Pre-Feasibility Study

SEA FOOD PROCESSING PLANT

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) 9213046-47 Tel: (081) 831623, 831702
Fax: (042) 36304926-7 Fax: (021) 5610572 Fax: (091) 286908 Fax: (081) 831922
helpdesk.punjab@smeda.org.pk helpdesk-khi@smeda.org.pk helpdesk-pew@smeda.org.pk helpdesk-qta@smeda.org.pk

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TABLE OF CONTENTS
1 DISCLAIMER .................................................................................................... 2
2 EXECUTIVE SUMMARY ................................................................................... 3
3 INTRODUCTION TO SMEDA ........................................................................... 3
4 PURPOSE OF THE DOCUMENT ..................................................................... 4
5 BRIEF DESCRIPTION OF PROJECT & PRODUCT ........................................ 4
5.1 Production Process Flow .......................................................................... 5
5.2 Installed and Operational Capacity ........................................................... 5
6 CRITICAL FACTORS ....................................................................................... 6
7 GEOGRAPHICAL POTENTIAL FOR INVESTMENT ....................................... 7
8 POTENTIAL TARGET CUSTOMERS / MARKETS .......................................... 7
9 PROJECT COST SUMMARY ........................................................................... 7
9.1 Project Economics .................................................................................... 7
9.2 Project Cost .............................................................................................. 8
9.3 Land and Building Requirement ............................................................... 9
9.4 Machinery & Equipment Requirement .................................................... 10
9.5 Furniture & Fixtures Requirement ........................................................... 11
9.6 Vehicles Requirement............................................................................. 12
9.7 Office Equipment Requirement ............................................................... 12
9.8 Human Resource Requirement .............................................................. 13
9.9 Utilities and Other Costs ......................................................................... 13
9.10 Raw Fish & Shrimp Requirement............................................................ 13
9.11 Revenue Generation............................................................................... 13
10 CONTACT DETAILS....................................................................................... 14
11 USEFUL WEB LINKS ..................................................................................... 15
12 ANNEXURES .................................................................................................. 16
12.1 Income Statement................................................................................... 16
12.2 Balance Sheet ........................................................................................ 17
12.3 Cash Flow Statement ............................................................................. 18
13 KEY ASSUMPTIONS ...................................................................................... 19
13.1 Operating Cost Assumptions .................................................................. 19
13.2 Production Cost Assumptions ................................................................. 19
13.3 Revenue Assumptions ............................................................................ 19

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1 DISCLAIMER

This information memorandum is to introduce the subject matter and provide a

general idea and information on the said matter. 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

Document Control
Document No. PREF-NO 12

Revision No. 1

Prepared by SMEDA Punjab – OS

Revision Date February, 2021

For information helpdesk.punjab@smeda.org.pk

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2 EXECUTIVE SUMMARY

Seafood is any form of sea life regarded as food by humans, prominently including fish
and shellfish. Pakistan is endowed with abundant fishery resources that have
significant potential to make big contribution to economic growth and social
development.
This particular pre-feasibility study is for setting up a ‘Sea Food Processing Plant’. The
focus of the business would be to provide quality sea food products. The unit will
initially process Shrimp, Tuna Fish, King Fish. Mackerel, Queen Fish and Salmon.
Later on variety of fishes and other sea food items may be increased along production.
The unit is proposed to be located at the coastal areas of Pakistan ideally near a fish
harbor such as, Karachi, Ormara, Pasni and Gwadar etc.
The proposed plant has a capacity to process 780,000 kgs. of different kinds of fish
annually. However, starting operational capacity is assumed at 60% with gradual
increase of 5% in subsequent years up to maximum capacity utilization of 90%. This
production capacity is estimated to be economically viable and justifies the capital as
well as operational cost of the project. Complete adherence to food compliance
practices and efficient supply chain management is critical to the success of this
project. Therefore, entrepreneurs knowledge and experience in fisheries sector is
absolutely necessary.
Total project cost is estimated as Rs. 96.430 million with capital investment of Rs.
92.805 million and working capital Rs. 3.625 million. Based on an equity finance model,
the project NPV is around Rs. 170.261 million, with an IRR of 42% and Payback Period
of 2.97 years. The project will provide employment opportunities to 27 people including
the Owner. The legal business status of this project is assumed to be ‘Sole
Proprietorship’.

