capacity is in excess of 1,000 tiles / day).

Following table provides a list of equipment required for the establishment of a Light Weight Roof Tiles Manufacturing Unit:

Table 7: List of Equipment Items Total Cost

(Rs.) 1 Tile Moulds (450 moulds)* 720,000 2 Misc. Equipment (Shovels, Wheel barrow,

Brushes and other masonry tools) 30,000

Total 750,000 * One mold produces 2 tiles

The unit does not require high tech equipments or machinery. The moulds can be made of wood or metal, for this project it is proposed that metallic moulds are used since they are much more durable and long lasting as compared to wooden moulds. One mould consists of two tiles placed side by side. Other miscellaneous equipments include items such as shovels, wheel barrow, brushes and other masonry tools.



12.6 Office Equipment These costs are based on the assumption that a setup will be required to monitor the unit and manage the production of roof tiles. The office is also proposed to be located at site.

Table 8: Office Equipment Costs Furniture / Office

equipment Cost per unit Total Cost

(Rs.) 1 Furniture Lump sum 25,000 2 Office Equipment Lump sum 20,000

Total 45,000

12.7 Raw Material Requirements The raw material required for making roof tiles includes cement, sand, crushed stone, stone powder, iron wire and water. Cost of goods sold for cement tiles is determined for by adding cement, sand, gravel, sand powder, iron wires, water and direct labour costs. This cost varies owing to the different ratios of raw materials used by different manufacturers. For this project an average cost of goods sold is assumed to be Rs. 13.14 per tile. The growth in inventory cost is assumed to increase at 8% per annum. Raw Material inventory will be maintained for 12 days.

Table 9: Cost of Material

Description Unit Required to produce 115

tiles

Unit Cost (Rs.)

Cost (Rs.)

Cost / Tile

(12”x12”) (Rs.)

Cement (1 bag) 1 510 510 4.43 Sand (1-1.5 bag) 4.05 40 162 1.41 Gravel (zero size-0.5 bag) 1.5 40 60 0.52

Crush powder (khaka-1.5 bag) 4.5 50 225 1.96

Iron wire 4.6 65 299 2.60

Used Motor Oil (1-1.5 liters) 1.5 80 120 1.04 Water 135 1 135 1.17

Cost per Unit 13.14



12.8 Human Resource Requirement Roof tiles manufacturing is a simple process hence unskilled workers with proper training / instructions can easily start the production. The personnel needed for the project are as under:

Table 10: Human Resource Requirement

Description No. of Employees Salary per month (Rs.)

Labor (Semi/Unskilled) 3 30,000 Security Guard 1 10,000 Total Staff 4 40,000

The above table provides details of human resource required to run the proposed manufacturing unit. Semi / unskilled workers are required to make the roof tiles. The owner will be responsible to oversee the raw material, finished goods and take orders and manage the marketing / sales of the roof tiles.

12.9 Revenue Generation Sales price ranges from Rs. 16 to Rs. 20 per tile depending upon the quality of tile. Sale price for this project has been calculated as Rs. 18 per tile. The sales price growth rate is assumed to increase at 10% per annum.

Table 11: Revenue Assumptions

Product Unit Sales Price

(Rs./Unit)

First Year Production

@ 80% (less

inventory)

First Year Sales

Revenue (Rs)

Roof tiles 288,000 18 220,800 3,974,400 Total Sales Revenue 3,974,400

12.10 Other Costs Table 12: Operating Expenses

Description Rs. Administration expense 120,000 Land lease rental expense 100,000 Travelling expense 48,000 Communications expense (phone, fax, mail, internet, etc.) 12,000 Office expenses (stationary, entertainment, janitorial services, etc.)

