Pre-Feasibility Study

Prime Minister’s Small Business Loan Scheme

Inland Fish Farming

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, Egerton Road,

Lahore Tel 92 42 111 111 456, Fax 92 42 36304926-7

helpdesk@smeda.org.pk

REGIONAL OFFICE PUNJAB

REGIONAL OFFICE SINDH

REGIONAL OFFICE KPK

REGIONAL OFFICE BALOCHISTAN

3rd Floor, Building No. 3,

Aiwan e Iqbal, Egerton Road Lahore,

Tel: (042) 111-111-456 Fax: (042)6304926-7

helpdesk.punjab@smeda.org.pk

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

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

Fax: (021) 5610572 helpdesk-khi@smeda.org.pk

Ground Floor State Life Building

The Mall, Peshawar. Tel: (091) 9213046-47

Fax: (091) 286908 helpdesk-pew@smeda.org.pk

Bungalow No. 15-A Chaman Housing Scheme

Airport Road, Quetta. Tel: (081) 831623, 831702

Fax: (081) 831922 helpdesk-qta@smeda.org.pk

September 2013

Pre-feasibility Study Inland Fish Farming

September-2013

ii

Table of Contents

1.   DISCLAIMER ..................................................................................................................................................... 1 

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

3.  INTRODUCTION TO SMEDA ......................................................................................................................... 2 

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

5.  EXECUTIVE SUMMARY ................................................................................................................................. 3 

6.  BRIEF DESCRIPTION OF PROJECT & PRODUCT .................................................................................. 3 

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

8.  INSTALLED & OPERATIONAL CAPACITIES ............................................................................................ 5 

9.  GEOGRAPHICAL POTENTIAL FOR INVESTMENT ................................................................................. 5 

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

11.  PRODUCTION PROCESS FLOW ................................................................................................................. 6 

12.  PROJECT COST SUMMARY ......................................................................................................................... 6 

12.1  PROJECT ECONOMICS ................................................................................................................................ 6 12.2  PROJECT FINANCING .................................................................................................................................. 7 12.3  PROJECT COST .......................................................................................................................................... 7 12.4  SPACE REQUIREMENT ................................................................................................................................ 7 12.5  MACHINERY AND EQUIPMENT .................................................................................................................... 7 12.6  FURNITURE & FIXTURES ............................................................................................................................ 8 12.7  HUMAN RESOURCE REQUIREMENT ........................................................................................................... 8 12.8  REVENUE GENERATION ............................................................................................................................. 8 

13.  CONTACT DETAILS OF EXPERTS AND CONSULTANTS ..................................................................... 9 

14.  ANNEXURE ..................................................................................................................................................... 10 

14.1  PROFIT AND LOSS STATEMENT .............................................................................................................. 10 

14.2  BALANCE SHEET .......................................................................................................................................... 11 

14.3  CASH FLOW ................................................................................................................................................... 12 

14.4  USEFUL PROJECT MANAGEMENT TIPS ................................................................................................ 13 

14.5  USEFUL LINKS ............................................................................................................................................... 14 

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

September 2013 1

11.. DDIISSCCLLAAIIMMEERR

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

September 2013 2

22.. PPUURRPPOOSSEE OOFF TTHHEE DDOOCCUUMMEENNTT

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, and production, marketing, finance and business management.

The purpose of this document is to facilitate potential investors in Inland Fish Farming 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.

33.. IINNTTRROODDUUCCTTIIOONN TTOO SSMMEEDDAA

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 successful 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.

September 2013 3

44.. IINNTTRROODDUUCCTTIIOONN TTOO SSCCHHEEMMEE

Prime Minister’s ‘Small Business Loans 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 through National Bank of Pakistan (NBP) and First Women Bank Ltd. (FWBL).

Small business loans with tenure upto 7 years, and a debt : equity of 90 : 10 will be disbursed to SME beneficiaries across Pakistan, covering; Punjab, Sindh, Khyber Pakhtunkhwah, Balochistan, Gilgit Baltistan, Azad Jammu & Kashmir and Federally Administered Tribal Areas (FATA).

