Pre-Feasibility Study

WOVEN POLYPROPYLENE SACKS

Small and Medium Enterprise Development Authority
Government of Pakistan
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th

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NWFP

REGIONAL OFFICE
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May 2005

investment or otherwise. due care and diligence has been taken to compile this document. Although.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. DOCUMENT CONTROL Document No. 2005 Issued by Library Officer . Therefore. The content of the information memorandum does not bind SMEDA in any legal or other form. the content of this memorandum should not be relied upon for making any decision. and the actual results may differ substantially from the presented information.Sindh Issue Date May. The prospective user of this memorandum is encouraged to carry out his / her own due diligence and gather any information he/she considers necessary for making an informed decision. the contained information may vary due to any change in any of the concerned factors. SMEDA does not assume any liability for any financial or other loss resulting from this memorandum in consequence of undertaking this activity. All the material included in this document is based on data/information gathered from various sources and is based on certain assumptions. PREF-10 Revision 1 Prepared by SMEDA-Sindh Approved by Provincial Chief .

........................................................ 6 TRADE STATISTICS ..................1 SECTOR CHARACTERISTIC ............................................................4 7. 8 The Polypropylene Fabric Weaving Process............................................................................................................................................................................. 9 LAND & BUILDING REQUIREMENT ................................................................... 4 4.2 SUB SECTOR INFORMATION ...10 KEY SUCCESS FACTORS/PRACTICAL TIPS FOR SUCCESS ...................................................7 PROPOSED PRODUCT MIX ...........................5 6............................................. 3 3...........................................................................................................................................................................3 LEGAL ISSUES REGARDING INDUSTRY ........................ 10 9 FINANCIAL ANALYSIS...........2 PROJECT BRIEF ............................................................................................. 6 6.............................................................. 8 MACHINERY REQUIREMENT .................................................................................................................................................................................................................................................... 9 MACHINERY SUPPLIER .......................... 9 PRODUCT/PROJECT STANDARDS AND COMPLIANCE ISSUES .................. 1 3....... 2 3..9 PROPOSED LOCATION ........... 10 8 HUMAN RESOURCE REQUIREMENT...............................................1 PURPOSE OF THE DOCUMENT .............. 5 5....................................... 9 RECOMMENDED MODE . 2 3.... 8 MACHINE MAINTENANCE .......................................................................................................................... 1 3 PROJECT PROFILE.................................1 Sub sector Performance .3 7.................1 6..........6 6................................ 10 9.................................................................................................. 5 5 MARKET INFORMATION ......2 6......................... 8 Technology/Process Options................................................................................................................................................ 9 7..................................................................6 LAND REQUIREMENT .............................................................. 6 PRODUCTION PROCESS FLOW .......................................... 9 COVERED AREA REQUIREMENT .....................................................................................................................................................3 MARKET ENTRY TIMING .................................................. 6 PRODUCT MIX OFFERED ...................................................5 PROJECT CAPACITY AND RATIONALE ................................ 6 RAW MATERIAL REQUIRED . 11 .............................................................................................. 1 3............................................4............................................. 1 2 CRUCIAL FACTORS & STEPS IN DECISION MAKING FOR INVESTMENT.............................................. 2 3....................1 OP PORTUNITY RATIONALE ..............................7 6......................................................................................6 PROJECT INVESTMENT .............................. 7 TECHNOLOGY AND PROCESSES ................................................................................................................................................... 9 SUITABLE LOCATION....................................................................5 7......................................4 6............................................. 5 TARGET CUSTOMERS .........3 6...................................................................................... 3 4..............................................1 6................. 2 3.....8 RECOMMENDED PROJECT PARAMETERS ......................................2 5............................................1 5.................................... 9 CONSTRUCTION COST ..........3 6............................................................4....... 3 4................ 3 4 SECTOR & INDUSTRY ANALYSIS..2............................2 CAPITAL COSTS .......................1 9....................................4 PROPOSED BUSINESS LEGAL STATUS .2 7....................3 6 PRODUCTION PROCESS........................... 2 3............................................................................................................................................ 3 3...............................................11 STRATEGIC RECOMMENDATIONS ............................................................................................................................................................................................................................................... 9 UTILITIES REQUIREMENT ...................................... 4 4.................................................................4...........................................................................................................1 7..................... 8 The Polypropylene Tape Making Process ............................................. 2 3..........2 6................. 3 3................................. 10 WORKING CAPITAL ...............................................................................................................................................................................................................8 7 MARKET POTENTIAL .......................................................................................................................................

