Bakery & Confectionery (Rs. 2.04 Million)

Pre-Feasibility Study
(Bakery and Confectionery)
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 Complex, Egerton Road,
Lahore
Tel: (92 42) 111 111 456, Fax: (92 42) 36304926-7
helpdesk@smeda.org.pk
REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE
Punjab Sindh Khyber Pakhtunkhwa Balochistan
3rd Floor, Building No. 3, 5th Floor, Bahria Ground Floor Bungalow No. 15-A
Aiwan-e-Iqbal Complex, Complex II, M.T. Khan Road, State Life Building Chaman Housing Scheme
Egerton Road Lahore, Karachi. The Mall, Peshawar. Airport Road, Quetta.
Tel: (042) 111-111-456 Tel: (021) 111-111-456 Tel: (091) 111-111-456 Tel: (081) 2831623, 2831702
Fax: (042) 36304926-7 Fax: (021) 35610572 Fax: (091) 5286908 Fax: (081) 2831922
helpdesk.punjab@smeda.org.pk helpdesk-khi@smeda.org.pk helpdesk-pew@smeda.org.pk helpdesk-qta@smeda.org.pk
Note: All SMEDA Services / information related to PM's Youth Business Loan are Free of Cost
December, 2013
Pre-feasibility Study Bakery and Confectionery
TABLE OF CONTENTS
1 DISCLAIMER ................................................................................................. 2
2 PURPOSE OF THE DOCUMENT .................................................................. 3
3 INTRODUCTION TO SMEDA ........................................................................ 3
4 INTRODUCTION TO SCHEME ..................................................................... 4
5 EXECUTIVE SUMMARY................................................................................ 4
6 BRIEF DESCRIPTION OF PROJECT & PRODUCT ..................................... 4
7 CRITICAL FACTORS ..................................................................................... 5
8 INSTALLED & OPERATIONAL CAPACITIES................................................ 5
9 POTENTIAL TARGET MARKET .................................................................... 5
10 PROJECT COST SUMMARY ........................................................................ 6
10.1 PROJECT ECONOMICS ............................................................................. 6
10.2 PROJECT FINANCING ............................................................................... 6
10.3 PROJECT COST....................................................................................... 7
10.4 SPACE REQUIREMENT ............................................................................. 7
10.5 MACHINERY AND EQUIPMENT REQUIREMENTS ........................................... 8
10.6 FURNITURE & FIXTURES AND OTHER EQUIPMENTS .................................... 9
10.7 RAW MATERIAL REQUIREMENTS ............................................................... 9
10.8 HUMAN RESOURCE REQUIREMENT ......................................................... 10
10.9 REVENUE GENERATION ......................................................................... 10
10.10 UTILITIES AND OTHER COSTS................................................................. 11
11 CONTACT DETAILS OF EXPERTS & CONSULTANTS ............................. 11
12 ANNEXURES ............................................................................................... 12
12.1 INCOME STATEMENT ............................................................................. 12
12.2 STATEMENT OF CASH FLOW .................................................................. 13
12.3 BALANCE SHEET ................................................................................... 14
12.4 USEFUL PROJECT MANAGEMENT TIPS .................................................... 15
12.5 USEFUL LINKS ...................................................................................... 16
13 KEY ASSUMPTION ..................................................................................... 17
13.1 RAW MATERIAL ASSUMPTIONS ............................................................... 17
13.2 SALES ASSUMPTIONS ............................................................................ 24
1 DISCLAIMER
This information memorandum is to introduce the subject matter and provide a
general idea and information on the said 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.
For more information on services offered by SMEDA, please contact our website:
www.smeda.org.pk
All SMEDA Services / Information related to PM’s Youth Business Loan are FREE OF COST - 2
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 Bakery and
Confectionery 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 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 Youth Business Loan’, for young entrepreneurs, with an
allocated budget of Rs. 5.0 Billion for the year 2013-14, is designed to provide
subsidised financing at 8% mark-up per annum for one hundred thousand
(100,000) beneficiaries, through designated financial institutions, initially by the
National Bank of Pakistan (NBP) and the First Women Bank Ltd. (FWBL).
Small business loan up to Rs. 2 million with tenure up to 8 years inclusive of 1
year grace period, and a debt : equity of 90 : 10 will be disbursed to SME
beneficiaries across Pakistan, covering; Punjab, Sindh, Khyber Pakhtunkhwah,
Balochistan, Gilgit Baltistan, Azad Jammu & Kashmir and Federally Administered
Tribal Areas (FATA).
5 EXECUTIVE SUMMARY
Bakery and Confectionery business is growing in both urban and semi-urban
areas. This pre-feasibility study encompasses the bakery business located in
commercial neighborhood surrounding and middle income residential localities.
Major products include cakes, snacks, sweets, nimko, biscuits, bread and
general confectionery items, which will be sold to target customers of the vicinity.
The sales outlet will be supported by an in house production facility. Selections of
adequate product mix and business location, supported by marketing efforts are
the critical success factors.
This Bakery & Confectionery business will be started as sole proprietorship with
an investment of Rs. 2.04 million. This project is based on 90% debt and 10%
equity ratio. Projected NPV, IRR and Payback of this project are Rs. 8.29 million
51% and 2.77 years respectively. The business will provide employment
opportunity to 06 individuals including the owner manager.
6 BRIEF DESCRIPTION OF PROJECT & PRODUCT

