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Pre-Feasibility Study

Prime Ministers Small Business Loan Scheme

Sheep Fattening Farm

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

[email protected]

REGIONAL OFFICE

PUNJABREGIONAL OFFICE

SINDHREGIONAL OFFICE

KPKREGIONAL OFFICE

BALOCHISTAN

3rd Floor, Building No. 3,

Aiwan e Iqbal, Egerton RoadLahore,

Tel: (042) 111-111-456

Fax: (042)6304926-7

[email protected]

5TH Floor, Bahria

Complex II, M.T. Khan Road,

Karachi.

Tel: (021) 111-111-456Fax: (021) 5610572

[email protected]

Ground Floor

State Life Building

The Mall, Peshawar.

Tel: (091) 9213046-47Fax: (091) 286908

[email protected]

Bungalow No. 15-A

Chaman Housing Scheme

Airport Road, Quetta.

Tel: (081) 831623, 831702Fax: (081) 831922

[email protected]

September 2013
mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]


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Pre-Feasibility Study (Sheep Fattening Farm)

Table of Contents

1 Disclaimer.........................................................................................................12 purpose of the document .............................................................................23 Introduction to SMEDA .................................................................................24 Introduction to Scheme ................................................................................35 Executive Summary .......................................................................................36 Brief description of Project & Product .....................................................37 Critical Factors ................................................................................................48 Installed & Operational Capacities ............................................................49 Geographical Potential for Investment ....................................................510 Potential Target Markets / cities................................................................. 511 Production Process Flow .............................................................................5

11.1 Breed Selection .......................................................................................................... 511.2 Characteristics of Breeds Recommended for Sheep Fattening: ........................ 6

12 Project Cost Summary ..................................................................................612.1 Project Economics ..................................................................................................... 612.2 Project Financing ....................................................................................................... 712.3 Project Cost ................................................................................................................ 712.4 Space Requirement................................................................................................... 812.5 Machinery and Equipment........................................................................................ 912.6 Human Resource Requirement ............................................................................... 912.7 Revenue Generation ................................................................................................. 9

13 Annexure ........................................................................................................1013.1 Profit & Loss Statement .......................................................................................... 1013.2 Projected Balance Sheet ............................................................................................. 1113.3 Projected Cash Flow Statement .................................................................................. 1213.4 Useful Project Management Tips ............................................................................... 1313.5 Useful Links ............................................................................................................... 14

14 Key Assumptions .........................................................................................16

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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

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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 Sheep Fattening Farm

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 its 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 TTOOSSMMEEDDAA

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 nationalincome, 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.

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44 IINNTTRROODDUUCCTTIIOONN TTOOSSCCHHEEMMEE

Prime Ministers 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 EEXXEECCUUTTIIVVEESSUUMMMMAARRYY

Sheep Fattening Farm is proposed to be located at promising areas of Balochistan. Theproject is related to Sheep fattening purposes, the total installed capacity 450 Sheep

with initial utilization of 70% (315 sheep).

Total Cost Estimates is Rs. 2.19 Million with fixed investment Rs. 1.29 Million and

working capital Rs. 0.90 Million.

Given the cost assumptions IRR and payback are 31% and 3.31 years respectively

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

1. Selection of Quality Sheep

2. Farm Management

The livestock sector is a leading sub-sector of the agriculture sector in Pakistan. In

2012-13 it contributed over 55.4 per cent to the Agriculture sector with growth rate of 3.7

% and 11.9 % to the GDP which is more than the aggregated contribution of entire crop

sector of the country.

Livestock in Balochistan has its potential in contributing to increased incomes to the

farmers. Growth in output has varied over the years but in general has barely kept pace

with population growth.

66 BBRRIIEEFF DDEESSCCRRIIPPTTIIOONN OOFFPPRROOJJEECCTT&& PPRROODDUUCCTT

Following key parameters pertaining to subject pre-feasibility study are elaborated to

briefly describe the project.

