Prepare a financial model for the next five years to see where the A-Zee pharma would stand.

 Sales
o The company currently has local gross sales of PKR 15.1bn of which Essential, Non-essential,
Hardship have the following breakups 20%/ 75% / 5%
o Volumetric growth is expected to be at least 5% for the first two years and then 4% for the
remaining 3 years.
o Export sales currently stand at PKR 1.6bn which shall increase by 10% YoY
o The last price increase allowed for hardship cases was in the outgoing year FY21
o Toll manufacturing sales currently stand at PKR 500mn which shall increase by 5% YoY
o Sales tax on local products sales is at 1%, whereas discounts (net of sales tax) are at 7% and sales
returns (after discounts) are at the rate of 5%
 Cost of goods sold
o Currently the cost of imported material is PKR 4.1bn. Split between local and imported APIs is as
follows:
 Local 40%, where local API cost shall increase by 50% of inflation
 International: 60%, where international API cost shall increase by 1% YoY
 The company’s year end is Fiscal Year (FY)
 The company currently has 200mn shares issued, 140mn free float and 500mn authorized shares
 Depreciation is PKR 600mn to be allocated 90% to COGS, 8% S&D and 2% to Admin
 The company is expected to have PKR 200mn as cash and bank balance at the end of every year
 The company has a long term loan of PKR 8bn as of June-21 payable in equal installments in the next 5
years, priced at 6M Kibor +100bps . The 6MK is expected to be 100bps above the policy rate for the
foreseeable future
 The company has short term loans of PKR 5bn constant in the 5 year period priced at 6MK +200bps
 The income tax rate is expected to be 29%, the rate of tax on bank deposits is 15%
 The company plans to have at least PKR 300mn in cash and cash equivalent at the end of every year.
 PKR shall depreciate by 6.7% annually.
 The company wants to have a payout of 40%
 The costs / income required in manufacturing and distribution are as follows:

Item Costs as of FY21 Increment

Cost of goods sold

Salaries & wages PKR 700mn Inflation + 2%
All other factory overheads PKR 2300mn Inflation

Selling & Distribution

Salaries & Benefits PKR 2000mn Inflation + 2%
Advertising & Promotion 4.0% of sales
Bonus to sales man 1.0 % of sales
Others PKR 2300mn by inflation

Administrative
Salaries PKR 500mn by inflation
Others PKR 950mn by inflation
Other expenses
Workers’ Profit Participation Fund 4.5% of PBT
Workers’ Welfare Fund 1.5% of PBT

Other income
Rental Income PKR 200mn by 10% p.a
On bank deposits ??