The proposed Bakery and Confectionery shop is a small scale project with a
production area and sales out-let. It will be equipped with basic machinery and
fixtures. The production area will require covered area of 2,700 sqft and the
outlet will be established on 900 sq.ft. The sales outlet will remain open for
business for 16 hours per day around the year.
Product mix will include cakes, snacks, sweets, nimko, biscuits, bread and
general confectionery items. This merchandise will be prepared and acquired
according to the demand of local customers and in quantities directly proportional
to expected sales.
Maximum sales are expected during Eid seasons and in winters. First year
revenues of the project are estimated to be Rs 11.24 million. It is expected that
production growth rate will be 5% per annum along with 10% per annum increase
in sales price.
7 CRITICAL FACTORS
• Background knowledge and experience of the entrepreneur in the bakery

business.
• Induction of trained human resource for production of requisite items.
• Maintenance of quality and hygiene standards.
• Pricing strategy & understanding requirements of the target customers.
• Decor presentation and layout of the shop and products.
• Location considerations for easy access of the customers.
8 INSTALLED & OPERATIONAL CAPACITIES
As mentioned, the sales of bakery items are 70 % of total sales revenue. The
installed capacity of bakery depends on the variety of the products being
produced. Installed capacity of major production items is cakes 23,785 pounds,
40,470 pieces of snacks, 6,035 kgs of sweets and nimko, and 5,325 kgs of mixed
biscuits.
Starting capacity utilization is 70% of the installed capacity growing at the rate of
5% per annum.
9 POTENTIAL TARGET MARKET

Areas having presence of middle income groups in the smaller cities will be an
ideal location for opening sales outlet of the business. Ideally, production facility
of the workshop should be located alongside the sales outlet; however, if the
rental costs are a constraint, production facility can be established at a distant
economical location. In such a case, higher transportation costs may need to be
factored in.
Smaller cities with growing middle income group such as Sargodha, shekhupura,
Gujrat, Sukkur, Hyderabad, Nowshehra, Charsadda, Quetta, Khuzdar and Gilgit
are some of the prospective cities for setting up this business.
10 PROJECT COST SUMMARY

A detailed financial model has been developed to analyze the commercial
viability of Bakery and Confectionery business under the ‘Prime Minister’s Youth
Business Loan’. Various cost 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
attached as annexures.
10.1 Project Economics

All the figures in this financial model have been calculated for estimated sales of
Rs. 11.24 million in the year one. The capacity utilization during year one is
worked out at 70% with 5% increase in subsequent year’s up to the maximum
capacity utilization of 95%.
The following table shows internal rate of return, payback period and net present
value of the proposed venture.
Table 1: Project Economics
Description Details
Internal Rate of Return (IRR) 51%
Payback Period (yrs) 2.77
Net Present Value (Rs.) 8,288,026
Project returns are based on the margins of the items sold. Profitability of the
business is highly dependent on raw material cost. Moreover, in bakery or food
item businesses the probability of wastage is higher, hence the reduction of
wastage through demand and supply analysis will play a vital role in profit
maximization. In this regard, efficient supply chain management will be an
appropriate strategy for this venture.
Another crucial factor for the success of this project is to maintain the hygienic
standards and clean environment to avoid customer complaints.
10.2 Project Financing

Following table provides details of the equity required and variables related to
bank loan;
Table 2: Project Finance

Description Details
Total Equity (10%) Rs. 204,144
Bank Loan (90%) Rs. 1,837,298
Markup to the Borrower (%age / annum) 8%
Tenure of the Loan (Years) 8
Grace Period (Year) 1
10.3 Project Cost

Following fixed and working capital requirements have been identified for
operations of the proposed business.
Table 3: Capital Investment for the Project
Description Amount Rs.

Capital Cost
Plant and Machinery 1,124,750
Furniture, Fixture and Office Equipment 270,000
Motor Vehicles 45,000
Pre-operating Cost 120,000
Total Capital Cost 1,559,750
Working Capital
Raw Material Inventory 106,692
Up-front Building Rent 225,000
Cash 150,000
Total Working Capital 481,692
Total Project Cost 2,041,442
*Pre-paid Production Facility and Shop Rent (for 3,600 sq. ft. @ Rs. 75,000 per month)
3 Months Rent as Security and 1 Months Advance Rent calculated.
10.4 Space Requirement

