Construction Feasibility

Pre-Feasibility Study

HHoouussiinngg CCoonnssttrruuccttiioonn CCoommppaannyy

Small and Medium Enterprise Development Authority

Government of Pakistan

www.smeda.org.pk

HEAD OFFICE

6th Floor LDA Plaza Egerton Road, LahoreTel 111 111 456, Fax: 6304926-7 Website www.smeda.org.pk

[email protected] OFFICE

PUNJABREGIONAL OFFICE

SINDHREGIONAL OFFICE

NWFP

REGIONAL OFFICE BALOCHISTAN

8th Floor LDA Plaza Egerton Road, Lahore

Tel 111 111 456, Fax: 6304926-7 Website www.smeda.org.pk

[email protected]

5TH Floor, BahriaComplex II, M.T. Khan Road,

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

Fax: (021) [email protected]

Ground FloorState Life Building

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


Bungalow No. 15-AChaman Housing Scheme

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


December, 2006

Pre Feasibility Study Housing Construction Company

PREF-80/December, 2006/Rev2

1 INTRODUCTION TO SMEDA ____________________________________________________ 2

2 PURPOSE OF THE DOCUMENT _________________________________________________ 2

3 CRUCIAL FACTORS & STEPS IN DECISION MAKING FOR INVESTMENT __________ 3

4 PROJECT PROFILE ____________________________________________________________ 3

4.1 OPPORTUNITY RATIONALE _____________________________________________________ 3

4.2 PROJECT BRIEF ______________________________________________________________ 4

4.3 MARKET ENTRY TIMING _______________________________________________________ 4

4.4 PROPOSED BUSINESS LEGAL STATUS _____________________________________________ 4

4.5 PROJECT CAPACITY AND RATIONALE _____________________________________________ 4

4.6 PROJECT INVESTMENT_________________________________________________________ 4

4.7 PROPOSED LOCATION _________________________________________________________ 5

4.8 KEY SUCCESS FACTORS/PRACTICAL TIPS FOR SUCCESS _______________________________ 5

4.9 STRATEGIC RECOMMENDATIONS ________________________________________________ 5

5 SECTOR & INDUSTRY ANALYSIS _______________________________________________ 5

5.1 SECTOR CHARACTERISTICS _____________________________________________________ 5

5.2 SUB SECTOR INFORMATION _____________________________________________________ 5

5.2.1 Government Policy Direction ________________________________________________ 6

5.3 LEGAL ISSUES REGARDING HOUSING INDUSTRY ____________________________________ 7

6 MARKET INFORMATION_______________________________________________________ 7

6.1 MARKET POTENTIAL __________________________________________________________ 7

6.2 TARGET CUSTOMERS _________________________________________________________ 8

6.3 TRADE STATISTICS ___________________________________________________________ 8

7 PRODUCTION PROCESS________________________________________________________ 8

7.1 PRODUCTION PROCESS FLOW ___________________________________________________ 9

7.2 RAW MATERIAL REQUIREMENT _________________________________________________ 9

7.3 MACHINERY REQUIREMENT ____________________________________________________ 9

7.4 PRODUCT/PROJECT STANDARDS AND COMPLIANCE ISSUES ____________________________ 9

7.5 RECOMMENDED HOUSE LAYOUT _______________________________________________ 10

8 LAND & BUILDING REQUIREMENT ____________________________________________ 12

8.1 COVERED AREA REQUIREMENT ________________________________________________ 12

8.2 RENT COST ________________________________________________________________ 12

8.3 RECOMMENDED MODE _______________________________________________________ 12

8.4 UTILITIES REQUIREMENT _____________________________________________________ 12



8.5 SUITABLE LOCATION_________________________________________________________ 12

9 HUMAN RESOURCE REQUIREMENT ___________________________________________ 12

10 FINANCIAL ANALYSIS ________________________________________________________ 13

10.1 PROJECT COSTS_____________________________________________________________ 13

10.2 PROJECTED INCOME STATEMENT _______________________________________________ 14

10.3 PROJECTED BALANCE SHEET __________________________________________________ 15

10.4 PROJECTED CASH FLOW STATEMENT ____________________________________________ 16

10.5 COST OF SALES _____________________________________________________________ 17

11 KEY ASSUMPTIONS___________________________________________________________ 18



DISCLAIMER

The purpose and scope of this information memorandum is to introduce the subject

matter and provide a general idea and information on the said area. All the material

included in this document is based on data/information gathered from various sources and

is based on certain assumptions. 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 does not assume any liability for any financial or other loss

resulting from this memorandum in consequence of undertaking this activity. The

prospective user of this memorandum is encouraged to carry out additional diligence and

gather any information he/she feels necessary for making an informed decision.

