Gems Stone Lapidary

8/13/2019 Gems Stone Lapidary

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Pre-Feasibility Study

(Gems Stone Lapidary)

Small and Medium Enterprises Development Authority

Ministry of Industries & ProductionGovernment of Pakistan

www.smeda.org.pk

HEAD OFFICE

4th Floor, Building No. 3, Aiwan-e-Iqbal Complex, Egerton Road,

LahoreTel: (92 42) 111 111 456, Fax: (92 42) 36304926-7

[email protected]

REGIONAL OFFICE

PunjabREGIONAL OFFICE

SindhREGIONAL OFFICE

Khyber PakhtunkhwaREGIONAL OFFICE

Balochistan3rdFloor, Building No. 3,

Aiwan-e-Iqbal Complex,

Egerton Road Lahore,

Tel: (042) 111-111-456

Fax: (042) [email protected]

5TH Floor, Bahria

Complex II, M.T. Khan Road,

Karachi.

Tel: (021) 111-111-456


Ground Floor

State Life Building

The Mall, Peshawar.

Tel: (091) 111-111-456


Bungalow No. 15-A

Chaman Housing Scheme

Airport Road, Quetta.

Tel: (081) 2831623, 2831702


Note: All SMEDA Services / information related to PM's Youth Business Loan areFree of Cost

December, 2013


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Pre-Feasibility Study Gemstone Lapidary

Table of Contents

1.DISCLAIMER .......................................................................................................................................... 22.PURPOSE OF THE DOCUMENT ......................................................................................................... 33.INTRODUCTION TO SMEDA .............................................................................................................. 34.INTRODUCTION TO SCHEME ........................................................................................................... 45.EXECUTIVE SUMMARY ...................................................................................................................... 46.BRIEF DESCRIPTION OF PROJECT & PRODUCT ........................................................................ 47.CRITICAL FACTORS ............................................................................................................................ 58.INSTALLED & OPERATIONAL CAPACITY .................................................................................... 59.GEOGRAPHICAL POTENTIAL FOR INVESTMENT/SUITABLE LOCATIONS ........................ 510. POTENTIAL TARGET MARKETS/CITIES ................................................................................. 611. PRODUCTION PROCESS FLOW .................................................................................................. 712. PROJECT COST SUMMARY ......................................................................................................... 712.1. PROJECT ECONOMICS ....................................................................................................................... 712.2. PROJECT FINANCING ........................................................................................................................ 812.3. PROJECT COST .................................................................................................................................. 812.4. SPACE REQUIREMENT....................................................................................................................... 812.5. MACHINERY AND EQUIPMENT .......................................................................................................... 912.6. RAW MATERIAL REQUIREMENTS ................................................................................................... 1012.7. ROUGH GEMSTONES ....................................................................................................................... 1012.8. LAPIDARY CONSUMABLES ............................................................................................................. 1012.9. HUMAN RESOURCE REQUIREMENT ................................................................................................ 1112.10. REVENUE GENERATION .................................................................................................................. 1112.11. OTHER COSTS................................................................................................................................. 1213. CONTACTS ...................................................................................................................................... 1214. ANNEXURE ..................................................................................................................................... 1314.1. INCOME STATEMENT ...................................................................................................................... 1314.2 STATEMENTOFCASHFLOW .................................................................................................. 1414.3 BALANCESHEET ....................................................................................................................... 1514.2. USEFULPROJECTMANAGEMENTTIPS ................................................................................ 1614.3. USEFULLINKS ........................................................................................................................... 1715. KEY ASSUMPTIONS ..................................................................................................................... 19


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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 beenprovided 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

SMEDA Services / Information related to PMs Youth Business Loan are FREE OF COST - 2
http://www.smeda.org.pk/http://www.smeda.org.pk/


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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 Gems Stone Lapidary

by providing them 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.