55.. EEXXEECCUUTTIIVVEE SSUUMMMMAARRYY

Inland Fish Farming is proposed to be located in the potential areas of Pakistan, which provide desired suitable environment. The proposed location for the establishment of the fish farms is primarily warm area, having particularly a water temperature range between 5 - 30 degree centigrade. It is suggested that the farms may be established in Sibi and Jacobabad etc. or any other place, having similar attributes.

Fish is a nutritious product, widely consumed around the world, in varieties of food items. In addition, fish is also used in medicine industry. All such factors contribute towards making fish farming a viable project for investment.

The project will start operations at 14,400 fish species of different age, for first 9 month’s cycle.

Total cost estimate is Rs. 2.1 Million, with fixed investment Rs. 0.7 Million, and working capital Rs. 1.4 Million.

Given the cost assumptions, IRR and Payback are 51% and 2.8 years respectively.

The most critical considerations or factors for success of the project are:

1. Healthy and certified seedlings

2. Ample supply of water

66.. BBRRIIEEFF DDEESSCCRRIIPPTTIIOONN OOFF PPRROOJJEECCTT && PPRROODDUUCCTT

Following key parameters must be addressed as per pre-feasibility study:

Techniques: Three different techniques are used for inland fish farming. However, keeping in view the economical, technical and managerial factors, Semi-intensive fish farming technique is suggested for the proposed project.

September 2013 4

Location: The project would be located in Sibi, Naseer Abad, Jaffar Abad (Balochistan) or warm areas that provide suitable environment, particularly water temperature range between 5-30 degree centigrade.

Product: Fish is nutrient product wildly consumed around the world in verities of food items. It is not only used in a wide range of traditional to modern dishes, but is also sold as canned product. In addition, fish is also used in medicine industry.

Target Market: In addition to major cities, such as Quetta, Karachi, Lahore and Islamabad, there is an enormous export potential for Middle Eastern countries.

Employment Generation: The proposed project will provide direct employment to 5 individuals. Financial analysis shows the proposed inland farm shall be profitable from the very first year of operations.

September 2013 5

77.. CCRRIITTIICCAALL FFAACCTTOORRSS

The commercial viability of the proposed project depends on the following factors:

Selection of proper location with water, equipment, and staff play very important role in ensuring the project to run successfully.

Farm should be positioned away from agricultural activities, to avoid spray application of pesticides.

It should have enough elevation, so it can easily be desiccated, during the off season.

Healthy certified seedlings must be purchased from certified dealers, for the assurance of desire fish species.

To attract larger number of customers, the product must be processed on basic quality standards.

Each farm should maintain a written health and welfare program, for elimination of diseases and quality production.

Farm should have a whole sale distribution of its final product.

88.. IINNSSTTAALLLLEEDD && OOPPEERRAATTIIOONNAALL CCAAPPAACCIITTIIEESS

The project will start operations with 20,000 fish species of different age, for the first 9 month’s cycle. The proposed fish species for the said project are Thaila, Moraka and Rohu. These species provide an ideal environment for farm management, as per their feeding pattern. Rohu feeds near the water surface, Thaila in the middle and Moraka takes feeds from the bottom. This pattern will provide an efficient utilization of feeds and prevent feed losses. The recommended ratio of these species is Rohu (40%), Thaila (30%) and Moraka (30%) respectively.

99.. GGEEOOGGRRAAPPHHIICCAALL PPOOTTEENNTTIIAALL FFOORR IINNVVEESSTTMMEENNTT

The proposed location for establishment of the fish farms will primarily be warm areas that provide suitable environment, with particularly water temperature range between 5-30 degree centigrade. It is suggested, that the farms may be established in Sibi, Jaffarabad, Naseerabad (Baluchistan) etc. or any other place, having similar attributes.

The marketing of fish follows the traditional distribution channel, through middlemen or wholesalers at farm who will identify potential buyers and negotiate price, or directly to retailers in urban markets. The time spent in transportation, from farm to the retail shop, varies from area to area. Over the years, collection and transportation of fish has improved with the use of loader vehicles. However, greater the distance between farm and consumer, more complicated will be the marketing or distribution system, due to the

September 2013 6

perishable nature of the product. The trick in marketing is availability of current market information, of fish supply and demand, which will determine the selling price.

