Cut Clower Farm ( Gladiolus, Marigold, Statice and Chrysanthemum)
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Transcript of Cut Clower Farm ( Gladiolus, Marigold, Statice and Chrysanthemum)
Pre-Feasibility Study (Cut Flower 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 Complex, Egerton Road,
Lahore Tel: (92 42) 111 111 456, Fax: (92 42) 36304926-7
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
5th Floor, Bahria Complex II, M.T. Khan Road,
Karachi. Tel: (021) 111-111-456 Fax: (021) 35610572
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
Pre-feasibility Study Cut flower Farm
Table of Content
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 ................................................ 6
10 Potential Target Markets / Cities ........................................................ 6
11 Process Flow: ..................................................................................... 6
12 Project Cost Summary ....................................................................... 6
12.1 Project Economics .......................................................................................... 7 12.2 Project Financing ............................................................................................ 8 12.3 Project Cost .................................................................................................... 8 12.4 Space Requirement ........................................................................................ 8 12.5 Machinery and Equipment .............................................................................. 9 12.6 Furniture ......................................................................................................... 9 12.7 Raw Material Requirement ............................................................................. 9 12.8 Human Resource Requirement....................................................................... 9 12.9 Revenue Generation ..................................................................................... 10 12.10 Other Costs ................................................................................................... 10 13 Contacts - Suppliers, experts/consultants, Dev. Institutions ........ 11
14 Annexure ........................................................................................... 11
14.1 Income Statement ......................................................................................... 11 14.2 Project Balance Sheet .................................................................................. 12 14.3 Cash Flow Statement .................................................................................... 13 14.4 Useful Project Management Tips .................................................................. 14 14.5 Useful Links .................................................................................................. 14 15 Key Assumptions .........................................................................................16
Pre-feasibility Study Cut Flower Farm
1 DISCLAIMER This information memorandum is to introduce the subject matter and provide a general idea and information on the subject. Although, the material included in this document is based on data / information gathered from various reliable sources; however, it is based upon certain assumptions which may differ from case to case. The information has been provided on “as is where is basis” without any warranties or assertions as to the correctness or soundness thereof. Although, due care and diligence has been taken to compile this document, the contained information may vary due to any change in any of the concerned factors, and the actual results may differ substantially from the presented information. SMEDA, its employees or agents do not assume any liability for any financial or other loss resulting from this memorandum in consequence of undertaking this activity. The contained information does not preclude any further professional advice. The prospective user of this memorandum is encouraged to carry out additional diligence and gather any information which is necessary for making an informed decision, including taking professional advice from a qualified consultant / technical expert before taking any decision to act upon the information.
For more information on services offered by SMEDA, please contact our website: www.smeda.org.pk
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Pre-feasibility Study Cut Flower Farm
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 Cut Flower Farm by providing them with a general understanding of the business with the intention of supporting potential investors in crucial investment decisions.
The pre-feasibility reports builds upon best practices developed by enterprises through trial and error and industrial norms that provide practical guidance on various aspects of starting and managing a successful business.
Apart from carefully studying the whole document one must consider critical aspects provided later on, which form basis of any investment decision.
3 INTRODUCTION TO SMEDA The Small and Medium Enterprises Development Authority (SMEDA) was established in October 1998 with an objective to provide fresh impetus to the economy through development of Small and Medium Enterprises (SMEs).
With a mission "to assist in employment generation and value addition to the national income, through development of the SME sector, by helping increase the number, scale and competitiveness of SMEs", SMEDA has carried out ‘sectorial research’ to identify policy, access to finance, business development services, strategic initiatives and institutional collaboration and networking initiatives.
Preparation and dissemination of pre-feasibility studies in key areas of investment has been a hallmark of SME facilitation by SMEDA.
Concurrent to the pre-feasibility studies, a broad spectrum of business development services is also offered to the SMEs by SMEDA. These services include identification of experts and consultants and delivery of need based capacity building programs of different types in addition to business guidance through help desk services.