12,000

Professional fees (legal, audit, consultants, etc.) 9,936



Depreciation expense 121,670 Amortization of pre-operating costs 10,336 Subtotal 433,942

13 CONTACT DETAILS OF SUPPLIERS, EXPERTS AND GOVERNMENT INSTITUTIONS

1. Institute of Ceramics, Small Industrial Estate (SIE) G.T Road, Gujrat Ph: 053 – 3520883 2. Muhammad Iqbal Khan M/s Khan & Brothers RCC Pipe and tough Tile, Zarghoon Road, Quetta. Cell: 0333-7817500. 3. Kasi RCC Pipes and Tiles, Airport Road, Quetta. Cell: 0300-3887682, 0333-7875901. 4. Haji Abdullah M/s haji Abdullah RCC Pipes & Pillar Factory, Almo Choke,Airport

Road,Near Ganj Quetta. Cell: 0321-8114680 (Haji Abdullah) Cell:0336-6719161 (Nasar Ullah)



14 ANNEXURE

14.1 Income Statement

Statement Summaries SMEDAIncome Statement

Rs. in actualsYear 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Revenue 3,974,400 5,108,400 5,945,940 6,554,909 7,210,400 7,931,440 8,724,584 9,597,042 10,556,746 11,612,421 Cost of goods sold 3,290,280 4,110,810 4,681,889 5,076,073 5,491,511 5,941,097 6,427,652 6,954,232 7,524,147 8,140,981

Gross Profit 684,120 997,590 1,264,051 1,478,836 1,718,889 1,990,343 2,296,932 2,642,810 3,032,599 3,471,440

General administration & selling expensesAdministration expense 120,000 131,683 144,504 158,573 174,012 190,954 209,546 229,948 252,336 276,903 Travelling & Comm. expense (phone, fax, etc.) 60,000 65,842 72,252 79,287 87,006 95,477 104,773 114,974 126,168 138,452 Office expenses (stationary, etc.) 12,000 13,168 14,450 15,857 17,401 19,095 20,955 22,995 25,234 27,690 Professional fees (legal, audit, etc.) 9,936 12,771 14,865 16,387 18,026 19,829 21,811 23,993 26,392 29,031 Depreciation expense 121,670 121,670 121,670 121,670 121,670 121,670 121,670 121,670 121,670 121,670 Amortization expense 10,336 10,336 10,336 10,336 10,336 - - - - -

Subtotal 433,942 455,471 478,078 502,111 528,452 547,026 578,755 613,579 651,799 693,747 Operating Income 250,178 542,119 785,973 976,725 1,190,437 1,443,317 1,718,177 2,029,231 2,380,800 2,777,693

Other income - - - - - - - - - - Gain / (loss) on sale of assets - - - - - - - - - - Earnings Before Interest & Taxes 250,178 542,119 785,973 976,725 1,190,437 1,443,317 1,718,177 2,029,231 2,380,800 2,777,693

Interest expense 160,648 147,075 129,235 109,915 88,991 66,331 41,789 15,211 - - Earnings Before Tax 89,530 395,044 656,738 866,810 1,101,446 1,376,987 1,676,387 2,014,020 2,380,800 2,777,693

Tax 17,906 79,009 131,348 173,362 220,289 275,397 335,277 402,804 476,160 555,539 NET PROFIT/(LOSS) AFTER TAX 71,624 316,035 525,390 693,448 881,157 1,101,590 1,341,110 1,611,216 1,904,640 2,222,155

Balance brought forward 71,624 387,659 913,050 1,606,497 2,487,654 3,589,244 4,930,354 6,541,569 8,446,210 Total profit available for appropriation 71,624 387,659 913,050 1,606,497 2,487,654 3,589,244 4,930,354 6,541,569 8,446,210 10,668,364 Owner's Withdrawals - - - - - - - - - - Balance carried forward 71,624 387,659 913,050 1,606,497 2,487,654 3,589,244 4,930,354 6,541,569 8,446,210 10,668,364



14.2 Projected Balance Sheet

Statement Summaries SMEDABalance Sheet

Rs. in actualsYear 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

AssetsCurrent assets

Cash & Bank 250,000 213,928 459,514 794,842 1,289,086 1,952,494 2,778,598 3,807,964 5,067,489 6,951,974 9,804,344 Accounts receivable - 326,663 373,266 454,288 513,734 565,698 622,267 684,494 752,944 828,238 911,062 Finished goods inventory - 143,056 172,080 195,507 211,503 228,813 247,546 267,819 289,760 313,506 339,208 Equipment spare part inventory 13,800 18,286 21,942 24,936 28,278 32,067 36,364 41,237 46,763 53,029 - Raw material inventory 96,704 131,799 162,668 190,153 221,795 258,702 301,749 351,961 410,527 478,838 - Pre-paid annual land lease 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 -