The space requirement for the proposed bakery and confectionary unit mainly
includes the production hall, store room and a retail outlet. For this purpose it is
recommended that a rented place of maximum 3,600 sqft (i.e. 2,700 sqft for
production space and 900 sq.ft for outlet) would be acquired on rent basis in the
vicinity of newly developing housing societies in the major cities. The production
space and bakery outlet could be acquired at separate places. However, it
should be ensured that both the facilities are located closely for easy supply of
produced goods to the outlet.
Table 4: Space Requirement
Estimated Area
Description Monthly Rent (Rs.)
(Sqft)
Production Space 2,700 30,000
Outlet Space 900 45,000
10.5 Machinery and Equipment Requirements

Plant, machinery and equipment for the proposed project are stated below.
Table 5: List of Plant Machinery and Equipment
Sr. No Description of Req. Qty Unit Cost (Rs.) Total Cost
Item (Rs.)
1 Flour Sifter 1 125,000 125,000
Mixer (60 Kg or 40
2 1 250,000 250,000
Ltr Capacity
3 Cross Sheeter 1 200,000 200,000
4 Oven (8x8 ft) 1 350,000 350,000
5 Dyes 30 75 2,250
6 Deep Freezer 1 50,000 50,000
7 Fryer and Burner 2 15,000 30,000
8 Ceiling Machine 1 1,500 1,500
9 Moving Trolleys 2 10,000 20,000
10 Trays 30 200 6,000
11 UPS and Batteries 2 20,000 40,000
Misc. Tools &
12 Equipments (Pans, 1 50,000 50,000
Knives and others)
Total 1,124,750
The required machinery is easily available in the local markets. Used and new
machinery can be purchased from different whole sale markets including Lahore,
Karachi, Peshawar, Gujranwala, etc. These requirements are based on the
proposed production plans as mentioned elsewhere.
10.6 Furniture & Fixtures and Other Equipments

In addition to the above plant machinery and equipment, following necessary
items will be required for the proposed venture.
Table 6: Furniture & Fixture and Other Equipment

Sr. No Description of Req. Qty Unit Cost (Rs.) Total Cost
Item (Rs.)
1 Production Tables 2 5,000 10,000
Chairs & Other
2 10,000 10,000
Furniture
Cost of Renovation
3 and Interior 125,000 125,000
Designing
4 Air conditioner 1 45,000 45,000
5 Vertical Freezer 1 30,000 30,000
Weighing Scales
6 (For Cash Counter 1 5,000 5,000
& Production)
7 Micro Wave Oven 1 10,000 10,000
8 Sign Board 1 10,000 10,000
9 Miscellaneous 1 25,000 25,000
Total 270,000
10.7 Raw Material Requirements

The raw materials are required for production of different varieties of bakery and
confectionary products. The complete details of raw materials along with recipe
of different products are enclosed as Annexure 13.1.
10.8 Human Resource Requirement

Table 7: Human Resource Requirement
Description No. of Employees Salary/Month
(per person)
Owner Manager 1 25,000
Master Chef 1 20,000
Salesmen 2 10,000
Helpers 2 10,000
Total Staff 6
The owner of the business is recommended to personally manage the operations

of the proposed venture. Additionally, above HR composition shall be engaged in
order to manage the operational affairs of this project under the supervision of
the owner. Appropriate experience for chef and salesmen would be required.
10.9 Revenue Generation

Following table provides the details of sales revenues for year one:
Table 8: Sales Revenue (1st Year)
Product Mix 1st Year Sales Revenue (Rs.)
Bakery Sales 8,645,315
General Item Sales 2,593,595
Total Sales 11,238,910
The above sales revenues are based on following key operational assumptions:
Table 9: Operational Assumptions

No of Working Days 355
No. of Working Hours / day 16
No. of Shifts / day 2
10.10 Utilities and Other Costs

An essential cost to be borne by the company is the cost of electricity and gas.
The electricity expenses are estimated to be around Rs. 50,000 per month,
whereas, gas expenses are estimated to be Rs. 500,000 / year (including both
natural gas and LPG at 100% capacity utilization). Considering the non
availability or low pressure of natural gas alternate burning fuels i.e. LPG, wood
or kerosene oil may need to be considered. Advance procurement of raw
materials and packing material for at least 03 days along with 02 days finished
goods stock level will be maintained for uninterrupted sales of goods, at the
production and outlet facility.
11 CONTACT DETAILS OF EXPERTS & CONSULTANTS
Prof. Dr. Salim Ur Rehman Principal Scientific Officer

National Institute of Food Science and Food and Biotechnology Research
Technology Centre
University of Agriculture, Faisalabad PCSIR Labs
Phone:041-9200161-70/3011 Ferozpur Road, Lahore
Fax: 041-9201439 Ph: 042-99230688-95
Mobile: 0300-6681047
12 ANNEXURES
12.1 Income Statement

