Kamyab Jawan Youth Entrepreneurship Scheme Pre-Feasibility

Kamyab Jawan

Youth Entrepreneurship Scheme

Pre-Feasibility Study

Laundry and Dry Cleaning

Small and Medium Enterprises Development Authority

Ministry of Industries & Production

Government of Pakistan

www.smeda.org.pk

HEAD OFFICE

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

Lahore

Tel 92 42 111 111 456, Fax 92 42 36304926-7

[email protected]

REGIONAL OFFICE

PUNJAB REGIONAL OFFICE

SINDH REGIONAL OFFICE

KPK REGIONAL OFFICE

BALOCHISTAN

3rd Floor, Building No. 3,

Aiwan e Iqbal, Egerton Road

Lahore,

Tel: (042) 111-111-456

Fax: (042)6304926-7

[email protected]

5TH Floor, Bahria

Complex II, M.T. Khan

Road, Karachi.

Tel: (021) 111-111-456

Fax: (021) 5610572

[email protected]

Ground Floor

State Life Building, The Mall,

Peshawar.

Tel: (091) 9213046-47

Fax: (091) 286908

[email protected]

Bungalow No. 15-A

Chaman Housing Scheme, Airport

Road, Quetta.

Tel: (081) 831623, 831702

Fax: (081) 831922

[email protected]

http://www.smeda.org.pk/

mailto:[email protected]



TABLE OF CONTENTS

1 DISCLAIMER .......................................................................................................................................... 1

2 PURPOSE OF THE DOCUMENT ........................................................................................................ 2

3 INTRODUCTION TO SMEDA ............................................................................................................. 2

4 INTRODUCTION TO SCHEME ........................................................................................................... 2

5 EXECUTIVE SUMMARY ....................................................................................................................... 3

6 BRIEF DESCRIPTION OF PROJECT & PRODUCT ........................................................................ 4

6.1 OPERATIONS PROCESS FLOW .........................................................................................................4

6.2 INSTALLED AND OPERATIONAL CAPACITY.....................................................................................6

7 CRITICAL FACTORS ............................................................................................................................. 8

8 GEOGRAPHICAL POTENTIAL FOR INVESTMENT ...................................................................... 9

9 POTENTIAL TARGET CUSTOMERS / MARKETS ......................................................................... 9

10 PROJECT COST SUMMARY ................................................................................................................ 9

10.1 PROJECT ECONOMICS .......................................................................................................................9

10.2 PROJECT FINANCING ..................................................................................................................... 10

10.3 PROJECT COST ............................................................................................................................... 10

10.4 MACHINERY AND EQUIPMENT REQUIREMENT ........................................................................... 10

10.5 FURNITURE & FIXTURES REQUIREMENT .................................................................................... 11

10.6 OFFICE EQUIPMENT REQUIREMENT ............................................................................................ 12

10.7 SPACE REQUIREMENT ................................................................................................................... 12

10.8 RAW MATERIAL REQUIREMENT .................................................................................................. 13

10.9 HUMAN RESOURCE REQUIREMENT ............................................................................................. 13

10.10 UTILITIES AND OTHER COSTS ...................................................................................................... 14

10.11 REVENUE GENERATIONS ............................................................................................................... 14

11 CONTACT DETAILS ........................................................................................................................... 15

12 ANNEXURES ........................................................................................................................................ 16

12.1 INCOME STATEMENT ..................................................................................................................... 16

12.2 BALANCE SHEET ............................................................................................................................ 17

12.3 CASH FLOW STATEMENT .............................................................................................................. 18

13 USEFUL WEB LINKS.......................................................................................................................... 19

14 KEY ASSUMPTIONS .......................................................................................................................... 20

14.1 OPERATING COST ASSUMPTIONS................................................................................................. 20

14.2 PRODUCTION COST ASSUMPTION ................................................................................................ 20

14.3 REVENUE ASSUMPTIONS............................................................................................................... 20

14.4 FINANCIAL ASSUMPTIONS ............................................................................................................ 20

Pre-Feasibility Study Laundry and Dry Cleaning

Small and Medium Enterprises Development Authority (SMEDA) 1

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.

In case the document is intended to be used for loan application under any

specified loan scheme, respective scheme parameters are to be incorporated

accordingly. In doing so, financial results may vary from results shown in this

document.