For more information on services offered by SMEDA, please contact our website: www.smeda.org.pk

DOCUMENT CONTROL

Document No. PREF-80

Revision 2

Prepared by SMEDA-Punjab

Issue Date February 2005

Revision Date December , 2006

Issued by Library Officer



11 IINNTTRROODDUUCCTTIIOONN TTOO SSMMEEDDAA

The Small and Medium Enterprise Development Authority (SMEDA) was established with the objective to provide fresh impetus to the economy through the launch of an aggressive SME support program.

Since its inception in October 1998, SMEDA had adopted a sectoral SME development approach. A few priority sectors were selected on the criterion of SME presence. In depth research was conducted and comprehensive development plans were formulated after identification of impediments and retardants. The all-encompassing sectoral development strategy involved recommending changes in the regulatory environment by taking into consideration other important aspects including finance, marketing, technology and human resource development.

SMEDA has so far successfully formulated strategies for sectors including, fruits and vegetables, marble and granite, gems and jewelry, marine fisheries, leather and footwear, textiles, surgical instruments, transport and dairy. Whereas the task of SME development at a broader scale still requires more coverage and enhanced reach in terms of SMEDA’s areas of operation.

Along with the sectoral focus a broad spectrum of business development services is also offered to the SMEs by SMEDA. These services include identification of viable business opportunities for potential SME investors. In order to facilitate these investors, SMEDA provides business guidance through its help desk services as well as development of project specific documents. These documents consist of information required to make well-researched investment decisions. Pre-feasibility studies and business plan development are some of the services provided to enhance the capacity of individual SMEs to exploit viable business opportunities in a better way.

This document is in the continuation of this effort to enable potential investors to make well-informed investment decisions.

22 PPUURRPPOOSSEE OOFF TTHHEE DDOOCCUUMMEENNTT

The objective of the pre-feasibility study is primarily to facilitate potential entrepreneurs to facilitate investment and provide an overview about housing construction business. The project pre-feasibility may form the basis of an important investment decision and in order to serve this objective, the document covers various aspects of housing construction business concept development, start-up, production, marketing, finance and business management. The document also provides sectoral information, brief on government policies and international scenario, which have some bearing on the project itself.

This particular pre-feasibility is regarding “Housing construction Company” which comes under “Construction and Real Estate” sector.



33 CCRRUUCCIIAALL FFAACCTTOORRSS && SSTTEEPPSS IINN DDEECCIISSIIOONN MMAAKKIINNGG FFOORR IINNVVEESSTTMMEENNTT

Housing can play a significant role in the economic growth of our country, as a source of jobs and capital investment, as a secure vehicle for individual and family savings, and as an essential contributor to personal happiness. So before making any investment decision, it is advisable to evaluate the associated risk factors by taking into consideration certain key elements. These may include availability of resources, academic knowledge, andspecific managerial and technical skill set.

The development of a vibrant housing industry is based on an ample supply of affordable land, with easy access to transportation and efficient distribution of necessities such as energy and water.

On the other hand a demand driver may be the desire of many families to modernize, enlarge or otherwise renovate their homes. This has been an important part of the housing culture for many decades.

Financial institutions are an important partner in the housing sector. To broaden the consumer base for home ownership, especially among lower income families, the financial sector is greatly assisted by banks and financial institutions.

For the housing industry, a well trained work force is essential. An added advantage for Pakistani housing industry is that skilled labour is available at fairly cheap rate.

