Project Managment (chip board)

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Chip Board PlantInvestmentMs.c(Accounting & Finance) 3rd

This is our assignment work, and most of data pulledout from SMEDA.

Prepared byFahad Saeed Malik5/1/2009


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Project Report

OnCHIPBOARD PLANT

Subject

Project Management

Submitted to

Mr. Javad Iqbal

Submitted by

Fahad Saeed Malik 49

Shahid Mumtaz Ali 48

Saeed Aslam Bandasha 24Rizwan Ali Jutt 20

Silver Star Chip Board ManufacturerMs.c (A/F) 3rd


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Alif Laam Raa. A book which we have revealed to you(Muhammad) so that You may lead the people from out of thedark nesses into the light by their Lords leave to the path of

the All-Might, the Praiseworthy.(Al- Quran)



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DEDICATION

ToThe students of Pakistan, who are in thehunt for a dazzling future in this country

that can endeavor their aptitude forevery difficulty in prospect

And

To our teachers who are a rock-solidpotency for us their motivation willempower us to face the intricacy in

future

And

To my mother,Whose unwavering faith in me

Has been the driving force in my lifeHer unconditional love and prayers

remain my unremitting sourceOf strength.



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Prelude

Project is a fundamental part of Ms.c (A/F) program because it

gives us practical knowledge of what we have learnt during our

study period. This report is written to fulfill the requirement of our

degree. Research project provides opportunities to have been

scrutiny and experience. This report process is valuable in course of

learning. This report is also a step of some chance of practical

experience form. In this report will be covering all vital information

and heir scanning exposures in the form of our observation.

In this report we have tried our levels best efforts to cover and

elaborate necessary inferences suitable to enhance the knowledge.

We hope our efforts of transfer of knowledge through this report

will be information gaining for readers.



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Acknowledgement

This work would not have been possible without the support and

encouragement of my Teacher, Javid Iqbal under whose supervision. Wchose this topic and began the Project.

We cannot end without thanking of our all teachers, on whose constant

encouragement and love. we have relied throughout our time at the

University We are very grateful also to the examples of our other

friends, their unflinching courage and conviction will always inspire us

and we hope to continue, in our own small way, the noble mission to

which they gave their lives. It is to them that I dedicate this work.



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Overture

Pakistan is its way to progress and a numbers of commercial activities are in

process. Housing & construction sectors are declared as industry. With these

developments these sectors are growing drastically. The growth of allied industries is

normal practice therefore demand for chipboard has increased. Local industry is not able

to cater the local demand and every year a considerable quantity of chipboard is imported

from different parts of the world to meet the demand. Therefore it is a right Project in

this environment but for high quality board definitely.

Banking policies for housing loans are also playing an important roll in the boost of

the housing sector. The construction style has absolutely changed and demand of

chipboard and laminated board has significantly increased. Afghanistan Development

Program after the war has also contributed in opportunities to enhance considerable

export by taking part in the development of Afghanistan. Construction business is a

demanding area. Trade has opened for all the world economies from 2005 and it is

visualized that demand will increase more in future.

Due to increase in population and need of constructing new houses it is expected that

demand for chipboard will rise ultimately. Chipboard industry is a growing industry of

Pakistan which can contribute positively in the GDP. This industry has reasonable

potential to attract new markets abroad by providing high quality board.


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Executive summation

Name of the Project:

Silver Star Chipboard Manufacturing

Plant

Main Sponsors:

Fatima Group

3. Cost of the Capital:Fixed Cost 177,967,609

Initial Working Capital 64,050,000

Total 242,0176,09

1. Date of Commercial Production:

30/06/2010

Silver Star Chip Board Manufacturer

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CRUCIAL FACTORS & STEPS IN DECISIONMAKING FOR

INVESTMENT:

Before making the decision, whether to invest in setting up the Gold Chain manufacturing

unit or not, one should carefully analyze the associated risk factors. An industrial sector

SWOT analysis is given below that can help in analyzing these factors, which can play

important role in making the decision. However, a prospective entrepreneur would have to

conduct micro level SWOT analysis on the basis of the intended city/town for his business.

SWOT Analysis

Strengths: Continuous availability & easy access of the raw material, which mainly comprise

Wood.

Availability of Labor and skilled craftsmen.

Latest technology of manufacturing Chipboard with high working efficiency and

trouble free operations.

Easy availability of spare parts.

Own Research & Development department for new design creations.

The life style of the people is improving and trends are continuously changing over

time and more people are now directed towards using the new style of furniture and as

well modern.

WEAKNESSES:

Strict controls over the Labor efficiency need to be observed to reduce the risk the

minimum level


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No state of art type of management and also machinery.

