Final f.m Presntn2003

8/2/2019 Final f.m Presntn2003

1/20

Submitted to:Sir TalatManzoor

By:

Muhammad Anas

Nadeem-ul-haq

khan

Ahsan waseem

khan


2/20


3/20

Nadeem, Ahsan and Anas are three business partnersstarting a new construction business named A & NConstructors. The company will be operating in theKarachi for both small and large scale construction,

repair, and alteration projects focusing on residentialconstruction. With the business boom that isoccurring in our local area and the desire to improve

overall profit margins, the company is planning totarget market from residential clients to the larger

commercial customers. This business plan will lay outour goals and tasks to make this transition

successful and create enough market sharesto succeed in this highly competitive market.


4/20

As population is increasing day byday and people want their ownresidence at cheap rates with

better residential facilities andhealthy environment so we ascompany decided to acquire

significant market share becausethere is enough room for growth inthis industry, which will provide our

firm growth opportunities.


5/20

The Karachi market is booming at this moment,overall business growth during the past severalyears has raised and is expected to continue in

upcoming years. This makes for a very attractivemarket for A & N Constructors.

We will be concentrating on the customers that willprovide us with the greatest margin, in other words

those clients desiring residential buildingconstruction. This is the fastest growing segment of

residential clients requiring our services. The othercategories that we will serve include the restaurant

segment, the special facilities segment, and all otherpotential commercial clients.


6/20

First Project and its Costs:-

Our first project is to build 10 residential houses (asmall community) in SARJANI TOWN near 4k bus stop.

Because its the area where people are coming tolive, the area has enough room for construction. Its

near city and property is comparatively cheaper thanother areas.

Cost of property (land) per house is Rs.11, 00,000(200 yards)

Our equity financing will be of Rs.402, 00,000

Debt financing portion will be Rs. 268, 00,000 (loanfrom a bank @ 18%)

Sale price per house Rs. 16,000,000

Estimated construction cost per house Rs. 6700000


7/20

Name of contractor: A & N constructors

Address of site: Sarjani town near 4knorth Karachi

Covered area of each plot size: 50`-0=apprx 139SQ yard

Construction area of each plot: Foundation +ground floor covered area 1250SQFT

1st floor covered area approx 1500 SQ ft

2nd floor area approx 1500 SQ Ft


8/20

Total covered area: approx 4240 SQ ft (Ground floor + 1stfloor +2nd floor) with foundationConstruction rate: Rs.1250/= per SQ ft

Total amount: 5300000(fifty three lac twelvethousand and five hundred)

The Above rates are for complete structure to finishing work withmaterial.


9/20

Year 1: 160000000 * 0.2 = 32000000Year 2: 160000000 * 0.1 = 16000000

Year3: 160000000 * 0.1 = 16000000

Total: 64000000

The above is the yearly cash receipt by usfrom the customers. Where 20% is showing

the down payment for the first year 10% isthe yearly rather than monthly installmentsand 160000000 is indicating the selling price

of the property.


10/20

160000000-64000000 = 96000000

It is the remaining amount afterdeducting yearly installments.

96000000/36 = 2666666.667

Per month inflow from monthlyinstallments by the customers


11/20

Year 1: D+ 12 Installments = 32000000+32000000 =64000000

Year2: Yi2+12 Installments= 16000000+32000000= 48000000

Year3: Yi3+12 Installments = 16000000+32000000= 48000000

Total:=160000000

These are the yearly inflows which the company willreceive during 3 years


12/20


13/20


14/20

NPV:- 53994923.61

IRR:- 68.74%

MIRR:-48.97%


15/20

Strengths :-

Low Cost/Good Value for Money

Abundant Cheap Manpower

Hard Working

Plenty and Cheap Construction Materials Available

Good Relationship with Government.

Booming Home Market


16/20

Relatively Low Management CapacityLack of Experience for SophisticatedProject Procurement

Low Ability to Create Financial Solutions forClients

Relative Low Ability to ManageSophisticated Projects

Weak in Professional Services


17/20

Opportunities:-Booming International Construction Market

More Open Global Construction Market

Chinese Construction Industrys Reform toward InternationalPractice

Increasing Collaboration and Partnering among InternationalCompetitors

Threats:-Intense Competition in the Global Construction Market

Sophistication of Management and Technologies

Increasing Trend toward Providing Integral ServiceIntense Competition for Talented People


18/20

Expected profit will be much higher than market return

and after the successful completion of the project andhaving fruitful results we will be able to expand ourbusiness and continuation of other projects will lead usto the economies of scale. It will also make us efficientin cost cutting, generating high profit and creating

customers satisfaction.We should have to increase our revenues and we had

to maintain high return because of high tax rates. NPVis positive and we are having high returns so we shouldhave to go with the decision of starting this project. Its

PBP is very less and we can recover the investedamount after 1 year. IRR and MIRR are also high whichshows the high profitability with no unconventional cashflows. We have also saved tax on interest payment.


19/20


20/20

Documents

Final f.m Presntn2003