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 prefeasibility studies in key areas of investment has
been a successful hallmark of SME facilitation by SMEDA.

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Concurrent to the prefeasibility 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 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, and
production, marketing, finance and business management.
The purpose of this document is to facilitate potential investors in Sea Food Processing
Plant by providing them with 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 its successful management.
Apart from carefully studying the whole document one must consider critical aspects
provided later, which form basis of any Investment Decision.

5 BRIEF DESCRIPTION OF PROJECT & PRODUCT

Seafood is a natural part of a balanced diet. It contains high levels of several important
nutrients and thus helps maintain a good nutritional status. Pakistan is endowed with
abundance of fishery resources that have huge potential to make significant
contribution to economic growth and social development. Sea food processing industry
in Pakistan is outdated, under-capitalized and lacks value addition. Therefore,
establishment of quality sea food processing unit offer lucrative business opportunity
for potential investors.
The proposed project involves processing of different kinds of fish for both domestic
and international market. Processing of sea food primarily involves the post catching
activities and fish meat preservation to increase shelf life of the produce. The post fish
catching processes involves, fish icing, grading, cleaning, cutting and packing while
meat preservation comprises of freezing and cold storage. According to the proposed
business model, the processing unit will purchase the raw fishes from the ‘Fish Auction
Hall’ as well as directly from Fisherman at fish boats and after processing the packed
frozen sea food (i.e. fish and shrimp) will be sold in the market.

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The processing plant will be equipped with modern fish processing machine and
equipment along with installation of efficient meat freezing and cold storage facility.
The plant will initially process Shrimps, Tuna Fish, King Fish, Mackerel, Queen Fish
and Salmon Fish. Afterwards, new varieties of fish and sea food items will be added in
the production line. The final product i.e. frozen fish meat and shrimps, initially will be
supplied to local food markets of major cities across Pakistan. Besides that, restaurant
chains and 5-star hotels across the country will also be potential consumers of the
produced sea food. The unit will also explore the possibility of targeting the export
market through local traders.
The plant should be located at the coastal areas of Pakistan, especially near to a fish
harbour. Financial analysis shows the unit shall be profitable from the very first year of
operation. The legal status is proposed to be ‘Sole Proprietorship’.

5.1 Production Process Flow

The production process flow of the ‘Sea Food Processing Plant’ is as follows:

Figure 1: Production Process Flow Diagram

Icing, Washing Cutting and

Raw Fish
and Grading Cleaning

Slicing and
Packaging Blast Freezing
Filleting

Storing

5.2 Installed and Operational Capacity

Total installed capacity of the project is assumed at processing 780,000 kgs. of fishes
and shrimps per year. The initial operational capacity of the project will be 60% with an
annual growth of 5%. Maximum capacity utilization of the project is assumed at 90%.
The Plant is assumed to operate on a single shift of 8 hours for 300 days per annum.

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Table 1: Installed and Operational Capacity

Maximum
Total Operational
Operational
Processing Capacity 60 % -
Description Capacity 90% -
Capacity (Kgs) Year 1 (Kgs)
Year 7 (Kgs)
Shrimp 150,000 90,000 135,000

Tuna 180,000 108,000 162,000

King Fish 75,000 45,000 67,500

Mackerel 75,000 45,000 67,500

Queen Fish 75,000 45,000 67,500

Salmon 225,000 135,000 202,500

Total 780,000 468,000 702,000

6 CRITICAL FACTORS

Following are the factors critical for the success of this business venture;
 Background knowledge and related experience of the entrepreneur in sea food
processing.
 Complete adherence to food compliance practices and efficient supply chain
management.
 Availability of quality fishes that meets international and national quality standards.
 Significant number of suppliers to meet production ability.
 Exceed customer expectations by offering high quality products at reasonable
prices with quick turnaround times.
 Appropriate arrangement for transportation of product to the processing unit.
 Business location is the key to success, near to fish harbor and easy accessibility
to target customers.
 Effective marketing and distribution of the product.
 Employ careful financial and accounting analysis to ensure efficiency and proper
controls.