1100.. PPOOTTEENNTTIIAALL TTAARRGGEETT MMAARRKKEETTSS// CCIITTIIEESS

The target customers for fish are households, hotels, restaurants and pharmaceutical companies. Fish production, trade and utilization in the world has been increasing dramatically fast, due to the prevalence of huge demand. Fish industry trade is expected to reach $130 billion by the end of 2013. In 2007, USA was the largest consumer of fish with imports worth US$ 13.63 billion. Japan followed as second major importer with US$11.38 billion, whereas, Spain stood at third position with imports of US$ 6.98 billion.

1111.. PPRROODDUUCCTTIIOONN PPRROOCCEESSSS FFLLOOWW

The overall production cycle for the inland fish farming comprises of 8-9 months, subject to the life/age of the seedlings (specie). In case of fresh seedlings (with an age of less than 20 days), the production cycle will take 9 months to achieve the desired output. It varies respectively, with the selection of fish (seedlings) age. Keeping in view the economical prospective, it is suggested that fish with different age may be used for different ponds.

1122.. PPRROOJJEECCTT CCOOSSTT SSUUMMMMAARRYY

A detailed financial model has been developed to analyze the commercial viability of Inland Fish Farming under the Prime Minister’s Small Business Loan Scheme. 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.

1122..11 PPrroojjeecctt EEccoonnoommiiccss

All figures in the financial model have been calculated, for 14,400 units of fish for 4 acres of land. The following table shows internal rates of return and payback period.

TTaabbllee 11 -- PPrroojjeecctt EEccoonnoommiiccss

Description Details Internal Rate of Return (IRR) 51% Payback Period (yrs) 2.8 Net Present Value (NPV) 9,942,224

September 2013 7

Factors that influence the profitability of Inland Fish Farm are farm management, selection of fish seedlings, proper feeding and care of oxygen in ponds.

1122..22 PPrroojjeecctt FFiinnaanncciinngg

Following table provides details of the equity required and variables related to bank loan;

Description Details Total Equity (10%) Rs. 219,500

Bank Loan (90 %.) Rs. 1,975,500 Markup to the Borrower (%age/annum) 8% Tenure of Loan (Years) 7

1122..33 PPrroojjeecctt CCoosstt

Following requirements have been identified for operations of the proposed business.

TTaabbllee 11:: CCaappiittaall IInnvveessttmmeenntt ffoorr tthhee PPrroojjeecctt

Capital Investment Amount (Rs.) Total Capital Cost 7,52,500 Initial Working Capital 1,442,500 Total Project Cost 2,195,000

1122..44 SSppaaccee RReeqquuiirreemmeenntt

Total area required for the Inland Fish Farming is 4 acres of land that comprises of 3 pond, office building, guard room and open space.

TTaabbllee 22:: SSppaaccee RReeqquuiirreemmeenntt

Space Requirement (Sq. ft.) Cost/ Unit Area (Sq. ft.) Total Cost Office Building cum Store 600 150 90,000 Construction of 3 Ponds 25,000 - 75,000 Total 165,000

1122..55 MMaacchhiinneerryy aanndd EEqquuiippmmeenntt

Following table provides list of machinery and equipment required for Inland Fish Farm.

TTaabbllee 33:: LLiisstt ooff MMaacchhiinneerryy aanndd EEqquuiippmmeenntt

Description No Total Price (PKR)

Air Pump/ Water Pump 4 100,000 Net 1 50,000 Pipes (500 Running Ft.) 1 100,000 Filter 4 80,000 Total 12 330,000

September 2013 8

Main equipment for Inland Fish Farming is provided in table given above. Fish farming does not require special equipment or machinery etc.