For more information on services offered by SMEDA, please contact our website:

www.smeda.org.pk



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 Laundry and

Dry Cleaning business 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 it’s 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 successful 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 ‘Kamyab Jawan – Youth Entrepreneurship Scheme’, for young

entrepreneurs between the age group of 21 - 45 years, is designed to provide

subsidized financing through the National Bank of Pakistan, Bank of Punjab and

Bank of Khyber under the guidance and supervision of the State Bank of Pakistan.

The loans will be disbursed to SME beneficiaries across Pakistan, covering;

Punjab, Sindh, Khyber Pakhtunkhwa, Balochistan, Gilgit Baltistan and Azad

Jammu & Kashmir. The Program aims to provide 25% of the loans to women

entrepreneurs.

Loans provided through Kamyab Jawan Program are segregated in two tiers: Tier

1 loans fall in the range of Rs. 100,000 to Rs. 500,000, with Debt:Equity 90:10 and

6% markup to borrower, and, Tier 2 loans are from Rs. 500,000 to Rs. 5 Million,

with Debt:Equity 80:20 and 8% markup to borrower. Both loans are for a period of

up to 8 years with a grace period of 1 year.

Application forms are available both in branches and dedicated websites of

National Bank of Pakistan, Bank of Punjab and Bank of Khyber.

5 EXECUTIVE SUMMARY

The Importance of Laundry and Dry Cleaning is often under estimated by the

business community of Pakistan. This business is service-oriented and carries

large potential for investment in the metropolitan cities. The life style of people in

Pakistan has changed over the years. Now a days, people are more conscious

about their clothes and use more sophisticated measures for cleaning clothes.

Beside households, commercial businesses, such as the Hotel Industry,

Restaurants and other corporations also need the services of laundry and dry

cleaning on day-to-day basis.

This particular pre-feasibility is intended to provide general information for setting

up an integrated laundry and dry-cleaning unit. It provides a range of services

related to domestic and commercial sector consumers. These services range from

washing, drying and pressings of fabric wears to complex and more professional

services like cleaning sensitive stuff, blankets, curtains, shirwanis and other home

accessories.

The proposed “Laundry and Dry Cleaning” unit will have an installed capacity of

washing and dry cleaning of 81,180 units per annum. However, initial operational

capacity is assumed to be 50% during first year with a gradual increase of 5% in

the subsequent years up to maximum capacity utilization of 90%. It is suggested to

open the shop in a populated and developed area or nearby to newly developing

housing societies.



The proposed business venture entails a total investment of about Rs 4.62 million.

This includes a capital investment of Rs. 3.65 million and a sum of Rs. 0.97 million

as working capital. The project is financed through 80% debt and 20% equity. The

project NPV is around Rs 16.83 million, with an IRR of 43 % and payback period

of 3.33 years. The legal business status of this project is proposed as Sole

Proprietorship.

6 BRIEF DESCRIPTION OF PROJECT & PRODUCT

Due to growing number of working parents, changing life styles of urban

population and busy schedules of daily life in metropolitan cities, families prefer to

utilize outsourced dry cleaning and laundry services. Additionally, most of the

cloths of winter season cannot be washed or cleaned inside home due to their

stuff. Therefore, people always prefer to get those cloths washed from dry

cleaners. Beside households, Commercial business also needs the services of

laundry and dry cleaning business. Business like Hotel Industry, Restaurants and

other office’s require the laundry services on day-to-day basis. These factors have

attributed significantly towards the growth of laundry and dry cleaning businesses

in the country.

This pre‐feasibility study focuses on establishing a laundry and dry cleaning unit in

any metropolis of Pakistan. The proposed unit will provide a wide range of

washing, dry cleaning and pressing services for fabric wears to complex and more

professional services like cleaning sensitive stuff, blankets, curtains, shirwanis and

other home accessories to both the domestic. Target customers of these services

will comprise of both households and commercial consumers (i.e. hotels,

restaurants, banquet halls, caterers, hostels, hospitals and others). Commercial

customers will be playing a significant role in the success of proposed business.

6.1 Operations Process Flow

Liquid solvent and small amount of water are added to the machine. The machine

then stirs clothes in a manner similar to a domestic washing machine to remove

dirt, oil, and stains. Once clean, the clothes are then manually transferred to a

dryer (laundry procedure), then pressed and shaped.

The production operation mainly comprises of two separate processes i.e. laundry

and dry cleaning, as exhibited in the following diagram. Brief explanation of these

processes are as follows:

Tagging: The clothes are firstly tagged with a specific number, mentioned in the

invoice given to customers. This procedure is used for identification of clothes for

particular customers.