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7 GEOGRAPHICAL POTENTIAL FOR INVESTMENT

The proposed location for the establishment of such a facility could be the areas within
the proximity of Balochistan and Sindh coastal belt. If the project is closer to a fish
Harbor it will have an added advantage of being nearer to the raw material supply.
Therefore, areas around Karachi, Ormara, Pasni and Gawadar can be suitable
locations for setting up this unit. Subsequently, availability of skilled labor, raw material
and close customer proximity is extremely important for the success of this business.

8 POTENTIAL TARGET CUSTOMERS / MARKETS

The potential target market for the processed sea food will be the general public of
middle and upper middle income group as well as restaurants, food chains and cafes.
Considering to that, major cities for instance Karachi, Lahore, Peshawar, Quetta,
Rawalpindi, Islamabad, Multan, Sialkot, Faisalabad, Hyderabad and etc. with large
urban population base would be the potential target markets for the proposed
business.
The bulk buyers, especially big retail chains and food restaurants will be targeted
through direct ordering basis whereas small retail shops may be approached through
designated wholesaler and traders. Additionally, unit will also explore the possibility of
targeting the export market through local traders.

9 PROJECT COST SUMMARY

A detailed financial model has been developed to analyse the commercial viability of
Sea Food Processing Plant. 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.

9.1 Project Economics

All the figures in this financial model have been calculated for estimated sales of Rs.
577 million in the year one. The capacity utilization during year one is worked out at
60%. The following table shows internal rate of return, payback period and net present
value of the proposed venture.
Table 2: Project Economics

Description Details

Internal Rate of Return (IRR) 42%

Payback Period (yrs.) 2.97

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Net Present Value (Rs.) 170,261,224

Calculation of break-even analysis is as follows:

Table 3: Breakeven (100% Equity Based)
Break-Even
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Analysis

Break-Even
170,457,055 174,368,552 182,266,010 191,536,007 201,819,875 227,461,224 240,320,968 253,982,104 269,227,404 286,445,149
Revenue

Break-Even
137,104 127,500 121,159 115,746 110,874 113,600 109,111 104,831 101,021 97,711
Units
Margin of
70% 74% 76% 77% 79% 78% 79% 79% 79% 79%
Safety

However, for the purposes of further explanation the Project Economics based on
Debt:Equity (i.e. 50:50) Model has also been computed. Based on Debt:Equity model
the Internal Rate of Return, Payback Period and Net Present Value of the proposed
project are provide in the table below.
Table 4: Project Economics Based on Debt (50%):Equity (50%)

Description Details

Internal Rate of Return (IRR) 40%

Payback Period (Yrs.) 3.20

Net Present Value (Rs.) 233,271,150

The financial assumptions for Debt: Equity are as follows:

Table 5: Financial Assumptions for Debt:Equity Model

Description Details

Debt (50%) 48,215,012

Equity (50%) 48,215,012

Interest Rate on Debt 12%

Debt Tenure 5

Debt Payment / Year 2

The projected Income Statement, Cash Flow Statement and Balance Sheet attached
as annexures are based on 100% Equity Based Business Model.

9.2 Project Cost

Following fixed and working capital requirements have been identified for operations

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of the proposed business.

Table 6: Project Cost

Description Amount Rs.

Capital Cost

Land 12,000,000

Building / Infrastructure 24,191,985

Machinery & Equipment 40,092,050

Furniture & Fixtures 506,000

Vehicles 13,377,000

Office Equipment 646,000

Wapda Security 201,000

Pre-Operating Costs 1,791,000

Total Capital Cost 92,805,035

Cash 1,907,464

Equipment Spare Part Inventory 20,881

Raw Material Inventory 1,362,219

Upfront Insurance Payment 334,425

Total Working Capital 3,624,989

Total Project Cost 96,430,024

9.3 Land and Building Requirement

Approximately 3 Kanals of land would be required for establishment of proposed unit.
It is recommended that required land should be procured in the identified coastal city /
area. The cost of land is estimated at the rate of Rs. 4 million per kanal.
The infrastructural requirements of the project mainly comprise the construction of
various facilities including processing hall, cold storage, store and management
building. Details of infrastructure requirement and cost related to land and civil works
are given in the below table:

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Table 7: Infrastructure Requirement

Estimated Unit Cost Total Cost

Description
Area (Sq. ft.) (Rs.) (Rs.)