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 sectoral 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 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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4. INTRODUCTION TO SCHEME

Prime Ministers Youth 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,

by designated financial institutions, initially through National Bank of Pakistan (NBP)and 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

While, Lahore & Karachi with its large Gold and Gem studded jewellery making industryare suitable locations, Gems Stone Lapidary is proposed to be located at Peshawar

since major trade/export is taking place in this city. Within Peshawar, Namak Mandi

area is preferable, as large Gems Clusters exist here. These jewellery markets are the

main customers of cut and polished gemstones. The proposed unit will process rough

gemstones, initially semi precious gemstones like Aquamarine, Peridot, Tourmaline etc.

These gemstones mainly come from mines in Chitral, Mardan and Gilgit Baltistan in

addition to gems from Afghanistan and other nearby locations.

Proposed unit will have the capacity to process 3,000 units (Cut & Polished Gemstones,

(average 3 carat weight per stone). In the first year of operation, the unit would run on60% of the total production capacity, which is processing 1,800 pieces.

The total cost of the project is Rs. 2.08 million, with capital cost of Rs. 1.19 million andoperation cost of Rs. 0.89 million. Given the cost assumptions, IRR and payback are38 % and two years respectively, thus making the project a profitable venture.

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

1. Awareness about current market trends i.e. the type of stone & type of cutrequired by customers, which in this case are jewellers.

2. Availability of skilled labour.

6. BRIEF DESCRIPTION OF PROJECT & PRODUCT

Technology:This proposed unit with modern processing machines includes

faceting, cutting and polishing to produce cut and polished precious and semi-

precious gem stones of both calibrated and non-calibrated types.



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Location: The unit will be located in or near gems trading clusters such as

Namak Mandi in Peshawar, or Lahore and Karachi also, where access to raw

gemstones is easy.

Product: The unit would initially process semi-precious gem stones like

Aquamarine, Tourmaline, Peridot etc. which comes from Chitral and Northernareas.

Target Market: An enormous export market for Pakistani gemstones exists in

Europe, USA, Middle East, Hong Kong, Taiwan, etc. The Government of

Pakistan, recognizing the potential for local value addition has waived off import

duty on lapidary equipment.

Employment: The proposed project will provide direct employment to 9 people.

Profitability: Financial analysis shows the unit shall be profitable from the very

first year of operation.

7. CRITICAL FACTORS

The commercial viability of the Gems Stone Lapidary depends, primarily, on regular

orders from customers. Following are some other points that have to be ensured to

make the business successful:

1. Awareness about current market trends i.e. the type of stone & type of cutsrequired by customers; which in this case are jewellers.

2. Availability of skilled labour.3. Timely delivery of orders

4. Availability of raw material (rough, uncut and unpolished gemstones).

8. INSTALLED & OPERATIONAL CAPACITY

The installed capacity shall be 3,000 pieces per year. The project will run with

approximately 60% capacity in first year of its operations with annual increase of 3% in

production, constraint being skill levels.

9. GEOGRAPHICAL POTENTIAL FOR INVESTMENT/SUITABLE

LOCATIONS

The most appropriate location for setting up a Gems Stone Lapidary would bePeshawar, since major trade/export takes place in this city. Within Peshawar, Namak



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Mandi area is preferable as large Gem Clusters exist here. Similarly, Lahore & Karachi,with their large Gold and Gem studded jewellery making industry, are other suitablelocations. Chitral and Mingora as well as Gilgit and Skardu are also suitable locationsfor establishment of Gems Stone Lapidary due to proximity to raw material sources.

10. POTENTIAL TARGET MARKETS/CITIESInitially the products, mainly semi-precious natural gemstones will be processed byfocusing on demand of the jewellery manufactures of Karachi, Lahore and Peshawar.

After having reasonable domestic customers base, export market can be targeted,provided export standards are met. The main export markets for Pakistani Gemstoneare U.A.E, United Kingdom, Thailand, Canada, Italy, China, Netherlands, Saudi Arabia,USA, Hong Kong and Germany.



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11. PRODUCTION PROCESS FLOW

The process of Lapidary includes grading, cutting and polishing of gemstones. Rawstones are either purchased from the market, or provided by the customers (Jewellers).

Individual stone is then examined (graded) and cut into smaller stones along its majorline of fracture and inclusions. The smaller pieces are then mounted on cutting tools,which are then faceted on faceting machines. The final operation involves polishing ofthe faceted stones. Polished stones are then delivered to the customers or sold in themarket.