Sorting: After tagging the clothes are arranged in different sets. Some people sort

by color, others sort by fabric type.

Washing: The clothes are washed in a washing machine using detergents such

as, detergents, washing powders, soaps and etc. This procedure is only applied

for the laundry services.

Dry Cleaning: In this process, the sensitive, expensive and only dry clean

recommended clothes are cleaned. For this purpose, chemical is used to clean the

clothes, which is known as Perclon.

Drying: The clothes washed in a laundry procedure are dried using dryers.

Steam Pressing: In this process both the clothes either washed or dry-cleaned are

pressed and shaped using steam press equipment.

Packing: Once pressed, the clothes are properly hanged and covered in the plastic

wrap and then tagged so that they can be easily identified.



Process Flow Diagram

6.2 Installed and Operational Capacity

The proposed dry cleaning facility will have an installed capacity of processing

around 248 kg of clothes per day. Accordingly, the unit will have an overall

installed capacity processing 81,180 units per annum. Maximum utilization of the

unit is assumed to be 90%, whereas capacity utilization during first year of

operation is worked out at 50% with gradual increase of 5% annually. Details of

the project capacity are as follow:

Tagging

Sorting

Washing

Dry Cleaning

Drying

Steam Pressing

Packing

Bleach for White Cloths

Detergents & Washing Soap

Perclon (Chemical Applied)



Table 1: Project Operational Capacities

Description Details

Working hours per day 8 hours

Operating shift per day 1

Working days per annum 330 days

Maximum clothes dry clean per day 246 units of clothes

Maximum weight of clothes per day 248 Kg

Maximum weight of clothes per batch 62 Kg

Hours utilized per batch (Laundry & Dry cleaning) 2 hours

Product Mix Wise Installed and Operational Capacity

Weight wise and unit wise distribution of product mix per day of the proposed

laundry and dry cleaning shop is as follows:

Table 2: Weight / Unit Wise Distribution of Product Mix per Day

Description Average Weight

Per Unit (Kg)

Average

Number of

Units Per Day

Average

Weight Per Day

(Kg)

Trousers 0.35 30.00 10.50

Coats (all Kinds)(winter) 2.00 15.00 30.00

Shirts 0.18 40.00 7.20

Jackets/sweater 2.25 15.00 33.75

Dupta 0.05 20.00 1.00

Shalwar Qameez 0.45 40.00 18.00

Blankets 2.25 08.00 18.00

Bed sheets 0.35 20.00 07.00

Curtain 1.25 08.00 10.00

Others(avg.) 2.25 50.00 112.50

Total 11.38 246 247.95

The proposed distribution of product mix is determined on average basis, which

will be affected through seasonal variations.

Details of product mix wise operational and installed capacities are provided in the

table below:



Table 3: Product Mix Wise Installed and Operational Capacity

Items Description % Of Total

Production

Total

Production

Capacity in

Units

(Annually)

Operational

Capacity

50 % (Year

1)

Maximum

Operational

Capacity

90 %

Fabric Wear

Trousers 12.20% 9,900 4,950 8,910

Coats (all

Kinds)(winter) 6.10% 4,950 2,475 4,455

Shirts 16.26% 13,200 6,600 11,880

Jackets/sweater 6.10% 4,950 2,475 4,455

Dupta 8.13% 6,600 3,300 5,940

Shalwar Qameez 16.26% 13,200 6,600 11,880

Blankets 3.25% 2,640 1,320 2,376

Bed sheets 8.13% 6,600 3,300 5,940

Curtain 3.25% 2,640 1,320 2,376

Others(avg.) 20.33% 16,500 8,250 14,850

Total 100% 81,180 40,590 73,062

7 CRITICAL FACTORS

Following are the factors critical for the success of this business venture:

Warranty of clothes from damages and any type of color fading.

Prime business location for proposed dry cleaning.

Reasonable and competitive charges, positioned against competitors.

On time delivery of clothes can leave good impression on the customers.

Technical and efficient labor

Right product mix, proper inventory management, emphasis on customer

services.

Employing and retaining skilled labor.

Advertisement on local cable and banners. Existing dry cleaners are not

advertising for their services.