4 INTRODUCTION TO SCHEME ‘Prime Minister’s Youth Business Loan’ program, for young entrepreneurs, with an allocated budget of Rs. 5.0 Billion for the year 2013-14, is designed to provide subsidised financing at 8% mark-up per annum for one hundred thousand (100,000)
SMEDA Services / Information related to PM’s Youth Business Loan are FREE OF COST - 3
Pre-feasibility Study Cut Flower Farm
beneficiaries, through designated financial institutions, initially through the National Bank of Pakistan (NBP) and the First Women Bank Ltd. (FWBL).
Loans from Rs. 0.1 million to Rs. 2.0 million with tenure up to 8 years inclusive of 1 year grace period, and a debt: equity of 90: 10 will be disbursed to SME beneficiaries across Pakistan, covering; Punjab, Sindh, Khyber Pakhtunkhwa, Balochistan, Gilgit Baltistan, Azad Jammu & Kashmir and Federally Administered Tribal Areas (FATA).
5 EXECUTIVE SUMMARY Cut Flower Farm is proposed to be located at favorable flower growing areas in Pakistan including Pattoki, Khaniwal, Faisalabad, Dadu, Sukkur, Peshawar, Swat, Quetta, Kalat, Ziarat, Pishin, Khanozai, Killa Saifullah etc.
The varieties included are Gladiolus, Mari Gold, Statice and Chrysanthemum.
Production Capacity of Gladiolus, Statice, Chrysanthemum and Marigold is 150,000 Kg, having first year production capacity of 60,000 Kg at initial utilization of 40% in year -01.
Total Cost Estimate is Rs. 1.88 Million with fixed investment of Rs. 1.53 Million and working capital of Rs. 0.35 Million.
Given the cost assumptions IRR and payback are 71% and 2.04 years, respectively.
The most critical considerations or factors for success of the project are:
• One of the major competitive advantages of Balochistan is the tenure of production. In Balochistan, flower plants can be produced for 8 months while in other provinces of Pakistan, such period is for 4 months only.
• Balochistan’s dry and cold climate offers better opportunities for growth of cut flower. Quetta, Mastung, Kalat, Pishin, Killa Saifullah and Ziarat are some of the areas recommended for starting such a farm in Balochistan.
6 BRIEF DESCRIPTION OF THE PROJECT Following have been addressed as per pre-feasibility study for a five acre farm:
• Location: The Cut Flower Farm is proposed to be located at favourable flower growing areas in Pakistan and particularly in Balochistan including District Quetta, Kalat, Ziarat, Pishin / Khanozai, Killa Saifullah and any other temperate area.
• Product: The farm would produce cut flowers to fulfil the local demand of cut flower varieties including Gladiolus, Mari Gold, Statice and Chrysanthemum.
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Pre-feasibility Study Cut Flower Farm
• Target Market: The target market for the Cut Flower Farm is local. Major buyers of cut flower are in larger cities such as Karachi, Peshawar, Lahore and Islamabad and domestic market is Quetta, whereas, other potential areas of Balochistan can also be targeted based upon demand.
• Employment Generation: The proposed project will provide direct employment to 06 people. Financial analysis shows the unit shall be profitable from the very first year of operation.
7 CRITICAL FACTORS • Establishment of the farms in areas where basic infrastructure including water
and electricity are available.
• Farming should be done on scientific grounds, taking care of input requirements and pest management techniques.
• Well-trained / experienced staff will add to the efficiency of the farm.
• Producer should be aware of ever-changing fashion in terms of flower color and varieties.
• Special attention towards healthy and certified seeds / bulbs, land preparation, sowing pattern, water management, fertilizer application and marketing is required.
8 INSTALLED AND OPERATIONAL CAPACITY Total farm area is assumed to be five (05) Acres. Cultivation of Gladiolus, Statice, Chrysanthemum and Marigold will be distributed on the farm area respectively.