12. PROJECT COST SUMMARY

A detailed financial model has been developed to analyze the commercial viability ofGems Stone Lapidary under the Prime Ministers Youth Business Loan Scheme.Various cost and revenue related assumptions along with results of the analysis are

outlined in this section.

12.1. PROJECT ECONOMICS

A target processing and production of 3000 units (cut & polished gemstones) wherebyunits processed and produced by Gems Stone Lapidary in year one will be around 1800units (cut & polished gemstones) running at 60% production capacity.

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

Table 1 - Project EconomicsDescription Details

Internal Rate of Return (IRR) 38%

Payback Period (years) 02

Net Present Value (NPV) 4,714,799

Raw Stones ofCustomers

Purchase ofRaw Stones

Grading Cutting Polishing

Delivery toCustomers

Sale toMarket



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requirement for processing area and office. The Units operating in the industry do notfollow any set pattern. Following table shows calculations for project space requirement.

Table 4: Space Requirement

Space Requi rement (in ft.) Sqft

Cutting & Polishing Room 500Offices & Strong Room 250

Total Area 750

Monthly rent for the building with covered area of 750 Sft is estimated at Rs. 21,000

12.5. MACHINERY AND EQUIPMENT

Following combination of machinery is required for cutting and polishing ofapproximately 3,000 units (cut & polished gemstones, with average weight of 3 carats)

per year. Approximate prices for machinery of different origins are given below:

Table 5: List of Machinery and Equipment

MachineryDescription

QuantityCost

Rs/unitTotalRs.

Trim Saw 2 60,000 120,000

Faceting unit 2 60,000 120,000

Calibrating machineswith wheels

1 350,000 350,000

Dual Grinder 2 40,000 80,000

Wet belt sander

Horizontal 1 70,000 70,000

Vertical 1 80,000 80,000

Faceting Accessories 1 150,000 150,000

Faceting Table 1 20,000 20,000

Total 990,000

Main equipment for Gems Stone Lapidary is Trim Saw, for initial trimming of roughGems Stone. After initial trimming, faceting takes place followed by polishing.



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12.6. RAW MATERIAL REQUIREMENTS

Details of Lapidary Consumables and rough (uncut and unpolished) gemstones aregiven below:

12.7. ROUGH GEMSTONES

Table 6 Raw Material (Rough Gemstones)

Raw Material Weight(grams)

Carat Weight Rate/carat Total Cost (Rs.)

Rough Aquamarine 1,500 7,500 20 150,000

Rough Tourmaline 1,500 7,500 20 150,000

Total 3,000 15,000 20 300,000

In the first stage, rough gemstones are graded on the basis of quality for furtherprocessing. According to industry sources, when 3,000 grams of rough gemstones areprocessed, almost 30% i.e. 900 grams is not suitable for cutting and polishing andaround 70% i.e. 2100 grams can be processed further.

12.8. LAPIDARY CONSUMABLES

Basic raw material required for cutting and polishing gemstones is Silicon CarbidePaper, which comes in three sizes of 220, 600 and 1,000 meshes. Raw materialrequired for grinding and polishing of precious stones includes Diamond Powder,

Cerium Oxide and Chrome Oxide, Expandable Drum and Grinding Wheels etc.

Table 7: Lapidary Consumables

Raw Material Quantity Cost (Rs.)