Management Building 800 2,500 2,000,000

Processing Hall 5,000 2,500 12,500,000

Cold Store 2,250 1,800 4,050,000

Store 250 2,500 625,000

Security Guard Quarters 250 2,000 500,000

Water Tank 500,000

Cafeteria 144 2,500 360,000

Pavement/Driveway 2,250 500 1,125,000

Open Space 2,476 75 185,700

Electrical Room 80 2,500 200,000

Electric Wiring & Lighting 400,000

Boundary Wall 644,000

Design Fee 1,102,285

Total Construction Cost 24,191,985

Total Cost of Land 12,000,000
Total Cost 36,191,985

9.4 Machinery & Equipment Requirement

Plant, machinery and equipment for the proposed project are stated below
Table 8: Machinery & Equipment

Required Unit Cost Total Cost

Description
Quantity (Rs.) (Rs.)

Flake Ice Machine Capacity 2 Ton 1 2,200,000 2,200,000

Storage Bin 10 Ton 2 600,000 1,200,000

Cold Storage & Freezing

1 20,712,300 20,712,300
Equipment

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Fish Processing Machine 1 2,025,000 2,025,000

Automatic Seafood Weight

1 1,869,750 1,869,750
Grading Machine

Packaging Machine 1 4,500,000 4,500,000

Electrical Room Equipment 1 135,000 135,000

Tables &Racks 1 4,000,000 4,000,000

Cutting Tools Etc. 1 50,000 50,000

Transformers 1 1,150,000 1,150,000

Generator 100 KVA 1 2,250,000 2,250,000

Total 40,092,050

9.5 Furniture & Fixtures Requirement

Details of the furniture and fixture required for the project are given below.
Table 9: Furniture & Fixture

Unit Cost Total Cost

Description Quantity
(Rs.) (Rs.)

Chair (Owner) 1 18,000 18,000

Table (Owner) 1 22,000 22,000

Cabinet 1 12,000 12,000

Visitors Chairs Management 6 3,500 21,000

Chairs for Staff 2 6,500 13,000

Table Staff 2 9,000 18,000

File Racks 3 8,000 24,000

Visitors Chairs 4 2,500 10,000

Chair for Guards 6 2,000 12,000

Table 1 5,000 5,000

Fans 17 4,500 76,500

LED Lights 34 1,000 34,000

Air conditioners (1.5 ton split) 2 85,000 170,000

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Total 506,000

9.6 Vehicles Requirement

Vehicles will be required for transportation of ‘Raw Fish’ to processing unit and frozen
fish meat to market. The details of vehicle required for the project are given below.
Table 10: Vehicles

Unit Cost Total Cost

Description Quantity
(Rs.) (Rs.)

Mini Truck 2 2,500,000 5,000,000

Truck 1 5,000,000 5,000,000

Refrigerated Container 2 1,250,000 2,500,000

Bikes 70CC 3 80,000 240,000

Registration Fee (5% of Vehicle Cost) 637,000

Total 13,377,000

9.7 Office Equipment Requirement

Office equipment required for the proposed project are stated below.
Table 11: Office Equipment

Unit Cost Total Cost

Description Quantity
(Rs.) (Rs.)

Laptop 1 120,000 120,000

Computers 6 35,000 210,000

Computer printer (s) 3 20,000 60,000

Telephones 2 1,500 3,000

Security Equipment 1 100,000 100,000

Fridge 1 51,500 51,500

Water Dispenser 2 19,000 38,000

Oven 1 13,500 13,500

Miscellaneous Office Equipment 1 50,000 50,000

Total 646,000

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9.8 Human Resource Requirement

In order to run operations of Sea Food Processing Plant smoothly, details of human
resources required along with number of employees and monthly salary are
recommended as under.
Table 12: Human Resource Requirment

Monthly Salary
Description No. of Employees
per Person (Rs.)
Owner / Manager 1 80,000
Operations Manager 1 50,000
Accounts Officer 1 35,000
Marketing Manager 1 50,000
Sales Officer 3 30,000
Driver 3 25,000
Security Guard 3 24,000
Helpers 4 22,000
Meat Processors 10 30,000
Total 27

9.9 Utilities and Other Costs

An essential cost to be borne by the project is the cost of electricity. The electricity
expenses are estimated to be around Rs.305,285 (Direct & In director) per month.
Furthermore, promotional expense being essential for marketing of Sea Food
Processing Plant is estimated as 0.2% of revenue.

