Pre-Feasibility Study

LAUNDRY & DRY CLEANING

Small and Medium Enterprise Development Authority

Government of Pakistan
www.smeda.org.pk
HEAD OFFICE
th
6 Floor LDA Plaza Egerton Road, Lahore
Tel 111 111 456, Fax: 6304926-7 Website www.smeda.org.pk
Helpdesk@smeda.org.pk
REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE
PUNJAB SINDH NWFP BALOCHISTAN

8th Floor LDA Plaza Egerton 5TH Floor, Bahria Ground Floor Bungalow No. 15-A
Road, Lahore Complex II, M.T. Khan Road, State Life Building Chaman Housing Scheme
Tel 111 111 456, Fax: Karachi. The Mall, Peshawar. Airport Road, Quetta.
Tel: (021) 111-111-456 Tel: (091) 9213046-47 Tel: (081) 831623, 831702
6304926-7 Website Fax: (021) 5610572 Fax: (091) 286908 Fax: (081) 831922
www.smeda.org.pk Helpdesk-khi@smeda.org.pk helpdesk-pew@smeda.org.pk helpdesk-qta@smeda.org.pk
helpdesk@smeda.org.pk

March 2008
Pre-Feasibility Study Laundry & Dry Cleaning

DISCLAIMER
The purpose and scope of this information memorandum is to introduce the subject
matter and provide a general idea and information on the said area. All the material
included in this document is based on data/information gathered from various sources and
is based on certain assumptions. 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 does not assume any liability for any financial or other loss
resulting from this memorandum in consequence of undertaking this activity. The
prospective user of this memorandum is encouraged to carry out additional diligence and
gather any information he/she feels necessary for making an informed decision.

For more information on services offered by SMEDA, please contact our website:
www.smeda.org.pk

DOCUMENT CONTROL
Document No. PREF-78

Prepared by SMEDA-Punjab

Approved by Provincial Chief Punjab

Revision Date March, 2008

Issued by Library Officer

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1. INTRODUCTION TO SMEDA.................................................................................................... 4

2. PURPOSE OF THE DOCUMENT ............................................................................................... 4

3. CRUCIAL FACTORS & STEPS IN DECISION MAKING FOR INVESTMENT..................... 5

4. PROJECT PROFILE.................................................................................................................... 5
4.1 PROJECT BRIEF ....................................................................................................................... 5
4.2 OPPORTUNITY RATIONALE ...................................................................................................... 5
4.3 MARKET ENTRY TIMING ......................................................................................................... 5
4.4 PROPOSED BUSINESS LEGAL STATUS ....................................................................................... 6
4.5 PROJECT CAPACITY AND RATIONALE ....................................................................................... 6
4.6 PROJECT INVESTMENT ............................................................................................................. 6
4.7 PROPOSED PRODUCT MIX ........................................................................................................ 6
4.8 RECOMMENDED PROJECT PARAMETERS ................................................................................... 7
4.9 PROPOSED LOCATION .............................................................................................................. 7
5. SECTOR & INDUSTRY ANALYSIS........................................................................................... 7
5.1 SECTOR CHARACTERISTICS ..................................................................................................... 7
6. MARKET INFORMATION ......................................................................................................... 8
6.1 MARKET POTENTIAL ............................................................................................................... 8
6.2 TARGET CUSTOMERS .............................................................................................................. 8
7. PRODUCTION PROCESS........................................................................................................... 9
7.1 PRODUCTION PROCESS FLOW .................................................................................................. 9
7.2 RAW MATERIAL REQUIREMENT ............................................................................................. 10
7.3 REVENUES ............................................................................................................................ 10
7.4 TECHNOLOGY AND PROCESSES .............................................................................................. 11
7.5 MACHINERY REQUIREMENT .................................................................................................. 11
7.6 TOTAL MACHINE MAINTENANCE ........................................................................................... 12
8. LAND & BUILDING REQUIREMENT .................................................................................... 13
8.1 LAND REQUIREMENT ............................................................................................................ 13
8.2 COVERED AREA REQUIREMENT ............................................................................................. 13
8.3 RECOMMENDED MODE .......................................................................................................... 13
8.4 SUITABLE LOCATION............................................................................................................. 13
9. HUMAN RESOURCE REQUIREMENT................................................................................... 14
9.1 ESTIMATED TIME FOR PROJECT COMPLETION ........................................................................ 14
10. PROJECT COST.................................................................................................................... 15

