Light Weight Roof Tiles Pre-Feasibility Study

Pre-Feasibility Study
(Roof Tiles Manufacturing Unit Light Weight)
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
Punjab
REGIONAL OFFICE
Sindh
REGIONAL OFFICE
Khyber Pakhtunkhwa
REGIONAL OFFICE
Balochistan
3rd Floor, Building No. 3,

Aiwan-e-Iqbal Complex,
Egerton Road Lahore,
Tel: (042) 111-111-456
Fax: (042) 36304926-7
helpdesk.punjab@smeda.org.pk
5th Floor, Bahria

Complex II, M.T. Khan Road,
Karachi.
Tel: (021) 111-111-456
Fax: (021) 35610572
helpdesk-khi@smeda.org.pk
Ground Floor
State Life Building
The Mall, Peshawar.
Tel: (091) 111-111-456
Fax: (091) 5286908
helpdesk-pew@smeda.org.pk
Bungalow No. 15-A

Chaman Housing Scheme
Airport Road, Quetta.
Tel: (081) 2831623, 2831702
Fax: (081) 2831922
helpdesk-qta@smeda.org.pk
Note: All SMEDA Services / information related to PM's Youth Business Loan are Free of Cost
December, 2013
Light Weight Roof Tiles
Table of Contents
1
DISCLAIMER ..........................................................................................2
PURPOSE OF THE DOCUMENT .......................................................3
INTRODUCTION TO SMEDA ..............................................................3
INTRODUCTION TO SCHEME ...........................................................3
EXECUTIVE SUMMARY ......................................................................4
BRIEF DESCRIPTION OF THE PROJECT ......................................4
CRITICAL FACTORS ............................................................................5
INSTALLED AND OPERATIONAL CAPACITY...............................5
GEOGRAPHIC POTENTIAL FOR INVESTMENT ...........................5
10
POTENTIAL TARGET MARKETS / CITIES .....................................6
11
PRODUCTION PROCESS FLOW ......................................................7
12
PROJECT COST SUMMARY ..............................................................8
12.1
12.2
12.3
12.4
12.5
12.6
12.7
12.8
12.9
12.10
Project Economics ............................................................................................... 9

Project Financing ................................................................................................. 9
Project Cost ........................................................................................................ 10
Space Requirement ........................................................................................... 10
Machinery and Equipment ................................................................................ 11
Office Equipment................................................................................................ 12
Raw Material Requirements ............................................................................. 12
Human Resource Requirement ....................................................................... 13
Revenue Generation ......................................................................................... 13
Other Costs ......................................................................................................... 13
13
Contact Details of Suppliers, Experts and Government
institutions .......................................................................................................14
14
14.1
14.2
14.3
14.4
14.5
15
ANNEXURE ..........................................................................................15
Income Statement .............................................................................................. 15
Projected Balance Sheet .................................................................................. 16
Cash Flow Statement ........................................................................................ 17
Useful Project Management Tips .................................................................... 18
Useful Links ........................................................................................................ 18
KEY ASSUMPTIONS ..........................................................................20
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 exercised 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
SMEDA Services / Information related to PMs Youth Business Loan are FREE OF COST -
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 Roof Tiles
Manufacturing Unit (Light Weight) 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 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 sectorial
research to identify policy, access to finance, business development services,
strategic initiatives, institutional collaboration and networking initiatives.
Preparation and dissemination of prefeasibility studies in key areas of investment
has been a hallmark of SME facilitation by SMEDA.
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 INTRODUCTION TO SCHEME
Prime Ministers Youth Business Loan scheme, 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 National Bank of
Pakistan (NBP) and First Women Bank Ltd. (FWBL).
Loans from Rs.0.1 million to Rs.2.0 million with tenure upto 8 years inclusive of
grace period of 1 year and a debt : equity of 90 : 10 will be disbursed to SME
beneficiaries across Pakistan, covering; Punjab, Sindh, Khyber Pakhtunkhwa,
Balochistan, Gilgit Baltistan, Azad Jammu & Kashmir and Federally Administered
Tribal Areas (FATA).
5 EXECUTIVE SUMMARY
Light Weight Roof Tiles Manufacturing Unit is proposed to be located in adjoining
areas and major towns of any of the major cities of Balochistan.
Roof tiles used in Balochistan are generally available in the size 12x12 (one Sft.)
However, on demand, roof tiles of different specifications can also be manufactured.
Installed capacity of the proposed unit is 288,000 tiles and its initial utilization will be
230,400 tiles at 80% in year 1.
Total Cost Estimates is Rs. 2.15 Million with fixed investment Rs. 1.69 Million and
working capital Rs. 0.46 Million.
Given the cost assumptions, internal rate of return (IRR) and payback are 33% and
3.97 years respectively.
6 BRIEF DESCRIPTION OF THE PROJECT