Table 1: Production at 40% Capacity Production Capacity (Units) 150,000 Initial capacity utilization 40% Production per year 60,000 Production lost to Petals 12,000 Production quantity sold (Flowers) 48,000 Production quantity sold (Petals) 30
The proposed project is for farming of Gladiolus, Statice, Chrysanthemum and Marigold varieties and will generate revenues from sale of these varieties. Additional revenues will be generated from the sale of Gladiolus Corms which will start from the third year.
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Pre-feasibility Study Cut Flower Farm
Table 2: Product Mix Product Production Capacity Per
Year @ 100 % Sales Price (Rs.)
Gladiolus, Statice, Chrysanthemum and Mari Gold
150,000 kg 20 – 35/kg
9 GEOGRAPHIC POTENTIAL FOR INVESTMENT Pakistan is a country conducive to small scale farming where floriculture provides an opportunity for enhancing income from available land resources.
Floriculture is an upcoming opportunity in the country since it requires less water and provides more per acre income than traditional crops. It can play a major role in the economy. It can become an important sector such as Horticulture, Livestock & Fisheries.
Favorable growing areas particularly including Pattoki, Khaniwal, Faisalabad, Dadu, Sukkur, Peshawar, Swat, Quetta, Kalat, Ziarat, Pishin, Khanozai, Killa Saifullah etc.
One of the major competitive advantages of Balochistan is the tenure of production. In Balochistan, flower plants can be in produced for 8 months while in other provinces of Pakistan, such period is for 4 months only.
10 POTENTIAL TARGET MARKETS / CITIES Major buyers of cut flowers are in large cities such as Karachi, Peshawar, Lahore, and Islamabad. Main local target market is Quetta, whereas, other potential areas of Balochistan can also be targeted based on demand. 11 PROCESS FLOW:
The Flower process will be as under:
12 PROJECT COST SUMMARY A detailed financial model has been developed to analyze the commercial viability of “Cut Flower Farm - Gladiolus, Mari Gold, Statice and Chrysanthemum” under the
Land Leveling
Sowing Watering
Early Stage Plants
Visual Inspection
Plucking
Packing & Distribution
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Pre-feasibility Study Cut Flower Farm
Prime Minister’s Youth Business Loan. Various cost and revenue related assumptions along with results of the analysis are outlined in this section.
The projected Income Statement, Cash Flow Statement and Balance Sheet are attached as appendix.
12.1 Project Economics The total project investment is Rs. 1.88 Million which includes Capital Cost of Rs. 1.53 Million and Working Capital of Rs. 0.35 Million.
All the figures in this financial model have been calculated for a total farm area assumed to be Five (05) Acres. Cultivation of the cut flowers is expected to yield 150,000 Gladiolus, Statice, Chrysanthemum and Marigold over a distributed area of 05 Acres, respectively.
Yield covered by Cut Flower Farm of Gladiolus, Statice, Chrysanthemum and Marigold in year one will be 60,000 at initial capacity of 40%.
The following table shows internal rates of return and payback period.
Table 3 - Project Economics
Description Details
Internal Rate of Return (IRR) 71%
Payback Period (Yrs) 2.04
Net Present Value – NPV (Rs.) 4,196,607
Since floriculture sector in Pakistan is not highly developed there are great variations in the production and consumption cycle of cut flowers. The production cycle is especially dependent upon the natural environment and weather. Similarly, the consumption cycle is influenced by marriages, religious (URS) and political occasions. Due to these reasons it is difficult to forecast the actual requirement for cut flowers. Similarly, due to the perishable nature of the product, appropriate infrastructure and transportation also plays an important role in marketing and profitability of cut flowers.
Focus on healthy and certified seeds/ bulbs, land preparation, sowing pattern, water management, fertilizer application, hiring of skilled personal, pest management, ever-changing fashion in terms of flower color and varieties, along with marketing is required to avoid project losses.