8 GEOGRAPHICAL POTENTIAL FOR INVESTMENT

The recommended location for setting up the proposed laundry and dry-cleaning

shop will be a commercial market of developed or developing housing societies

having a considerable population concentration.

Considering to that, major cities for instance Karachi, Lahore, Peshawar, Quetta,

Rawalpindi, Islamabad, Multan, Sialkot, Faisalabad, Hyderabad and etc., with

large urban base would be the potential investment areas for the proposed

business.

9 POTENTIAL TARGET CUSTOMERS / MARKETS

The major target market for the dry-cleaning services will depend on the location

where dry cleaning business is situated. The target customers for proposed

business will not only be general public but also the commercial sector i.e. hostels,

catering companies, film industry and hospitals.

10 PROJECT COST SUMMARY

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

of laundry and dry-cleaning workshop and retailing. Various costs 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

also attached as annexure.

10.1 Project Economics

All the figures in this financial model have been calculated for estimated sales of

Rs. 10.77 million in the year one. The capacity utilization during year one is

worked out at 50% with 5% increase in subsequent years up to the maximum

capacity utilization of 90%.

The following table shows Internal Rate of Return, Payback Period and Net

Present Value of the proposed venture:

Table 4: Project Economics

Description Details

Internal Rate of Return (IRR) 43%

Payback Period (Yrs.) 3.33

Net Present Value (Rs.) 16,832,205



10.2 Project Financing

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

bank loan:

Table 5: Project Financing

Description Details

Total Equity (20%) Rs. 924,837

Bank Loan (80%) Rs. 3,699,348

Interest Rate 8%

Tenure of the Loan (Years) 8

Grace Period (Years) 1

10.3 Project Cost

Following fixed and working capital requirements have been identified for

operations of the proposed business:

Table 6: Project Cost

Description Amount Rs.

Capital Cost

Machinery & Equipment 2,570,000

Furniture & Fixtures 289,000

Office Equipment 107,500

Office Vehicle 600,000

Pre-operating Costs 89,111

Total Capital Cost 3,655,611

Equipment Spare Part Inventory 33,825

Raw Material Inventory 276,572

Upfront Building Rent 210,000

Cash 448,178

Total Working Capital 968,574

Total Project Cost 4,624,185

10.4 Machinery and Equipment Requirement

Following tables provides list of machinery and equipment required for an average

size laundry and dry-cleaning shop:



Table 7: Machinery and Equipment Required

Description No. Cost Per Unit

(Rs.) Total Cost (Rs.)

Washing Machine 42"*60" (60kg) 1 340,000 340,000

Hydro Extractor 24*12 (25kg) 1 120,000 120,000

Dryer Machine 48*42 (60kg) 1 125,000 125,000

Dry Clean Machine 30*18 (10kg) 1 650,000 650,000

Steam Press 1 50,000 50,000

Form Finisher Recondition 1 75,000 75,000

Cotton Press 1 200,000 200,000

Boiler 1 250,000 250,000

Steam Ironing Vacuums Table

Boiler with Compressor 1 60,000 60,000

Generator 1 700,000 700,000

Total Machinery & Equipment 1 2,570,000

The required machinery and equipment is locally manufactured and easily

available in Pakistan. These machines can also be imported from Italy, Germany,

China and Japan. However, the prices of new imported machinery are 2 to 3 times

higher than local machinery. The normal market trend is to use second hand

imported machines, which are easily available. The price of second-hand imported

machine and first hand local made machine is almost equal.

Accordingly, the machinery cost estimates in this pre-feasibility study are based on

second hand imported machines.

10.5 Furniture & Fixtures Requirement

Details of the furniture and fixture required for the project are given below:

Table 8: Furniture & Fixtures Requirement

Description Quantity Unit Cost (Rs.) Total Cost

(Rs.)

Iron Racks (10/15 ft) 10 7,500 75,000

Counter Table 2 8,000 16,000

Chairs 5 4,000 20,000



Stool 4 1,000 4,000

Fan 5 4,000 20,000

Exhaust Fan 4 4,500 18,000

Water Dispenser 1 15,000 15,000

Electric wiring & lighting 1 30,000 30,000

Air conditioners (1.5 ton Split) 1 75,000 75,000

Air Cooler for Workshop 1 16,000 16,000

Total 289,000

10.6 Office Equipment Requirement

Following office equipment will be required for proposed laundry and dry-cleaning

shop:

Table 9: Office Equipment Requirement

Description Quantity Unit Cost

(Rs.)