..............................................................................................................................................................................................1 11..................... ERROR! BOOKMARK NOT DEFINED........................... 14 RATIO ANALYSIS ............................. 11 INVENTORY ASSUMPTIONS .........1 10.... 11 10..........................................................................................................3 11 REVENUE ASSUMPTIONS ..10 KEY ASSUMPTIONS................................................3 11......... 15 .......................................................................................................................... 122 PROJECTED BALANCE SHEET ........................................4 PROJECTED INCOME STATEMENT ..................................2 10.............................................................................................2 11............. 11 RAW MATERIAL EXPENSE ................................................. 13 PROJECTED CASH FLOW STATEMENT ............... 11 PROJECTED FINANCIAL STATEMENTS ..... 11............

The most critical factor in this project would be to generate sufficient demand. past experience and specific managerial and technical skill set. cotton bags. This particular pre-feasibility is regarding polypropylene sacks which come under plastics sector. At times evaluation and analysis of strengths. The project pre-feasibility may form the basis of an important investment decision and in order to serve this objective.Pre-Feasibility Study 1 Woven Polypropylene Sacks PURPOSE OF THE DOCUMENT The objective of the pre-feasibility study is primarily to facilitate potential entrepreneurs in project identification for investment. the document/study covers various aspects of project concept development. Due to the inadequacy of these packaging methods to withstand various atmospheric conditions. cotton bags. 1 PROJECT PROFILE Opportunity Rationale Older packaging methods like multi-ply paper sacks. This pre-feasibility study tries to capture all the important factors that can play an instrumental role in the success of a project but all factors should be evaluated by the investor for their own specific project design with its unique parameters. marketing. jute bags for packaging. The polypropylene sacks market is based on high volumes and low prices. the scope of the industry is increasing. brief on government policies and international scenario. The inputs required are also low. 2005/Rev1 1 . with increasing agricultural yields and related industries. The industry has a high employment to capital ratio i. 3 3. jute bags. it is advisable to evaluate the associated risk factors by taking into consideration certain key elements. durability and ability to withstand water and pests. which forms the basis of any investment decision. If an agreement or a contract with a few high volume buyers can be arranged the business is most likely to succeed. production. A heavy loss occurs to the economy through the non-utilization of the available agro-based raw materials inputs. 2 CRUCIAL FACTORS & STEPS IN DECISION MAKING FOR INVESTMENT Before making any investment decision. These include availability of resources. 5 person per 10 ton of production. These sacks are better suited for storage due to their strength. finance and business management. academic knowledge. great fluctuation in prices of food stuff and industrial products etc is the result. The use of polypropylene sacks is steadily increasing in the agricultural sector. Before studying the whole document one must consider following critical aspects. which have some bearing on the project itself. weaknesses. start-up.e. opportunities and threats (SWOT) for a particular project serves the purpose of a basic tool in investment decision making. Polypropylene sacks are suitable for almost all the products that have used paper sacks. with one significant advantage being the PREF-10/May. The document also provides sectoral information. much of the produce spoils to the financial loss and frustration of the farmers and producers. etc had been used to cart away agricultural produce and industrial products.

9 for zinc and 4. Different sizes of sacks can be made to meet the demands of particular customers. The average weight of a bag is 100 grams. polymers etc. are possible by carrying out the required adjustment of the equipment.9 for aluminum. 3 Market Entry Timing Various products and services have high dependence on their commercialization timing and delivery to the customers.351. convert it into tape yarn and this tape yarn is woven on an automatic loom to produce polypropylene cloth. in Actual 17. sweater production. 6 Project Investment Initial Financing Debt Equity Total Investment 3. salt. 1 unit of energy per unit of production as compared to 3. The suitable timings for starting services of a school would be the month of March.030 34. Similarly production of cold drinks should be starting in spring or end of winter. Since the scope of this project is relatively small. dyes. the business can be launched as a sole proprietorship or as a partnership with relative ease.4 for steel.702. then the project should be started in a time that coincides with the requirement of the sacks so that the business starts off in an efficient manner 3. if main customers are to be sugar mills or the producers of other seasonal goods. 2005/Rev1 2 . Polypropylene sacks are usually suitable for packing most of the goods that have been traditionally packed in jute bags 3. plastic granules.000. Polypropylene sacks are used to store and transport industrial and agricultural products like animal feeds. sugar. maize.000 bags per annum. 3. 4 Proposed Business Legal Status Selection of the business status is totally dependent on the choice of the entrepreneur. One can buy the plant and machinery to meet the planned level of operation. In this case the project should be started in the time of the products that will be targeted. 10 kg. flours. pulses. 2 Project Brief Polypropylene woven sacks manufacturing units import polypropylene granules. ice cream production etc. 5 Project Capacity and Rationale The plant under consideration can produce 6.e. rice. sorghum. for instance. For instance sacks of 2 kg.060 Proposed Product Mix The product will be polypropylene sacks but the colors and printing will be according to the requirement of the clients. 7 Rs. cement.351.Pre-Feasibility Study Woven Polypropylene Sacks lower cost of energy i. Example can be a school setup.030 17. 3. 3. 100 kg etc. pigments. The dimensions of the sacks can also be changed within PREF-10/May. fertilizers. 3. 50 kg. millet.