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Pre-feasibility Study Cut Flower Farm
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.187,911
Bank Loan (90%) Rs.1,691,195
Annual Markup to the Borrower 8%
Tenure of the Loan (Years) 8
Grace Period (Years) 1
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. Land On lease Machinery & equipment 20,000 Land tillage and saplings 1,063,000 Furniture & fixtures 20,000 Pre-operating costs 430,514 Total Capital Costs 1,533,514 Working Capital Rs. Raw material inventory 20,592 Upfront land lease rent 125,000 Cash 200,000 Total Working Capital 345,592 Total Investment 1,879,106
12.4 Space Requirement Total required land for this project is five (05) acres, most of which will be used for farming. Land would be leased for the project, however, investors with own land can generate more income from the project.
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Pre-feasibility Study Cut Flower Farm
12.5 Machinery and Equipment Following table provides a list of equipment required for planting, managing and harvesting the farm.
Table 7: List of Machinery & Equipment
Items Total Cost Rs Shovels, pickaxes, Cutters , Cart & Misc tools etc
20,000
Total 20,000
12.6 Furniture Since this is a field oriented project, therefore, no office equipment will be required. However, there is a provision for purchase of rudimentary furniture.
Table 8: Furniture Cost
Description Total Cost (Rs.)
Furniture 20,000 Total 20,000
12.7 Raw Material Requirement Cost is determined for different cut flower varieties by adding their seed / bulb cost with labour, pesticides, fertilizer etc.
Table 9: Cost of Material
Material Cost (Rs.) Unit Total Annual Cost (Rs.)
Pesticide Sprays 20,000 5 100,000 Fertilizers 25,000 5 125,000 Water 25,000 5 125,000 Weeding 25,000 5 125,000 Total 475,000
12.8 Human Resource Requirement Table 10: Human Resource Requirement
Description No. of Employees Salary/month Supervisor / Marketing Officer
1 20,000
Farm Worker (Mali) Full Time
5 50,000
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Pre-feasibility Study Cut Flower Farm
Total Staff 6 70,000 Supervisor / Marketing Officer will be responsible for overseeing on-farm activities and marketing / sales of the cut flower.
Semi-skilled workers are required to look after the plants, watering, fertilizer application, de-weeding, insecticide use, planting and harvesting at the farm.
12.9 Revenue Generation
Table 11: Revenue Assumptions
Product Unit Sales Price (Rs./Unit)
First Year Sales Revenue (Rs)
Gladiolus, Statice, Chrysanthemum and Marigold
48,000 35 1,680,000
Petals (Kg.) 30 20 600 Total Sales Revenue 1,680,600 Price range for cut flower is Rs. 20 – 35 per kg. Sales growth rate is assumed to increase at 10% per annum. Increase in cost of goods sold is assumed to be 12%, as it is anticipated that some of the bulbs will be available for re-use within two years. Initial capacity of project is assumed at 40% of total available capacity and growth in capacity utilization is projected at 25% per annum.
12.10 Other Costs Table 12: Misc Expenses
Operating Expense / annum (Rs.) Administration Expense / annum 240,000 Land lease/rental expense / annum 125,000 Travelling expense 50,418 Communication expense 24,000 Depreciation expense 110,300 Amortization expense 43,051
Subtotal 592,769
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Pre-feasibility Study Cut Flower Farm
13 CONTACTS - SUPPLIERS, EXPERTS/CONSULTANTS, DEV. INSTITUTIONS Mr. Fahim Ahmed Malghani Horticulturist/Cold Chain Specialist Vegetable Botanist Agriculture Research Institute Agriculture & Cooperatives Department, Government of Balochistan Quetta Cell: 0334 4058071
SMEDA Services / Information related to PM’s Youth Business Loan are FREE OF COST - 11