Income Statement
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Revenue 11,238,910 13,419,982 15,747,024 18,405,275 21,437,705 24,892,570 27,401,857 30,142,043 33,156,247 36,471,872
Cost of sales
Cost of goods sold 1 7,681,843 9,172,615 10,763,159 12,580,085 14,652,764 17,014,179 18,729,288 20,602,216 22,662,438 24,928,682
Operation costs 1 (direct labor) 236,667 263,756 290,148 319,179 351,113 386,240 425,175 467,692 514,461 565,907
Operating costs 3 (direct electricity) 240,000 264,000 290,400 319,440 351,384 386,522 425,175 467,692 514,461 565,907
Operating costs 4 (direct water) 20,708 24,727 29,015 33,913 39,500 45,866 50,489 55,538 61,092 67,202
Operating costs 5 (direct gas) 345,139 412,118 483,580 565,213 658,337 764,433 841,491 925,641 1,018,205 1,120,025
Total cost of sales 8,524,357 10,137,216 11,856,301 13,817,829 16,053,098 18,597,240 20,471,618 22,518,780 24,770,658 27,247,723
Gross Profit 2,714,552 3,282,766 3,890,722 4,587,445 5,384,607 6,295,329 6,930,239 7,623,263 8,385,589 9,224,148
General administration & selling expenses

Administration expense 780,000 858,000 943,800 1,038,180 1,141,998 1,256,198 1,381,818 1,519,999 1,671,999 1,839,199
Administration benefits expense 78,000 85,800 94,380 103,818 114,200 125,620 138,182 152,000 167,200 183,920
Building rental expense 900,000 990,000 1,089,000 1,197,900 1,317,690 1,449,459 1,594,405 1,753,845 1,929,230 2,122,153
Electricity expense Outlet 360,000 396,000 435,600 479,160 527,076 579,784 637,762 701,538 771,692 848,861
Travelling expense 56,195 67,100 78,735 92,026 107,189 124,463 137,009 150,710 165,781 182,359
Communications expense (phone, fax, mail, internet, etc.) 15,600 17,160 18,876 20,764 22,840 25,124 27,636 30,400 33,440 36,784
Office expenses (stationary, entertainment, janitorial services, etc.) 7,800 8,580 9,438 10,382 11,420 12,562 13,818 15,200 16,720 18,392
Promotional expense 112,389 134,200 157,470 184,053 214,377 248,926 274,019 301,420 331,562 364,719
Depreciation expense 143,975 143,975 143,975 143,975 143,975 143,975 143,975 143,975 143,975 143,975
Amortization of pre-operating costs 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000
Miscellaneous expense 1
Subtotal 2,465,959 2,712,815 2,983,274 3,282,258 3,612,764 3,978,110 4,360,624 4,781,088 5,243,600 5,752,362
Operating Income 248,594 569,951 907,448 1,305,188 1,771,843 2,317,220 2,569,616 2,842,175 3,141,990 3,471,786
Earnings Before Interest & Taxes 248,594 569,951 907,448 1,305,188 1,771,843 2,317,220 2,569,616 2,842,175 3,141,990 3,471,786
Interest expense on long term debt (Project Loan) 152,495 139,611 122,676 104,337 84,475 62,964 39,668 14,439 - -
Subtotal 152,495 139,611 122,676 104,337 84,475 62,964 39,668 14,439 - -
Earnings Before Tax 96,099 430,340 784,772 1,200,851 1,687,368 2,254,256 2,529,947 2,827,736 3,141,990 3,471,786
Tax - 3,034 40,216 102,628 184,973 298,351 354,987 429,434 507,997 590,446
NET PROFIT/(LOSS) AFTER TAX 96,099 427,306 744,556 1,098,224 1,502,395 1,955,905 2,174,961 2,398,302 2,633,992 2,881,340
12.2 Statement of Cash Flow

Cash Flow Statement
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 96,099 427,306 744,556 1,098,224 1,502,395 1,955,905 2,174,961 2,398,302 2,633,992 2,881,340
Add: depreciation expense 143,975 143,975 143,975 143,975 143,975 143,975 143,975 143,975 143,975 143,975
amortization of pre-operating costs 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000
Deferred income tax - 3,034 40,216 102,628 184,973 298,351 354,987 429,434 507,997 590,446
Finished goods inventory (120,061) (20,864) (23,889) (27,257) (31,061) (35,352) (25,844) (28,433) (31,276) (34,404)
Equipment inventory - - - - - - - - - - -
Raw material inventory (106,692) (33,445) (40,744) (51,676) (65,403) (82,617) (80,258) (96,775) (117,098) (141,689) 816,396
Pre-paid building rent (225,000) (22,500) (24,750) (27,225) (29,948) (32,942) (36,236) (39,860) (43,846) (48,231) 530,538
Accounts payable 321,451 62,939 67,488 77,356 88,574 100,343 74,461 81,782 90,489 59,583
Cash provided by operations (331,692) 397,519 562,897 905,446 1,311,574 1,785,298 2,358,727 2,597,904 2,876,116 3,167,259 4,999,875
Financing activities
Project Loan - principal repayment - (204,028) (220,962) (239,302) (259,164) (280,674) (303,970) (329,199) - -
Additions to Project Loan 1,837,298 - - - - - - - - - -
Issuance of shares 204,144 - - - - - - - - - -
Cash provided by / (used for) financing activities 2,041,442 - (204,028) (220,962) (239,302) (259,164) (280,674) (303,970) (329,199) - -
Investing activities
Capital expenditure (1,559,750) - - - - - - - - - -
Acquisitions
Cash (used for) / provided by investing activities (1,559,750) - - - - - - - - - -
NET CASH 150,000 397,519 358,869 684,484 1,072,273 1,526,134 2,078,053 2,293,934 2,546,916 3,167,259 4,999,875
12.3 Balance Sheet