High employment turnover rate.

Marketing strategy is not implementing

Heavy investment in the working capital

No substitute of light

OPPORTUNITIES:

The life style of the people is improving and trends are continuously changing.

Thus the demand for chipboard remains alive and cant end.

Increasing preference for the high quality of chipboard is increasing time to time

Chipboards are popular and used in every class of the society.

Its a compulsory item in society for home making, offices, and every where chipboard

demand will always increase.

As population is increasing day by day construction

Of houses are rapid growing and diffidently the chipboard market will demanded

more?

THREATS:

Quality & design of the Chipboard needs to be considered very

closely.

Strict internal control and quality control procedures required.

Established competitors in Chipboard market.

New laminated sheets are required new style that can attract the

customers.


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Promotional activities are required for this industry.

Need a large amount.

6. Result of Projection:

The result of this Project is that, we are able to setting up a chipboard Manufacturing unit

and to evaluate its viability under present circumstances. Pakistan is its way to progress

and a numbers of commercial activities are in process.

Housing & construction sectors are declared as industry. With these developments these

sectors are growing drastically. The growth of allied industries is normal practice therefore

demand for chipboard has increased. Local industry is not able to cater the local demand and

every year a considerable quantity of chipboard is imported from different parts of the world to

meet the demand. Due to increase in population and need of constructing new houses it is

expected that demand for chipboard will rise ultimately. Chipboard industry is a growing

industry of Pakistan, which can contribute positively in the GDP. This industry has reasonable

potential to attract new markets abroad by providing high quality board.

One of the most common uses of chipboard is that it is the back piece, which provides Stiffne

on a scratch pad. Chipboard is the major input for the furniture industry and also used for kitch

tops and work surface.

7. Name of the Financial Institution:Industrial Development Bank (IDB)

8 . Justification of Production:

Local industry is not able to cater the local demand and every year a considerable quantity of


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chipboard is imported from different parts of the world to meet the demand.

One of the most common uses of chipboard is that it is the back piece, which provides

stiffness on a scratch pad. Chipboard is the major input for the furniture industry and also

used for kitchen tops and work surface.Afghanistan Development Program after the war has also contributed in opportunities to

enhance considerable export by taking part in the development of Afghanistan.

Construction business is a demanding area. Trade has open for

all the world economies from 2005 and it is visualized that demand will increase more in

future.

The demand of chipboard in Pakistan can be categorized into three broad groups of end users,

Furniture Manufacturers, Construction and Housing Industry. There could be a very small

percentage of other users.

Furniture Manufacturer

The furniture industry in Pakistan can be classified into following categories.

x Manually Operated Units

x Semi-mechanized units

x Mechanized Units

x High-tech Manufacturing Units

Chipboard and plywood are the major inputs for the furniture industry, which is the biggest user

of chipboard, accounts for approx. 60% of the total demand for the product. The wood used in

furniture making generally comprises Shesham, Chirh, Pine, Oak, Burmah, Teak, Plywood,

Kikar and Bamboos. Recently, chipboard is also extensively used for this purpose, which is

considered a healthy sign for the chipboard industry. Although the quality ofchipboard so

far produced in the country has not improved up to the world standard, yet with the passage of

time for products diversified uses, easy to handle, economical and many other factors, the use of

chipboard is likely to increase.


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Construction Agencies

The total world spending on the construction sector in a year is US $ 3.2 trillion against US $ 5.2

billion in Pakistan, according to a report compiled by the Lahore Chamber of Commerce and

Industry (LCCI). The growth rate of construction sector in Pakistan which stood at 5.70 percent

during the early 1990s, declined to (negative 4.92) percent in 1998-99, but then recovered to the

mark of 5.15 percent in 1999-2000.As per the information mentioned above it can be envisaged

that as the construction sector will improve it will ultimately improve the chipboard industry

positively.

By keeping in view increasing population growth rate, expanding demand and supply gap and

shortfall of 6 million housing units, it is expected that chipboard usage will increase to meet theshortfall of 6 million housing units.

Others

These include Interior decoration firms, Railways and other Government Agencies. Chipboard

is demanded by these agencies for a variety of purposes. Small quantities ofchipboard are

also in demand for miscellaneous purposes. For instance, bus body makers, packing firms, film

studios, PWD, WAPDA, Municipal Committees and improvement Trusts etc use it.

9. Marketing Activities:

The marketing of the project will be based on the following strong grounds:

x Contacts with end users and Contractor

x Advertisement

x Promotion schemes

x Point of purchase displays

It is assumed that by using all above mentioned methods, project will be able to fetch

considerable market share.

Pricing

Chipboard is available with or without lamination. Different rates are charged for both products.