11. FINANCIAL ANALYSIS ....................................................................................................... 16

11.1 PROJECTED INCOME STATEMENT ........................................................................................... 16
11.2 PROJECTED BALANCE SHEET ................................................................................................. 17
11.3 PROJECTED CASH FLOW STATEMENT ..................................................................................... 18
12. FINANCIAL ASSUMPTIONS ............................................................................................... 19

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1. INTRODUCTION TO SMEDA
Small and Medium Enterprise Development Authority (SMEDA) was established with
the objective to provide fresh impetus to the economy through the launch of an
aggressive SME support program.
Since its inception in October 1998, SMEDA had adopted a sectoral SME development
approach. A few priority sectors were selected on the criterion of SME presence. In depth
research was conducted and comprehensive development plans were formulated after
identification of impediments and retardants. The all-encompassing sectoral development
strategy involved overhauling of the regulatory environment by taking into consideration
other important aspects including finance, marketing, technology and human resource
development.
SMEDA has so far successfully formulated strategies for sectors including, fruits and
vegetables, marble and granite, gems and jewelry, marine fisheries, leather and footwear,
textiles, surgical instruments, transport and dairy. Whereas the task of SME development
at a broader scale still requires more coverage and enhanced reach in terms of SMEDA’s
areas of operation.
Along with the sectoral focus a broad spectrum of business development services is also
offered to the SMEs by SMEDA. These services include identification of viable business
opportunities for potential SME investors. In order to facilitate these investors, SMEDA
provides help desk services as well as development of project specific documents. These
documents consist of information required to make well researched investment decisions.
Pre-feasibility studies and business plan development are some of the services provided
to enhance the capacity of individual SMEs to exploit viable business opportunities in an
effective way.

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 document also provides sectoral information,
brief on government policies and international scenario, which have some bearing on the
project itself.
This particular pre-feasibility is regarding “Laundry & dry cleaning” which comes under
“service” sector. Before studying the whole document one must consider following
critical aspects, which forms the basis of any investment decision.

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3. CRUCIAL FACTORS & STEPS IN DECISION MAKING FOR INVESTMENT

Before making any investment decision, it is advisable to evaluate the associated risk
factors by taking into consideration certain key elements. These may include availability
of resources, academic knowledge, past experience and specific managerial and technical
skill set. Following are some of the key success factors for a Laundry and Dry Cleaning
business:
 There should be warranty of clothes from damages and any type of color fading.
 Prime business location for proposed dry cleaning.
 Reasonable and competitive charges, positioned against competitors.
 On time delivery of clothes can leave good impression on the customers.
 Technical and efficient labor.
 There should be advertisement on local cable and banners. Existing dry cleaners are
not advertising for their services.

4. PROJECT PROFILE

4.1 Project Brief

The proposed project entails setting up a dry cleaning unit. It provides a range of services
relating to domestic and commercial sector. These services range from washing, drying
and pressing to more complex services like cleaning sensitive fabric, blankets, shirwanis
and suits etc.
4.2 Opportunity Rationale
There is an important factor for the entrepreneurs to set up a dry cleaning business in big
cities of Pakistan due to the fact that it has become difficult for the people to wash all
types of clothes in their houses i.e. Jackets, Sherwanis and other sensitive clothes.
In Pakistan dry clean industry has grown over the years in small set-ups, with low quality
services, and there is a need for better service oriented dry clean units. There is a lot of
unfilled demand as can be judged from excessive rush at the existing dry clean setups.
The business is service-oriented and carries large potential for profits due to its unique
nature and uncontrolled spending of people, especially on marriages. The life style of the
people in Pakistan has changed over the years. Now days, people are more conscious
about their clothes and the need for dry cleaning has increased.
4.3 Market Entry Timing
The suitable timings for starting this business would be in October because this type of
business has a busy schedule in winters. In winter season, people normally wear worm
clothes that are sweaters, jackets, suits etc. and it is also season of weddings. Due to these
activities and wearing pattern the demand for dry cleaning increases compared to other
seasons.