000 Project Cost 34. chemicals. Marketing of the project would be required as there are a number of manufacturers already in the industry. The entrepreneur will have to position the project in terms of price and quality. Strict quality control and following of the product specifications are key points for any product. The other alternative is to get long term purchase agreements with some buyers which will be useful in utilizing capacity.060 Human Resource 50 IRR 24% Machinery Taiwan Financial Summary NPV Payback Period 17.000. or near agricultural locales where grains are harvested and processed. 3. Pricing would be based on the market rates and would be dependent on the world price of polypropylene which is in turn linked with the world oil prices. 10 Key Success Factors/Practical Tips for Success Critical success factors would be the maintenance of product quality and standards since the core issue in packaging material is that it should be effective in protecting the contents from the environment. 11 Strategic Recommendations 1.650 4. 2. Pricing would have to be competitive and if possible kept below market averages in order to attract a steady clientele. This would be in near factories producing fertilizers.78 Location Sind Cost of Capital(WACC) 16% Proposed Location 3. Marketing. 3. Recommended Project Parameters 3. in addition to entrepreneurial efforts.Pre-Feasibility Study Woven Polypropylene Sacks the operating range of the looms.702. The width of the sacks will depend on the operating range of the loom while the length can be changed at will since the sacks can be cut and stitched according to requirements. 1 SECTOR & INDUSTRY ANALYSIS Sector Characteristic Plastic industry in Pakistan is expanding at an average annual growth of 15%. Securing a regular source of polypropylene granules will also be of advantage. Pricing. 8 Capacity 6. 4 4. is also due to simplified tax PREF-10/May. The operating range is the minimum and maximum widths between which the loom can operate. The significant growth rate. 9 The plant can be located anywhere where there is a supply of water and electricity is available.261. It is suggested however that the plant is located near the region where demand is generated. 2005/Rev1 3 .

Kg. This is primarily due to a spread-out effect as consumption in other parts of the world has increased.5 billion annually to the national exchequer in shape of custom duty. Plastic industry is contributing more than Rs 7. house-ware. agricultural pipes. About 60% of the units are located in and around Lahore and the remaining at Karachi. Percentage-wise units in different locations are shown in the graph below. Europe and Japan amounting to 75% of global consumption. 600. 4. these countries have become leading exporters of plastic products to USA Europe. Taiwan. 1999-2000 19992000 3.Pre-Feasibility Study Woven Polypropylene Sacks policy on local production and reduction in import tariff on plastic raw material. There are over 5000 small scale plastic processing units providing employment to approx. Kg. refrigerators. woven sacks.3 7 17 Pakistan 10% India 11% Pakistan World 56% India China 23% China World Sub sector Information There are about 600 . Thailand. decreased to 70% in 1985.000 people. Hattar. Consumption in China. defense products. sanitary ware. televisions. PREF-10/May. Gadoon. 50% in 1998 and is expected to decrease to 40% by 2010. 2 Unit Kg. the un-organized sector has grown much more rapidly than the organized sector. In addition to domestic consumption. Japan and other regions.700 medium sized plastic processing units scattered all over Pakistan. Kg. The reason for this shift is the comparatively low cost of production in these countries. Faisalabad. furniture. packages. This however. other electrical goods. The organized sector is capable of producing quality products whereas the unorganized sector produces low quality cheap products through excessive use of plastic scrap. Korea. Plastic is a mother industry to hundreds of manufactured components and products like automobiles parts. etc.1 3. Comparative per capita consumption of plastics is given below: Country Pakistan India China World 4. During the last decade. Plastic consumption has traditionally been the highest in USA. Malaysia and India has increased manifold during the last few years.2. Multan and Quetta. sales tax and income tax. 2005/Rev1 4 .1 Sub sector Performance The industry is presently fragmented into organized and un-organized sectors.