Silicon Carbide Paper

220 mesh 200 Carats 4,000

600 mesh 300 Carats 8,000

1000 mesh 300 Carats 8,000

Diamond Powder

0.5 micron (Rs.25/carat) 200 Carats 4,000

1 micron (Rs.30/carat) 200 Carats 6,000

15 micron (Rs.30/carat) 200 Carats 6,000

Sanding belt 6 X 0.5

220 (70/piece) 50pc 3,500

600 (70/piece) 50pc 3,500

Sanding disk



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220 (70/pc) 50pc 3,500

600 (70/pc) 50pc 3,500

Cerium Oxide (500/lbs) 5 lbs. 2,500

Chrome Oxide (500/lbs) 10 Kg 5,000

Grinding Wheels (1,000/piece) 12 12,000

Expandable Drum 6 X 0.5 (3000/drum) 2 6,000

Leather Belt for polishing (1000/belt) 5 5,000

Misc./Contingencies - 9,500

Total 90,000

12.9. HUMAN RESOURCE REQUIREMENT

Table 8: Human Resource RequirementDescription No. of Employees Salary per month

Manager/Supervisor 1 35,000Cutters @10000 5 50,000

Accounts/AdministrationIncharge

1 12,000

Helper/Peons 1 10,000

Security Services Fees 1 10,000

Total 9 117,000

12.10. REVENUE GENERATION

In the first year of production, the unit will process 1800 units @60% production

capacity with 3% annual production increase,and process the finished product with anaverage weight of 3 carats. Initially semi- precious stones i.e Aquamarine, Tourmalineetc. will be processed and later on cutting and polishing of precious stones, such asemerald and ruby will be undertaken.

Table 8: Revenue

Product UnitSalesPrice

(Rs./Unit)

First YearProduction

Units

First YearSales

Revenue(Rs)

Category A(Cut & polishedAquamarine &Tourmaline)

3 carat 5000 306 1,530,000

Category B (Cut & polishedAquamarine &Tourmaline)

3 carat 1800 630 1,134,000

Category C(Cut & polishedAquamarine &Tourmaline)

3 carat 700 864 604,800

Total Sales Revenue 1800 3,268,800



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12.11. OTHER COSTS

An essential cost to be borne is the monthly rent @ 20,000 / month and utility charges@ 10,000 / which are projected to increase at the rate of 10% per year. In year 1, the

total rent cost amounts to Rs. 240,000. Similarly, electricity expense is estimated to beabout 10,000 per month which comes to Rs.120,000 per annum.

13. CONTACTS

1. Mr. Pervez Ellahi MalikM/S Malik Gems InternationalNamak Mandi PeshawarPh# 0321-8592517091-5252517

2. Mr. Afzal KhanLapidary InstructorGems and Jewellery Training and Manufacturing Centre (GJTMC)Opp. Imperial Store, Saddar, Cantt. PeshawarPh# 091-5269253

3. Mr. Naveed Masood

Director GGIP,

Gems and Gemological Institute of PakistanSuite # 209, 1st Floor, Benevolent Fund Building, Sadder Road, PeshawarPhone: (+92-91) 9213303, 9213196, 091-9213197, 0333-9155097



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14. ANNEXURE

14.1. INCOME STATEMENT


Projected Income Statement

YEAR- 1 YEAR- 2 YEAR- 3 YEAR- 4 YEAR- 5 YEAR- 6 YEAR- 7 YEAR- 8 YEAR- 9 YEA

SALES

Gem Stone (Cut & Polished) 1,530,000 1,767,150 2,041,058 2,357,422 2,722,823 3,144,860 3,632,314 4,195,322 4,845,597 5,5

1,134,000 1,309,770 1,512,784 1,747,266 2,018,092 2,330,896 2,692,185 3,109,474 3,591,443 4,1604,800 698,544 806,818 931,875 1,076,316 1,243,145 1,435,832 1,658,386 1,915,436 2,2

- - - - - - - - -

272400 3,268,800 3,775,464 4,360,661 5,036,563 5,817,231 6,718,901 7,760,331 8,963,182 10,352,476 11,9

COST OF SALES

Gem Stone (Cut & Polished) 390,000 471,900 570,999 690,909 836,000 1,011,560 1,223,987 1,481,024 1,792,039 2,1

- - - - - - - - -

- - - - - - - - -

- - - - - - - - -

COST OF GOODS SOLD 390,000 471,900 570,999 690,909 836,000 1,011,560 1,223,987 1,481,024 1,792,039 2,1

Electricity Expanse 120,000 132,000 145,200 159,720 175,692 193,261 212,587 233,846 257,231 2

Payroll Expanse (All Staff) 1,404,000 1,544,400 1,698,840 1,868,724 2,055,596 2,261,156 2,487,272 2,735,999 3,009,599 3,3