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Product will be provided to wholesaler at market prevailing rates, which could be different on the base

of product quality.

Distribution

The final product chipboard will directly supplied to wholesaler eliminating role of agencies. Distribution

network of product is illustrated below:

10. Company Information

Partners:

Fahad Saeed Malik

Shahid Mumtaz AliSaeed Aslam Bandasha

Rizwan Ali Jutt

Banks:


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Industrial Development BankBank Alflah limited

Project profileOpportunity Rational

Due to increase in population and need of constructing new houses it is expected that demand for chipboard will

rise ultimately. Chipboard industry is a growing industry of Pakistan, which can contribute positively in the

GDP. This industry has reasonable potential to attract new markets abroad by providing high quality board.

Banking policies for housing loans are also playing an important roll in the boost of the housing sector. The

construction style has absolutely changed and demand of chipboard and laminated board has significantly

increased. Afghanistan Development Program after the warhas also contributed in opportunities to enhance

considerable export by taking part in the development of Afghanistan. Construction business is a demanding

area. Trade has opened forall the world economies from 2005 and it is visualized that demand will increase

more in future.

Project Brief

Gluing together wood particles with an adhesive, under heat and pressure makes chipboard. This creates a rigid

board with a relatively smooth surface. Chipboard is available in different densities i.e. 25mm, 19mm, 8mm, 5mm

and 3mm.

One of the most common uses of chipboard is that it is the back piece, which provides Stiffness on a

scratch pad. Chipboard is the major input for the furniture industry and also used for kitchen tops and work

surface.

Market Entry Timings

Pakistan is its way to progress and a numbers of commercial activities are in process. Housing &

construction sectors are declared as industry. With these developments these sectors are growing drastically.

The growth of allied industries is normal practice therefore demand for chipboard has increased. Local industry is

not able to cater the local demand and every year a considerable quantity of chipboard is imported from different


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parts of the world to meet the demand. Therefore it is right time enter into this industrial sector but for high

quality board definitely.

Business Legal Status

The status of the business should be a corporate entity and it could be either a partnership or a limited company.

However, a private limited company will be the best option.

Project Capacity & Rational

Total production capacity of plant is 200 m3 per day.

Project Investment

Cost of the project will consist of the following.

Fixed Cost 177,967,609

Initial Working Capital 64,050,000

Total 242,0176,09

Proposed Location

Lower Punjab is best location for a chipboard manufacturing unit due to easy availability of raw material, cheap

labor force and excessive water availability. In chipboard industry mango and poplar wood are the main raw

materials. This industry needs excessive water in the manufacturing process. It is important to select the site

where raw material and water availability is easy. However the investor may consider other factors like easy


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access to roads, availability of labor, transportation cost and infrastructure facilities etc. Before selecting the site.

MACROECONOMIC INDICATORS OF PAKISTAN

Demography of Pakistan

The population of Pakistan was 32.5 million in 1947. Over the last fifty-five years, it has

increased by four folds reaching to a figure of 156 Million approximately. It is expected to 172

million marks in the year 2010. The demographic details of Pakistans population are givenbelow:

Population in 2009: 170 Million

Population Density: 200/sq. km

Population Growth (percentage): 2.18%

Population Doubling Time: 32 Years

Birth Rate: 29 per 1000 population

Population Growth

At present, the annual population growth rate is around 2.10 percent. Pakistans population will

be twice over in less than 32 years. Punjab is the most thickly populated area and Karachi is

the most densely populated city. Keeping in view the growth rate of population of the country it

is likely that housing requirements will enhance and automatically demand for the chipboard

will increase.

Housing Sector The housing and construction sector remained neglected in the past, which

resulted in housing backlog of over 4.3 million units according to 1998 census, which is now

projected to 6.0* million units. The annual additional requirement is estimated around 570,000*

housing


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units whereas the annual production is estimated around 300,000* housing units, resulting in a

recurring shortfall of 270,000* housing units annually. It is estimated that in order to address

the backlog and to meet the housing shortfall in the next 20 years, the overall housing

construction will have to be increased to 0.82 million housing units annuallyAccording to 1998 Population and Housing Census of Pakistan, there were over 19.3 million

housing units in the country as compared to 12.6 million enumerated in 1980, showing an

increase of 53.2 percent. The details are tabulated in the table appended herewith.

Housing Units

(Census 1998) (Houses in Millions)

On the basis of World Banks recommended occupancy rate of 6 persons per house, the total

number of housing units in the country roughly required was 26 million up to the end of

2005, based on the population of 156 million at present. Every year, 0.3 million new houses

should be added to the existing stock by the public & private sectors. On the other hand, 10

percent houses of the total supply are depleted/destroyed/demolished every year, resulting

into decline in available housing units to 20.0 million housing units leaving a back log of 6.0

million housing units.