9.10 Raw Fish & Shrimp Requirement

For the proposed project ‘Raw Fish and Shrimps’ caught from the sea will be
purchased at harbors and from local fish markets. During year 1, total 302,400 kgs. of
Fish and 72,000 kgs. of Shrimp will be purchased from the local market for processing
purposes. Around, 25% wastage is estimated in the actual live meat of fish and
shrimps.

9.11 Revenue Generation

Based on the capacity utilization of 60%, sales revenue during the first year of
operations is provided in the table below.

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Table 13: Revenue Generation – Year 1

Description Operational Finished Units Sale Sales

Capacity In Goods Available Price / Revenue
Kgs Inventory for Sale Kg. (Rs.)
(Kgs) (Rs.)
Shrimp 90,000 750 89,250 1,250 111,562,500
Tuna 108,000 900 107,100 1,675 179,392,500
King Fish 45,000 375 44,625 1,980 88,357,500
Mackerel 45,000 375 44,625 780 34,807,500
Queen Fish 45,000 375 44,625 950 42,393,750
Salmon 135,000 1,125 133,875 900 120,487,500
Total 468,000 3,900 464,100 577,001,250

10 CONTACT DETAILS

In order to facilitate potential investors, contact details of machinery suppliers related

to the proposed project are given below.
Table 14: Machinery Suppliers

Name of Supplier Address Email / Website

243-S, Quaid -e- Azam

Koldkraft
industrial Estate Kot Lakhpat
Refrigeration Pvt www.koldkraftergroup.com
Lahore Pakistan
Ltd
+92-42-3511672728

Austurhraun 9 IS 210
Marel Iceland –
Gardabaer Iceland info.fish@marel.com
Fish Processing
+354-563-8000

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11 USEFUL WEB LINKS

Small & Medium Enterprises Development

www.smeda.org.pk
Authority (SMEDA)
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 Baluchistan www.balochistan.gov.pk
Government of Gilgit Baltistan www.gilgitbaltistan.gov.pk
Government of Azad Jammu Kashmir www.ajk.gov.pk
Trade Development Authority of Pakistan
www.tdap.gov.pk
(TDAP)
Security Commission of Pakistan (SECP) www.secp.gov.pk
Federation of Pakistan Chambers of
www.fpcci.com.pk
Commerce and Industry (FPCCI)
State Bank of Pakistan (SBP) www.sbp.org.pk
Punjab Small Industries Corporation www.psic.gov.pk
Sindh Small Industries Corporation www.ssic.gov.pk
Ministry of National Food Security &
www.mnfsr.gov.pk
Research
Punjab Food Authority www.pfa.gop.pk
Sindh Food Authority www.sfa.gos.pk
Fisheries Development Board www.fdb.org.pk
Livestock & Fisheries Department Sindh www.livestock.sindh.gov.pk
Ministry of Maritime Affairs Pakistan www.moma.gov.pk

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12 ANNEXURES

12.1 Income Statement

Calculations SMEDA
Income Statement

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Revenue 577,001,250 661,430,109 747,959,084 841,487,380 942,498,608 1,051,507,241 1,169,060,490 1,228,082,071 1,289,486,175 1,353,960,484