Deprecition Expanse 57,000 54,150 51,443 48,870 46,427 44,106 41,900 39,805 37,815

Machine Maintenance Expanse 22,800 21,660 20,577 19,548 18,571 17,642 16,760 15,922 15,126

Rent Expanse 252,000 264,600 277,830 291,722 306,308 321,623 337,704 354,589 372,319 3

Amortization of Preliminary Expanses 10,000 10,000 10,000 10,000 10,000 - - - -

TOTAL OPERATING EXPANSES 1,865,800 2,026,810 2,203,890 2,398,584 2,612,594 2,837,788 3,096,223 3,380,161 3,692,089 4,0

EARNINGS BEFORE INTEREST & TAXES 1,013,000 1,276,754 1,585,772 1,947,071 2,368,637 2,869,554 3,440,121 4,101,997 4,868,347 5,7

FINANCIAL EXPENSES

Financial Charges on Long term loan 149,904 137,912 122,456 105,763 87,735 68,265 47,237 24,527 -

TOTAL FINANCIAL EXPENSES 149,904 137,912 122,456 105,763 87,735 68,265 47,237 24,527 -

PROFIT BEFORE TAX 863,096 1,138,842 1,463,317 1,841,308 2,280,902 2,801,289 3,392,884 4,077,470 4,868,347 5,7

INCOME TAX 51,964 93,326 141,998 215,762 303,680 422,822 570,721 745,741 983,004 1,2

PROFIT AFTER TAX 811,132 1,045,516 1,321,319 1,625,546 1,977,222 2,378,467 2,822,163 3,331,729 3,885,343 4,5

Retained Earnings at the beginning of year - 811,132 1,451,082 2,249,643 3,214,529 4,378,978 5,768,834 7,401,764 9,322,411 11,5

Dividend 405,566 522,758 660,660 812,773 988,611 1,189,233 1,411,081 1,665,864 1,9

Retained Earnings at the end of year 811,132 1,451,082 2,249,643 3,214,529 4,378,978 5,768,834 7,401,764 9,322,411 11,541,890 14,1


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14.2 STATEMENT OF CASH FLOW


cted Cash Flow Statement

YEAR- 0 YEAR- 1 YEAR- 2 YEAR- 3 YEAR- 4 YEAR- 5 YEAR- 6 YEAR- 7 YEAR- 8 YEAR- 9 Y

RATING ACTIVITIES

rofit - 863,096 1,138,842 1,463,317 1,841,308 2,280,902 2,801,289 3,392,884 4,077,470 4,868,347

ciation - 57,000 54,150 51,443 48,870 46,427 44,106 41,900 39,805 37,815

ization (Pre-operational Expenses) (50,000) 10,000 10,000 10,000 10,000 10,000 - - - -

ofit before working capital changes (50,000) 930,096 1,202,992 1,524,759 1,900,178 2,337,329 2,845,395 3,434,784 4,117,275 4,906,162

ing Capital changes

materials stock (440,000) 351,536 (8,077) (9,774) (11,826) (14,310) (17,315) (20,951) (25,351) (30,674)

- (1,278) (268) (325) (393) (475) (575) (696) (842) (1,019)

ed goods stock - (8,750) (1,838) (2,223) (2,690) (3,255) (3,939) (4,766) (5,767) (6,978)

nts payable - 32,500 6,825 8,258 9,992 12,091 14,630 17,702 21,420 25,918

nts receivable - (272,400) (42,222) (48,766) (56,325) (65,056) (75,139) (86,786) (100,238) (115,774)

ng capital changes (440,000) 101,608 (45,580) (52,830) (61,242) (71,005) (82,338) (95,497) (110,778) (128,528)

- (51,964) (93,326) (141,998) (215,762) (303,680) (422,822) (570,721) (745,741) (983,004)

provided by/ used in operations (490,000) 979,739 1,064,086 1,329,932 1,623,174 1,962,644 2,340,234 2,768,566 3,260,756 3,794,630