Location: The farm would be established in sheep rearing areas of country

where range grazing is available. In Balochistan the suitable areas to establish

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sheep farm are Southern, central and some northern parts. Major production

areas in Balochistan include Kalat, Khuzdar, Kharan, Mastung, Noshki Mashkel,

Sibi, Naseerabad, Jaffarabad, Kohlo, Dera Bugti, Killa Saifullah, Ziarat, Loralai,

Zhob, Barkhan and Lasbela Districts

Product (Breed): The most suitable breeds for fattening include Balochi,

Harnai and Bibrik sheep. The farmers not only has to select the better breed

which can bring results for fattening but also has to select most suitable animals

from the selected breed. Through better management the weight gain of these

selected breeds would be higher.

Target Market: In addition to local markets in Karachi, Lahore and

Islamabad an enormous export market for Middle Eastern countries, Iran etc.

Employment Generation: The proposed project will provide direct employment

to 4 people. Financial analysis shows the unit shall be profitable from the very

first year of operation

77 CCRRIITTIICCAALLFFAACCTTOORRSS

The livestock sector is a leading sub-sector of the agriculture sector in Pakistan.

In 2012-13 it contributed over 55.4 per cent to the Agriculture sector with growth

rate of 3.7 % and 11.9 % to the GDP which is more than the aggregated

contribution of entire crop sector of the country1.

Swift increases in consumption/demand of live stock products.

Increasing demand of byproducts, blood, skin, etc.

Technological improvement in live stock production and processing in developed

countries which can be replicated in the developing countries

88 IINNSSTTAALLLLEEDD&& OOPPEERRAATTIIOONNAALLCCAAPPAACCIITTIIEESS

The farm will start production with 315 sheep (70% of total capacity). The farm will

achieve maximum capacity of 405 sheep (90% of total capacity) in its 7th year. The

limit of 450 animals has been imposed on the farm because very large flock would be

difficult to manage. The farm would focus on the rearing of young stock for fattening and

marketing. Lambs and kids from six to eight months of age will be purchased and resold

in the market after a fattening period of 120 days.

1Economic Survey of Pakistan

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99 GGEEOOGGRRAAPPHHIICCAALLPPOOTTEENNTTIIAALL FFOORRIINNVVEESSTTMMEENNTT

Over the years, the livestock sector has emerged as a leading sub-sector of the

agriculture sector in Pakistan. In 2005-06 livestock accounted for 49.6% of agricultural

value added and about 10.7% of GDP. The role of livestock in the rural economy is

critical, with approximately 35 million people located in rural areas engaged in raising

livestock, which generates approximately 30-40% of their income2.

In Balochistan contribution of livestock is estimated to be 40% towards agriculture

share, the Livestock is the mainstay of more than 75% of the people inhabiting in the

countryside of Balochistan.

The potential areas for investment to establish proposed projects in sheep rearing areas

of country where range grazing is available. In Balochistan the suitable areas to

establish sheep farm are Southern, central and some northern parts.

1100 PPOOTTEENNTTIIAALLTTAARRGGEETTMMAARRKKEETTSS// CCIITTIIEESSThe farm can be established in sheep rearing areas of country where range grazing is

available. In Balochistan the suitable areas to establish sheep farm are Southern,

central and some northern parts. Major production areas in Balochistan include Kalat,

Khuzdar, Kharan, Mastung, Noshki Mashkel, Sibi, Naseerabad, Jaffarabad, Kohlo, Dera

Bugti, Killa Saifullah, Ziarat, Loralai, Zhob, Barkhan and Lasbela Districts

1111 PPRROODDUUCCTTIIOONNPPRROOCCEESSSSFFLLOOWW

Animals selected for fattening should be from six months to eight months of age. At this

age the animal is weaned and used to eating green fodder and grass. As compare togrown up sheep the daily weight gain capacity is also better at this age. Weight and age

of all the selected animals should also be similar otherwise the larger and older animals

would not let the smaller animals to eat feed according to their requirement. Selected

animals should not be sick, weak or with physical disabilities.

1111..11 BBrreeeedd SSeelleecctt iioonn

The farmers not only has to select the better breed which can bring results for fattening

but also has to select most suitable animals from the selected breed. Through better

management the weight gain of these selected breeds would be higher. The most

suitable breeds for fattening include Balochi, Harnai and Bibrik sheep.

The animals should be tagged on arrival to the farm, the information to be recorded

include breed of animal, live weight of animal and age of animals date of purchase etc.