Total Cost

(Rs.)

Laptop (Used) 1 40,000 40,000

POS software with Printer 1 30,000 30,000

Telephone 1 2,500 2,500

UPS with Battery 1 35,000 35,000

Total 107,500

10.7 Space Requirement

In order to reduce the initial capital expenditure, the proposed laundry and dry

clean shop is proposed to be set-up on a rental premises. The space should be

rented in a commercial market to ensure the easy accessibility of customers.

For the proposed machinery, office, furniture & fixture and other equipment’s,

approximately 1,000 square feet area is required. Following is the covered area

requirement split into various sections. It is recommended that customer dealing

office area should be separate from the machine and working area.

Table 10: Space Requirement

Sections Total Area (sq. ft.)

Laundry Shop 500

Working, Machine Area and Store 500



Total Covered Area 1,000

Rent of the proposed unit is assumed as Rs. 70,000 per month.

10.8 Raw Material Requirement

Raw material used for the purpose of dry cleaning of clothes is Perclon chemical.

Perchloroethylene, or perclon, is the dominant chemical solvent used in dry

cleaning. Perclon (Perchloroethylene) is a liquid chemical that consists of 40%

alcohol, 50% kerosene oil and 10% liquid used to save the color fading of clothes.

Perclon (Perchloroethylene) is a clear, colorless liquid and evaporates quickly.

Bleach is also used especially for white clothes. Detergent is used for simple

washing i.e. washing soap and surf. The main raw materials required along with

their usage are listed below. The annual requirement of each raw material is

based on an assumption of 100 kg fabric weight.

Table 11: Raw Material Requirement

Description Quantity

Required

Rate Per

Liter (Rs.) Total Cost (Rs.)

Perclon 20 Liter 290 5,800

Bleach 2.5 Liter 70 175

Tar Pine Oil 10 Liter 135 1,350

Detergent and Soda Ash 2 Kg 70 140

Sulphuric Acid 3 Kg 100 300

Total 7,765

10.9 Human Resource Requirement

In order to run operations of laundry and dry cleaning smoothly, details of human

resources required along with number of employees and monthly salary are

recommended as under:

Table 12: Human Resource Requirment

Description No. of Employees Monthly Salary per

Person (Rs.)

Shop Manager 1 40,000

Workshop Manager 1 35,000

Technical Staff (Machine Operator) 1 25,000



Helper (Machine Operator) 2 20,000

Press Operator 4 18,000

Shop Boy 2 17,500

Packing Man 1 17,500

Total 12

10.10 Utilities and Other Costs

An essential cost to be borne by the business is the cost of electricity; a three-

phase commercial electricity connection is required. The annual electricity

expenses are estimated as Rs. 895,680 in first year with 10% increase in

subsequent years. This project also requires marketing and promotional activities

for which approximately Rs. 107,679 will be spent on marketing and promotion

expenses in year 1. Moreover, some miscellaneous office expenses occur every

year, which includes (stationary expense, tea and entertainment expense for loyal

customers and employees, commuting expense and other non-recurring

expenses).

10.11 Revenue Generations

Based on the capacity utilization of laundry and dry cleaning, sales revenue during

the first year of operations is estimated as under:

Table 10: Revenue Generation – Year 1

Description of Items No. Of Units Processed

Sale Price / Unit (Rs.) *

Sales Revenue (Rs.)

Fabric Wear

Trouser 4,950 175 866,250

Coats (All Kinds) 2,475 350 866,250

Shirts 6,600 150 990,000

Jacket / Sweater 2,475 280 693,000

Dupatta 3,300 130 429,000

Shalwar Qameez 6,600 200 1,320,000

Home and Miscellaneous Fabrics

Blankets 1,320 430 567,600

Bed Sheets 3,300 430 1,419,000



Curtain 1,320 240 316,800

Others (Avg.) 8,250 400 3,300,000

Total 40,590 10,767,900

* Avg of Laundry & Dry Cleaning prices.