44 PPRROOJJEECCTT PPRROOFFIILLEE

44..11 OOppppoorrttuunniittyy RRaattiioonnaallee

1Housing is one of the basic human requirements, as every family needs a roof. Providing shelter to every family has become a major issue as a result of rapid urbanization and higher population growth. On the other hand, the provision of house has not kept pace with the above phenomenon and resulted in the deterioration of living condition, increased health hazarded and rapid growth of slums and squatter settlements (Katchi Abadies). The improvement of slums and katchi abadies and provision of affordable housing to shelterless population will not only help alleviate the urban and rural poverty but also increase the productivity of the low income population through improved public health. The present Government is committed to give priority to housing sector and has demonstrated its commitment by allocating significant resources for its accelerated development, which would contribute to the economy in the form of additional employment and support 30 – 40 allied industries. The multiple effects of the housing and construction sector have the potential to create maximum employment opportunities besides generating industrial, commerce and trade activities.

1 Economic survey of Pakistan 2005-06



44..22 PPrroojjeecctt BBrriieeff

The project under consideration will be for construction of residential houses of 5 Marla (1,125 sq. ft.), 7 Marla (1,575 sq. ft.) and 10 Marla (2,250 sq. ft.) within the proposed locations. The proposed sites for the construction are JOHAR TOWN, WAPDA TOWN and VALENCIA HOUSING SOCEITY.

44..33 MMaarrkkeett EEnnttrryy TTiimmiinngg

Though the construction work is not dependent on the time but, as per industry norm, the ideal timing for housing construction is from May to Jun and then from September to November. The reason is rainy season during July and August which causes delays in construction process. During December to February the labour is mostly migrated to rural areas for crop harvest. During harvest season labour is paid more in rural areas this causes shortage of labour and consequently rise in daily wages.

44..44 PPrrooppoosseedd BBuussiinneessss LLeeggaall SSttaattuuss

The proposed legal structure of the business entity is either sole proprietorship or partnership. Although selection totally depends upon the choice of the entrepreneur but this financial feasibility is based on a Sole Proprietorship.

44..55 PPrroojjeecctt CCaappaacciittyy aanndd RRaattiioonnaallee

The proposed project size is simultaneous construction of two houses at nearby locations. This will provide the minimum feasible size for the project and minimum capital outlay for project initiation.

44..66 PPrroojjeecctt IInnvveessttmmeenntt

The total cost of the project is Rs.6.903million.

TTaabbllee 44--11 PPrroojjeecctt CCoossttss

Capital Investment 303,400 Working Capital Requirement 6,600,000

Total Investment 6,903,400

The proposed pre-feasibility is based on the assumption of 50% debt and 50% equity. However this composition of debt and equity can be changed as per the requirement of the investor.

TTaabbllee 44--22 PPrroojjeecctt FFiinnaanncciinngg

Debt 50% 3,451,700

Equity 50% 3,451,700

Total project Investment 6,903,400



TTaabbllee 44--33 VViiaabbiilliittyy

IRR 116.94%NPV @25% 250,954 Pay Back Period (year) 1.81

44..77 PPrrooppoosseedd LLooccaattiioonn

The proposed locations for the construction of houses are as follows

JJoohhaarr TToowwnn

WWAAPPDDAA TToowwnn

VVaalleenncciiaa TToowwnn

44..88 KKeeyy SSuucccceessss FFaaccttoorrss//PPrraaccttiiccaall TTiippss ffoorr SSuucccceessss

The key success factors for housing Construction Company are careful selection of construction site and a good architecture. The investment in good construction material and efficient use of labour are also very crucial. In short quality pays in the long run.

44..99 SSttrraatteeggiicc RReeccoommmmeennddaattiioonnss

The construction industry is only profitable if the projects are completed in time.

Quality of materials used ensures quality of houses built. Superior quality is the best competitive advantage these days.

Careful selection of residential area counts towards selling price and timely sales

The investment in good architectural design is worth it. A good look is the first thing buyers would be looking for at the first place.

55 SSEECCTTOORR && IINNDDUUSSTTRRYY AANNAALLYYSSIISS

55..11 SSeeccttoorr CChhaarraacctteerriissttiiccss

The construction sector in Pakistan today is still at low ebb. This can be judged from the fact that per capita consumption of cement in Pakistan is one of the lowest among the developing countries i.e. 70 kgs. With public spending on the decline and most projects being funded under loans from international agencies, the fate of construction sector seems to be hanging in balance. This sector has a big vacuum in the market and a lot has to be done yet.