2 Economic Survey of Pakistan 2005-06

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1111..22 CChhaarraacctteerriisstt iiccss ooffBBrreeeeddss RReeccoommmmeennddeedd ffoorrSShheeeepp FFaatttteenniinngg::

1111..22..11 BBaalloocchhii SShheeeepp

The Balochi sheep originated in the southwest Pakistan, eastern Iran and southern

Afghanistan. It is a large sized fat tailed breed important in central, southern and somesouth-western parts of the Balochistan. It is a mutton and dairy sheep, producing coarse

wool. Its fleece is white with pigmented head and legs. Body size varies between 35

and 40 Kg in adult eves, milk yield between 40-50 kg in a period of about 125 days.

The average fleece production is 1.3 1.8 Kg.

1111..22..22 BBiibbrriikk

It is a fat tailed, mutton type sheep that is found in parts of Loralai Kohlu, Bugti,

Barkhan, Musakhel and Sibi districts in Balochistan province. It is a medium size breed.

Body colour is white with black or brown head. The wool yield is about 1.7 Kg. the tail is

fat and short. Average adult live-weight is 27 kg.

1111..22..33 HHaarrnnaaii

The Harnai is a fat tail, mutton /wool type breed. They are found in parts of Loralai,

Quetta, Sibi and Zhob districts in Balochistan. They are medium size with a white body

coat with a black or tan spotted d head and ears. The wool yield is 2.6 kg with medium

fiber diameter. They have a compact body with a small fat tail, high fiber density. Its

wool is dense and heavy. Average adult body weight is around 30-32 kg. The breed

also produces excellent quality mutton.

1122 PPRROOJJEECCTTCCOOSSTTSSUUMMMMAARRYY

A detailed financial model has been developed to analyze the commercial viability of

Sheep Fattening Farm under the Prime Ministers 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 the figures in this financial model have been calculated for 450 sheep for total area

of around 9,400 sq.ft, that would be used for different functions of the farm.

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

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TTaabbllee 11 -- PPrroojjeecctt EEccoonnoommiiccss

Description Details

Internal Rate of Return (IRR) 31%

Payback Period (yrs) 3.31

Net Present Value (NPV) 848,681

Establishment of the farms in areas where cheap land is available, but still not very

far from the animal markets.

The farming should be done on scientific grounds taking care of Vaccination,

Medicine etc.

Healthy and attractive local female without horn should be selected, as it has

better characteristics compatible with the local environment.

Healthy and quality male stock should be selected for breeding.

New feeding techniques including concentrate feeding and preparation of urea

molasses blocks, wheat straw treatment should be used for better results.

Well-trained/experienced staff adding in the efficiency of the farm

1122..22 PPrroojjeecctt FFiinnaanncciinngg

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

Description Details

Total Equity (@ 10%) Rs. 218,884

Bank Loan (@ 90%) Rs. 1,969,955

Markup to the Borrower (%age/annum) 8%

Tenure of the Loan (Years) 7

1122..33 PPrroojjeecctt CCoosstt

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

TTaabbllee 11:: CCaappii ttaall IInnvveessttmmeenntt ffoorr tthhee PPrroojjeecctt

Capital Investment Amount (Rs.)

Total Capital Cost 1,292,373Initial Working Capital 896,466

Total Project Cost 2,188,839

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1122..44 SSppaaccee RReeqquuiirreemmeenntt

Details of the area required are given in below accordingly

TTaabbllee 22:: SSppaaccee RReeqquuiirreemmeenntt

Item Space / AnimalSq.ft.

TotalAreaSq.ft.

Cost /Sq.ft.(Rs.)

Totalcost . Rs.

Owners Room 144 500 72,000

Shed Space 20 3,000 150 450,000

Stores for Raw Material 240 300 72,000

Attendants Room 136 300 40,800

Open Paddock 50 6,000 5 30,000

Total Cost 664,800

Total investment in building and infrastructure is calculated to be approximately Rs. 0.66

million.

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1122..55 MMaacchhiinneerryy aanndd EEqquuiippmmeenntt

Following table provides list of machinery and equipment required for Sheep Fattening

Farm working for Livestock sector.

TTaabbllee 33:: LLiisstt ooffMMaacchhiinneerryy aanndd EEqquuiippmmeenntt

Description Unit Unit Price(Rs.)