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 1,680,600 3,004,073 3,812,861 4,194,147 4,613,562 5,074,918 5,582,410 6,140,651 6,754,716 7,430,188 Cost of goods sold 763,100 1,083,040 1,167,016 1,256,248 1,355,101 1,464,702 1,586,311 1,721,337 1,871,357 2,038,137
Gross Profit 917,500 1,921,033 2,645,845 2,937,900 3,258,461 3,610,216 3,996,099 4,419,314 4,883,359 5,392,051
General administration & selling expensesAdministration expense 240,000 244,800 249,696 254,690 259,784 264,979 270,279 275,685 281,198 286,822 Rental expense 125,000 137,500 151,250 166,375 183,013 201,314 221,445 243,590 267,949 294,743 Utilities expense - - - - - - - - - - Travelling & Comm. expense (phone, fax, etc.) 74,418 114,602 139,355 151,293 164,385 178,745 194,500 211,788 230,761 251,588 Office vehicles running expense - - - - - - - - - - Office expenses (stationary, etc.) - - - - - - - - - - Promotional expense - - - - - - - - - - Insurance expense - - - - - - - - - - Professional fees (legal, audit, etc.) - - - - - - - - - - Depreciation expense 110,300 110,300 110,300 110,300 110,300 110,300 110,300 110,300 110,300 110,300 Amortization expense 43,051 43,051 43,051 43,051 43,051 43,051 43,051 43,051 43,051 43,051 Property tax expense - - - - - - - - - - Miscellaneous expense - - - - - - - - - -
Subtotal 592,769 650,254 693,653 725,710 760,533 798,390 839,576 884,414 933,260 986,505 Operating Income 324,731 1,270,779 1,952,192 2,212,190 2,497,928 2,811,826 3,156,523 3,534,901 3,950,099 4,405,546
Other income - - - - - - - - - - Gain / (loss) on sale of assets - - - - - - - - - - Earnings Before Interest & Taxes 324,731 1,270,779 1,952,192 2,212,190 2,497,928 2,811,826 3,156,523 3,534,901 3,950,099 4,405,546
Interest expense 140,368 128,509 112,921 96,040 77,757 57,957 36,514 13,291 - - Earnings Before Tax 184,362 1,142,270 1,839,271 2,116,150 2,420,171 2,753,869 3,120,010 3,521,610 3,950,099 4,405,546
Tax 11,327 148,840 253,390 294,922 340,525 390,580 445,501 505,741 570,015 638,332 NET PROFIT/(LOSS) AFTER TAX 173,035 993,430 1,585,881 1,821,228 2,079,646 2,363,289 2,674,508 3,015,869 3,380,085 3,767,214
Balance brought forward 173,035 1,166,465 2,752,346 4,573,574 6,653,220 9,016,509 11,691,017 14,706,886 18,086,971 Total profit available for appropriation 173,035 1,166,465 2,752,346 4,573,574 6,653,220 9,016,509 11,691,017 14,706,886 18,086,971 21,854,185 Dividend - - - - - - - - - - Balance carried forward 173,035 1,166,465 2,752,346 4,573,574 6,653,220 9,016,509 11,691,017 14,706,886 18,086,971 21,854,185
SMEDA Services / Information related to PM’s Youth Business Loan are FREE OF COST - 11
14.2 Project 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 200,000 480,929 1,544,354 3,256,238 5,224,427 7,469,604 10,015,072 12,889,647 16,124,686 20,070,823 25,093,541 Accounts receivable - 23,022 32,087 46,691 54,843 60,327 66,359 72,995 80,295 88,324 97,157 Finished goods inventory - - - - - - - - - - - Equipment spare part inventory - - - - - - - - - - - Raw material inventory 20,592 50,769 62,926 77,525 95,511 117,670 144,969 178,602 220,038 271,087 - Pre-paid annual land lease 125,000 137,500 151,250 166,375 183,013 201,314 221,445 243,590 267,949 294,743 - Pre-paid building rent - - - - - - - - - - - Pre-paid lease interest - - - - - - - - - - - Pre-paid insurance - - - - - - - - - - -
Total Current Assets 345,592 692,219 1,790,618 3,546,830 5,557,793 7,848,915 10,447,846 13,384,834 16,692,968 20,724,978 25,190,698
Fixed assetsLand - - - - - - - - - - - Building/Infrastructure - - - - - - - - - - - Saplings & Land Tillage 1,063,000 956,700 850,400 744,100 637,800 531,500 425,200 318,900 212,600 106,300 -