Key parameters pertaining to the proposed project are briefly described as under:
Technology: Traditional moulds (known as firma by the local industry) and

simple masonry equipment would be required to produce light weight roof tiles for
the use of construction industry.
Location: The unit would be located in urban and rural areas of Pakistan, where
access of buyers is easy and all raw materials are easy available.
Product: The unit would produce light weight roof tiles to fulfil the local housing
construction demand of tiles of different sizes and strengths depending upon the
individual requirements of the customer.
Target Market: Main target market for the proposed project is the local industry.
However customers from neighbouring country Afghanistan can also be targeted
since reconstruction of the country is in progress.
Employment Generation: The proposed unit will provide direct employment to

04 people. Financial analysis shows the unit shall be profitable from the very first
year of operation.
7 CRITICAL FACTORS
Establishment of the unit in areas where basic facilities including water and
electricity are available.
Material procurement skills.
Training of staff to increase efficiency.
Effective distribution networks.
8 INSTALLED AND OPERATIONAL CAPACITY

The financial statements for this project are based on the production of 900 tiles/
day. However, the project can be initiated with the production of 300 tiles / day in
smaller towns and other areas where the demand is comparatively lower. Initial
production capacity of unit is assumed to be 80% which will increase @ 10%
annually and attain maximum capacity of 95 %.
Table 1: Production Capacity
Average
Daily
Productio
n / person
No. of
Labou
r
Total Daily
Productio
n
300
900
Annual
Productio
n (320
days/Yr)
@ 100%
capacity
288,000
Capacity
Utilizatio
n in Year1
80%
Finished
Tiles
Inventor
y
230,400
9,600
Tiles
availabl
e for
Sale
(Year1)*
220,800
9 GEOGRAPHIC POTENTIAL FOR INVESTMENT

Construction activities and its output is an integral part of a countrys economy and
industrial development. The construction industry is often seen as a driver of
economic growth especially in developing countries. This industry can mobilize and
effectively utilize local human and material resources in the development and
maintenance of housing and infrastructure to promote local employment and
improve economic efficiency.
There are different types of roof options including reinforced concrete structure, clay
bricks, metal roof etc. Due to the soaring construction costs, low cost roof options
are in high demand in most of the rural and urban areas of the country. The tiles are
used in a large number of construction projects including non-traditional / traditional
housing, community centres, warehouses and factories etc. It is also suitable for
schools and other public buildings especially in the rural areas.
Demand for such type mainly exists for housing projects in towns and smaller cities.
Additionally, in larger cities the low cost roofs are used in suburban housing
schemes, warehouses and factories. The production unit can be established in cities
and towns where access to basic raw materials including cement, sand and water is
easily available, like Lahore, Faisalabad, Gujranwala, Rawalpindi, Karachi,
Hyderabad, Sukkur, Peshawar, Charsaddah, Quetta, Sibbi, Naseerabad, Pashin,
Zhob etc.
10 POTENTIAL TARGET MARKETS / CITIES

Market for the light weight roof tiles exists in all major cities where construction
activities are advancing day by day. Besides the housing sector, tiles can be
marketed to corporate customers for construction of warehouses, factories, schools
and hospitals etc. District Quetta, Mastung, Kalat, Sibi, Pishin, Killa Saifullah, Ziarat
and other cities and towns of the country including Lahore, Karachi, Multan,
Faisalabad, Peshawar, Rawalpindi etc. are the potential localities. The tiles can also
be sold to customers from Afghanistan where construction industry is in boom.
11 PRODUCTION PROCESS FLOW

Major raw materials used in the manufacturing of roof tiles include cement, sand and
gravel mixture which is reinforced with steel wires.
Steps required for the manufacturing of these tiles comprise of mixing, moulding, demoulding & curing, storage and distribution. Production flow diagram is given below:
Ordering & Stockpiling of Raw