Total Cost.(Rs.)

Chopper 1 15,000 15,000

Water Pump with boring 1 250,000 250,000

Mangers 10. 2,500 25,000

Tubs 5 1,500 7,500

Hand Cart 1 5,000 5,000

Weigh Scale 1 50,000 50,000

Misc 1 15,000 15,000

Total 367,500

1122..66 HHuummaann RReessoouurrccee RReeqquuiirreemmeenntt

TTaabbllee 44:: HHuummaann RReessoouurrccee RReeqquuiirreemmeenntt

Description No. ofEmployees

Salary permonth

Owner Manager 1 25,000Farm Attendants 3 30,000

Total Staff 4 55,000

The table above provides details of human resource required for sheep fattening farm.

1122..77 RReevveennuuee GGeenneerraattiioonn

Product SalesPrice

(Rs./Unit)

First YearProduction

(Sheep)

First YearSales

Revenue

(Rs)Sale of Live Sheep 12,375 315 3,898,125

Total Sales Revenue 3,898,125

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1133 AANNNNEEXXUURREE

1133..11 PPrrooffii tt && LLoossss SSttaatteemmeenntt

Statement Summaries SMEDA

Income StatementRs. in actuals

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Revenue 3,898,125 4,385,391 4,911,638 5,479,546 6,091,965 6,396,564 6,716,392 7,052,211 7,404,822 7,775,063

Cost of Goods Sold

Feed & Vaccination Cost 709,774 780,751 858,826 944,709 1,039,180 1,143,098 1,257,407 1,383,148 1,521,463 1,673,609

Cost of Sheeps 1,724,625 1,897,088 2,086,796 2,295,476 2,525,023 2,777,526 3,055,278 3,360,806 3,696,887 4,066,576

Direct Labor 360,000 396,000 435,600 479,160 527,076 579,784 637,762 701,538 771,692 848,861

Repair & Maintenance 15,000 16,875 18,900 21,085 23,442 24,614 25,845 27,137 28,494 29,918

Utilities 60,000 70,714 82,971 96,973 112,945 124,239 136,663 150,330 165,363 181,899

Total Cost of Sales 2,869,399 3,161,428 3,483,094 3,837,403 4,227,666 4,649,260 5,112,956 5,622,959 6,183,898 6,800,863

Gross Profit 1,028,726 1,223,963 1,428,544 1,642,143 1,864,299 1,747,303 1,603,436 1,429,252 1,220,924 974,200

General administration & selling expenses

Administration expense 309,000 339,900 373,890 411,279 452,407 497,648 547,412 602,154 662,369 728,606

Travelling & Comm. expense (phone, fax, e tc .) 60,000 66,000 72,600 79,860 87,846 96,631 106,294 116,923 128,615 141,477

Office vehicles running expense - - - - - - - - - -

Office expenses (stationary, etc.) 7,500 8,250 9,075 9,983 10,981 12,079 13,287 14,615 16,077 17,685

Depreciation expense 70,490 70,490 70,490 70,490 70,490 70,490 70,490 70,490 70,490 70,490

Amortization expense 31,768 31,768 31,768 31,768 31,768 - - - - -

Property tax expense - - - - - - - - - -

Miscellaneous expense 19,491 21,927 24,558 27,398 30,460 31,983 33,582 35,261 37,024 38,875

Subtotal 498,248 538,335 582,381 630,777 683,951 708,830 771,065 839,443 914,575 997,133

Operating Income 530,478 685,628 846,163 1,011,366 1,180,348 1,038,473 832,371 589,809 306,348 (22,933)

Other income - - - - - - - - - -

Gain / (loss) on sale of assets - - - - - - - - - -

Earnings Before Interest & Taxes 530,478 685,628 846,163 1,011,366 1,180,348 1,038,473 832,371 589,809 306,348 (22,933)

Interest expense 151,131 133,067 113,513 92,348 69,439 44,640 17,798 - - -

Earnings Before Tax 379,347 552,561 732,649 919,017 1,110,909 993,833 814,573 589,809 306,348 (22,933)

Tax - - - - - - - - - -

NET PROFIT/(LOSS) AFTER TAX 379,347 552,561 732,649 919,017 1,110,909 993,833 814,573 589,809 306,348 (22,933)