NCING ACTIVITIES

erm loan 1,873,800 (149,904) (193,201) (208,657) (225,350) (243,378) (262,848) (283,876) (306,586) -

equity 208,200

nd paid - (405,566) (522,758) (660,660) (812,773) (988,611) (1,189,233) (1,411,081) (1,665,864)

provided by/ used in Financing activities 2,082,000 (149,904) (598,767) (731,415) (886,009) (1,056,151) (1,251,459) (1,473,109) (1,717,667) (1,665,864)

STING ACTIVITIES

l Expenditure (1,140,000) - - - - - - - -

provided by/ used in Investing activities (1,140,000) - - - - - - - - -

ash Flow 452,000 829,835 465,319 598,517 737,165 906,493 1,088,775 1,295,457 1,543,089 2,128,766

alance B/ F - 452,000 1,281,835 1,747,154 2,345,670 3,082,835 3,989,328 5,078,103 6,373,560 7,916,649

balance C/ F 452,000 1,281,835 1,747,154 2,345,670 3,082,835 3,989,328 5,078,103 6,373,560 7,916,649 10,045,415


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14.3 BALANCE SHEET

Projected Balance Sheet

YEAR-0 YEAR - 1 YEAR - 2 YEAR - 3 YEAR - 4 YEAR - 5 YEAR - 6 YEAR - 7 YEAR - 8 YEAR - 9 YEAR

ASSETS

Current Assets

Cash & Bank Balance 250,000 1,301,739 2,039,012 2,630,924 3,406,117 4,352,080 5,481,883 6,820,050 7,926,649 10,075,415 12,54

Raw materials stock 390,000 38,464 46,542 56,315 68,142 82,452 99,766 120,717 146,068 176,742 21

W.I.P - 1,278 1,546 1,871 2,264 2,740 3,315 4,011 4,853 5,873

Finished goods stock - 8,750 10,588 12,811 15,501 18,756 22,695 27,461 33,228 40,206 4

Receivables 272,400 314,622 363,388 419,714 484,769 559,908 646,694 746,932 862,706 99

640,000 1,622,632 2,412,310 3,065,310 3,911,738 4,940,797 6,167,568 7,618,934 8,857,731 11,160,942 13,81

TOTAL CURRENT ASSETS

Fixed Assets

At Cost less: A cc. Depreciation 1,140,000 1,083,000 1,028,850 977,408 928,537 882,110 838,005 796,105 756,299 718,484 68

Intangible Assets

Upfront Insurance 252,000 180,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000

Pre-operational Expenses Worth 50,000 40,000 30,000 20,000 10,000

TOTAL ASSETS 2,082,000 2,925,632 3,631,160 4,202,718 4,970,275 5,922,907 7,085,573 8,475,039 9,654,030 11,899,426 14,49

LIABILITIES AND EQUITY

Current Liabilities

Current maturity of long term loan 208,657 225,350 243,378 262,848 283,876 306,586 - -

Accounts Payable - 32,500 39,325 47,583 57,576 69,667 84,297 101,999 123,419 149,337 18

TOTAL CURRENT LIABILITIES - 32,500 247,982 272,933 300,954 332,515 368,173 408,585 123,419 149,337 18

Non current LiabilitiesLong term Loan 1,873,800 1,873,800 1,723,896 1,471,942 1,246,592 1,003,214 740,366 456,490 - -

EQUITY

Paid up Capital 208,200 208,200 208,200 208,200 208,200 208,200 208,200 208,200 208,200 208,200 20

Retained Earnings - 811,132 1,451,082 2,249,643 3,214,529 4,378,978 5,768,834 7,401,764 9,322,411 11,541,890 14,10

Total Equity 208,200 1,019,332 1,659,282 2,457,843 3,422,729 4,587,178 5,977,034 7,609,964 9,530,611 11,750,090 14,31

TOTAL LIABILITIES & EQUITY 2,082,000 2,925,632 3,631,160 4,202,718 4,970,275 5,922,907 7,085,573 8,475,039 9,654,030 11,899,426 14,49

- - - - - - - - - -



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Pre-Feasibility StudyGemstone Lapidary

14.2. USEFUL PROJECT MANAGEMENT TIPS

Technology

Required Spare Parts & Consumables: Suppliers credit agreements and

availability, as per schedule of maintenance be ensured before start ofoperations.