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The present progress involves construction of approximately 4500 housing units/apartments

in 4 major urban centers of Karachi, Lahore, Islamabad and Peshawar at an estimate cost of

Rs. 5 billion. The execution of this program has been entrusted to the National Housing

Authority. It is estimated that approximately 8,000-10,000 laborers and skilled workers areworking on various projects including more than 5000 professional engineers and architects.

In addition, this has also provided an incentive to the 40 downstream industries including

furniture, cement, steel, electrical industries, piping etc.

Government Policies

It is high time that government provides the necessary incentives so that this industry may

play its due role in the industrial development of the country. Further, this industry, on

attaining more dimensional growth, with government assistance, may be able to earn the

badly needed foreign exchange through export of its products. A beginning in this regard has

already been made with the export of our furniture to Saudi Arabia and Gulf States.

Government has granted relief to certain industries involved in housing and construction

projects. In order to boost the Pakistans economy, Construction Sector is being given

special incentives in the shape of reduction in withholding tax from 6% to 1%, which will

ultimately improve the business activities of the downstream industries like furniture,

Chipboard, and Construction material industries as well. By keeping in view increasing

population growth rate, expanding demand and supply gap and shortfall of 6 million housing

units, it is expected that chipboard usage will increase to meet the shortfall of 6 million

housing units.

At Present only 10 units are in laminated chipboard manufacturing. Most of these units have

average rated capacity of approximately 30,000 sheets per/month in 3 shifts. But this sector is

also under utilized and could not attain its average capacity. Imported fine raw material will

help in the quality improvement, which may increase export rate. In the open trade era,

production of high quality product could help in achieving the export targets and the sector


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will grow accordingly. A beginning in this regard has already been made with the export

of our furniture to Saudi Arabia and Gulf States. Government has granted relief to

certain industries involved in housing and constructionprojects.

MARKET INFORMATION

Market potential

Pakistan is facing housing problem since its birth because of the migration of millions

ofpeople from India to Pakistan. However situation is changing now. Many macro and

micro construction works are underway to meet the shortfall of 6.0 million housesboth by the private and public sector, which is a healthy sign for many industries

including chipboard industry. On the basis of all the factors relating to the growth rate of

population, housing industry and export potential, we can anticipate a reasonable growth

rate in demand of the chipboard and laminated board in coming future. On the basis of

the population growth and housing industry, 6% growth in demand till 2010 is

anticipated. The following table is showing the calculations.

Competitive Environment

For a newly established firm it is imperative to face a competitive environment

in the market as competition enhances a companys ability to strive for

continuous improvement. In the field of manufacturing chipboard new entity

will be competing with a number of competitors, some of which are listed

below:

Hamza Chipboard

Gohar Chipboard

Sahar Chipboard


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Haidry Chipboard

Sun Chipboard

Sind Chipboard

Jehlum Chipboard

National Chipboard

Allied and Associated Industries

The project could be very healthy for the allied industries like housing, furniture

and automobile industries by giving them their products at internal transfer rates,

which will ultimately reduce the cost of production of allied companies, and he nce

there would be

a positive impact on the consolidated profitability of the associated companies.

Demand and Supply Gap

Chipboard Industry in Pakistan is an unorganized sector, therefore, it is hard to get

exact demand and supply gap figure. There is a meager gap between demand and

supply of chipboard in Pakistan. This gap is being filled by importing chipboard

from different

countries of the world namely China, Germany, Indonesia, Italy and Maldives

Islands.


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Target Customers

Exporters

The Pakistan government has been taking a number of steps to give a fillip to export.

But these efforts are mainly restricted to increase the traditional exports of agriculture

products and items being manufactured by big industrial units. These exports are

subject to dordrumism as a result of developing countries like Pakistan. The eleventh

September mishap is a concrete example.

Under such atmosphere, it is necessary that Pakistan should, along with taking steps for

safeguarding our traditional exports from the adverse effects of globalization etc, seek

other avenues to raise its exports. One of these avenues may be the development of our

woodwork and wood based industry, which has started to adopt a scientific

approach for its development.

As a result various items of wooden furniture in new design are in appreciable demand,both domestically and internationally. Presently, we are exporting to Sri Lanka, Middle

East, Saudi Arabia, Afghanistan and some Gulf States various items of wooden

furniture.


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Chipper

.

Flaker


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Conveyers

Dry Dust Fisher


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Screening

Storage tank


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Refiners

Dry chip tank


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Glue blender

Glue Kitchen


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Blade grinder

Sending machine

Project Managment (chip board)

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