55..22 SSuubb sseeccttoorr IInnffoorrmmaattiioonn

According to the latest available census of 1998, the total number of housing units, throughout the country, was 19.3 million, 67.7 per cent housing was in rural areas and 32.3 per cent in urban areas. The overall housing stock comprised 39 per cent kucha houses, 40 per cent semi-pukka houses and 21 per cent pukka houses. The housing



backlog, as estimated according to the 1998 census, was 4.3 million units. The annual additional requirement is estimated around 500,000 housing units whereas the annual production is estimated around 300,000 housing units resulting in a recurring backlog of 270,000 housing units annually. The household size is 6.6 persons and the occupancy per room is 3.3 persons. It is estimated that to make up the backlog and to meet the shortfall in the next 20 years, the overall housing production has to be raised to 500,000 housing units annually. The usual privileges, concessions, exemptions and remissions have become applicable to this industry in accordance with the Board of Investment policy. (Pakistan & Gulf Economist).

The construction sector registered a growth rate of 7.9 percent against a target of 5.4 percent and last year's growth of 3.1 percent. Housing and construction has been identified as one of the major drivers of growth and the government has taken various budgetary and non-budgetary measures to boost this sector which has responded positively despite higher input prices.

55..22..11 GGoovveerrnnmmeenntt PPoolliiccyy DDiirreeccttiioonn

Construction industry alone provides impetus to over 42 other industries. As the Government of Pakistan aims at alleviating poverty and improving revenue collection, a focused attention to this industry can help in achieving both the objectives. On the one hand it has the potential to offer new job opportunities and, on the other hand, enhance revenue collection from other industries. Realizing this fact the Government of Pakistan has took a number of measures for reviving the housing and construction sector, which has been declared a priority industry.

The government has announced various incentives in the National Housing Policy for providing affordable housing for the poor. A rapid growth in housing finance will significantly contribute to the economy in the form of additional employment and support a variety of allied industries.

These measures include; the improvement in the availability of housing finance by encouraging commercial banks to extend housing loans, the reduction in interest rates from 17-18% to 7.5 to 8.5%, streamlining of the legal frame work for loan recovery of financial institutions, and the enhancement of bank exposure to housing finance from 5% to 10% of net advances.

The maximum housing loans per party limit has been increased from Rs.5 million to Rs.10.0 million and the maximum debt-equity increased from 70:30 to 85:15. The maximum loan tenure for housing finance has been increased from 15 to 20 years and the maximum limit of lending for HBFC has been increased from Rs.20 million to Rs.50 million.

In the fiscal area, the measures taken include the enhancement of Tax credits on borrowing under housing loans from financial institutions from Rs.100,000/- or 25% of the income of the mortgager, to Rs.500,000/- or 40% of the income of the mortgager, whichever is less. The limit of property income for withholding tax has been raised from Rs.100,000/- to Rs.200,000/-. The rate of withholding tax on property income has been reduced from 7.5% to 5%. CED on wires and cables



has been withdrawn and excise duty on cement has been reduced by 25% to lessen the cost of construction2.

55..33 LLeeggaall IIssssuueess RReeggaarrddiinngg HHoouussiinngg IInndduussttrryy

Following government departments are involved in the Housing Industry.

Lahore Development Authority (For more info please visit http://www.lda.gop.pk ). WAPDA Town housing Society

66 MMAARRKKEETT IINNFFOORRMMAATTIIOONN

66..11 MMaarrkkeett PPootteennttiiaall

Construction industry in Pakistan has been in the developing stage. In fact two decades ago, the construction companies were better organized and played significant role in the country's development and progress. However during the last twenty years there has been considerable decline in the growth, ability and efficiency of the construction companies. Large and established companies have been replaced with small and medium size companies lacking in management, financial viability and necessary experience to take-up sizable prestigious projects of national importance whereas in the period of seventies, Pakistani companies executed large projects in Middle East and Gulf after obtaining these projects in International competition. The new housing policy (2001) by current government has proved to be a catalyst for sustainable growth in construction industry in recent years.