Materials
Mixing (1 Day)
Molding (1 Day)
De-molding and Curing (2 -10 Days)
Storage / Sale & Distribution
Following steps describe the process flow for the production of light weight roof tiles
in detail:
Step 1: Ordering & Stockpiling of Raw Materials
Raw materials required for the production of light weight roof tiles include
sand, cement, iron wires and crushed gravel and are ordered and stored as
per the production requirement.
It is recommended to store raw materials for at least one weeks production

requirements for efficient running of project and orders fulfillment on time.
Step 2: Mixing
Cement aggregates while mixing in the foremost step. Sand is pre-washed to

remove dirt contaminants. When the aggregate are mixed thoroughly, water is
added to the mixture.
In the local roof tile industry, mixing is performed manually, however, for
higher production requirements aggregate mixer machine may also be used
when producing large quantity of tiles.
Step 3: Moulding
The mold is lubricated with a thin layer of used motor oil and kerosene
mixture. It prevents sticking and allows the tile to be easily removed from the
mold after setting. The lubrication is applied by using a paint brush.
After lubrication the mold is half filled with aggregate mixture. At this point
metal wires are placed on the aggregate in a crisscross manner. Six to twelve
wires are used depending upon the requirement of the customer. The
diameter of wire also varies. After adding the wires the mold is completely
filled with the cement aggregate.
When the moulds are full, the concrete is compacted and the upper surface is
made smooth by using masonry tools.
The size and design of the mold determines the size and design of the
finished tile.
Step 4: De-moulding, Setting & Curing
The mold containing the wet concrete tile is moved to the setting area.
Initially, small amount of water is applied to keep the tiles wet. After about one
day the tiles are removed from the mold and moved to a water tank where
they are kept immersed in water for further two days.
After being removed from the water tank the tiles are kept in ambient
temperature for another seven days to become firm.
Step 5: Storage and distribution
The tiles do not require specific storage requirements; they are normally
stored in open air. The tiles are inspected for defects before shipment.
12 PROJECT COST SUMMARY

A detailed financial model has been developed to analyze the commercial viability of
Roof Tiles Manufacturing Unit (Light Weight). Various cost and revenue related
assumptions along with results of the analysis are outlined in this section.
The projected Income Statement, Balance Sheet and Cash Flow Statement are
attached as Appendices.
12.1
Project Economics
The total project investment is Rs. 2.15 Million which includes Capital Cost of Rs.
1.69 Million and Working Capital of Rs. 0.46 Million. The project is assumed to be
financed through 10% equity and 90% debt basis.
All the figures in this financial model have been calculated for an estimated area of
around 10,000 Sqft. The manufacturing unit is expected to produce 900 tiles / day.
Whereby production covered by proposed unit at 100% capacity in year one will be
288,000 tiles.
The following table shows internal rate of return and payback period.
Table 3 - Project Economics
Description
Internal Rate of Return (IRR)
Payback Period (yrs)
Net Present Value (NPV)
Details
33%
3.97
Rs.2,599,480
Major portion of the cost of tile is attributed to the quantity of cement and number /
diameter of reinforcement wire used in a single tile. There are variations in quantity
of cement and the number of reinforcement wires used, additionally; the diameter of
reinforcement wire is also reduced by some manufactures. This results in great
variation in the production cost of a single tile. Therefore, it is difficult to compete
solely on the basis of price in this sector. The entrepreneur can, however, attain
competitive edge in this industry by standardizing the production process. Higher
strengths can be produced with the addition of supplementary cement and using
good quality of reinforcement wires.
Price is normally determined by the amount of cement used and the number of
reinforcement wires used in the tile. Owing to the nature of supply and demand,
short-term price fluctuations may also occur.
12.2
Project Financing
Following table provides details of the equity required and variables related to bank
loan:
Table 4: Project Financing