Total Current Assets 460,504 933,732 1,289,470 1,759,727 2,364,395 3,137,773 4,086,525 5,253,475 6,667,481 8,725,586 11,054,613

Fixed assetsBuilding/Infrastructure 843,400 801,230 759,060 716,890 674,720 632,550 590,380 548,210 506,040 463,870 421,700 Machinery & equipment 750,000 675,000 600,000 525,000 450,000 375,000 300,000 225,000 150,000 75,000 - Furniture & fixtures 25,000 22,500 20,000 17,500 15,000 12,500 10,000 7,500 5,000 2,500 - Office equipment 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 -

Total Fixed Assets 1,638,400 1,516,730 1,395,060 1,273,390 1,151,720 1,030,050 908,380 786,710 665,040 543,370 421,700

Intangible assetsPre-operation costs 51,681 41,345 31,009 20,673 10,336 - - - - - -

Total Intangible Assets 51,681 41,345 31,009 20,673 10,336 - - - - - - TOTAL ASSETS 2,150,585 2,491,807 2,715,539 3,053,789 3,526,451 4,167,823 4,994,905 6,040,185 7,332,521 9,268,956 11,476,313

Liabilities & Shareholders' EquityCurrent liabilities

Accounts payable - 251,691 317,230 362,866 394,175 427,410 463,582 502,973 545,893 592,688 592,890 Total Current Liabilities - 251,691 317,230 362,866 394,175 427,410 463,582 502,973 545,893 592,688 592,890

Other liabilitiesDeferred tax - 17,906 75,000 75,000 75,000 75,000 60,000 45,000 30,000 15,000 - Long term debt 1,935,527 1,935,527 1,720,591 1,487,816 1,235,720 962,701 667,021 346,799 - - -

Total Long Term Liabilities 1,935,527 1,953,433 1,795,591 1,562,816 1,310,720 1,037,701 727,021 391,799 30,000 15,000 -

Shareholders' equityPaid-up capital 215,059 215,059 215,059 215,059 215,059 215,059 215,059 215,059 215,059 215,059 215,059 Retained earnings - 71,624 387,659 913,050 1,606,497 2,487,654 3,589,244 4,930,354 6,541,569 8,446,210 10,668,364

Total Equity 215,059 286,683 602,718 1,128,108 1,821,556 2,702,713 3,804,302 5,145,412 6,756,628 8,661,268 10,883,423 TOTAL CAPITAL AND LIABILITI 2,150,585 2,491,807 2,715,539 3,053,789 3,526,451 4,167,823 4,994,905 6,040,185 7,332,521 9,268,956 11,476,313



14.3 Cash Flow Statement

Statement Summaries SMEDACash Flow Statement

Rs. in actualsYear 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Operating activitiesNet profit - 71,624 316,035 525,390 693,448 881,157 1,101,590 1,341,110 1,611,216 1,904,640 2,222,155 Add: depreciation expense - 121,670 121,670 121,670 121,670 121,670 121,670 121,670 121,670 121,670 121,670 amortization expense - 10,336 10,336 10,336 10,336 10,336 - - - - - Deferred income tax - 17,906 57,094 - - - (15,000) (15,000) (15,000) (15,000) (15,000) Accounts receivable - (326,663) (46,603) (81,022) (59,446) (51,964) (56,570) (62,227) (68,449) (75,294) (82,824) Finished good inventory - (143,056) (29,025) (23,427) (15,996) (17,310) (18,733) (20,273) (21,941) (23,746) (25,701) Equipment inventory (13,800) (4,486) (3,656) (2,995) (3,341) (3,789) (4,297) (4,873) (5,526) (6,266) 53,029 Raw material inventory (96,704) (35,095) (30,869) (27,485) (31,642) (36,907) (43,048) (50,211) (58,566) (68,312) 478,838 Accounts payable - 251,691 65,538 45,636 31,310 33,235 36,172 39,391 42,920 46,794 203 Other liabilities - - - - - - - - - - -