1122..66 FFuurrnniittuurree && FFiixxttuurreess

Description Total Cost Office equipment 10,000

1122..77 HHuummaann RReessoouurrccee RReeqquuiirreemmeenntt

TTaabbllee 44:: HHuummaann RReessoouurrccee RReeqquuiirreemmeenntt

Description No. of Employees Salary per month Owner manager 1 25,000 Supervisor 1 12,000 Labour 2 20,000 Guard 1 10,000 Total Staff 5 70,000

The table above provides details of human resource required to manage basic fish farm. The staff salaries are estimated according to the market trends. However, these requirements and pay scales may vary area to area.

1122..88 RReevveennuuee GGeenneerraattiioonn

Final product of Inland Fish Farm is fish ready for sale in market that will generate revenue. The capacity of farm is 16,000 units of fish for first year sell price as per market Rs. 270.

Product Unit Sales Price (Rs./Unit)

First Year Production

First Year Revenue (Rs)

Fish No. 325 14,400 4,680,000 Total Sales Revenue 4,680,000

September 2013 9

1133.. CCOONNTTAACCTT DDEETTAAIILLSS OOFF EEXXPPEERRTTSS AANNDD CCOONNSSUULLTTAANNTTSS

Prof. Dr. Muhammad Ashraf

Chairman Dept. of Fisheries and Aquaculture, University of Veterinary and Animal Sciences, Out Fall Road, Lahore Ph: 042-99213510, 049-4422102 (Ravi Campus Pattoki) Cell No. 0300-7627688

Dr. Abdul Rab

Program Leader/ PSO Aquaculture and Fisheries Programme National Agricultural Research Centre Park Road, Islamabad Tel: 051 9255061, 051 9255012

Muhammad Ashraf

Director General Fisheries Department of Fisheries, Government of Punjab 2- Sanda Road Lahore Ph: 042-99212374-75 & 79

Director General Department of Fisheries Govt. of Balochistan, Quetta Ph: 081-9211587

September 2013 10

1144.. AANNNNEEXXUURREE

1144..11 PPRROOFFIITT AANNDD LLOOSSSS SSTTAATTEEMMEENNTT

Projected Income Statement (Rs.) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Revenue 4,680,000 5,405,400 6,243,237 7,210,939 8,328,634 9,619,573 11,110,606 12,832,750 14,821,827 17,119,210 Bed Debt Expenses 46,800 54,054 62,432 72,109 83,286 96,196 111,106 128,328 148,218 171,192 Net (Adjusted Sales) 4,633,200 5,351,346 6,180,805 7,138,829 8,245,348 9,523,377 10,999,500 12,704,423 14,673,608 16,948,018

Cost of Sales 3,494,800 3,869,030 4,284,519 4,745,988 5,258,722 5,828,640 6,462,376 7,167,372 7,951,975 8,825,557

Cost of fry 450,000 519,750 600,311 693,359 800,830 924,959 1,068,328 1,233,918 1,425,176 1,646,078 Cost of Feed 2,332,800 2,566,080 2,822,688 3,104,957 3,415,452 3,756,998 4,132,698 4,545,967 5,000,564 5,500,620 Salaries (Production Staff) 504,000 554,400 609,840 670,824 737,906 811,697 892,867 982,153 1,080,369 1,188,406 Utilities 208,000 228,800 251,680 276,848 304,533 334,986 368,485 405,333 445,866 490,453 Gross Profit 1,138,400 1,482,316 1,896,285 2,392,841 2,986,626 3,694,737 4,537,124 5,537,051 6,721,633 8,122,461 Gross Profit Margin 25% 28% 31% 34% 36% 39% 41% 44% 46% 48%

General Administrative & Selling ExpensesSalaries 300,000 330,000 363,000 399,300 439,230 483,153 531,468 584,615 643,077 707,384 Factory/Office Miscellaneous Expenses 120,000 132,000 145,200 159,720 175,692 193,261 212,587 233,846 257,231 282,954 Rent Expense 100,000 105,000 110,250 115,763 121,551 127,628 134,010 140,710 147,746 155,133