Plastic industry in the un-organized sector is totally self-financed 4. 1 MARKET INFORMATION Market Potential The market for plastic materials is growing rapidly due to varied and rising use of plastic goods over recent years. drums. the largest item.000 people.Pre-Feasibility Study Name Of City Woven Polypropylene Sacks % units Lahore 40 Karachi 25 Gujranwala 12 Faisalabad 7 Multan 4 Hattar 3 Gadoon 3 Quetta 3 Others 8 There are about 600 – 700 medium sized plastic processing units scattered all over Pakistan. which is then converted into films. Sales taxes is 15 %. polyvinyl chloride. Polyethylene. aluminum. 600. is mainly imported as raw material in granular form. 3 Legal Issues Regarding Industry Legal environment plays a crucial role in the workings of any sector. Imports of PREF-10/May. there are over 5000 small scale plastic processing units providing employment to approx. household articles. toys and sporting goods. etc. glass. polyester. This encouragement is expected to continue. 2005/Rev1 5 . tin. Besides these units. liners. acrylic polymer. The government is encouraging the setting up of manufacturing facilities and has reduced import duties on machinery as well as on the imported polypropylene granules. Import of polyethylene. The custom duty on the import of the polypropylene granules is 10% and on machinery imported is 5 %. substituting wood. polystyrene and poly ether forms three fourths of the total imports. 5 5. In Pakistan awareness about regulations and policy framework is very minimal and limited access to information effects negatively on the business operations. bottles. polypropylene. china clay.

It will also compare price levels of Pakistan’s exports with international average and top exporting countries. fabric can also be made by slitting one side of the woven fabric which is in the form of a tube. Imports from the United States include a wide spectrum of products namely polyethylene. Colors or dyes for giving the polypropylene sacks the required colors.4 percent to 3. cotton. polypropylene. share of Thailand has jumped from less than 1 percent to over 7 percent during this period. polyvinyl alcohol. chemicals and other industries. fertilizer. transport costs and shipment time. distributors and manufacturers of agricultural goods. Other supplier countries are South Korea. polyester. In the early 1990’s. Germany. PREF-10/May. rice. 6. Nevertheless. There is also a market for polypropylene bags like shopping bags and luggage bags made from polypropylene which are often used. 2 Product Mix Offered The products offered will be the sacks of various sizes. Market share of Hungary has fallen from 11. 1. polyvinyl chloride. Similarly. 1 PRODUCTION PROCESS Raw Material Required The raw materials required are . The polypropylene granules that are made into the tape yarn and then woven into the sacks 2. Major target customers can be the sugar. industrial goods that can be packed in polypropylene sacks. which dominate the import market because of lower prices. wheat. and polymerization products in primary form. For example. silicone. 6 6. 2005/Rev1 6 . 5. polyurethane. Saudi Arabia. 2 Target Customers The target customers will be any producers. 3 Trade Statistics This section of the report will provide trends and statistics of Pakistan as well as international imports. imports from the U. Importers prefer cheaper goods and therefore procure substantially from Far Eastern countries where the freight cost is lower and transportation time is less. polyvinyl chloride. The production line can be expanded further to cater to the cement industry as well but this will require some expansion in the production line and additional machinery will be needed. exports and consumption level.2 percent. averaged around 8 percent of the total but have gradually fallen in percentage. Hungary. the respective share of each country has varied widely between 1994 and 1996.S. 5. Thailand.Pre-Feasibility Study Woven Polypropylene Sacks low density and high density polyethylene and derivatives account for 23 percent of total imports. This fabric is used for packing purposes in the textile industry and specially for export products. Japan. China and Belgium.

2005/Rev1 7 PIGMENT . 3 Woven Polypropylene Sacks Production Process Flow PP RESIN MIXER FLAT YARN MAKING M/C CIRCULAR LOOM CUTTING & SEWING MACHINE PRINTING MACHINE BALING PRESS MACHINE PREF-10/May.Pre-Feasibility Study 6.

laminated sacks are required and as such before stitching and printing the fabric has to be laminated by extrusion coating of LDPE.1 The Polypropylene Tape Making Process The polypropylene tapes are manufactured by slitting films of PP or HDPE which are produced by blown extrusion technique.248.960 1. The extruded PP film is then coded and the bubble is collapsed.897 . 5 Machinery Requirement The types and number of different machines required for the proposed project are listed below: Type of Machinery Tape making machine Circular Loom Machine Auto Conversion Line 2 color printing machine Baling Press Total Cost of machinery PREF-10/May.130 26.834.121.660 654.4.000 11. and pulling it away with a pair of nip rolls. 6.950 9. Molten plastics are extruded through circular die and the tube is inflated by blowing with air to a desired diameter. 4 Woven Polypropylene Sacks Technology and Processes 6.950 86.4.927 5. Alternatively orientation can be carried out by using hot plate.4. These tapes are stretched in orientation water bath which is at its boiling point.Pre-Feasibility Study 6. is stabilized and then wound on bobbins.000 11.060 15. The fabric is then woven on looms and finally cut to size and stitched to sacks of required dimensions. Whenever required. 6. The HDPE/PP tape. the granules of plastic are fed to the extruder through the hopper. In this process. fabric is made using warping and yarn winding machine.404.570 26.3 Technology/Process Options The technology is relatively uniform amongst suppliers of machinery.2 The Polypropylene Fabric Weaving Process From bobbins carrying polypropylene yarn.080 Value in Rs 6. 2005/Rev1 Quantity 1 9 1 1 1 $ Price per unit 114.000 259. The granules are fed into the extruder with the color granules and extruded into tape yarn which is then woven into the fabric with circular looms which produces the fabric in the form of a tube. In some cases.000 21. after orientation.000 8 $ Price 114. Lamination should be done from outside.290 1. The film thus formed is then slit to desired width.000 21. 6. the sacks are screen-printed using specially prepared ink.545.