Description
Total Equity (10%)
Bank Loan (90%)
Markup to the Borrower (%age/annum)
Tenure of the Loan (Years)
Grace period (Year)
12.3
Details
Rs.215,059
Rs.1,935,527
8%
08
01
Project Cost
Following requirements have been identified for operations of the proposed

business:
Table 5: Capital Investment for the Project
12.4
Capital Investment
Building/Infrastructure
Machinery & equipment
Furniture & fixtures
Office equipment
Pre-operating costs
Total Capital Costs
Rs.
843,400
750,000
25,000
20,000
51,681
1,690,081
Working Capital
Upfront Land lease
Equipment spare part inventory
Raw material inventory
Cash
Total Working Capital
Total Investment
Rs.
100,000
13,800
96,704
250,000
460,504
2,150,585
Space Requirement
Considering the various facilities required including production, storage of raw

materials and finished tiles, total land requirement for the project is estimated at
10,000 Sft. The finished product and raw materials (with the exception of cement)
does not require covered area, therefore, they can be stored in open air. However, a
storage room for cement is required and a small office should also be constructed at
the production facility. A detail of covered area required for different facilities is given
below:
10
Table 6: Building Requirement

Description
Area
Unit Cost
Total Cost
(Sft)
(Rs.)
(Rs.)
Office
224
1,300
291,200
Store
224
1300
291,200
Production Shed
360
600
216,000
Water Tank
45,000
Total
808
843,400
Total cost for construction of building and infrastructure is worked out to be
approximately Rs. 0.84 million.
12.5
Machinery and Equipment
Major cost of the equipment is attributed to the moulds (known as firma by the local
industry), in addition to the moulds the project requires very simple masonry
equipment. (Cement mixer is only feasible to be used if the production capacity is in
excess of 1,000 tiles / day).
Following table provides a list of equipment required for the establishment of a Light
Weight Roof Tiles Manufacturing Unit:
Table 7: List of Equipment
Items
1
2
Tile Moulds (450 moulds)*

Misc. Equipment (Shovels, Wheel barrow,
Brushes and other masonry tools)
Total
* One mold produces 2 tiles
Total Cost
(Rs.)
720,000
30,000
750,000
The unit does not require high tech equipments or machinery. The moulds can be
made of wood or metal, for this project it is proposed that metallic moulds are used
since they are much more durable and long lasting as compared to wooden moulds.
One mould consists of two tiles placed side by side. Other miscellaneous
equipments include items such as shovels, wheel barrow, brushes and other
masonry tools.
11
12.6
Office Equipment
These costs are based on the assumption that a setup will be required to monitor the
unit and manage the production of roof tiles. The office is also proposed to be
located at site.
Table 8: Office Equipment Costs
1
2
12.7
Furniture / Office
equipment
Furniture
Office Equipment
Total
Cost per unit Total

Cost
(Rs.)
Lump sum
25,000
Lump sum
20,000
45,000
Raw Material Requirements
The raw material required for making roof tiles includes cement, sand, crushed
stone, stone powder, iron wire and water. Cost of goods sold for cement tiles is
determined for by adding cement, sand, gravel, sand powder, iron wires, water and
direct labour costs. This cost varies owing to the different ratios of raw materials
used by different manufacturers. For this project an average cost of goods sold is
assumed to be Rs. 13.14 per tile. The growth in inventory cost is assumed to
increase at 8% per annum. Raw Material inventory will be maintained for 12 days.
Table 9: Cost of Material

Description
Unit
Required to
produce 115
tiles
Unit
Cost
(Rs.)
Cost
(Rs.)
Cost /
Tile
(12x12)
(Rs.)
Cement (1 bag)
510
510
4.43
Sand (1-1.5 bag)

Gravel (zero size-0.5 bag)
4.05
1.5
40
40
162
60
1.41
0.52
Crush powder (khaka-1.5 bag)
4.5
50
225
1.96
Iron wire
4.6
65
299
2.60
Used Motor Oil (1-1.5 liters)

Water
1.5
135
80
1
120
135
1.04
1.17
Cost per Unit
13.14
12
12.8
Human Resource Requirement
Roof tiles manufacturing is a simple process hence unskilled workers with proper
training / instructions can easily start the production. The personnel needed for the
project are as under:
Table 10: Human Resource Requirement
Description
No. of Employees
Labor (Semi/Unskilled)
Security Guard
Salary per month