TTaabbllee 66--11 HHoouussiinngg UUnniittss bbyy TTeennuurree ((IInn mmiilllliioonn))33

Census 1998Tenure All Areas Rural Urban

All Types 19.3 13.1 6.2(100) (100) (100)

Owned 15.6 11.4 4.2(80.8) (87.1) (67.6)

Rented 1.7 0.3 1.4(9.0) (2.3) (23.2)

Rent Free 2.0 1.4 0.6(10.2) (10.6) (9.2)

Note: The figures in parenthesis are percent shares

2 Economic Survey of Pakistan 2004

3 Source: Population and Housing Census 1998



66..22 TTaarrggeett CCuussttoommeerrss

The target customers are the general public of upper-middle income group.

66..33 TTrraaddee SSttaattiissttiiccss

A brief overview of major industry segments is as below.

TTaabbllee 66--22 TToottaall NNuummbbeerr ooff CCoonnssttrruuccttiioonn CCoommppaanniieess44

Category C-1 242 NumbersProject Cost Limit No limitCategory C-2 127 NumbersProject Limit Cost Upto Rs 100 millionCategory C-3 900 NumbersProject Cost Limit Upto Rs 50 millionCategory C-4 769 NumbersProject Cost Limit Upto Rs 20 millionShare in GDP (%age):Construction 3.5Housing 6.0GDP/GNP Real Growth Rates ( %age):Construction 6.24Housing 5.28Gross Fixed Capital Formation:Construction Rs 13,532 millionHousing Rs 56,093 millionContribution to Employment:Total Employed Labor Force 37.03 millionConstruction Sector Share 2.50 millionForeign Direct Investment (Jul-2003.) US$ 21.1 millionImport of Construction Machinery US$ 67.9 millionAverage turn over per year Rs 250 billion

77 PPRROODDUUCCTTIIOONN PPRROOCCEESSSS

This section will include the production details of the project, which includes the raw material required, product mix, production capacity, production proportion of each product etc.

3 SSoouurrccee:: PPaakkiissttaann BBooaarrdd ooff IInnvveessttmmeenntt



77..11 PPrroodduuccttiioonn PPrroocceessss FFllooww

The production process includes the following steps.

Procurement of Land

Architecture Design

Materials Procurement

Erection of Foundations

Construction of Structure

Installation of Electrical Wire Pipes

Construction of roof.

Plaster of cement

Sewerage and water pipe installation

Construction of floors and bathrooms

Paints and electrification

77..22 RRaaww MMaatteerriiaall RReeqquuiirreemmeenntt

Following raw materials will be used:

Bricks Steel Doors and Grills

Sand Wood

Crush Win board

Steel Chipboard

Mud Glass

Cement Varnish

Floor Tiles Paints

Bath Room Fittings Hardware

Cupboards Wires

Lighting accessories Misc. electrification equipment

Sewerage and Water Supply Pipes PVC Pipes

Dadex Pipe

77..33 MMaacchhiinneerryy RReeqquuiirreemmeenntt

All the required machinery like Mixer, Lifts etc are available widely on rental basis.

77..44 PPrroodduucctt//PPrroojjeecctt SSttaannddaarrddss AAnndd CCoommpplliiaannccee IIssssuueess

Please check with the relevant authorities (Like LDA for Johar Town and WAPDA Cooperative Housing Society for WAPDA Town) for more specific details about the



Construction and Compliance issues. These Compliance Issues vary widely by location and by size of plot. Detailed requirements can be obtained from concerned authority upon request.

77..55 RReeccoommmmeennddeedd HHoouussee LLaayyoouutt

For a 5 Marla house following layout is recommended, (front 25 feet X length 45 feet )

Ground Floor

2 bedrooms (13X12 ft) + attached bathrooms (5X5 ft)

1 kitchen (6X8 ft)

A car porch (15X10 ft)

1 TV Lounge (13X10 + 2X8 ft)

1 Drawing Room (11X13 ft)

Vacant Space (5 ft on front and 5 ft at back)

1st Floor


1 store (6X8 ft)

A stair room (10X10 ft)

1 TV Lounge (13X10 + 2X8 ft)

1 Living Room (7X13 ft)

Tarries (5 Feet)

Doors and Windows

Windows 7 (4.5X4.5)

Windows 4 (2X2)

Front Door 1 (7X4)

Room Doors 13 (7X3)

Bathroom Doors 4 (7X2.25)

For a 7 Marla house following layout is recommended, (front 28 feet X length 50 feet)

Ground Floor

2 bedrooms (11X12.5 ft) + attached bathrooms (7X7 ft)

1 kitchen (15X5 ft)