environment and social standards is becoming integral factor for a business survival. feet for office space and storing raw material and finished goods. PREF-10/May. 6. China. and some types of dyes are unsuitable for exposure to sunlight 7 7. some manufacturers are also available in India. 1 LAND & BUILDING REQUIREMENT Land Requirement Land of approximately 7200 square feet is required for the machinery alone and the whole project would require about 8240 square feet of space in total. These standards also effect choice of supplier and contractor for any business inputs. A machinery maintenance schedule will have to be maintained by the maintenance and technical staff on a regular basis. 7 Machinery Supplier Machinery suppliers are numerous and are located in Austria. Ltd. The coloring has to be used after determining the end use of the sacks because certain types of dyes are unsuitable for use with chemical compounds. 6 Woven Polypropylene Sacks Machine Maintenance Machinery will be set up and initial training conducted by technicians that the machinery manufacturer will send to start off the plant. 8 Product/Project Standards And Compliance Issues As the time progresses compliance with quality. Agents of some machinery manufacturers are located in Pakistan. 6. 4 Recommended Mode The preferable mode of acquisition for the land and building would be to purchase the land because rented premises would be insecure and could led to problems in the long run. Most large buyers have specifications regarding the type of sacks that they need.Pre-Feasibility Study 6. 7. Water is also required in a few stages of the production process but in small quantities. 7. 3. US. Taiwan. The machinery that we have considered is supplied by the For Dah Industry Co. 2 Covered Area Requirement Covered area of the plant would have 840 sq. 7. 7. 5 Utilities Requirement The major utility required is electricity as the machinery is run on electric motors. Land in the form of Grounds has been allocated for possible future extension in the project.530. 3 Construction Cost The construction cost of the plant would be Rs.000. 2005/Rev1 9 . the weight. This includes the construction of the plant area as well as the office and warehouse. color and density of the sack’s weave are usually key issues. Taiwan.

000 288.000 25.000 96.000 120.500 628.000 6.797 .000 120.000 192.653.000 5.203 3.000 96.000 144.000 36.000 8.188 155.500 54.000 432.000 8.000 4.000 12. The number of plant workers is higher due to the 24 hour working of the plant. 1 # of personnel 1 1 2 2 4 6 4 2 2 2 16 1 1 2 1 1 2 50 Salary Ann. in actual 975.640 101.000 288. 2005/Rev1 10 Rs.000 4.000 600.530.000 FINANCIAL ANALYSIS Capital Costs Capital Investment Land Building/Infrastructure/Modification Machinery & equipment Furniture & fixtures Office equipment Pre-operating costs & project promotion cost Total Capital Costs PREF-10/May.000 300.000 6.000 5.000 4. Salary Costs 50.000 6.266 29.000 4.000 23.000 12.206.043.000 768.000 288.000 240. 6 Woven Polypropylene Sacks Suitable Location The most suitable location will be where there is adequate infrastructure and preferably near the source of demand.000 6.000 3.000 144. Personnel General Manager Production Manager Engineers/Fitters Extruder Operators Winder Operators Weavers Cutting Machine Operator Printing Supervisor Stitcher Baling press worker Helpers Marketing Executives Accounts Officer Electrician Office Boy Driver Guards Total 9 9.Pre-Feasibility Study 7. 8 HUMAN RESOURCE REQUIREMENT The plant would require 50 people in total out of which 6 people would be the administrative and managerial staff and 44 would be the plant workers.000 10.