(Rs.)
3
1
4
Total Staff
30,000
10,000
40,000
The above table provides details of human resource required to run the proposed
manufacturing unit. Semi / unskilled workers are required to make the roof tiles. The
owner will be responsible to oversee the raw material, finished goods and take
orders and manage the marketing / sales of the roof tiles.
12.9
Revenue Generation
Sales price ranges from Rs. 16 to Rs. 20 per tile depending upon the quality of tile.
Sale price for this project has been calculated as Rs. 18 per tile. The sales price
growth rate is assumed to increase at 10% per annum.
Table 11: Revenue Assumptions
Product
Roof tiles
Total Sales Revenue
12.10
Unit
Sales
First Year
Price
Production
(Rs./Unit)
@ 80%
(less
inventory)
288,000
18
220,800
First Year
Sales
Revenue
(Rs)
3,974,400
3,974,400
Other Costs
Table 12: Operating Expenses
Description
Administration expense
Land lease rental expense
Travelling expense
Communications expense (phone, fax, mail, internet, etc.)
Office expenses (stationary, entertainment, janitorial
services, etc.)
Professional fees (legal, audit, consultants, etc.)
Rs.
120,000
100,000
48,000
12,000
12,000
9,936
13
Depreciation expense
Amortization of pre-operating costs
Subtotal
121,670
10,336
433,942
13 CONTACT DETAILS OF SUPPLIERS, EXPERTS AND GOVERNMENT INSTITUTIONS

1. Institute of Ceramics, Small Industrial Estate (SIE)
G.T Road, Gujrat
Ph: 053 3520883
2. Muhammad Iqbal Khan
M/s Khan & Brothers RCC Pipe and tough Tile, Zarghoon Road, Quetta.
Cell: 0333-7817500.
3. Kasi RCC Pipes and Tiles, Airport Road, Quetta.
Cell: 0300-3887682, 0333-7875901.
4. Haji Abdullah M/s haji Abdullah RCC Pipes & Pillar Factory, Almo Choke,Airport
Road,Near Ganj Quetta.
Cell: 0321-8114680 (Haji Abdullah)
Cell:0336-6719161 (Nasar Ullah)
14
14
ANNEXURE
14.1 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. in actuals
Year 10
3,974,400
3,290,280
684,120
5,108,400
4,110,810
997,590
5,945,940
4,681,889
1,264,051
6,554,909
5,076,073
1,478,836
7,210,400
5,491,511
1,718,889
7,931,440
5,941,097
1,990,343
8,724,584
6,427,652
2,296,932
9,597,042
6,954,232
2,642,810
10,556,746
7,524,147
3,032,599
11,612,421
8,140,981
3,471,440
General administration & selling expenses

Administration expense
Travelling & Comm. expense (phone, fax, etc.)
Office expenses (stationary, etc.)
Professional fees (legal, audit, etc.)
Depreciation expense
Amortization expense
Subtotal
Operating Income
120,000
60,000
12,000
9,936
121,670
10,336
433,942
250,178
131,683
65,842
13,168
12,771
121,670
10,336
455,471
542,119
144,504
72,252
14,450
14,865
121,670
10,336
478,078
785,973
158,573
79,287
15,857
16,387
121,670
10,336
502,111
976,725
174,012
87,006
17,401
18,026
121,670
10,336
528,452
1,190,437
190,954
95,477
19,095
19,829
121,670
547,026
1,443,317
209,546
104,773
20,955
21,811
121,670
578,755
1,718,177
229,948
114,974
22,995
23,993
121,670
613,579
2,029,231
252,336
126,168
25,234
26,392
121,670
651,799
2,380,800
276,903
138,452
27,690
29,031
121,670
693,747
2,777,693
Other income
Gain / (loss) on sale of assets
Earnings Before Interest & Taxes
250,178
542,119
785,973
976,725
1,190,437
1,443,317
1,718,177
2,029,231
2,380,800
2,777,693
Interest expense
Earnings Before Tax
160,648
89,530
147,075
395,044
129,235
656,738
109,915
866,810
88,991
1,101,446
66,331
1,376,987
41,789
1,676,387
15,211
2,014,020
2,380,800
2,777,693
Tax
NET PROFIT/(LOSS) AFTER TAX
17,906
71,624
79,009
316,035
131,348
525,390
173,362
693,448
220,289
881,157
275,397
1,101,590
335,277
1,341,110
402,804
1,611,216
476,160
1,904,640
555,539
2,222,155
Balance brought forward