1 Store (10X7)


1 TV Lounge (17X10)




Vacant Space (7 ft on front and 7 ft at back)

1st Floor

2 bedrooms (11X12.5 ft) + attached bathrooms (7X7 ft)

1 store (10X7 ft)

1 kitchen (15X5 ft)


1 TV Lounge (17X10)


Tarries (5 Feet)

Doors and Windows

Windows 7 (4.5X4.5)

Windows 4 (2X2)

Front Door 1 (7X4)

Room Doors 13 (7X3)


For a 10 Marla house following layout is recommended, (front 35 feet X length 65 feet)

Ground Floor


1 kitchen (15X10 ft)

1 store (14X10 ft)


1 TV Lounge (14X20 ft)


Vacant Space (10 ft on front and 7 ft at back 5 ft Galley)

1st Floor


1 store (14X10 ft)

1 kitchen (15X10 ft)


1 TV Lounge (14X20 ft)


Tarries (5 Feet)

Doors and Windows



Windows 13 (4.5X4.5)

Windows 4 (2X2)

Front Door 1 (7X4)

Room Doors 15 (7X3)


88 LLAANNDD && BBUUIILLDDIINNGG RREEQQUUIIRREEMMEENNTT

88..11 CCoovveerreedd AArreeaa RReeqquuiirreemmeenntt

The required space for office is 400 Sq. Feet office

88..22 RReenntt CCoosstt

The Rent Cost for office will be Rs. 12,000 per month.

88..33 RReeccoommmmeennddeedd MMooddee

It is recommended to rent an office on the preferred.

88..44 UUttiilliittiieess RReeqquuiirreemmeenntt

Electricity and two phone lines will be required in office.

88..55 SSuuiittaabbllee LLooccaattiioonn

The office should be located near the construction sites for administrative purpose. The suitable location can be Faisal Town, Johar Town and Garden Town.

99 HHUUMMAANN RREESSOOUURRCCEE RREEQQUUIIRREEMMEENNTT

Designation Number Salaries / Month

Manager 1 55,000

Accounts Officer 1 18,000

Diploma Engineer 1 22,000

Drafts man 1 15,000

Office Boy 2 4,500

Security Guards 1 5,000


PREF-80/Feb, 2005/Rev113

1100 FFIINNAANNCCIIAALL AANNAALLYYSSIISS

1100..11 PPrroojjeecctt CCoossttss

Office Equipment Cost

Furniture & Fixture 61,400

Air Conditioner 25,000

Computers 50,000

Printer 25,000

Sub Total 161,400

Preliminary Expenses 70,000

Preoperational Expenses 72,000

Total 303,400

Working Capital Required 6,600,000

Total Project Cost 6,903,400



1100..22 PPrroojjeecctteedd IInnccoommee SSttaatteemmeenntt

PKR

(ooo)

Year - I Year - II Year - III Year - IV Year - V Year - VI Year - VII Year - VIII Year - IX Year - X

Sales/Revenue 17,000 28,600 56,108 88,759 126,811 210,152 351,392 456,809 792,890 1,030,757Cost of Sales:

Add opening stock - - - - - - - - - - Operating expenses 10,900 16,612 29,334 42,284 55,423 84,840 131,380 158,703 257,624 313,250 Less closing stock

10,900 16,612 29,334 42,284 55,423 84,840 131,380 158,703 257,624 313,250

Gross Profit 6,100 11,988 26,774 46,475 71,388 125,312 220,012 298,106 535,266 717,507 Operating Expenses:

Administrative Expenses 1,765 1,933 2,120 2,327 3,257 3,564 3,918 4,308 4,737 5,209 Marketing Expenses 170 286 561 888 1,268 2,102 3,514 4,568 7,929 10,308

Operating Profit 4,166 9,769 24,092 43,261 66,863 119,646 212,580 289,230 522,600 701,990

Financial Charges 459 362 266 169 72 - - - - -

Profit before Taxation 3,707 9,406 23,827 43,092 66,790 119,646 212,580 289,230 522,600 701,990 Taxation 1,172 3,167 8,214 14,957 23,252 41,751 74,278 101,105 182,785 245,571

Profit after Taxation 2,534 6,239 15,612 28,135 43,539 77,895 138,302 188,124 339,815 456,418