2 Rs.5 1. 2005/Rev1 0. 1 Revenue Assumptions Revenue Assumptions Sale Price per unit Sale price growth rate Production capacity utilization Production capacity utilization growth rate Maximum capacity utilization 10.44 85. 11.5 11 Months Months Months .000 5.775 118. $ Rs.50 7% 85% 2% 95% Raw Material Expense Polypropylene is the key variable in the expenses as it is imported and can fluctuate widely in connection with the world oil prices. 3 1440 85800 1.8 $ Rs. Expense Assumptions Cost /ton Cost /ton Cost per Kg Cost per Kg 10.266 1. in actual 20. Currently the international market prices are $1150-1200 per ton.507 4.607.000.0 0.547 10 KEY ASSUMPTIONS 10. 2 Woven Polypropylene Sacks Working Capital Working Capital Equipment spare part inventory Raw material inventory Upfront insurance payment Cash Total Working Capital Rs.Pre-Feasibility Study 9. Inventory Assumptions Inventory Assumptions Equipment spare part inventory Raw material inventory Finished goods inventory PREF-10/May.746.

2005/Rev1 12 .439.595 96.943 1.309 12.543 187.062.146.283.979 87.912 9.492 5.315.068 76. etc.752 113.000.372.316 Interest expense Earnings Before Tax 1.532 1.655.255.593 21.946.533 111.720 102.407.506.296 878.865.567.107 82.819 58.620 131.577 1.148.227.837.504 26.199.488.764 19.531 29.245 80.277 114.191 114.533 1.178 92.533 111.296 717.238.739.032 84.296 1.107 2.844 2.432 105.653 140.595 2.685.609 15.865.642 6.) Depreciation expense Amortization expense Property tax expense Miscellaneous expense Subtotal Operating Income 1. fax.125 1.964.092.577 1.818 12.310 1.661 7.865.871 59.206.149 11.694 266.480 131.966 47.224.504 6.465 19.891 7.081.533 1.095 76.288 1.314 71.932.423.468.106.336 63.209 1.490.316 Tax NET PROFIT/(LOSS) AFTER TAX 617.120.124.050.989 2.065 6.050.647.516 4.118 85.163.533 1.315 27.031 1.977.533 111.927.059 122.769 111.205.864.737 8.714.296 802.538 6.Pre-Feasibility Study Woven Polypropylene Sacks 11.827 150.095.847.612.567.672 68.070 31.893.242.311 2.073 8.250.889 122.473 25.410 15.381 20.380.967 1.042.783.836 978.055 2.875.418.574 35.844.378 71.513.500.585.505.095 2.623 2.619 59.371.999.683.113 1.060 71.081.031 1.095 70.090.167.527.515.199.106 16.851.393 28.533 1.091 14.146.225.110 131.146.247 Other income Gain / (loss) on sale of assets Earnings Before Interest & Taxes 38.936 Balance brought forward Total profit available for appropriation Dividend Balance carried forward 1.500 18.693 11.471.094 1.919 42.146.439 25.569 17.060 467.020.468 31.360 140.839 14.169.006.842 19.928 5.276.303 1.951 7.567.043.486 4.155 1.537 79.493 778.439.635.531.919 42.115 1.156 62.567.754 1.632.567.573.692.844 92.871 2.241 74.529.045 3.518 51.364 5.490 42.632.615 1.234 80.008 6.876 18.577 5.935 3.528 32.472 1.673 22.999.815.306 122.812.852 5.533 111.133.567.407.633.650.899 11.650 69.388 8.191.462.998.252 106.201 8.311 8.419 7.996.801.1 Projected Income Statement Statement Summaries SMEDA Income Statement Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Rs.123 2.423.965 2.937 96.146 8.906.315 7.053 1.834 15.720 4.) Office vehicles running expense Office expenses (stationary.358.092 12.533 1.254 270.371.332.478. audit.709 22.323.763.866.880 107.206.047.031 1.786 96.387 24.423.516 4.) Promotional expense Insurance expense Professional fees (legal.871.840 7.943 101.314 Revenue Cost of goods sold Gross Profit PREF-10/May.527.744 2.938 48.641.062.431 3.745.633.229.180 854.268 26.291.533 111.966.502 28.315.073 16. etc.893.439 80.251.784 2.504 6.069 255.047 1.639 2.499.976.133 114.194.450.237 21.712 7.847.758 3.638. etc.516 12.095.574 2.132.393 28.468 3.747 15.785.982.429 9.613 87.201 36.966 2.311 2.785 118.910 516.664 1.784 23.363.032 4. expense (phone.266 71.488 105.252 2.567.148.385 9.374.567.439 23.567.960 105.518 59.289 22.495.189 140.268 1.093 97.788.391.567.785 2.523 87.413.775.784 52.844 94.639 11.702.731.366 1.031 3.517 6.999.550 General administration & selling expenses Administration expense Rental expense Utilities expense Travelling & Comm.612 10.047.442 6.443.352 150.304 27.081.839 8.426.135. in actuals Year 10 71.937 13.966.240 12.647 10.773 5.504 16.664 907.120 914.296 961.515.647 13.571.829 150.953 17.