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4.4 Proposed Business Legal Status

There are three main forms of business: Sole Proprietorship, Partnership and Company.
An enterprise can be a proprietorship or a partnership and even it can be registered under
company law with corporate law authority. Although selection totally depends upon the
choice of the entrepreneur but this financial feasibility is based on a private limited
company.
For getting information on the formation of type of firm/company, please refer to the
website: www.saarcnet.org/newsaarcnet/govtpolicies/Pakistan/settingbusiness.html
It is recommended that the proposed project be started as a sole proprietorship or a
partnership because it requires less legal requirement. Similarly a lower income tax rate
of tax is applicable to sole proprietorship than that of companies.
4.5 Project Capacity and Rationale
The proposed dry clean will handle 60 kg of clothes per bath. Details of the project
capacity are as follow:
Table 4-1: Project Capacity
Project Dry Cleaning
Working hours per day 8 hours
Operating shift per day 1
Working days per annum 300 days
Maximum clothes dry clean per day 395 units of clothes
Maximum weight of clothes per day 320 Kg
Maximum weight of clothes per batch 60Kg
Hours utilized per batch (Laundry & Dry cleaning) 1.5 hours
4.6 Project Investment
Total project cost of the proposed laundry and dry cleaning unit is Rs. 4.603 million. This
includes a fixed cost of Rs. 3.845 million and a working capital of Rs. 0.758 million.
4.7 Proposed Product Mix
Following is the product mix of the proposed laundry & dry cleaning shop:
Table 4-2: Proposed Product Mix
Average Weight Average Number Average Weight
per unit (kg) of units per day per day (kg)
Trousers 0.35 80.00 28.00
Coats (all Kinds)(winter) 2.00 15.00 30.00
Shirts 0.18 60.00 10.80
Jackets/sweater 2.25 15.00 33.75
Dupata 0.05 25.00 1.25
Shalwar Qameez 0.45 40.00 18.00
Blankets 2.25 10.00 22.50

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Bed sheets 0.35 80.00 28.00

Curtain 1.25 10.00 12.50
Others(avg.) 2.25 60.00 135.00
Total 11.38 395.00 320
The proposed business is affected through seasonal variations. Following table shows the
seasonal distribution of different clothes/ fabric:
Table 4-3 Seasonal Variations (100% Capacity)
Description Spring Summer Autumn Winter Total
Trousers 6,000 6,000 6,000 6,000 24,000
Coats (all Kinds)(winter) 0 0 0 4,500 4,500
Shirts 4,500 4,500 4,500 4,500 18,000
Jackets/sweater 0 0 0 4,500 4,500
Dupta 1,875 1,875 1,875 1,875 7,500
Shalwar Qameez 3,000 3,000 3,000 3,000 12,000
3,000 3,000
Blankets 0 0 0
Bed sheets 6,000 6,000 6,000 6,000 24,000
Curtain 750 750 750 750 3,000
Others(avg.) 4,500 4,500 4,500 4,500 18,000
Total 26,630 26,630 26,630 38,630 118,500

4.8 Recommended Project Parameters

Capacity Human Resource Technology/Machinery Location
320 kgs per day 9 Local Manufacturing See Table 8-3
Machinery
Financial Summary
Project Cost IRR NPV Payback Period
Rs. 4.603 Million 43.50% Rs. 5.25 Million 2.72 years
4.9 Proposed Location
Large public sector dry cleaners are concentrated in major cities of the country.
Therefore, it is suggested that new dry cleaner should be opened up in areas mentioned in
table 8-3, where there is little presence of existing dry cleaning facilities.

5. SECTOR & INDUSTRY ANALYSIS

5.1 Sector Characteristics

The numbers of Dry Cleaners in Pakistan has increased at a slow pace over the last few
years. The size of this sector is still growing. There are few large dry cleaners operating
in commercial areas of Lahore like Mall Road, Defence and Main Market Gulberg. They
have a created a monopolized situation with less competition. They are currently four to
five large-scale dry cleaners in Lahore such as Pearl dry cleaners at Barkat Market and

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Mall Road, British Kwick dry cleaners at Mall Road, National dry cleaners at Wahdat
Road and Faisal Town and PC dry cleaners. These dry cleaners are using machines of
60kg capacity in general. Similarly, few large Dry cleaners have also been operating in
prime business locations in Rawalpindi, Multan, Karachi and Quetta.