Total profit available for appropriation
Owner's Withdrawals
Balance carried forward
71,624
71,624
71,624
387,659
387,659
387,659
913,050
913,050
913,050
1,606,497
1,606,497
1,606,497
2,487,654
2,487,654
2,487,654
3,589,244
3,589,244
3,589,244
4,930,354
4,930,354
4,930,354
6,541,569
6,541,569
6,541,569
8,446,210
8,446,210
8,446,210
10,668,364
10,668,364
Revenue
Cost of goods sold
Gross Profit
15
14.2
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. in actuals
Year 10
250,000
13,800
96,704
100,000
460,504
213,928
326,663
143,056
18,286
131,799
100,000
933,732
459,514
373,266
172,080
21,942
162,668
100,000
1,289,470
794,842
454,288
195,507
24,936
190,153
100,000
1,759,727
1,289,086
513,734
211,503
28,278
221,795
100,000
2,364,395
1,952,494
565,698
228,813
32,067
258,702
100,000
3,137,773
2,778,598
622,267
247,546
36,364
301,749
100,000
4,086,525
3,807,964
684,494
267,819
41,237
351,961
100,000
5,253,475
5,067,489
752,944
289,760
46,763
410,527
100,000
6,667,481
6,951,974
828,238
313,506
53,029
478,838
100,000
8,725,586
9,804,344
911,062
339,208
11,054,613
Fixed assets
Building/Infrastructure
Machinery & equipment
Furniture & fixtures
Office equipment
Total Fixed Assets
843,400
750,000
25,000
20,000
1,638,400
801,230
675,000
22,500
18,000
1,516,730
759,060
600,000
20,000
16,000
1,395,060
716,890
525,000
17,500
14,000
1,273,390
674,720
450,000
15,000
12,000
1,151,720
632,550
375,000
12,500
10,000
1,030,050
590,380
300,000
10,000
8,000
908,380
548,210
225,000
7,500
6,000
786,710
506,040
150,000
5,000
4,000
665,040
463,870
75,000
2,500
2,000
543,370
421,700
421,700
Intangible assets
Pre-operation costs
Total Intangible Assets
TOTAL ASSETS
51,681
51,681
2,150,585
41,345
41,345
2,491,807
31,009
31,009
2,715,539
20,673
20,673
3,053,789
10,336
10,336
3,526,451
4,167,823
4,994,905
6,040,185
7,332,521
9,268,956
11,476,313
251,691
251,691
317,230
317,230
362,866
362,866
394,175
394,175
427,410
427,410
463,582
463,582
502,973
502,973
545,893
545,893
592,688
592,688
592,890
592,890
Assets
Current assets
Cash & Bank
Accounts receivable
Finished goods inventory
Equipment spare part inventory
Pre-paid annual land lease
Total Current Assets
Liabilities & Shareholders' Equity