Cash provided by operations (110,504) (36,072) 460,522 568,103 746,340 936,428 1,121,784 1,349,587 1,606,324 1,884,486 2,752,370

Financing activitiesChange in long term debt 1,935,527 - (214,936) (232,775) (252,096) (273,019) (295,680) (320,221) (346,799) - - Issuance of shares 215,059 - - - - - - - - - -

Cash provided by / (used for) financing a 2,050,585 - (214,936) (232,775) (252,096) (273,019) (295,680) (320,221) (346,799) - 100,000

Investing activitiesCapital expenditure (1,690,081) - - - - - - - - - -

Cash (used for) / provided by investing a (1,690,081) - - - - - - - - - -

NET CASH 250,000 (36,072) 245,586 335,328 494,244 663,408 826,104 1,029,366 1,259,524 1,884,486 2,852,370

Cash balance brought forward 250,000 213,928 459,514 794,842 1,289,086 1,952,494 2,778,598 3,807,964 5,067,489 6,951,974 Cash available for appropriation 250,000 213,928 459,514 794,842 1,289,086 1,952,494 2,778,598 3,807,964 5,067,489 6,951,974 9,804,344 Cash carried forward 250,000 213,928 459,514 794,842 1,289,086 1,952,494 2,778,598 3,807,964 5,067,489 6,951,974 9,804,344

s



14.4 Useful Project Management Tips Technology

• 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

• Ads & P.O.S. Promotion: Business promotion and dissemination through banners and launch events is highly recommended. Product brochures from good quality service providers can be of great help.

• Sales & Distribution Network: Expert's advice and distribution agreements are required.

• 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 promotional tool. Product cost estimates should be carefully documented before price setting.

Human Resources

• Adequacy & Competencies: Skilled and experienced staff should be considered an investment even to the extent of offering share in business profit.

• Performance Based Remuneration: Attempt to manage human resource cost should be focused through performance measurement and performance based compensation.

14.5 Useful Links

• Prime Minister’s Office

www.pmo.gov.pk

• Small & Medium Enterprises Development Authority (SMEDA)

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

• Government of Punjab

www.punjab.gov.pk

• Government of Sindh

www.sindh.gov.pk

• Government of Khyber Pakhtoonkhwa

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



15 KEY ASSUMPTIONS

Production related assumptions

Average Daily

Production / person

No. of Labour

Total Daily Production

Annual Production

(320 days/Yr)

@ 100% capacity

Capacity Utilization in Year-1

80%

Finished Tiles

Inventory

Tiles available for Sale (Year-1)*

300 3 900 288,000 230,400 9,600 220,800

Cost assumptions

Cost of goods sold for cement tiles is determined by adding cement, sand, gravel, sand powder, iron wires, water and direct labour costs. This cost varies owing to the different ratios of raw materials used by different manufacturers. For this project an average cost of goods sold is assumed to be Rs. 13.14 per tile. The growth in inventory cost is assumed to increase at 8% per annum. Revenue assumptions

Sales price ranges from Rs. 16 to Rs. 20 per tile depending upon the quality of tile. Sale price for this project has been calculated as Rs. 18 per tile. The sales price growth rate is assumed to increase at 10% per annum.

Table 11: Revenue Assumptions

Product Unit Sales Price

(Rs./Unit)

First Year Production

@ 80% (less

inventory)

First Year Sales

Revenue (Rs)

Roof tiles 288,000 18 220,800 3,974,400 Total Sales Revenue 3,974,400

Financial Assumptions

Debt 90 % Equity 10 % Required rate of return on equity 25 % WACC 16 %



Depreciation Rates

Building and Infrastructure 5 % Office Equipment 10 % Machinery and Equipment 10 %

Cash Flow Assumptions

Accounts Receivables Cycle (In Days) 30

Accounts Payable Cycle (In Days) 30 Cash in Hand Rs. 250,000

Economy Related assumptions

Inflation rate 10 % Electricity growth rate 10 % Water price growth rate 10 % Wage growth rate 10 %


roof tiles manufacturing unit - light weight (rs. 2.15 million).pdf

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