Cost of sales
Cost of goods sold 1 490,399,000 562,155,913 635,697,733 715,188,346 801,038,776 893,686,278 993,595,933 1,043,758,952 1,095,946,899 1,150,744,244
Direct labour 5,256,000 5,781,600 6,359,760 6,995,736 7,695,310 8,464,841 9,311,325 10,242,457 11,266,703 12,393,373
Machinery maintenance 1,002,301 1,052,416 1,052,416 1,052,416 1,052,416 1,052,416 1,052,416 1,052,416 1,052,416 1,052,416
Direct electricity 3,503,040 3,853,344 4,238,678 4,662,546 5,128,801 5,641,681 6,205,849 6,826,434 7,509,077 8,259,985
Direct water 1,583,550 1,662,728 1,745,864 1,833,157 1,924,815 2,021,056 2,122,108 2,228,214 2,339,625 2,456,606
Vehicles fuel etc. 2,894,400 3,183,840 3,502,224 3,852,446 4,237,691 4,661,460 5,127,606 5,640,367 6,204,403 6,824,844
Total cost of sales 504,638,291 577,689,840 652,596,676 733,584,648 821,077,809 915,527,732 1,017,415,238 1,069,748,840 1,124,319,124 1,181,731,468
Gross Profit 72,362,959 83,740,269 95,362,408 107,902,732 121,420,800 135,979,509 151,645,253 158,333,232 165,167,051 172,229,016
General administration & selling expenses
Administration expense 4,824,000 5,306,400 5,837,040 6,420,744 7,062,818 7,769,100 8,546,010 9,400,611 10,340,672 11,374,740
Administration benefits expense 144,720 159,192 175,111 192,622 211,885 233,073 256,380 282,018 310,220 341,242
Electricity expense 160,385 176,424 194,066 213,473 234,820 258,302 284,132 312,546 343,800 378,180
Water expense 120,600 132,660 145,926 160,519 176,570 194,228 213,650 235,015 258,517 284,368
Travelling expense 482,400 530,640 583,704 642,074 706,282 776,910 854,601 940,061 1,034,067 1,137,474
Communications expense (phone, fax, mail, internet, etc.) 144,720 159,192 175,111 192,622 211,885 233,073 256,380 282,018 310,220 341,242
Office vehicles repair and maintenance expense 802,620 882,882 971,170 1,068,287 1,175,116 1,292,628 1,421,890 1,564,079 1,720,487 1,892,536
Office expenses (stationary, entertainment, janitorial services, etc.) 482,400 530,640 583,704 642,074 706,282 776,910 854,601 940,061 1,034,067 1,137,474
Promotional expense 1,154,003 1,038,602 934,742 841,268 757,141 681,427 613,284 551,956 496,760 447,084
Insurance expense 334,425 267,540 200,655 133,770 66,885 538,595 430,876 323,157 215,438 107,719
Professional fees (legal, audit, consultants, etc.) 241,200 265,320 291,852 321,037 353,141 388,455 427,301 470,031 517,034 568,737
Uniform expenses for processing staff 60,000 66,000 72,600 79,860 87,846 96,631 106,294 116,923 128,615 141,477
Depreciation expense 8,099,104 8,099,104 8,099,104 8,123,291 8,119,391 9,752,749 9,780,748 9,776,233 9,776,233 9,808,645
Amortization of pre-operating costs 358,200 358,200 358,200 358,200 358,200 - - - - -
Industrial Connection charges 360,000 - - - - - - - - -
Bad debt expense 2,885,006 3,307,151 3,739,795 4,207,437 4,712,493 5,257,536 5,845,302 6,140,410 6,447,431 6,769,802
Miscellaneous expense 1 723,600 795,960 875,556 963,112 1,059,423 1,165,365 1,281,902 1,410,092 1,551,101 1,706,211
Subtotal 21,377,383 22,075,907 23,238,337 24,560,390 26,000,177 29,414,981 31,173,352 32,745,212 34,484,663 36,436,932
Operating Income 50,985,575 61,664,362 72,124,070 83,342,342 95,420,623 106,564,528 120,471,901 125,588,020 130,682,388 135,792,084

Other income (interest on cash) 51,256 641,717 1,860,365 3,226,791 4,565,252 6,112,298 8,127,687 10,350,074 12,735,121 15,339,257
Other income 2
Gain / (loss) on sale of computer equipment - - 97,500 - - 210,368 - - 341,028 272,258
Gain / (loss) on sale of office vehicles - - - - 5,350,800 - - - -
Earnings Before Interest & Taxes 51,036,832 62,306,079 74,081,935 86,569,133 105,336,675 112,887,195 128,599,588 135,938,094 143,758,537 151,403,599

Earnings Before Tax 51,036,832 62,306,079 74,081,935 86,569,133 105,336,675 112,887,195 128,599,588 135,938,094 143,758,537 151,403,599