Current liabilities
Accounts payable
Total Current Liabilities
Other liabilities
Deferred tax
Long term debt
Total Long Term Liabilities
1,935,527
1,935,527
17,906
1,935,527
1,953,433
75,000
1,720,591
1,795,591
75,000
1,487,816
1,562,816
75,000
1,235,720
1,310,720
75,000
962,701
1,037,701
60,000
667,021
727,021
45,000
346,799
391,799
30,000
30,000
15,000
15,000
Shareholders' equity
Paid-up capital
Retained earnings
Total Equity
TOTAL CAPITAL AND LIABILITI
215,059
215,059
2,150,585
215,059
71,624
286,683
2,491,807
215,059
387,659
602,718
2,715,539
215,059
913,050
1,128,108
3,053,789
215,059
1,606,497
1,821,556
3,526,451
215,059
2,487,654
2,702,713
4,167,823
215,059
3,589,244
3,804,302
4,994,905
215,059
4,930,354
5,145,412
6,040,185
215,059
6,541,569
6,756,628
7,332,521
215,059
8,446,210
8,661,268
9,268,956
16
215,059
10,668,364
10,883,423
11,476,313
14.3
Cash Flow Statement
Statement Summaries
SMEDA
Cash Flow Statement
Operating activities
Net profit
Add: depreciation expense
amortization expense
Deferred income tax
Accounts receivable
Finished good inventory
Equipment inventory
Accounts payable
Other liabilities
Cash provided by operations
Financing activities
Change in long term debt
Issuance of shares
Cash provided by / (used for) financing a
Year 0
Year 1
Year 2
Year 3
Year 4
Year 5
(13,800)
(96,704)
(110,504)
71,624
121,670
10,336
17,906
(326,663)
(143,056)
(4,486)
(35,095)
251,691
(36,072)
316,035
121,670
10,336
57,094
(46,603)
(29,025)
(3,656)
(30,869)
65,538
460,522
525,390
121,670
10,336
(81,022)
(23,427)
(2,995)
(27,485)
45,636
568,103
693,448
121,670
10,336
(59,446)
(15,996)
(3,341)
(31,642)
31,310
746,340
881,157
121,670
10,336
(51,964)
(17,310)
(3,789)
(36,907)
33,235
936,428
1,101,590
121,670
(15,000)
(56,570)
(18,733)
(4,297)
(43,048)
36,172
1,121,784
1,341,110
121,670
(15,000)
(62,227)
(20,273)
(4,873)
(50,211)
39,391
1,349,587
1,611,216
121,670
(15,000)
(68,449)
(21,941)
(5,526)
(58,566)
42,920
1,606,324
(214,936)
(214,936)
(232,775)
(232,775)
(252,096)
(252,096)
(273,019)
(273,019)
(295,680)
(295,680)
(320,221)
(320,221)
(346,799)
(346,799)
1,935,527
215,059
2,050,585
Investing activities
Capital expenditure
(1,690,081)
Cash (used for) / provided by investing a (1,690,081)
Year 6
Year 7
Year 8
Year 9
1,904,640
121,670
(15,000)
(75,294)
(23,746)
(6,266)
(68,312)
46,794
1,884,486
Rs. in actuals
Year 10
2,222,155
121,670
(15,000)
(82,824)
(25,701)
53,029
478,838
203
2,752,370
100,000
NET CASH
250,000
(36,072)
245,586
335,328
494,244
663,408
826,104
1,029,366
1,259,524
1,884,486
2,852,370
Cash balance brought forward

Cash available for appropriation
Cash carried forward
250,000
250,000
250,000
213,928
213,928
213,928
459,514
459,514
459,514
794,842
794,842
794,842
1,289,086
1,289,086
1,289,086
1,952,494
1,952,494
1,952,494
2,778,598
2,778,598
2,778,598
3,807,964
3,807,964
3,807,964
5,067,489
5,067,489
5,067,489
6,951,974
6,951,974
6,951,974
9,804,344
9,804,344
s
17
14.4
Useful Project Management Tips
Technology
Quality Assurance Equipment & Standards: Whatever means required

products quality standards need to be defined on the packaging and a system to
check them instituted, this improves credibility.
Marketing
Ads & P.O.S. Promotion: Business promotion and dissemination through

banners and launch events is highly recommended. Product brochures from
good quality service providers can be of great help.
Sales & Distribution Network: Expert's advice and distribution agreements are
required.
Price - Bulk Discounts, Cost plus Introductory Discounts: Price should never
be allowed to compromise quality. Price during introductory phase may be lower
and used as promotional tool. Product cost estimates should be carefully
documented before price setting.
Human Resources
Adequacy & Competencies: Skilled and experienced staff should be

considered an investment even to the extent of offering share in business profit.
Performance Based Remuneration: Attempt to manage human resource cost

should be focused through performance measurement and performance based
compensation.
14.5
Useful Links
Prime Ministers Office
www.pmo.gov.pk
Small & Medium Enterprises Development Authority (SMEDA)

www.smeda.org.pk
National Bank of Pakistan (NBP)

www.nbp.com.pk
First Women Bank Limited (FWBL)

www.fwbl.com.pk
Government of Pakistan
www.pakistan.gov.pk
18
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 Pakhtoonkhwa

www.khyberpakhtunkhwa.gov.pk
Government of Balochistan
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 (TDAP)

www.tdap.gov.pk
Securities and Exchange Commission of Pakistan (SECP)

www.secp.gov.pk
Federation of Pakistan Chambers of Commerce and Industry (FPCCI)

www.fpcci.com.pk
State Bank of Pakistan (SBP)