Machinary & Equipment 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 - Furniture & fixtures 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 - Office vehicles - - - - - - - - - - - Office equipment - - - - - - - - - - -
Total Fixed Assets 1,103,000 992,700 882,400 772,100 661,800 551,500 441,200 330,900 220,600 110,300 -
Intangible assetsPre-operation costs 430,514 387,463 344,411 301,360 258,309 215,257 172,206 129,154 86,103 43,051 0 Legal, licensing, & training costs - - - - - - - - - - -
Total Intangible Assets 430,514 387,463 344,411 301,360 258,309 215,257 172,206 129,154 86,103 43,051 0 TOTAL ASSETS 1,879,106 2,072,382 3,017,429 4,620,290 6,477,902 8,615,672 11,061,251 13,844,888 16,999,670 20,878,329 25,190,698
Liabilities & Shareholders' EquityCurrent liabilities
Accounts payable - 12,241 25,347 28,832 32,649 37,007 41,989 47,695 54,240 61,762 56,696 Export re-finance facility - - - - - - - - - - - Short term debt - - - - - - - - - - - Other liabilities - - - - - - - - - - -
Total Current Liabilities - 12,241 25,347 28,832 32,649 37,007 41,989 47,695 54,240 61,762 56,696
Other liabilitiesLease payable - - - - - - - - - - - Deferred tax - 8,000 134,315 351,200 604,039 896,361 1,232,024 1,615,245 2,050,633 2,541,686 3,091,907 Long term debt 1,691,195 1,691,195 1,503,392 1,300,001 1,079,729 841,174 582,819 303,021 - - -
Total Long Term Liabilities 1,691,195 1,699,195 1,637,707 1,651,201 1,683,768 1,737,535 1,814,843 1,918,266 2,050,633 2,541,686 3,091,907
Shareholders' equityPaid-up capital 187,911 187,911 187,911 187,911 187,911 187,911 187,911 187,911 187,911 187,911 187,911 Retained earnings - 173,035 1,166,465 2,752,346 4,573,574 6,653,220 9,016,509 11,691,017 14,706,886 18,086,971 21,854,185
Total Equity 187,911 360,946 1,354,376 2,940,257 4,761,485 6,841,131 9,204,419 11,878,928 14,894,796 18,274,881 22,042,095 TOTAL CAPITAL AND LIABILITI 1,879,106 2,072,382 3,017,429 4,620,290 6,477,902 8,615,672 11,061,251 13,844,888 16,999,670 20,878,329 25,190,698
- - - - - - - - - - -
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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 - 173,035 993,430 1,585,881 1,821,228 2,079,646 2,363,289 2,674,508 3,015,869 3,380,085 3,767,214 Add: depreciation expense - 110,300 110,300 110,300 110,300 110,300 110,300 110,300 110,300 110,300 110,300 amortization expense - 43,051 43,051 43,051 43,051 43,051 43,051 43,051 43,051 43,051 43,051 Deferred income tax - 8,000 126,315 216,885 252,839 292,322 335,663 383,221 435,389 491,053 550,221 Accounts receivable - (23,022) (9,065) (14,605) (8,151) (5,484) (6,033) (6,636) (7,300) (8,029) (8,832) Finished good inventory - - - - - - - - - - - Equipment inventory - - - - - - - - - - - Raw material inventory (20,592) (30,177) (12,158) (14,599) (17,986) (22,159) (27,299) (33,633) (41,436) (51,049) 271,087 Pre-paid building rent - - - - - - - - - - - Pre-paid lease interest - - - - - - - - - - - Advance insurance premium - - - - - - - - - - - Accounts payable - 12,241 13,105 3,486 3,817 4,358 4,982 5,706 6,545 7,522 (5,066) Other liabilities - - - - - - - - - - -
Cash provided by operations (20,592) 293,429 1,264,979 1,930,400 2,205,098 2,502,034 2,823,953 3,176,518 3,562,419 3,972,932 4,727,975
Financing activitiesChange in long term debt 1,691,195 - (187,803) (203,391) (220,272) (238,555) (258,355) (279,798) (303,021) - - Change in short term debt - - - - - - - - - - - Change in export re-finance facility - - - - - - - - - - - Add: land lease expense - 125,000 137,500 151,250 166,375 183,013 201,314 221,445 243,590 267,949 294,743 Land lease payment (125,000) (137,500) (151,250) (166,375) (183,013) (201,314) (221,445) (243,590) (267,949) (294,743) - Lease principal repayment - - - - - - - - - - - Issuance of shares 187,911 - - - - - - - - - - Purchase of (treasury) shares - - - - - - - - - - -