Tax 16,982,891 20,927,127 25,048,677 29,419,196 35,987,836 38,630,518 44,129,855 46,698,333 49,435,488 52,111,259
NET PROFIT/(LOSS) AFTER TAX 34,053,941 41,378,952 49,033,258 57,149,937 69,348,839 74,256,677 84,469,732 89,239,761 94,323,049 99,292,340

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12.2 Balance Sheet

Calculations SMEDA
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 1,907,464 2,193,045 49,144,315 99,684,874 158,458,419 206,761,779 282,222,100 367,992,859 460,013,051 558,796,644 668,343,931
Accounts receivable 47,424,760 50,894,439 57,920,104 65,319,718 73,314,493 81,945,446 91,256,208 98,512,708 103,461,709 108,634,794
Finished goods inventory 4,240,658 4,817,170 5,441,545 6,116,604 6,845,881 7,633,139 8,482,387 8,914,574 9,369,326 9,847,762
Equipment spare part inventory 20,881 23,022 24,173 25,381 26,650 27,983 29,382 30,851 32,394 34,013 -
Raw material inventory 1,362,219 1,639,621 1,946,824 2,299,778 2,704,632 3,168,320 3,698,649 4,079,649 4,497,813 4,958,839 -
Pre-paid insurance 334,425 267,540 200,655 133,770 66,885 538,595 430,876 323,157 215,438 107,719 -
Total Current Assets 3,624,989 55,788,646 107,027,576 165,505,451 232,692,908 290,657,050 375,959,592 472,165,111 572,185,977 676,728,250 786,826,488

Fixed assets
Land 12,000,000 12,000,000 12,000,000 12,000,000 12,000,000 12,000,000 12,000,000 12,000,000 12,000,000 12,000,000 12,000,000
Building/Infrastructure 24,191,985 22,982,386 21,772,787 20,563,187 19,353,588 18,143,989 16,934,390 15,724,790 14,515,191 13,305,592 12,095,993
Wapda Security 201,000 201,000 201,000 201,000 201,000 201,000 201,000 201,000 201,000 201,000 201,000
Machinery & equipment 40,092,050 36,082,845 32,073,640 28,064,435 24,055,230 20,046,025 16,036,820 12,027,615 8,018,410 4,009,205 -
Furniture & fixtures 506,000 455,400 404,800 354,200 303,600 253,000 202,400 151,800 101,200 50,600 -
Office vehicles 13,377,000 10,701,600 8,026,200 5,350,800 2,675,400 21,543,792 17,235,034 12,926,275 8,617,517 4,308,758 -
Computer equipment 390,000 261,300 132,600 455,374 302,487 153,501 527,152 350,167 177,697 610,244 405,362
Office equipment 256,000 230,400 204,800 179,200 153,600 128,000 102,400 76,800 51,200 25,600 -
Total Fixed Assets 91,014,035 82,914,931 74,815,827 67,168,196 59,044,905 72,469,307 63,239,195 53,458,448 43,682,215 34,511,000 24,702,355

Intangible assets
Pre-operation costs 1,791,000 1,432,800 1,074,600 716,400 358,200 - - - - - -
Total Intangible Assets 1,791,000 1,432,800 1,074,600 716,400 358,200 - - - - - -
TOTAL ASSETS 96,430,024 140,136,377 182,918,003 233,390,047 292,096,014 363,126,357 439,198,787 525,623,559 615,868,192 711,239,250 811,528,842

Liabilities & Shareholders' Equity

Current liabilities
Accounts payable 9,652,412 11,055,086 12,493,872 14,049,901 15,731,406 17,547,158 19,502,198 20,507,069 21,555,078 22,552,331
Total Current Liabilities - 9,652,412 11,055,086 12,493,872 14,049,901 15,731,406 17,547,158 19,502,198 20,507,069 21,555,078 22,552,331

Shareholders' equity
Paid-up capital 96,430,024 96,430,024 96,430,024 96,430,024 96,430,024 96,430,024 96,430,024 96,430,024 96,430,024 96,430,024 96,430,024
Retained earnings 34,053,941 75,432,893 124,466,151 181,616,088 250,964,927 325,221,604 409,691,337 498,931,098 593,254,148 692,546,487
Total Equity 96,430,024 130,483,965 171,862,917 220,896,176 278,046,112 347,394,951 421,651,629 506,121,361 595,361,123 689,684,172 788,976,512
TOTAL CAPITAL AND LIABILITIES 96,430,024 140,136,377 182,918,003 233,390,047 292,096,014 363,126,357 439,198,787 525,623,559 615,868,192 711,239,250 811,528,842