11 CONTACT DETAILS

In order to facilitate potential investors, contact details of private sector service

providers relevant to the proposed project be given. In Lahore, there are

approximately 5 to 6 manufactures of laundry and dry-cleaning machines, as

mentioned below:

i. Abdul Waheed at Canal Park Gulberg

ii. Nirwana (Pvt) Ltd at Gulberg Arcade

iii. Mushtaq Engineering Works at Township

iv. 786 Washing Lab & Research Centre in Nishtar Colony Ferozpur Road

v. Usman Enterprises at Yateem Khana (Cell No: 0322-4553261)



12 ANNEXURES

12.1 Income Statement

Calculations SMEDA

Income Statement

Rs. in actuals

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

Revenue 10,767,900 12,733,042 14,932,385 17,390,007 20,132,277 23,188,070 26,588,986 30,369,608 34,567,760 37,160,342

Cost of sales

Raw Material Requirment 3,176,797 3,739,091 4,364,538 5,059,227 5,829,787 6,683,434 7,628,026 8,672,112 9,824,993 10,512,742

Packing Cost 142,065 167,211 195,180 226,246 260,706 298,880 341,122 387,813 439,369 470,125

Operation costs 1 (direct labor) 1,554,000 1,709,400 1,880,340 2,068,374 2,275,211 2,502,733 2,753,006 3,028,306 3,331,137 3,664,251

Operating costs 2 (machinery maintenance) 202,950 245,570 294,683 351,164 415,995 490,280 575,261 672,337 783,074 861,382

Operating costs 3 (direct electricity) 706,680 777,348 855,083 940,591 1,034,650 1,138,115 1,251,927 1,377,119 1,514,831 1,666,314

Operating costs 4 (direct water) 180,000 198,000 217,800 239,580 263,538 289,892 318,881 350,769 385,846 424,431

Operating costs 5 (direct gas) 540,000 594,000 653,400 718,740 790,614 869,675 956,643 1,052,307 1,157,538 1,273,292

Total cost of sales 6,502,492 7,430,619 8,461,025 9,603,923 10,870,501 12,273,009 13,824,866 15,540,764 17,436,789 18,872,537

Gross Profit 4,265,408 5,302,423 6,471,360 7,786,084 9,261,777 10,915,061 12,764,121 14,828,844 17,130,971 18,287,805

General administration & selling expenses

Administration expense 1,620,000 1,782,000 1,960,200 2,156,220 2,371,842 2,609,026 2,869,929 3,156,922 3,472,614 3,819,875

Administration benefits expense 162,000 178,200 196,020 215,622 237,184 260,903 286,993 315,692 347,261 381,988

Building rental expense 840,000 924,000 1,016,400 1,118,040 1,229,844 1,352,828 1,488,111 1,636,922 1,800,615 1,980,676

Electricity expense 189,000 207,900 228,690 251,559 276,715 304,386 334,825 368,308 405,138 445,652

Travelling expense 81,000 89,100 98,010 107,811 118,592 130,451 143,496 157,846 173,631 190,994

Communications expense (phone, fax, mail, internet, etc.) 121,500 133,650 147,015 161,717 177,888 195,677 215,245 236,769 260,446 286,491

Office vehicles running expense 210,000 231,000 254,100 279,510 307,461 338,207 372,028 409,231 450,154 495,169

Office expenses (stationary, entertainment, janitorial services, etc.) 162,000 178,200 196,020 215,622 237,184 260,903 286,993 315,692 347,261 381,988

Promotional expense 107,679 118,447 130,292 143,321 157,653 173,418 190,760 209,836 230,819 253,901

Depreciation expense 416,650 416,650 416,650 416,650 416,650 489,911 489,911 489,911 489,911 489,911

Amortization of pre-operating costs 17,822 17,822 17,822 17,822 17,822 - - - - -

Subtotal 3,927,651 4,276,969 4,661,219 5,083,893 5,548,836 6,115,711 6,678,291 7,297,129 7,977,851 8,726,645

Operating Income 337,756 1,025,454 1,810,142 2,702,190 3,712,941 4,799,350 6,085,830 7,531,715 9,153,120 9,561,160

Gain / (loss) on sale of office vehicles - - - - 240,000 - - - -

Earnings Before Interest & Taxes 337,756 1,025,454 1,810,142 2,702,190 3,952,941 4,799,350 6,085,830 7,531,715 9,153,120 9,561,160

Interest expense on long term debt (Project Loan) 304,945 283,806 249,884 213,165 173,420 130,398 83,830 33,423 - -

Subtotal 304,945 283,806 249,884 213,165 173,420 130,398 83,830 33,423 - -

Earnings Before Tax 32,811 741,648 1,560,258 2,489,025 3,779,522 4,668,952 6,002,000 7,498,292 9,153,120 9,561,160