Balance Sheet
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Assets
Current assets
Cash & Bank 150,000 547,519 906,388 1,590,872 2,663,144 4,189,278 6,267,331 8,561,265 11,108,182 14,275,440 19,275,315
Finished goods inventory 120,061 140,925 164,814 192,071 223,132 258,484 284,328 312,761 344,037 378,441
Raw material inventory 106,692 140,137 180,881 232,557 297,960 380,576 460,834 557,610 674,708 816,396 -
Pre-paid building rent 225,000 247,500 272,250 299,475 329,423 362,365 398,601 438,461 482,307 530,538 -
Total Current Assets 481,692 1,055,217 1,500,444 2,287,717 3,482,598 5,155,352 7,385,251 9,841,664 12,577,958 15,966,412 19,653,756
Fixed assets
Machinery & equipment 1,124,750 1,012,275 899,800 787,325 674,850 562,375 449,900 337,425 224,950 112,475 -
Furniture, fixtures and Office Equipment 270,000 243,000 216,000 189,000 162,000 135,000 108,000 81,000 54,000 27,000 -
Office vehicles 45,000 40,500 36,000 31,500 27,000 22,500 18,000 13,500 9,000 4,500 -
Total Fixed Assets 1,439,750 1,295,775 1,151,800 1,007,825 863,850 719,875 575,900 431,925 287,950 143,975 -
Intangible assets
Pre-operation costs 120,000 108,000 96,000 84,000 72,000 60,000 48,000 36,000 24,000 12,000 -
Total Intangible Assets 120,000 108,000 96,000 84,000 72,000 60,000 48,000 36,000 24,000 12,000 -
TOTAL ASSETS 2,041,442 2,458,992 2,748,244 3,379,542 4,418,448 5,935,227 8,009,151 10,309,589 12,889,908 16,122,387 19,653,756
Liabilities & Shareholders' Equity

Current liabilities
Accounts payable 321,451 384,390 451,879 529,235 617,809 718,151 792,612 874,394 964,884 1,024,466
Total Current Liabilities - 321,451 384,390 451,879 529,235 617,809 718,151 792,612 874,394 964,884 1,024,466
Other liabilities
Deferred tax - 3,034 43,250 145,877 330,851 629,202 984,188 1,413,622 1,921,619 2,512,065
Long term debt (Project Loan) 1,837,298 1,837,298 1,633,270 1,412,308 1,173,007 913,843 633,169 329,199 - - -
Total Long Term Liabilities 1,837,298 1,837,298 1,636,304 1,455,558 1,318,884 1,244,694 1,262,371 1,313,387 1,413,622 1,921,619 2,512,065
Shareholders' equity
Paid-up capital 204,144 204,144 204,144 204,144 204,144 204,144 204,144 204,144 204,144 204,144 204,144
Retained earnings 96,099 523,405 1,267,961 2,366,185 3,868,580 5,824,485 7,999,445 10,397,747 13,031,740 15,913,080
Total Equity 204,144 300,243 727,549 1,472,106 2,570,329 4,072,724 6,028,629 8,203,590 10,601,892 13,235,884 16,117,224
TOTAL CAPITAL AND LIABILITIES 2,041,442 2,458,992 2,748,244 3,379,542 4,418,448 5,935,227 8,009,151 10,309,589 12,889,908 16,122,387 19,653,756
12.4 Useful Project Management Tips

Technology
• Required spare parts & consumables: Suppliers credit agreements and
availability as per schedule of maintenance be ensured before start of
operations.
• Energy Requirement: Should not be overlooked and alternate source of
energy for critical operations be arranged in advance.
• Machinery Suppliers: Should be asked for training and after sales services
under the contract with the machinery suppliers.
• Quality Assurance Equipment & Standards: Required products quality
standards need to be defined on the packaging and a system to check them
instituted, this improves credibility.
Marketing
• Product Development & Packaging: Expert's help may be engaged for
product/service and packaging design & development.
• Ads & Point of Sales Promotion: Business promotion and dissemination
through banners and launch events is highly recommended. Product
brochures should be acquired from good quality service providers.
• Price - Bulk Discounts, Cost plus Introductory Discounts: Price should
not be allowed to compromise on quality. Price during introductory phase may
be lower and used as promotional tool. Product cost estimates should be
carefully documented before price setting. Government controlled prices shall
be displayed.
Human Resources
• Adequacy & Competencies: Skilled and experienced master chef should be
considered an investment and be retained on better terms, if necessary
12.5 Useful Links