Balance brought forward 379,347 931,908 1,664,558 2,583,575 3,694,484 4,688,317 5,502,891 6,092,700 6,399,048

Total profit available for appropriation 379,347 931,908 1,664,558 2,583,575 3,694,484 4,688,317 5,502,891 6,092,700 6,399,048 6,376,115

Dividend - - - - - - - - - -

Balance carried forward 379,347 931,908 1,664,558 2,583,575 3,694,484 4,688,317 5,502,891 6,092,700 6,399,048 6,376,115

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1133..22 PPrroojjeecctteedd BBaallaannccee SShheeeett


Balance SheetRs. 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 80,000 188,079 467,492 872,937 1,418,108 2,103,499 2,591,283 2,844,958 3,183,774 3,189,944 6,066,649

Accounts receivable - 213,596 226,946 254,713 284,690 317,028 342,151 359,259 377,222 396,083 415,887

Finished goods inventory - - - - - - - - - - -

Eq uip me nt sp are part in ve nt ory 5,000 5,906 6,946 8,136 9,498 10,471 11,545 12,728 14,033 15,471 -Raw material inventory 811,466 937,244 1,082,516 1,250,306 1,444,104 1,667,940 1,926,471 2,225,073 2,569,960 2,968,304 -

Total Current Assets 896,466 1,344,825 1,783,899 2,386,093 3,156,400 4,098,938 4,871,450 5,442,018 6,144,989 6,569,802 6,482,536

Fixed assets

Land 91,233 91,233 91,233 91,233 91,233 91,233 91,233 91,233 91,233 91,233 91,233

Building/Infrastructure 664,800 631,560 598,320 565,080 531,840 498,600 465,360 432,120 398,880 365,640 332,400

Machinery & equipment 367,500 330,750 294,000 257,250 220,500 183,750 147,000 110,250 73,500 36,750 -

Furniture & fixtures 10,000 9,500 9,000 8,500 8,000 7,500 7,000 6,500 6,000 5,500 5,000

Office vehicles - - - - - - - - - - -

Office equipment - - - - - - - - - - -

Total Fixed Assets 1,133,533 1,063,043 992,553 922,063 851,573 781,083 710,593 640,103 569,613 499,123 428,633

Intangible asset s

Pre-operation costs 158,839 127,071 95,304 63,536 31,768 - - - - - -

Le ga l, lic en sin g, & t ra in in g co st s - - - - - - - - - - -

Total Intangible Assets 158,839 127,071 95,304 63,536 31,768 - - - - - -

TOTAL ASSETS 2,188,839 2,534,939 2,871,756 3,371,692 4,039,741 4,880,021 5,582,043 6,082,121 6,714,602 7,068,925 6,911,169

Liabilities & S hareholders' Equity

Current liabilities

Accounts payable - 185,893 207,352 231,395 258,349 288,551 322,370 360,347 403,018 450,993 316,170Total Current Liabilities - 185,893 207,352 231,395 258,349 288,551 322,370 360,347 403,018 450,993 316,170

Other liabilities

Long term debt 1,969,955 1,750,815 1,513,612 1,256,855 978,933 678,102 352,472 - - - -

To ta l Lo ng Term Lia bilit ies 1,969,955 1,750,815 1,513,612 1,256,855 978,933 678,102 352,472 - - - -

Shareholders' equity

Paid-up capital 218,884 218,884 218,884 218,884 218,884 218,884 218,884 218,884 218,884 218,884 218,884

Retained earnings - 379,347 931,908 1,664,558 2,583,575 3,694,484 4,688,317 5,502,891 6,092,700 6,399,048 6,376,115

Total Equity 218,884 598,231 1,150,792 1,883,442 2,802,459 3,913,368 4,907,201 5,721,775 6,311,584 6,617,932 6,594,999

TOTAL CAPITAL AND LIABILITI 2,188,839 2,534,939 2,871,756 3,371,692 4,039,741 4,880,021 5,582,043 6,082,121 6,714,602 7,068,925 6,911,169

Note: Total assets value wi ll differ from project cost due to first installment of leases paid a t the start of year 0- - - - - - - - - - -

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1133..33 PPrroojjeecctteedd CCaasshh FFllooww SSttaatteemmeenntt