Tax - 24,165 124,039 267,805 564,880 820,685 870,699 1,394,402 1,973,591 2,116,405

NET PROFIT/(LOSS) AFTER TAX 32,811 717,483 1,436,219 2,221,220 3,214,642 3,848,267 5,131,301 6,103,891 7,179,529 7,444,755



12.2 Balance Sheet

Calculations SMEDA

Balance Sheet

Rs. in actuals

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

Current assets

Cash & Bank 448,178 672,531 1,272,404 2,508,391 4,454,279 6,341,345 9,785,170 14,398,566 19,853,651 27,079,161 37,794,301

Accounts receivable 206,508 225,351 265,285 309,941 359,803 415,401 477,314 546,178 622,687 687,804

Equipment spare part inventory 33,825 42,975 54,148 67,753 84,274 104,289 128,484 157,674 192,826 222,714 -

Raw material inventory 276,572 358,078 459,772 586,247 743,091 937,091 1,176,486 1,471,269 1,833,548 2,158,086 -

Pre-paid building rent 210,000 231,000 254,100 279,510 307,461 338,207 372,028 409,231 450,154 495,169 -

Total Current Assets 968,574 1,511,091 2,265,776 3,707,186 5,899,045 8,080,735 11,877,569 16,914,054 22,876,357 30,577,817 38,482,105

Fixed assets

Machinery & equipment 2,570,000 2,313,000 2,056,000 1,799,000 1,542,000 1,285,000 1,028,000 771,000 514,000 257,000 -

Furniture & fixtures 289,000 260,100 231,200 202,300 173,400 144,500 115,600 86,700 57,800 28,900 -

Office vehicles 600,000 480,000 360,000 240,000 120,000 966,306 773,045 579,784 386,522 193,261 -

Office equipment 107,500 96,750 86,000 75,250 64,500 53,750 43,000 32,250 21,500 10,750 -

Total Fixed Assets 3,566,500 3,149,850 2,733,200 2,316,550 1,899,900 2,449,556 1,959,645 1,469,734 979,822 489,911 -

Intangible assets

Pre-operation costs 89,111 71,289 53,467 35,644 17,822 - - - - - -

Total Intangible Assets 89,111 71,289 53,467 35,644 17,822 - - - - - -

TOTAL ASSETS 4,624,185 4,732,230 5,052,442 6,059,380 7,816,768 10,530,291 13,837,214 18,383,788 23,856,180 31,067,728 38,482,105

Current liabilities

Accounts payable 75,233 89,481 105,641 123,967 144,754 168,337 195,105 225,508 257,528 227,150

Total Current Liabilities - 75,233 89,481 105,641 123,967 144,754 168,337 195,105 225,508 257,528 227,150

Other liabilities

Long term debt (Project Loan) 3,699,348 3,699,348 3,287,830 2,842,389 2,360,229 1,838,324 1,273,397 661,902 - - -

Total Long Term Liabilities 3,699,348 3,699,348 3,287,830 2,842,389 2,360,229 1,838,324 1,273,397 661,902 - - -

Shareholders' equity

Paid-up capital 924,837 924,837 924,837 924,837 924,837 924,837 924,837 924,837 924,837 924,837 924,837

Retained earnings 32,811 750,294 2,186,514 4,407,734 7,622,376 11,470,643 16,601,944 22,705,834 29,885,363 37,330,118

Total Equity 924,837 957,648 1,675,132 3,111,351 5,332,571 8,547,213 12,395,480 17,526,781 23,630,671 30,810,200 38,254,955

TOTAL CAPITAL AND LIABILITIES 4,624,185 4,732,230 5,052,442 6,059,380 7,816,768 10,530,291 13,837,214 18,383,788 23,856,180 31,067,728 38,482,105

Liabilities & Shareholders' Equity

Assets



12.3 Cash Flow Statement

Calculations SMEDA

Cash Flow Statement

Rs. in actuals

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

Operating activities

Net profit 32,811 717,483 1,436,219 2,221,220 3,214,642 3,848,267 5,131,301 6,103,891 7,179,529 7,444,755

Add: depreciation expense 416,650 416,650 416,650 416,650 416,650 489,911 489,911 489,911 489,911 489,911

amortization of pre-operating costs 17,822 17,822 17,822 17,822 17,822 - - - - -

Accounts receivable (206,508) (18,844) (39,933) (44,656) (49,862) (55,598) (61,914) (68,864) (76,509) (65,117)