• Prime Minister’s Office, www.pmo.gov.pk
• Small and Medium Enterprise Development Authority, www.smeda.org.pk
• National Bank of Pakistan (NBP), www.nbp.com.pk
• First Women Bank Limited (FWBL), www.fwbl.com.pk
• State Bank of Pakistan (SBP), www.sbp.org.pk
• Government of Pakistan, www.pakistan.gov.pk
• Ministry of Industries & Production, www.moip.gov.pk
• Ministry of Education, Training & Standards in Higher Education,
http://moptt.gov.pk
• Government of Punjab, www.punjab.gov.pk
• Government of Sindh, www.sindh.gov.pk
• Government of Khyber Pakhtunkhwa, www.khyberpakhtunkhwa.gov.pk
• Government of Balochistan, www.balochistan.gov.pk
• Government of 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
• Ministry of National Food Security & Research, www.mnfsr.gov.pk
• Punjab Food Authority, www.punjabfoodauthority.gov.pk
13 KEY ASSUMPTION
13.1 Raw Material Assumptions (at 100% capacity)
Plain & Dry Cakes

Plain cakes
Qty
Qty Qty
Ingredients
Units of % Qty Ingredients Ingredients
Raw material: Quantity Rate Cost For Making
measure ingredients Ingredients in grams For For Making 1
1 Pound
Making 1 Kg Kg (gms)
(gms)
Butter Kg 280 450 125,959 21.73% 303 225 225 102.058
Sugar Kg 50 60 2,986 3.86% 333 40 40 18.144
Flour (Maida) Kg 373 50 18,661 28.97% 393 300 300 136.078
Baking powder Kg 12 60 746 0.97% 12 10 10 4.536
Eggs Pcs 11,594 7 81,157 34.77% 7,261 9 360 163.293
Flavour Ltr. 1 500 311 0.05% 1 0.5 1 0.227
Cream and Honey Kg 124 400 49,762 9.66% 100 100 45.359
279,582 100.0% 8,302 1,036
Plain fruit cakes
Qty
Qty Qty
Ingredients
1 Pound
(gms)
Butter Kg 316 450 142,012 24.498% 162 250 250
Sugar Kg 50 60 3,030 3.920% 178 40 40
Flour (Maida) Kg 316 50 15,779 24.498% 211 250 250

Baking powder Kg 13 60 757 0.980% 6 10 10
Fruit Chunks Kg 379 60 22,722 29.397% 66 300 300
Samolina (Sooji) Kg 63 80 5,049 4.900% 66 50 50
Eggs Pcs 3,865 7 27,052 11.759% 3,888 3 120
Flavours Ltr. 1 500 316 0.049% 0.32 0.5 0.5
216,716 100.00% 4,578 1020.5
Dry cakes
Qty
Qty Qty
Ingredients
1 Pound
(gms)
Butter Kg 357 450 160,629 22.167% 545 225 225
Sugar Kg 63 60 3,807 3.941% 545 40 40
Flour (Maida) Kg 436 50 21,814 27.094% 545 275 275
Baking powder Kg 16 60 952 0.985% 22 10 10
Eggs Pcs 14,492 7 101,446 35.468% 16,364 9 360
Flavour Ltr. 8 500 3,966 0.493% 1.09 5 5
Cream + Honey Kg 159 400 63,458 9.852% 100 100
356,072 100.00% 18,023 1015
Sweets & Nimko

Nimko
Qty
Qty Qty
Ingredients
1 Pound
(gms)
Gram Flour (Baisn) Kg 485 90 43,639 68.293% 491 700 700
Dry Fruit Kg 139 160 22,166 19.512% 123 200 200
Chickpeas (Channey) Kg 69 120 8,312 9.756% 61 100 100
Nimko Masala Kg 17 150 2,598 2.439% 25 25 2525 25 25
Sweets
Qty
Qty Qty
Ingredients
1 Pound
(gms)
Solidified wholemilk
Kg 1,801 400 720,290 33.816% 1,050 350 350
(Khoya)
Flour (Maida) Kg 1,158 50 57,880 21.739% 263 225 225
Eggs Kg 21,300 7 149,100 15.459% 131 4 160
Ghee Kg 772 175 135,054 14.493% 53 150 150
Sugar syrup or Sugar Kg 772 800 617,391 14.493% 919 150 150
1,679,716 100% 2,415 1035
Chicken Bread
Qty
Qty Qty
Ingredients
1 Pound
(gms)
Flour (Maida) Kg 416.02 50 20,801 14.648% 336.00 150 150
Oil Ltr 55.47 190 10,539 1.953% 33.60 20 20
Yeast Kg 5.55 180 998 0.195% 1.68 2 2
Sugar Kg 69.34 60 4,160 2.441% 33.60 25 25
Salt Kg 5.55 8 44 0.195% 3.60 2 2
Chicken Kg 970.70 275 266,943 34.180% 480.00 350 350
Onion Kg 346.68 40 13,867 12.207% 720.00 125 125
Masala Kg 138.67 84 11,648 4.883% 84.00 50 50
Cheese Kg 277.34 800 221,875 9.766% 180.00 100 100
Mayonnaise &
Kg 138.67 90 12,480 4.883% 120.00 50 50
Ketchup
Mix Vegetable Kg 416.02 80 33,281 14.648% 120.00 150 150
2,840 596,639 100.000% 2,112 1024 1024
Fresh Cream cakes
Qty
Qty Qty
Ingredients
1 Pound
(gms)
Butter Kg 491 450 221,135 12.207% 545 80 125
Sugar Kg 393 60 23,588 9.766% 545 100 100
Flour (Maida) Kg 491 50 24,571 12.207% 545 100 125
Baking powder Kg 8 60 472 0.195% 22 2 2
Eggs Pcs 16,103 7 112,718 15.625% 16,364 4 160