www.sbp.org.pk
19
15
KEY ASSUMPTIONS
Production related assumptions

Average
No. of Total Daily
Annual
Capacity Finished
Tiles
Daily
Labour Production Production Utilization
Tiles
available
Production
(320
in Year-1 Inventory for Sale
/ person
days/Yr)
80%
(Year-1)*
@ 100%
capacity
300
3
900
288,000
230,400
9,600
220,800
Cost assumptions
Cost of goods sold for cement tiles is determined by adding cement, sand, gravel,
sand powder, iron wires, water and direct labour costs. This cost varies owing to the
different ratios of raw materials used by different manufacturers. For this project an
average cost of goods sold is assumed to be Rs. 13.14 per tile. The growth in
inventory cost is assumed to increase at 8% per annum.
Revenue assumptions
Sales price ranges from Rs. 16 to Rs. 20 per tile depending upon the quality of tile.
Sale price for this project has been calculated as Rs. 18 per tile. The sales price
growth rate is assumed to increase at 10% per annum.
Table 11: Revenue Assumptions
Product
Roof tiles
Total Sales Revenue
Unit
Sales
First Year
Price
Production
(Rs./Unit)
@ 80%
(less
inventory)
288,000
18
220,800
First Year
Sales
Revenue
(Rs)
3,974,400
3,974,400
Financial Assumptions
Debt
Equity
Required rate of return on equity
WACC
90 %
10 %
25 %
16 %
20
Depreciation Rates
Building and Infrastructure
Office Equipment
Machinery and Equipment
5%
10 %
10 %
Cash Flow Assumptions

Accounts Receivables Cycle (In Days)
Accounts Payable Cycle (In Days)
Cash in Hand Rs.
30
30
250,000
Economy Related assumptions

Inflation rate
Electricity growth rate
Water price growth rate
Wage growth rate
10 %
10 %
10 %
10 %
21

Light Weight Roof Tiles Pre-Feasibility Study

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Pre-Feasibility Study

(Roof Tiles Manufacturing Unit Light Weight)

Small and Medium Enterprises Development Authority

3rd Floor, Building No. 3,

5th Floor, Bahria

Bungalow No. 15-A

Light Weight Roof Tiles

PURPOSE OF THE DOCUMENT .......................................................3

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

INTRODUCTION TO SCHEME ...........................................................3

EXECUTIVE SUMMARY ......................................................................4

BRIEF DESCRIPTION OF THE PROJECT ......................................4

CRITICAL FACTORS ............................................................................5

INSTALLED AND OPERATIONAL CAPACITY...............................5

GEOGRAPHIC POTENTIAL FOR INVESTMENT ...........................5

POTENTIAL TARGET MARKETS / CITIES .....................................6

PRODUCTION PROCESS FLOW ......................................................7

PROJECT COST SUMMARY ..............................................................8

Project Economics ............................................................................................... 9

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

Light Weight Roof Tiles

Light Weight Roof Tiles

2 PURPOSE OF THE DOCUMENT

Light Weight Roof Tiles

6 BRIEF DESCRIPTION OF THE PROJECT

Technology: Traditional moulds (known as firma by the local industry) and

Employment Generation: The proposed unit will provide direct employment to

Light Weight Roof Tiles

8 INSTALLED AND OPERATIONAL CAPACITY

9 GEOGRAPHIC POTENTIAL FOR INVESTMENT

Light Weight Roof Tiles

10 POTENTIAL TARGET MARKETS / CITIES

Light Weight Roof Tiles

11 PRODUCTION PROCESS FLOW

Ordering & Stockpiling of Raw

De-molding and Curing (2 -10 Days)

Storage / Sale & Distribution

It is recommended to store raw materials for at least one weeks production

Light Weight Roof Tiles

Cement aggregates while mixing in the foremost step. Sand is pre-washed to

Step 4: De-moulding, Setting & Curing

Step 5: Storage and distribution

12 PROJECT COST SUMMARY

Light Weight Roof Tiles

Light Weight Roof Tiles

Table 4: Project Financing

Following requirements have been identified for operations of the proposed

Considering the various facilities required including production, storage of raw

Light Weight Roof Tiles

Table 6: Building Requirement

Machinery and Equipment

Tile Moulds (450 moulds)*

Light Weight Roof Tiles

Cost per unit Total

Raw Material Requirements

Table 9: Cost of Material

Sand (1-1.5 bag)

Crush powder (khaka-1.5 bag)

Used Motor Oil (1-1.5 liters)

Cost per Unit

Light Weight Roof Tiles

Human Resource Requirement