Acc. Profit b/f - 2,534 8,773 24,386 52,520 96,059 173,953 312,255 500,380 840,195

Un-appropriated Profit c/f 2,534 8,773 24,386 52,520 96,059 173,953 312,255 500,380 840,195 1,296,613



1100..33 PPrroojjeecctteedd BBaallaannccee SShheeeett

PKR(ooo)

Year - 0 Year - I Year - II Year - III Year - IV Year - V Year - VI Year - VII Year - VIII Year - IX Year - X

Tangible Fixed Assets 161 138 118 101 87 76 66 57 50 44 38 Preliminary Expenses 70 56 42 28 14 - - - - - - Current Assets:

Cash in Hand / Bank 6,600 9,726 17,303 37,303 71,518 122,686 219,091 389,928 604,887 1,026,388 1,545,598 6,672 9,726 17,303 37,303 71,518 122,686 219,091 389,928 604,887 1,026,388 1,545,598

6,903 9,920 17,463 37,432 71,619 122,762 219,156 389,985 604,937 1,026,431 1,545,636

Owners Equity:Capital 3,452 3,452 3,452 3,452 3,452 3,452 3,452 3,452 3,452 3,452 3,452 Accumulated Profit - 2,534 8,773 24,386 52,520 96,059 173,953 312,255 500,380 840,195 1,296,613

Long Term Loan 3,452 2071 1381 690 - - - - - - - Current Liabilities:

Current Portionof Long Term Loan - 690 690 690 690 - - - - - - Tax provision - 1,172 3,167 8,214 14,957 23,252 41,751 74,278 101,105 182,785 245,571 Accounts Payable - - - - - - - - - - -

- 1,863 3,858 8,905 15,647 23,252 41,751 74,278 101,105 182,785 245,571

6,903 9,920 17,463 37,432 71,619 122,762 219,156 389,985 604,937 1,026,431 1,545,636



1100..44 PPrroojjeecctteedd CCaasshh FFllooww SSttaatteemmeenntt

PKR

(ooo)

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Profit before Financial Charges & Taxation - 4,166 9,769 24,092 43,261 66,863 119,646 212,580 289,230 522,600 701,990Amortization - 14 14 14 14 14 - - - - - Depreciation - 24 20 17 14 12 10 9 7 6 5

- 4,203 9,803 24,123 43,289 66,888 119,656 212,588 289,237 522,606 701,995Working Capital Change - 72 0 0 0 0 0 0 0 0 0Cash form other SourcesOwners 3,452 - - - - - - - - - - Bank Finance 3,452 - - - - - - - - - -

6,903 - - - - - - - - - - Total Sources 6903 4275 9803 24123 43289 66888 119656 212588 289237 522606 701995Fixed Assets 161 - - - - - - - - - - Preliminary Expenses 70 - Preoperational Expenses 72 - Working Capital 6,600 - Re -Payment of Loan - 1,149 1,053 956 859 763 - - - - - Tax - - 1,172 3,167 8,214 14,957 23,252 41,751 74,278 101,105 182,785

6,903 1,149 2,225 4,123 9,074 15,720 23,252 41,751 74,278 101,105 182,785 Cash Increase/(Decrease) - 3,126 7,578 20,000 34,215 51,168 96,404 170,837 214,959 421,501 519,210Opening Balance 6,600 6,600 9,726 17,303 37,303 71,518 122,686 219,091 389,928 604,887 1,026,388Closing Balance 6,600 9,726 17,303 37,303 71,518 122,686 219,091 389,928 604,887 1,026,388 1,545,598

6,600 9,726 17,303 37,303 71,518 122,686 219,091 389,928 604,887 1,026,388 1,545,598



1100..55 CCoosstt ooff SSaalleess

Rupees

Year - I Year - II Year - III Year - IV Year - V Year - VI Year - VII Year - VIII Year - IX Year - X

Operation - - - - - - - - - -

Land cost 5,600,000 9,218,750 17,460,938 26,757,813 36,560,059 58,822,632 94,795,227 118,494,034 199,377,537 249,221,921

Material cost 3,570,799 5,023,335 8,154,354 10,718,931 13,047,476 18,072,544 25,492,698 28,041,968 40,749,656 44,824,622