Equipment inventory (33,825) (9,150) (11,173) (13,605) (16,521) (20,015) (24,195) (29,190) (35,152) (29,888) 222,714

Raw material inventory (276,572) (81,506) (101,694) (126,476) (156,844) (194,000) (239,395) (294,783) (362,278) (324,538) 2,158,086

Pre-paid building rent (210,000) (21,000) (23,100) (25,410) (27,951) (30,746) (33,821) (37,203) (40,923) (45,015) 495,169

Accounts payable 75,233 14,248 16,160 18,327 20,786 23,583 26,769 30,403 32,020 (30,378)

Cash provided by operations (520,397) 224,353 1,011,392 1,681,428 2,428,047 3,375,277 4,008,752 5,224,891 6,116,987 7,225,509 10,715,140

Financing activities

Project Loan - principal repayment - (411,519) (445,441) (482,160) (521,905) (564,927) (611,495) (661,902) - -

Additions to Project Loan 3,699,348 - - - - - - - - - -

Issuance of shares 924,837 - - - - - - - - - -

Cash provided by / (used for) financing activities 4,624,185 - (411,519) (445,441) (482,160) (521,905) (564,927) (611,495) (661,902) - -

Investing activities

Capital expenditure (3,655,611) - - - - (966,306) - - - - -

Acquisitions

Cash (used for) / provided by investing activities (3,655,611) - - - - (966,306) - - - - -

NET CASH 448,178 224,353 599,874 1,235,987 1,945,888 1,887,066 3,443,825 4,613,396 5,455,085 7,225,509 10,715,140



13 USEFUL WEB LINKS

Prime Minister’s Office, www.pmo.gov.pk

Prime Minister’s Kamyab Jawan Program, www.kamyabjawan.gov.pk

Small and Medium Enterprise Development Authority, www.smeda.org.pk

State Bank of Pakistan (SBP), www.sbp.org.pk

National Bank of Pakistan (NBP), www.nbp.com.pk

Bank of Punjab (BoP), www.bop.com.pk

Bank of Khyber (BoK), www.bok.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 Jamu Kashmir, www.ajk.gov.pk

Securities & Exchange Commission of Pakistan (SECP), www.secp.gov.pk

Federation of Pakistan Chambers of Commerce and Industry (FPCCI)

www.fpcci.org.pk

Technical Education & Vocational Training Authority (TEVTA),

www.tevta.gop.pk

Punjab Vocational Training Council (PVTC), www.pvtc.gop.pk

http://www.pmo.gov.pk/

http://www.kamyabjawan.gov.pk/

http://www.smeda.org.pk/

http://www.sbp.org.pk/

http://www.nbp.com.pk/

http://www.bop.com.pk/

http://www.bok.com.pk/

http://www.pakistan.gov.pk/

http://www.moip.gov.pk/

http://www.punjab.gov.pk/

http://www.sindh.gov.pk/

http://www.khyberpakhtunkhwa.gov.pk/

http://www.balochistan.gov.pk/

http://www.gilgitbaltistan.gov.pk/

http://www.ajk.gov.pk/

http://www.secp.gov.pk/

http://www.fpcci.org.pk/

http://www.tevta.gop.pk/

http://www.pvtc.gop.pk/



14 KEY ASSUMPTIONS

14.1 Operating Cost Assumptions

Description Details

Administration Benefit Expenses 10% of Administration Expenses

Communication Expenses 7.5% of Administration Expenses

Office Expenses 10% of Administration Expenses

Depreciation Method Straight Line

Depreciation Rate 10% on Furniture & Fixtures

10% on Office Equipment

14.2 Production Cost Assumption

Description Amount / Percentage

Cost of Goods Sold Growth Rate 7%

Machinery Maintenance Per Unit Rs. 5.00

Direct Water Rs. 15,000 per month

Direct Gas Rs. 45,000 per month

14.3 Revenue Assumptions

Description Details

Growth in Sales Price 7.5%

Day Operational / Year 330

Production Capacity in First Year 50%

Percentage Increase in Production Capacity

Every Year 5%

Maximum Production Capacity 90%

14.4 Financial Assumptions

Description Details

Debt 80%

Equity 20%

Interest Rate on Debt 8%

Debt Tenure 8 Years

Grace Period 1 Year

Documents

Kamyab Jawan Youth Entrepreneurship Scheme Pre-Feasibility