6. MARKET INFORMATION

6.1 Market Potential

From 1981 to 2008 the estimated population of Pakistan has grown from 85 million to
165 million making Pakistan the seventh most populous country in the world. This
growth rate has increased the demand for various products and services, and one of the
services is the proposed business. People in big cities are now inclined to use more
sophisticated measures to cleaning their clothes. These people range from middle class to
upper class.
6.2 Target Customers
The major target market for the dry cleaning services will depend on the location where
dry cleaning business is situated. The target customers for proposed business will not
only be general public but also the commercial sector i.e. hostels, catering companies,
film industry and hospitals.

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7. PRODUCTION PROCESS

7.1 Production Process Flow

Liquid solvent and small amount of water are added to the machine. The machine then
agitates clothes in a manner similar to a domestic washing machine to remove dirt, oil,
and stains. Once clean, the clothes are then manually transferred to a dryer (laundry
procedure), then pressed and shaped.

Tagging

Sorting

Detergent Washing Bleach on

Washing soap white
(Simple)

Perclon Dry Cleaning

cleaning

Drying

Steam
Pressing

Sorting &
Pressing

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The above chart shows two processes separately that are laundry and dry cleaning. Each
process is explained as below:
a) Tagging :- The clothes are firstly tagged with a specific number, mentioned in the
invoice given to customers. This procedure is used for identification of clothes once
ready for collection by the customers.
b) Sorting: - After tagging the clothes are arranged in different sets. Some people sort
by color. Others sort by fabric type
c) Washing: - The clothes are washed in a washing machine using detergent i.e. Surf,
washing powder etc. This procedure is only followed when laundry service is
required by the customers.
d) Dry Cleaning: - In this process, the sensitive, expensive and only dry clean
recommended clothes are cleaned. The chemical used to clean the clothes in this
process is called Perclon (see raw material section for details).
e) Drying :- The clothes washed in a laundry procedure are dried using dryers.
f) Steam Pressing :- In this process both the clothes either washed or dry cleaned are
pressed and shaped using steam press equipments.
g) Packing :- Once pressed, the clothes are properly hanged and covered in the plastic
wrap and then tagged so that it can be easily identified.
7.2 Raw Material Requirement
Raw material used for the purpose of dry cleaning of clothes is Perclon chemical by ICI
Pakistan. Perchloroethylene, or perclon, is the dominant chemical solvent used in dry
cleaning. Perclon (Perchloroethylene) is a liquid chemical that consists of 40% alcohol,
50% kerosene oil and 10% liquid used to save the color fading of clothes. Perclon
(Perchloroethylene) is a clear, colorless liquid and evaporates quickly.
Bleach is also used especially for white clothes. Detergent is used for simple washing i.e.
washing soap and surf. Following table shows the raw material costing:
Table 7-1 Raw Material Costing
Chemicals Quantity Rate per Total Total Cost
Required per Liter Cost per Per Annum
day (Liter) day (Rs.)
Perc Lon 20 285 5,700 1,689,000
Bleach 2 55 110 31,000
Tar pine Oil 20 30 600 178,000
Cost of chemicals 1,898,000

7.3 Revenues
The proposed product mix has been given in table 4-2. Sale prices and the number of
clothes processed are listed in the table below:
Table 7-2 Sale Price
Items Number of units Rate (Rs.) Total sale
per year (Rs.)

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Trousers 24,000 80 1,920,000

Coats (all Kinds)(winter) 4,500 170 765,000
Shirts 18,000 40 720,000
Jackets/sweater 4,500 150 675,000
Dupatta 7,500 40 300,000
Shalwar Qameez 12,000 75 900,000
Blankets 3,000 230 690,000
Bed sheets 24,000 100 2,400,000
Curtain 3,000 170 510,000
Others(avg.) 18,000 80 1,440,000
Total 118,500 10,320,000
7.4 Technology and Processes
There are several manufacturers of dry cleaning machines in Pakistan. In Lahore, there
are approximately 5 to 6 manufactures of such machines i.e. Abdul Waheed at Canal Park
Gulberg, Nirwana (Pvt) Ltd at Gulberg Arcade, Mushtaq Engineering Works at
Township,786 Washing Lab & research Centre in Nishtar Colony Ferozpur road. Some
others are in Bund Road, Qainchi and Model Town. These machines can also be imported
from the following countries:
 Italy
 Germany
 China
 Japan
However, the prices of imported machinery are 2 to 3 times higher than local machinery.
In terms of quality of cleaning and capacity, there is no major difference between local
and imported machinery. Therefore, it is advisable to acquire locally manufactured
machinery rather than the imported machinery.
7.5 Machinery Requirement