Cash Flow StatementRs. 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 - 379,347 552,561 732,649 919,017 1,110,909 993,833 814,573 589,809 306,348 (22,933)

Add: depreciation expense - 70,490 70,490 70,490 70,490 70,490 70,490 70,490 70,490 70,490 70,490

amortization expense - 31,768 31,768 31,768 31,768 31,768 - - - - -

Deferred income tax - - - - - - - - - - -

Accounts receivable - (213,596) (13,350) (27,767) (29,977) (32,338) (25,124) (17,108) (17,963) (18,861) (19,804)Finished good inventory - - - - - - - - - - -

Equipment inventory (5,000) (906) (1,040) (1,191) (1,362) (974) (1,073) (1,183) (1,305) (1,438) 15,471

Raw material inventory (811,466) (125,777) (145,273) (167,790) (193,797) (223,836) (258,531) (298,603) (344,886) (398,344) 2,968,304

Accounts payable - 185,893 21,459 24,043 26,954 30,202 33,819 37,977 42,671 47,974 (134,823)

Other liabilities - - - - - - - - - - -

Ca sh pro vid ed by op era tio ns (816,466) 327,219 516,616 662,202 823,093 986,222 813,414 606,146 338,817 6,170 2,876,705

Financing activities

Ch ang e in lon g t erm d eb t 1,969,955 (219,139) (237,204) (256,757) (277,922) (300,832) (325,630) (352,472) - - -

Issuance of shares 218,884 - - - - - - - - - -

Purchase of (treasury) shares - - - - - - - - - - -

Cash provided by / (used for) financ 2,188,839 (219,139) (237,204) (256,757) (277,922) (300,832) (325,630) (352,472) - - -

Investin g acti vities

Capital expenditure (1,292,373) - - - - - - - - - -

Acquisitions - - - - - - - - - - -

Cash (used for) / provided by invest (1,292,373) - - - - - - - - - -

NET CASH 80,000 108,079 279,413 405,445 545,171 685,390 487,784 253,674 338,817 6,170 2,876,705

Cash balance brought forward 80,000 188,079 467,492 872,937 1,418,108 2,103,499 2,591,283 2,844,958 3,183,774 3,189,944Cash available fo r appropria tion 80,000 188,079 467,492 872,937 1,418,108 2,103,499 2,591,283 2,844,958 3,183,774 3,189,944 6,066,649

Dividend - - - - - - - - - - -

Cash carried forward 80,000 188,079 467,492 872,937 1,418,108 2,103,499 2,591,283 2,844,958 3,183,774 3,189,944 6,066,649

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1133..44 UUsseeffuull PPrroojjeecctt MMaannaaggeemmeenntt TTiippss

Technology

List of Machinery & Equipment (As per Section 12.5)

Required spare parts & consumables: Suppliers credit agreements andavailability 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 Suppl iers: Should be asked for training and after sales services

under the contract with the machinery suppliers

Quality Assurance Equipment & Standards: Whatever means required

products quality standards need to be defined on the packaging and a system

to check them instituted, this improves credibility

Marketing

Product Development & Packaging: Expert's help may be engaged for

product/service and packaging design & development

Ads & P.O.S. Promotion: Business promotion and dissemination through

banners and launch events is highly recommended. Product broachers from

good quality service providers

Sales & Distribution Network: Expert's advise and distribution

agreements are required with.

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. Government controlled prices shall

be displayed.

Human Resources

List of Human Resource (As per Section 12.8)

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.

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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.

1133..55 UUsseeffuull LLiinnkkss

Prime Ministers 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 Gilgi t Baltistan

www.gilgitbaltistan.gov.pk

Government of Azad Jamu Kashmir

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www.ajk.gov.pk

Trade Development Authority of Pakistan (TDAP)

www.tdap.gov.pk

Securi ty 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 Design(PIFD)

www.pifd.edu.pk

Pakistan Fashion Design Council (PFDC)

www.pfdc.org

September 2013

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1144 KKEEYYAASSSSUUMMPPTTIIOONNSS

Particulars Assumption

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 Staff Salaries 10 % per year

Increase in Utilities (Electricity / Water / Gas) 10 % per year

Debt / Equity Ratio 90 : 10

DepreciationPlant 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) 08 % per annum

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