718.999 111.109 80.297 38.094.500 2.442.559 445.073 25.740.023.415.600 13.279 1.174 6.504 23.577.359.000.778 2.010.835 333.174 5.900 18.655.777.705.306 34.786 20.960.547 550.368.203 3.446 2.638 31.089 1.865.325 8.931 5.439 13.118.347 4.311.266 5.280.500 28.626 17.622 5.522.500 16.445.782 6.039 12.952.172.314 94.518 76.440.268 975.888 26.303.139.689 106.016.118.460.451 2.992.279 17.203 2.894.991.081.246.692 30.621 1.657.268.857 39.526.712.922.016.680 7.325 8.873.296 5.234 4.287.655.061.185 39.706 222.893.471.718.500 11.557.203 3.095.000.976.929.185 445. & training costs Total Intangible Assets TOTAL ASSETS 556.384 60.775 118.862 Shareholders' equity Paid-up capital 17.801 975.311.311.626 39.253.139.311 39.279 28.390.500 7.965.031 18.723 827.203 1.256 40.428.203 2.232 108.212.706 17.203 2.588 95.328 5.730.393 45.824.456.827 73.000 18.483.005 6.585 2.279 2.353 11.550 124.894.275 62.342 7.871 17.871 47.530.110.960.867 975.366.803 11.192.307.358.723 1.273 2.428.035 9.359.194 47.000 9.875.653.591 41.450 10.359.308 5.319 46.423.594 77.613 16.307.359.754.000 23.145.718 46.000 2.736 975.224.484 6.542.592 222.083.277.241 23.675.213 Fixed assets Land Building/Infrastructure Machinery & equipment Furniture & fixtures Office vehicles Office equipment Total Fixed Assets 975.642 5.004 13.561 1.483.785.033 6.146.359.203 2.632.929.134 15.960 22.783 39.464.456.998 975.359.408 3.474 5.359.461.577 19.974 17.640 101.873.746.782.359.094 15.083 13.900.331 12.511.289 5.110 8.365.481 556.359.294 82.484 6.279 6.174 8.218.675.516 21.795 40.279 59.296 111.444.327 35.039.931.652 2.431 17.559 17.248.279 TOTAL CAPITAL AND LIABILITIES 34.026.588 78.023.463 11.750 15.827.359. licensing.825 33.540 2.801.511.999 17.076 91.501 9.350 25. in actuals Year 10 1.765.009.Pre-Feasibility Study Woven Polypropylene Sacks 11.334 975.528 69.917.174 7.804.481 34.315.308 10.133 24.908.128 20.203 2.022.098.177.500 21.727 37.150 1.907.869 140.862 827.907 56.330.711 1.592 41.188 155.919 60.164.279 Retained earnings Total Equity 17.200 23.203 1.888 333.806 6.279 8.919.444.296 5.974 8.279 1.150 5.233.633.050 20.692 23.716.888 39.524.941.289 5.000 14.100 9.191.480 45.888 17.413.131.527 30.564 10.199 70.777.312 59. 2005/Rev1 - 13 - 17.724 9.512 81.826.597.279 42.118.886.139.421.567 .603.279 71.820 50.948 71.400 975.983.986.966 8.279 4.599 10.740 51.294.000 4.094 11.494 42.560 4.966 8.932 975.243.260.835 17.342 7.593 97.432.203 Intangible assets Pre-operation costs Legal.524.353.591 8.415 5.926 14.352 4.344 10.359.844 97.359.607.187.575 55.134 2.300 7.220.146 17.505.748.314 88.563.913 93.984 Assets Current assets Cash & Bank Accounts receivable Finished goods inventory Equipment spare part inventory Raw material inventory Pre-paid annual land lease Pre-paid building rent Pre-paid lease interest Pre-paid insurance Total Current Assets Liabilities & Shareholders' Equity Current liabilities Accounts payable Export re-finance facility Short term debt Other liabilities Total Current Liabilities Other liabilities Lease payable Deferred tax Long term debt Total Long Term Liabilities PREF-10/May.507 4.653 61.171.847.999.585 70.383.353 38.308 8.477 15.101 7.279 617.000 20.203 3.424 23.659.319 15.212.062.296 40.465 975.203 3.531 975.051 1.647.839 7.359.798 86.359.527.180.2 Projected Balance Sheet Statement Summaries SMEDA Balance Sheet Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Rs.680 6.480.956 46.673 56.228 2.559.931.774.585 1.311 20.