Labour cost 1,484,000 2,085,875 3,371,242 4,417,323 5,382,105 7,442,086 10,493,133 11,542,446 16,747,645 18,422,410

Rent of mixer - - - - - - - - - -

Utilities connection 95,200 119,000 166,600 190,400 214,200 261,800 333,200 333,200 428,400 428,400

Electricity Chg. 149,760 164,736 181,210 199,331 219,264 241,190 265,309 291,840 321,024 353,126

10,899,759 16,611,696 29,334,342 42,283,797 55,423,103 84,840,252 131,379,567 158,703,488 257,624,262 313,250,479



1111 KKEEYY AASSSSUUMMPPTTIIOONNSS

TTaabbllee 1111--11 OOppeerraattiinngg AAssssuummppttiioonnss

1st Year construction (No. of houses) 4 5 Marla 3 7 Marla 1 10 Marla 0

TTaabbllee 1111--22 RReevveennuuee AAssssuummppttiioonnss

Sales prices Rs.5 Marla 40000007 Marla 500000010 Marla 7200000Sales price growth rate 30%

TTaabbllee 1111--33 FFiinnaanncciiaall AAssssuummppttiioonnss

Project life (Years) 10Debt 50%Equity 50%Interest rate on long term debt 14%Debt tenure (Years) 5No. of installments in a year 2Amortization (years) 5

TTaabbllee 1111--44 MMaatteerriiaall RReeqquuiirreemmeenntt AAssssuummppttiioonnss

Materials Estimated RequirementBricks 20 / sq ftSand 1 Truck/ 167 Sq. ftCrush 0.6 Cubic feet / sq ftSteel 1.35 kg / sq ftCement 1 Bag / 3.07 sq ftMud 1 Trolley / 87 sq ft Tiles on roof 2500 for 5 Marla; 3000 for 7 Marla and 5000 for 10 Marla

HouseTiles (for front) 52.02 Sq m for 5 Marla; 59.83 Sq m for 7 Marla; & 65.03

Sq m for 10 MarlaGrills 160 sq ft for 5 Marla; 160 Sq ft for 7 Marla and 280 sq ft

for 10 MarlaGlass 140 sq ft for 5 Marla; 140 sq ft for 7 Marla and 250 sq ft

for 10 Marla HouseLamination 12 sheets for 5 Marla House; 16 Sheets for 7 Marla and 18



sheets for 10 Marla HouseChip Board 66 sheets for 5 Marla House; 74 Sheets for 7 Marla and 74

sheets for 10 Marla HousePly 12 sheets for 5 Marla House; 17 Sheets for 7 Marla and 19

sheets for 10 Marla HouseWood 242 Sq ft for 5 Marla; 296 Sq ft for 7 Marla and 296 Sq ft

for 10 Marla House

TTaabbllee 1111--55 MMaatteerriiaall ccoosstt AAssssuummppttiioonnss55

Material Rs Price Unit

Bricks 2400 Thousand

Sand 1600 Truck (350 cub ft)

Crush 20 Cubic ft

Steel 30 Kg

Cement 230 Bag

Mud 500 Trolley

Tiles 1800 Thousand

Grills including labour 150 Sq ft

Gate including labour 150 Sq ft

Glass 30 Sq ft

Tiles for Front 425 Sq m

Flooring :

Covered area 35 Sq ft

Bath rooms 450 Sq m

Others (Front, Back & Galli) 50 Sq ft

Door 80 Sq ft

Wood 15 Sq Ft

Lamination 1025 Sheet

Chipboard 700 Sheet

Ply 210 Sheet

5 Prices provided by: Khokar & Sons, Main Walton Road, Lahore. 0300-8866904



TTaabbllee 1111--66 LLaabboouurr ccoosstt AAssssuummppttiioonnss

Category Rate Basis of Pricing

Civil work 125 Sq ft

Electrification 9 Sq ft

Sanitation 9 Sq ft

Paint 17 Sq ftCarpenter 35000 5 Marla houseGuard 4500 MonthGlass Work 3 Sq ft

TTaabbllee 1111--77 EExxppeennssee AAssssuummppttiioonnss

Land Price per Marla Rs. 250,000Land Price growth rate 25%Fees for land Rs. 25,000

Material, Labour growth rate 10%

Documents

Construction Feasibility