Total number of different machines required for the proposed project is as follows:
Table 7-3: Machinery Requirement1
Description No. Cost Per Unit in Rs. Total in Rs.
Washing Machine 42"*60" (60kg) 1 160,000 160,000
Hydro Extractor 24*12 (25 kg) 1 75,000 75,000
Dryer Machine 48*42 (60 kg) 1 175,000 175,000
Dry Clean Machine 30*18 (10 kg) 1 350,000 350,000
Steam Press (pangenetic) 1 200,000 200,000
Form Finisher Recondition 1 170,000 170,000
Cotton Press 1 205,000 205,000

1
Bismillah Washing Lab.&Research Centre,347-262Ammar Block Nashtar Colony,Ferozpur Road Lahore.Tel : 042-5820669,
Mob:0300-4251156

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Sleeves, Collar& Cuff Press 1 270,000 270,000

Boiler 1 260,000 260,000
Steam Ironing Vacuums Table Boiler 1 60,000 60,000
With Compressor
Sub Total 1,925,000
Tax 5% 96,000
Others
Generator 1 480,000 480,000
Total 11 2,501,000
Table 7-4: Customer Dealing Office Equipment Requirement
Description No. Cost Per Unit(Rs.) Total(Rs.)
Spilt unit 1 40,000 40,000
Telephone sets 2 2,500 5,000
Fire extinguish 1 10,000 10,000
Total 55,000
Table 7-5: Other Equipment Requirement
Description No. Cost Per Unit(Rs.) Total(Rs.)
Fan 4 1,850 7,400
Exhaust fan 1 1,200 1,200
Water cooler 1 8,500 8,500
Lighting appliances 1 6,000 6,000
Total 23,100
Table 7-6: Furniture, Fixture and vehicle Requirement
Description No. Cost Per Unit(Rs.) Total(Rs.)
Wardrobes 2(10ft*3ft) 22,000 44,000
Sofa set 2 seater 1 7,500 7,500
Counter Table 1 8,000 8,000
Chairs 3 800 2,400
Stole 3 350 1,050
Suzuki Loader 1 650,000 650,000
Total 712,950
7.6 Total Machine Maintenance
Routine inspection of machinery is essential for long life of the machinery. One lubricant
is used twice in a year before peak season.

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8. LAND & BUILDING REQUIREMENT

8.1 Land Requirement

For the recommended machinery, office, furniture & fixture and other equipments,
approximately 1,125 square feet area is required.
8.2 Covered Area Requirement
Following is the covered area requirement split into various sections. It is recommended
that customer dealing office area should be separate from the machine and working area.
Table 8-1 Covered Area
Sections Area Total Area (sq. ft.)
Customer Dealing Office Area 22.50 x 20 450
Working & Machine Area 27 x 25 675
Total Covered Area 1,125
Table 8-2 Construction Cost
Cost Area is Sq ft. Cost per Sq ft. Total Cost
(Rs.) (Rs.)
Customer Dealing Office Area 450 900 405,000
Working and Machinery Area 675 6002 405,000
Total 810,000
8.3 Recommended Mode
It is suggested that for proposed dry cleaning business, area should be rented. The rent
cost for the business depends on the area where the business is situated. Starting the dry
cleaning in a rented area would significantly reduce the initial capital cost of the project.
A shop having 1,125 square feet area can be rented for approximately Rs. 50,000 per
month in commercial areas of large cities of the country.
8.4 Suitable Location
The dry cleaner is supposed to be in a location that is easily accessible and has
considerable population concentration. Considering the spread of new residential area
some of the suitable areas are:
Table 8-3: Suitable Locations
City Location
Lahore  Main Road Johar Town
 PCSIR Canal Area
 Valencia
 Wapda Town
 Punjab Co-operative Society
 Sabza Zar