Energy Requirement:Should not be overlooked 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 with the machinery suppliers. They must be communicated

about the timely availability of machinery with clear mutual understanding of

the required time period.

Quality Assurance Equipment & Standards: Product & service qualitystandards 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.

Sales & Distribution Network: Networking with gems trader and jewellers

should be strengthen.

Price - Bulk Discounts, Cost plus Introductory Discounts: Price shouldnever be allowed to compromise quality. Price during introductory phase 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, if applicable.

Human Resources

Adequacy & Competencies: Skilled and experienced staff should be

considered an investment and be retained by offering better term, if necessary.

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 to best practices is a route to

success. Least cost options for Training and Skill Development (T&SD) may be

linked with compensation benefits and awards.



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14.3. USEFUL LINKS

Prime Ministers Office

www.pmo.gov.pk

Small & Medium Enterprises Development Authority (SMEDA)

www.smeda.org.pk

National Bank of Pakistan (NBP)

www.nbp.com.pk

First Women Bank Limited (FWBL)

www.fwbl.com.pk

Government of Pakistan

www.pakistan.gov.pk

Ministry of Industries & Production

www.moip.gov.pk

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 Pakhtunkhwa

www.khyberpakhtunkhwa.gov.pk

Government of Balochistan

www.balochistan.gov.pk

Government of Gilgi t Baltistanwww.gilgitbaltistan.gov.pk

Government of Azad Jammu &Kashmir

www.ajk.gov.pk

Trade Development Authority of Pakistan (TDAP)



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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

Pakistan Institute of Fashion Design (PIFD)

www.pifd.edu.pk

Pakistan Fashion Design Council (PFDC)

www.pfdc.org

Pakistan Gems and Jewellery Development Company

www.pgjdc.org



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15. KEY ASSUMPTIONS

PRODUCTION ASSUMPTIONS

Maximum Capacity Utilization 100

Maximum Capacity Utilization (Year-1) 60At 100% capacity, the following will be the per day production break-up;

Gem Stone (Cut &

Polished) 100% 1

Total production per day 10

Gem Stone (Cut &

Polished) 100% 3,00

3,00

Per Annum 3,000OPERATING ASSUMPTIONS

Annual Production Capacity(Gem Stone (Cut & Polished)) year 1 1,80

Total Production Capacity (Year 1)

Growth Rate in Production (3%) OR (times) 1.0

Hours operational per day

Days operational per month 2

Days operational per year 31

ECONOMY-RELATED ASSUMPTIONS

Electricity growth rate (10%) OR (times) 1

Pay roll growth (10%) OR (times) 1

KEY ASSUMPTIONS

CASH FLOW ASSUMPTIONS

Accounts receivable cycle (in days) 3

Accounts payable cycle (in days) 3

WIP (Days)

Finished Goods (Days)

Raw Materials Inventory (Days) 3

Cash on Hand 260,00



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Financial Assumptions

Project Life (Years) 10

Debt 90%

Equity 10%

Interest Rate on Long term debt 8%Debt Tenure (Years) 8

Debt payment per years 12

Grace Period (Year) 1

REVENUE ASSUMPTIONS

Sales price per unit in year 1

Gem Stone (Cut &

Polished) 1800

Sale price growth rate (5%) OR (times) 1.05

EXPENSES ASSUMPTIONS

Electricity Expenses Per/Year(RS) 120,000

Machine maintenance Cost /year (% of total machinery cost) 2%

Growth in maintenance cost 3 %) OR (times) 1.03

Pre-paid land rent (12 months) 252,000

Cost of Rough Gem Stones 390,000

Raw material cost growth rate 5%

Rent growth rate 5%

COST OF GOODS SOLD ASSUMPTIONS

COGS Year 1

Gem Stone (Cut

& Polished) 216.67

COGS Growth Rate (4%) OR (times) 1.04

Gems Stone Lapidary

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