806 7.465) (3.943 55.577 2.150) (134.073 5.134.012) NET CASH 1.005) (2.775) (118.533 111.660.042.570) (117.806) (855.296 (651.095) (2.750) (1.862) (686.271) (959.554 9.094 6.827 503.195 9.917.887) (2.838 5.827 435.266) (4.585.311 4.133.296 1.332.131 (1.311 7.124.567.508.533 (827.504 14 .627 23.994 8.005) (449.691.359.804.000.782 9.900 38.474 2.067.701 - - - - - - 3.459.806 2.238) (115.827 524.607.391) (761.847.701 550.599 55.036.494) (121.383.827 465.167) (5.925) (881.533 (827.962) (109.260.291) 11.900 37.507) (4.146.724 38.288 4.197.986.279 Change in short term debt Change in export re-finance facility Add: land lease expense Land lease payment Change in lease financing Issuance of shares 17.705.101 5.803 80.416.854.424) (3.939) (2.657) (2.225 (659.972.416.939) (102.343 33.126 15.392.296 (708.639) (3.406) (109.331 12.031 2.999.929.827 468.993.831 12. in actuals Year 10 20.827 (658.533 (827.533 (827.000 PREF-10/May.533 111.717.025.459.Pre-Feasibility Study Woven Polypropylene Sacks 11.296 2.359 17.068.296 1.702.352) 33.567.022) (4.101 11.150) (1.993.527.551) (2.657.343 Rs.567.025.862) (734.472) (4.383.055 5.827 416.508.929.533 111.627 23.132.591 13.649 12.205.279 Purchase of (treasury) shares Cash provided by / (used for) financing activities 34.429 2.718.862) (771.567.543.224) (4.771) 11.115) (699.943 46.000 1.145) (1.176 Year 9 17.567.000 550.862) (783.625) 11.366) 11.705.713 4. 2005/Rev1 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 1.567.492 2.000.936 2.383 1.559 Investing activities Capital expenditure (28.567.320.526.533 111.865.045 2.989 (347.522.094 (5.020) (678.204.727) 11.197.979) 11.882) 11.123 2.132) 11.438.145 8.390.194.683.260.551) (2.681) 56.972.827 438.842.965.237) (1.424) (103.940) (125.359.176 17.885 7.533 (827.000.660.025.965.130.891 2.939) (2.176.965.720 2.793 15.296 617.899 2.423.746.915) 11.095) (2.320.567.663 10.504 5.197) (3.504 80.501 23.328 - - - - - - Year 8 14.465.900.533 111.526.862) (732.124.887) (2.452.328 550.172.023.739.3 Projected Cash Flow Statement Statement Summaries SMEDA Cash Flow Statement Year 0 Operating activities Net profit Add: depreciation expense amortization expense Deferred income tax Accounts receivable Finished good inventory Equipment inventory Raw material inventory Pre-paid building rent Pre-paid lease interest Advance insurance premium Accounts payable Other liabilities Cash provided by operations (20.330.642 2.567.547) Financing activities Change in long term debt 17.025.672) 1.617 4.827 500.591 5.107.000 Cash balance brought forward Cash available for appropriation Dividend Cash carried forward 1.782 4.827 5.463 11.834 6.000.328 4.391.516 5.309) (968.081.145) (2.062.722 7.567.378.072 13.993 6.657) (2.012) Acquisitions Cash (used for) / provided by investing activities (28.094 2.194.297) (3.107.932 10.

4 Ratio Analysis Calculations SMEDA Ratio Analysis Year 0 Profitability ratios Profit margin on sales ROI (same as ROA) ROE 2% 3% 6% Liquidity ratios Current ratio Quick ratio Asset management ratios Inventory turnover ratio Days sales outstanding Fixed assets turnover ratio Total assets turnover ratio Debt management ratios Debt ratio PREF-10/May. 2005/Rev1 Year 1 50% Year 2 3% 6% 13% Year 3 5% 10% 20% Year 4 6% 14% 27% Year 5 7% 20% 33% Year 6 9% 21% 40% Year 7 10% 22% 27% Year 8 11% 21% 24% Year 9 12% 22% 22% Year 10 13% 21% 23% 3 2 3 2 3 2 3 2 3 2 5 3 6 4 7 6 8 7 12 12 13 30 3 2 13 28 3 2 13 28 4 2 13 28 5 2 12 28 7 3 12 28 9 2 12 29 12 2 11 29 17 2 11 29 27 2 29 55 2 39% 33% 26% 20% 13% 6% 0% 0% 0% 0% 15 .Pre-Feasibility Study Woven Polypropylene Sacks 11.

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