2
Construction rate for 11 feet high roof

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 Eden City
Islamabad  Aabpara Market
 Super Market
 Blue Area
 Karachi Company
Karachi  Gulshan Iqbal
 Defence Phase 1 to 111
 Tariq Road
 Sadar
 Federal B Area
Quetta  Cantonment Area
 Liaqat Bazar
 Saryab Road
 Satelite Town
 Jinnah Road
Faisalabad  Satelite Town
 Madina Town
 Railway Road
 Peoples Colony(D Ground)
 Satiana Road
Multan  Cantonment Area
 New Multan

9. HUMAN RESOURCE REQUIREMENT

For the proposed size of dry cleaning, following manpower is required:
Table 9-1: HR Requirement
Position Required Salary Per Salary Per
Month(Rs.) Annum(Rs.)
Supervisor 1 10,000 120,000
Technical staff
(Machine operator) 2 7,000 168,000
Machine Operator
,Helper 2 5,000 120,000
Semi-skilled Worker 4 5,000 240,000
Total 19 648,000
9.1 Estimated Time For Project Completion
1. 20 days for completion of initial formalities, i.e., selection of suitable location and
renting of building etc.
2. 1 month for sanction of loan (in case, if financing has to be arranged through bank).
3. 1.5 month for purchase of machinery and equipments.
4. 1 month for furnishing and staff appointments.
5. This project can take-off within 2 months, as some of the activities will be in progress
simultaneously.

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10. PROJECT COST

Table 10-1: Project Cost

Description Total Cost (in 000’Rs.)
Plant & Machinery (Local) 2,501,000
Pre-production expenses 145,000
Furniture, fixture, equipment and vehicle 791,000
Erection and Installation 125,000
Mark-up during construction 161,000
Contingencies 122,000
Total fixed cost 3,845,000
Initial working capital 758,000
Project cost 4,603,000
Table 10-2: Financing Plan
Description % Amount (in 000’Rs.)
Debt 50 2,302,000
Equity 50 2,302,000
Total 4,603,000

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11. FINANCIAL ANALYSIS

11.1 Projected Income Statement

Rs.(000)

YEAR 1 2 3 4 5 6 7 8 9 10
CAPACITY UTILIZATION (%) 50 55 60 65 70 75 80 85 90 95

Sales (See Table 7a) 5,290 5,954 6,971 7,951 8,720 9,681 10,941 12,469 13,987 15,155

Less: cost of sales 2,652 2,874 3,114 3,372 3,649 3,946 4,266 4,609 4,974 5,368

Gross profit 2,638 3,080 3,857 4,579 5,071 5,735 6,675 7,860 9,013 9,787
50 52 55 58 58 59 61 63 64 65
Less: operating expenses
Administrative (See Table 8) 1,005 1,076 1,157 1,246 1,346 1,430 1,555 1,692 1,843 2,010

1,005 1,076 1,157 1,246 1,346 1,430 1,555 1,692 1,843 2,010

Operating profit 1,633 2,004 2,700 3,333 3,725 4,305 5,120 6,168 7,170 7,777
Less:
Financial expenses (See Table 9) 278 222 167 112 57 - - - - -
Profit Before Taxation 1,355 1,782 2,533 3,221 3,668 4,305 5,120 6,168 7,170 7,777
Income Tax 348 498 761 1,001 1,158 1,381 1,666 2,033 2,384 2,596

Net profit After Taxation 1,007 1,284 1,772 2,220 2,510 2,924 3,454 4,135 4,786 5,181

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11.2 Projected Balance Sheet

Rs.(000)
YEAR 0 1 2 3 4 5 6 7 8 9 10
CAPITAL & RESERVES:

Share capital 2,302 2,302 2,302 2,302 2,302 2,302 2,302 2,302 2,302 2,302 2,302
Retained earnings - 1,007 2,291 4,063 6,283 8,793 11,717 15,171 19,306 24,092 29,273

2,302 3,309 4,593 6,365 8,585 11,095 14,019 17,473 21,608 26,394 31,575
LOANS AND DEFERRED LIABILITIES:
Term Loan 2302 1842 1382 922 464 4 4 4 4 4 4

2,302 1,842 1,382 922 464 4 4 4 4 4 4

CURRENT LIABILITIES:
Maturity (Term Loan) - 460 460 460 460 460
A/C Payable - 37 38 43 48 54 59 66 72 79 87
Accrued Exp. - 157 165 174 183 192 203 213 225 237 250
Tax Payable - 348 498 761 1,001 1,158 1,381 1,666 2,033 2,384 2,596