Cash provided by / (used for) financ 1,754,106 (12,500) (201,553) (218,516) (236,910) (256,856) (278,486) (301,943) (327,380) (26,795) 294,743
Investing activitiesCapital expenditure (1,533,514) - - - - - - - - - - Acquisitions - - - - - - - - - - -
Cash (used for) / provided by invest (1,533,514) - - - - - - - - - -
NET CASH 200,000 280,929 1,063,426 1,711,884 1,968,189 2,245,178 2,545,467 2,874,575 3,235,039 3,946,137 5,022,718
Cash balance brought forward 200,000 480,929 1,544,354 3,256,238 5,224,427 7,469,604 10,015,072 12,889,647 16,124,686 20,070,823 Cash available for appropriation 200,000 480,929 1,544,354 3,256,238 5,224,427 7,469,604 10,015,072 12,889,647 16,124,686 20,070,823 25,093,541 Dividend - - - - - - - - - - - Cash carried forward 200,000 480,929 1,544,354 3,256,238 5,224,427 7,469,604 10,015,072 12,889,647 16,124,686 20,070,823 25,093,541
SMEDA Services / Information related to PM’s Youth Business Loan are FREE OF COST - 13
14.4 Useful Project Management Tips Technology
• Quality Assurance Equipment & Standards: Products quality standards/check need to be defined.
Marketing
• Product Development & Packaging: Experts may be engaged for product / service and packaging design & development.
• Ads & Point of Sale Promotion: Business promotion and dissemination through banners and launch events is highly recommended. Product brochures from good quality service providers can be developed.
• Sales & Distribution Network: Expert's advice and distribution agreements are required.
• Price - Bulk Discounts, Cost plus Introductory Discounts: During the introductory phase price may be lower and used as a promotional tool. Product cost estimates should be carefully documented before price setting. Government controlled prices shall be displayed, where applicable.
Human Resources
• List of Human Resource (As per Section 12.8)
• Adequacy & Competencies: Recruitment of skilled and experienced staff should be considered an investment.
• Performance Based Remuneration: Performance based remuneration should be offered to incentivize workers.
• Training & Skill Development: Training and skill development of employees and exposure to best practices should be undertaken. Least cost options for Training and Skill Development (T&D) may be linked with compensation benefits and awards.
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)
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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 Pakhtunkhwa
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 & 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
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15 KEY ASSUMPTIONS
Production Related Assumptions
Production Capacity (Units) 150,000 Initial capacity utilization 40% Production per year 60,000 Production lost to Patel (@ 20%) 12,000 Production quantity sold (Flowers) 48,000 Production quantity sold (Flowers in kgs. for petals) 30
Revenue Assumption
Production Capacity 50,000 3 150,000 Sale price per Flower in year 1 Rs. 35 Sale price per Kg. petals Rs. 20 Sale price growth rate 10% Production capacity utilization - Year 1 40% Production capacity utilization growth rate 25% Maximum capacity utilization 75% Financial Assumptions
Description 90 % Equity 10 % Debt 90% Debt Tenure (Years) 8 Interest Rate / annum 8% Grace Period (Years) 1
Depreciation Rates
Furniture 10 % Machinery and Equipment 10 %
Cash Flow Assumptions
Accounts Receivables Cycle (days) 5
Accounts Payable Cycle (days) 15 Cash in Hand Rs. 200,000
Economy Related assumptions
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Inflation rate 10 % Electricity growth rate 10 % Water price growth rate 2 % Wage growth rate 2 %
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