Amortization of Preliminary Expenses 30,000 30,000 30,000 30,000 30,000 - - - - - Depreciation Expense 50,250 45,225 40,703 36,632 32,969 29,672 26,705 24,034 21,631 19,468 Maintenance Expense 11,875 11,875 11,875 11,875 11,875 11,875 11,875 11,875 11,875 11,875 Pond Maintainence 25,000 26,250 27,563 28,941 30,388 31,907 33,502 35,178 36,936 38,783 Selling & Promotional Expense 46,332 53,513 61,808 71,388 82,453 95,234 109,995 127,044 146,736 169,480

Subtotal 683,457 733,863 790,398 853,619 924,158 972,730 1,060,142 1,157,302 1,265,231 1,385,077 Operating Income 454,943 748,453 1,105,887 1,539,222 2,062,468 2,722,007 3,476,981 4,379,748 5,456,402 6,737,383

Financial Charges (8% Per Annum) 150,112 131,904 112,185 90,829 67,700 42,652 15,525 - - -

Earnings Before Taxes 304,831 616,548 993,703 1,448,394 1,994,768 2,679,355 3,461,456 4,379,748 5,456,402 6,737,383 Tax - 61,655 71,555 139,759 246,454 392,339 587,864 836,424 1,159,421 1,580,584 Net Profit 304,831 554,894 922,147 1,308,634 1,748,314 2,287,016 2,873,592 3,543,324 4,296,982 5,156,799

September 2013 11

1144..22 BBAALLAANNCCEE SSHHEEEETT Projected Balance Sheet (Rs.) Year 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 Balance 283,000 734,506 1,033,485 1,665,160 2,646,401 4,027,715 5,875,089 8,262,990 11,654,099 15,776,561 20,734,433Raw Material Inventory 1,159,500 873,700 967,258 1,071,130 1,186,497 1,314,680 1,457,160 1,615,594 1,791,843 1,987,994 2,206,389Finished Goods Inventory 0 0 0 0 0 0 0 0 0 0 0Accounts Receivable 0 0 0 0 0 0 0 0 0 0 0Advnace Rent 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000

Total Current Assets 1,542,500 1,708,206 2,100,742 2,836,290 3,932,899 5,442,395 7,432,249 9,978,584 13,545,942 17,864,555 23,040,822

Fixed AssetsPlant Machinery & Facility 237,500 213,750 192,375 173,138 155,824 140,241 126,217 113,596 102,236 92,012 82,811Factory Construction 165,000 148,500 133,650 120,285 108,257 97,431 87,688 78,919 71,027 63,924 57,532Land 0 0 0 0 0 0 0 0 0 0 0Furniture & Fixtures 100,000 90,000 81,000 72,900 65,610 59,049 53,144 47,830 43,047 38,742 34,868Vehicle 0 0 0 0 0 0 0 0 0 0 0

Total Fixed Assets 502,500 452,250 407,025 366,323 329,690 296,721 267,049 240,344 216,310 194,679 175,211

Intangible AssetsPreliminary Expenses 150,000 120,000 90,000 60,000 30,000 - - - - - -

Total Assets 2,195,000 2,280,456 2,597,767 3,262,612 4,292,589 5,739,117 7,699,298 10,218,928 13,762,252 18,059,234 23,216,033

Owner's Equity 219,500 524,331 1,079,225 2,001,372 3,310,006 5,058,320 7,345,336 10,218,928 13,762,252 18,059,234 23,216,033

Long Term Liability 1,975,500 1,756,125 1,518,543 1,261,241 982,583 680,796 353,962 0 0 0 0

Total Equity & Liabilities 2,195,000 2,280,456 2,597,767 3,262,612 4,292,589 5,739,117 7,699,298 10,218,928 13,762,252 18,059,234 23,216,033

September 2013 12

1144..33 CCAASSHH FFLLOOWW

Projected Statement of Cash Flows (Rs.) Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Cash Flow From Operating Activities

Net Profit 0 304,831 554,894 922,147 1,308,634 1,748,314 2,287,016 2,873,592 3,543,324 4,296,982 5,156,799Add: Depreciation Expense 0 50,250 45,225 40,703 36,632 32,969 29,672 26,705 24,034 21,631 19,468