Flavour Ltr. 8 500 3,931 0.195% 1.09 2 2
Fresh Cream Kg 2,005 300 601,486 49.805% 510 510
987,899 100.000% 18,023 1024
* Assume 20% extra cost for this type of Cakes 1,185,479
Pastries & Puff etc
Qty
Qty Qty
Ingredients
1 Pound
(gms)
Butter Kg 315 450 141,526 12.207% 545 100 125
Sugar Kg 252 60 15,096 9.766% 545 100 100
Flour (Maida) Kg 315 50 15,725 12.207% 545 100 125
Baking powder Kg 5 60 302 0.195% 22 2 2
Eggs Pcs 10,306 7 72,139 15.625% 16,364 4 160
Flavour Ltr. 5 500 2,516 0.195% 1.09 2 2
Fresh Cream Kg 1,283 300 384,951 49.805% 510 510
632,256 100.000% 18,023 1024
Bread - - 100.000% 407 1030
Biscuits etc
Qty
Qty Qty
Ingredients
1 Pound
(gms)
Butter Kg 873 450 392,828 16.393% 303 170 170
Sugar Kg 770 60 46,215 14.465% 333 150 150
Flour (Maida) Kg 1,797 50 89,863 33.751% 393 350 350
Baking powder Kg 26 60 1,541 0.482% 12 5 5
Eggs Pcs 47,925 7 335,475 34.716% 7,261 9 360
Flavour Ltr. 10 500 5,135 0.193% 1 2 2
871,056 100% 8,302 1037
Snacks
Per Piece
Chicken Drum stick Leg Piece 45.5 161,525
Chicken Leg Piece 63 268,380
Chicken Shami 21 111,825
Chicken Sandwich 35 62,125
Chicken Patties 17.5 155,313
Chicken Bread roll 21 74,550
Chicken Pizza
Qty
Qty Ingredients
Units of % Qty Ingredients
Raw material: Quantity Rate Cost For Making 1 Kg
measure ingredients Ingredients in grams For
(gms)
Making 1 Kg
Flour (Maida) Kg 930.58 50 46,529 19.417% 336.00 200 200
Oil Ltr 69.79 190 13,261 1.456% 33.60 15 15
Yeast Kg 4.65 180 838 0.097% 1.68 1 1
Sugar Kg 93.06 60 5,583 1.942% 33.60 20 20
Salt Kg 18.61 15 279 0.388% 3.60 4 4
Chicken Kg 1,395.87 275 383,865 29.126% 480.00 300 300
Onion Kg 930.58 40 37,223 19.417% 720.00 200 200
Masala Kg 186.12 84 15,634 3.883% 84.00 40 40
Cheese Kg 465.29 800 372,233 9.709% 180.00 100 100
Mayonnaise &
Kg 232.65 90 20,938 4.854% 120.00 50 50
Ketchup
Mix Vegetables Kg 465.29 80 37,223 9.709% 120.00 100 100
4,793 933,607 100% 2,112 1030
* Figure are rounded off at zero decimal
13.2 Sales Assumptions (at 100% capacity)

Sales per Sales Per Sales Price Annual
Description Units
Day (Qty) Year (Qty) / Unit (Rs.) Sales (Rs.)
Fresh Cream Cakes
Fresh cream Pounds 10 3,550 180 639,000
Fresh fruit Pounds 5 1,775 180 319,500
Chocolate Cakes Pounds 5 1,775 180 319,500
Butter cream cakes Pounds 5 1,775 180 319,500
Total 8,875 1,597,500
Fresh & Chocolate

Pounds 5 1,775 180 319,500
Pastries
Donuts Pounds 5 1,775 180 319,500
Cream puff Pounds 3 1,065 180 191,700
Cream roll Pounds 3 1,065 180 191,700
Total 5,680 1,022,400
Bread (Out Sourced)