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12.3 Cash Flow Statement

Calculations SMEDA
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 34,053,941 41,378,952 49,033,258 57,149,937 69,348,839 74,256,677 84,469,732 89,239,761 94,323,049 99,292,340
Add: depreciation expense 8,099,104 8,099,104 8,099,104 8,123,291 8,119,391 9,752,749 9,780,748 9,776,233 9,776,233 9,808,645
amortization of pre-operating costs 358,200 358,200 358,200 358,200 358,200 - - - - -
Accounts receivable (47,424,760) (3,469,679) (7,025,664) (7,399,614) (7,994,775) (8,630,953) (9,310,762) (7,256,500) (4,949,001) (5,173,085)
Finished goods inventory (4,240,658) (576,512) (624,375) (675,059) (729,277) (787,259) (849,248) (432,186) (454,752) (478,436)
Equipment inventory (20,881) (2,140) (1,151) (1,209) (1,269) (1,333) (1,399) (1,469) (1,543) (1,620) 34,013
Raw material inventory (1,362,219) (277,402) (307,203) (352,953) (404,855) (463,688) (530,328) (381,000) (418,164) (461,026) 4,958,839
Advance insurance premium (334,425) 66,885 66,885 66,885 66,885 (471,710) 107,719 107,719 107,719 107,719 107,719
Accounts payable 9,652,412 1,402,674 1,438,786 1,556,029 1,681,504 1,815,753 1,955,040 1,004,872 1,048,008 997,253
Cash provided by operations (1,717,526) 285,582 46,951,270 50,992,033 58,773,545 69,847,152 75,982,958 85,770,759 92,020,192 99,388,611 109,547,287

Issuance of shares 96,430,024 - - - - - - - - - -

Cash provided by / (used for) financing activities 96,430,024 - - - - - - - - - -

Investing activities
Capital expenditure (92,805,035) - - (451,474) - (21,543,792) (522,637) - - (605,018) -
Cash (used for) / provided by investing activities (92,805,035) - - (451,474) - (21,543,792) (522,637) - - (605,018) -

NET CASH 1,907,464 285,582 46,951,270 50,540,559 58,773,545 48,303,359 75,460,321 85,770,759 92,020,192 98,783,593 109,547,287

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Pre-Feasibility Study Sea Food Processing Plant

13 KEY ASSUMPTIONS

13.1 Operating Cost Assumptions

Description Details

Travelling Expense 10% of Administration

Expense
Communication Expenses 3 % of Administration
Expense
Promotional Expenses 0.2% of Revenue
Depreciation Method Straight Line
Depreciation Rate 10% on Machinery
33% on Office Equipment
10% on Furniture & Fixture
20% on Vehicles
Inflation Growth Rate 10%
Electricity Price Growth Rate 10%
Salaries Growth Rate 10%
Water Price Growth Rate 5%

13.2 Production Cost Assumptions

Description Details

Cost per Kg. Shrimp (Rs.) 792

Cost per Kg. Tuna (Rs.) 1,070
Cost per Kg. King Fish (Rs.) 1,250
Cost per Kg. Mackerel (Rs.) 500
Cost per Kg. Queen Fish (Rs.) 600
Cost per Kg. Salmon (Rs.) 580
Cost of Goods Sold Growth Rate 5%
Average Wastage per kg. of Input 25%

13.3 Revenue Assumptions

Description Details

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Sales Price Growth Rate 5%

Hours Operational / Day 8
Capacity Utilization Year 1 60%
Maximum Capacity 90%
Sales Price per Kg. Shrimp (Rs.) 1,250
Sales Price per Kg. Tuna (Rs.) 1,675
Sales Price per Kg. King Fish (Rs.) 1,980
Sales Price per Kg. Mackerel (Rs.) 780
Sales Price per Kg. Queen Fish (Rs.) 950
Sales Price per Kg. Salmon (Rs.) 900

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