Amortization Expense 0 30,000 30,000 30,000 30,000 30,000 - - - - -(Increase) / decrease in Receivables - 0 0 0 0 0 0 0 0 0 0(Increase) / decrease in RM - 285,800 (93,558) (103,872) (115,367) (128,183) (142,479) (158,434) (176,249) (196,151) (218,396)(Increase) / decrease in FG Inventory 0 0 0 0 0 0 0 0 0 0

Net Cash Flow From Operations 0 670,881 536,561 888,977 1,259,899 1,683,100 2,174,209 2,741,863 3,391,109 4,122,462 4,957,872

Cash Flow From Financing Activities

Receipt of Long Term Debt 1,975,500Repayment of Long Term Debt (219,375) (237,583) (257,302) (278,658) (301,786) (326,835) (353,962) - - -Owner's Equity 219,500

Net Cash Flow From Financing Activities 2,195,000 (219,375) (237,583) (257,302) (278,658) (301,786) (326,835) (353,962) 0 0 0

Cash Flow From Investing Activities

Equipment (237,500) 0 0Factory/Office Furniture (100,000)Preliminary Operating Expenses (150,000)Purchase of Raw Material Inventory (1,159,500)Advance Rent (100,000)Construction & Renovation (165,000)

Net Cash Flow From Investing Activities (1,912,000) 0 0 0 0 0 0 0 0 0 0

NET CASH FLOW 283,000 451,506 298,978 631,675 981,242 1,381,313 1,847,374 2,387,901 3,391,109 4,122,462 4,957,872Cash at the Beginning of the Period 0 283,000 734,506 1,033,485 1,665,160 2,646,401 4,027,715 5,875,089 8,262,990 11,654,099 15,776,561Cash at the End of the Period 283,000 734,506 1,033,485 1,665,160 2,646,401 4,027,715 5,875,089 8,262,990 11,654,099 15,776,561 20,734,433

September -2013 13

1144..44 UUSSEEFFUULL PPRROOJJEECCTT MMAANNAAGGEEMMEENNTT TTIIPPSS

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: Should be asked for training and after sales services under the contract.

Quality Assurance Equipment & Standards: Required product quality standards need to be defined on the packaging and a system to check them instituted, as this improves credibility.

Marketing

Product Development & Packaging: Expert's help may be engaged for product/service and packaging design & development.

Ads & P.O.S. Promotion: Business promotion and dissemination through banners and launch events is highly recommended. Product brochures from good quality service providers are also useful.

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

Price - Bulk Discounts, Cost plus Introductory Discounts: Price should never be allowed to compromise quality. Product cost estimates should be carefully documented before price setting. Price during introductory phase may be lower and used as promotional tool. Government controlled prices shall be displayed.

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.

Training & Skill Development: Encouraging training and skill of self & employees through experts and exposure of best practices is route to success. Least cost options for Training and Skill Development (T&SD) may be linked with compensation benefits and awards.

September -2013 14

1144..55 UUSSEEFFUULL LLIINNKKSS

Prime Minister’s Office

www.pmo.gov.pk

Small & Medium Enterprises Development Authority (SMEDA)

www.smeda.org.pk

National Bank of Pakistan (SBP)

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

Ministry of Education, Training & Standards in Higher Education

http://moptt.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)

September -2013 15

www.tdap.gov.pk

Security 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

Pakistan Institute of Fashion and Design (PIFD)

www.pifd.edu.pk

Pakistan Fashion Design Council (PFDC)

www.pfdc.org

1155.. KKEEYY AASSSSUUMMPPTTIIOONNSS

Particulars Assumptions

Sales Price Growth Rate 5 % per year Capacity Utilization Growth Rate 5 % per year Increase in Cost of Raw Materials 10 % per year Increase in Utilities (Electricity/Water/Gas) 10 % per year Debt / Equity Ratio 90 : 10 Plant Building 10 % per annum Machinery 10 % per annum Office Furniture & Equipment 10 % per annum Loan Period 7 Years Loan Installments Quarterly Financial Charges (Loan Rate) 8 % per annum