Bread, Bun, Rusk Etc. Kgs 10 3,550 110 390,500
Total 390,500
Dry cakes
Dry cakes Pounds 10 3,550 180 639,000
Fruit cakes large Pounds 3 1,065 140 149,100
Fruit cakes small Pounds 5 1,775 140 248,500
Plain cakes large Pounds 3 1,065 120 127,800
Plain cakes small Pounds 5 1,775 120 213,000
Total 9,230 1,377,400
Snacks
Chicken pizza large Pcs 5 1,775 380 674,500
Chicken pizza medium Pcs 10 3,550 200 710,000
Chicken pizza small Pcs 14 4,970 100 497,000
Chicken bread Pcs 8 2,840 380 1,079,200
Chicken drum stick leg
Pcs 10 3,550 65 230,750
piece
Chicken leg piece Pcs 12 4,260 90 383,400
Chicken shami Pcs 15 5,325 30 159,750
Chicken sandwich Pcs 5 1,775 50 88,750
Chicken patties Pcs 25 8,875 25 221,875
Chicken bread roll Pcs 10 3,550 30 106,500
Total 40,470 4,151,725
Sales per Sales Per Sales Price Annual

Description Units
Day (Qty) Year (Qty) / Unit (Rs.) Sales (Rs.)
Sweets & Nimko
Nimko Kgs 2 710 400 284,000
Gulab Jaman Kgs 3 1,065 375 399,375
Chum Chum Kgs 3 1,065 375 399,375
Kalakand Kgs 2 710 375 266,250
Burfi Kgs 3 1,065 375 399,375
Moti Choor Kgs 3 1,065 375 399,375
Pateesa Kgs 1 355 375 133,125
Total 15 6,035 2,280,875
Biscuits
Cake Rusk Kgs 2 710 320 227,200
White Biscuits Kgs 1 355 320 113,600
Coconut Biscuits Kgs 1 355 320 113,600
Macaroon Coconut Kgs 1 355 320 113,600
Almond Macaroon Kgs 1 355 320 113,600
Cheese Finger Kgs 1 355 320 113,600
Salty Zeera Plus Kgs 1 355 320 113,600
Plain Khatai Kgs 1 355 320 113,600
Baker Khani Kgs 1 355 320 113,600
Finger Kgs 1 355 320 113,600
Jam Wafer Kgs 1 355 320 113,600
Special Biscuit Kgs 1 355 320 113,600
Chocolate Biscuits Kgs 1 355 320 113,600
Round Almond Biscuit Kgs 1 355 320 113,600
Total 15 5,325 1,704,000
* Figures are rounded off at zero decimal.

Bakery &amp; Confectionery (Rs. 2.04 Million)

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Pre-Feasibility Study

(Bakery and Confectionery)

Small and Medium Enterprises Development Authority

2 PURPOSE OF THE DOCUMENT

6 BRIEF DESCRIPTION OF PROJECT & PRODUCT

• Background knowledge and experience of the entrepreneur in the bakery

8 INSTALLED & OPERATIONAL CAPACITIES

9 POTENTIAL TARGET MARKET

10 PROJECT COST SUMMARY

10.1 Project Economics

Internal Rate of Return (IRR) 51%

Payback Period (yrs) 2.77

Net Present Value (Rs.) 8,288,026

10.2 Project Financing

Table 2: Project Finance

10.3 Project Cost

Description Amount Rs.

10.4 Space Requirement

10.5 Machinery and Equipment Requirements

10.6 Furniture & Fixtures and Other Equipments

Table 6: Furniture & Fixture and Other Equipment

10.7 Raw Material Requirements

10.8 Human Resource Requirement

The owner of the business is recommended to personally manage the operations

10.9 Revenue Generation

Table 9: Operational Assumptions

10.10 Utilities and Other Costs

11 CONTACT DETAILS OF EXPERTS & CONSULTANTS

Prof. Dr. Salim Ur Rehman Principal Scientific Officer

12.1 Income Statement

General administration & selling expenses

12.2 Statement of Cash Flow

12.3 Balance Sheet

Liabilities & Shareholders' Equity

12.4 Useful Project Management Tips

12.5 Useful Links

13.1 Raw Material Assumptions (at 100% capacity)

Plain & Dry Cakes

Flour (Maida) Kg 316 50 15,779 24.498% 211 250 250

Sweets & Nimko

Eggs Pcs 16,103 7 112,718 15.625% 16,364 4 160

Bread - - 100.000% 407 1030

Chicken Drum stick Leg Piece 45.5 161,525

Chicken Leg Piece 63 268,380

Chicken Shami 21 111,825

Chicken Sandwich 35 62,125

Chicken Patties 17.5 155,313

Chicken Bread roll 21 74,550

* Figure are rounded off at zero decimal

13.2 Sales Assumptions (at 100% capacity)

Fresh & Chocolate

Bread (Out Sourced)

Sales per Sales Per Sales Price Annual

* Figures are rounded off at zero decimal.

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Bakery & Confectionery (Rs. 2.04 Million)

Bakery & Confectionery (Rs. 2.04 Million)