- 1,002 1,161 1,438 1,692 1,864 1,643 1,945 2,330 2,700 2,933
4,604 6,153 7,136 8,725 10,741 12,963 15,666 19,422 23,942 29,098 34,512

FIXED ASSETS: Rs.(000) - - - - -

Fixed Assets 3,700 3,345 2,990 2,635 2,280 1,925 1,570 1,215 860 505 150

3,700 3,345 2,990 2,635 2,280 1,925 1,570 1,215 860 505 150

Deffered Cost 145 116 87 58 29 -

CURRENT ASSESTS:

Securities 120 120 120 120 120 120 120 120 120 120
Advance rent 300 -
Store & Spares - 3 3 3 3 3 3 4 4 4 4
Material Stock - 142 162 182 204 227 252 278 307 337 369
A/C Receivable - 123 139 163 186 203 226 255 291 326 354
Cash/Bank 758 2,004 3,635 5,564 7,919 10,485 13,495 17,550 22,360 27,806 33,515

758 2,692 4,059 6,032 8,432 11,038 14,096 18,207 23,082 28,593 34,362

4,604 6,153 7,136 8,725 10,741 12,963 15,666 19,422 23,942 29,098 34,512

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11.3 Projected Cash Flow Statement

YEAR 0 1 2 3 4 5 6 7 8 9 10

SOURCES:

Profit before taxation - 1,355 1,782 2,533 3,221 3,668 4,305 5,120 6,168 7,170 7,777
Add: Depreciation - 355 355 355 355 355 355 355 355 355 355
Add: Amortization - 29 29 29 29 29 - - - - -
Add: interest 278 222 167 112 57 - - - - -
- 2,017 2,388 3,084 3,717 4,109 4,660 5,475 6,523 7,525 8,132
OTHER SOURCES:
Sponsor contribution as capital 2,302 - - - - - - - - - -
Term Loan 2,302
Increase/(Dec) - 542 159 277 254 172 239 302 385 370 233
4,604 2,559 2,547 3,361 3,971 4,281 4,899 5,777 6,908 7,895 8,365

APPLICATIONS: - - - - - -

Fixed Assets 3,700 - - - - - - - - - -

Deffered Cost 145 - - - - - - - - - -

REPAYMENT OF:

Term Loan - - 460 460 460 460 460 - - - -

Financial Expenses - 278 222 167 112 57 - - - - -
Taxes Paid - 348 498 761 1,001 1,158 1,381 1,666 2,033 2,384 2,596

Inc.c.Assets - 688 (264) 44 43 40 48 56 65 65 60

3,845 1,314 916 1,432 1,616 1,715 1,889 1,722 2,098 2,449 2,656

SURPLUS (DEFICIT) 759 1,245 1,631 1,929 2,355 2,566 3,010 4,055 4,810 5,446 5,709
BALANCE OPENING - 759 2,004 3,635 5,564 7,919 10,485 13,495 17,550 22,360 27,806

BALANCE CLOSING 759 2,004 3,635 5,564 7,919 10,485 13,495 17,550 22,360 27,806 33,515

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12. FINANCIAL ASSUMPTIONS

Table 12-1 Operating Assumptions

Annual production capacity (No. of units) 118,500
Operating Shift per day 1
Operating hours per shift 8
Days operational per year 300
No. of Batches 5.33
Hours consumed for one batch 1.50
Table 12-2 Machinery Assumptions
Initial year capacity 50%
Maximum capacity 95%
Annual capacity growth rate 5%
Depreciation rate on machinery (Straight Line Method) 10%

Table 12-3 Revenue Assumptions

Sales prices Industry norms
Sales price growth rate 4-5%
Table 12-4 Financial Assumptions
Project life (Years) 10
Debt 50%
Equity 50%
Interest rate on long term debt 10%
Debt tenure (Years) 5
No. of installments in a year 2
Amortization (years) 5
Table 12-5 Cost of sales Assumptions
Raw Material cost growth rate 5%
Wage and salaries growth rate 5%
Fringe Benefits 5%
Variable Charges growth rate 5%
Repair and maintenance (%age of cost of machinery) 1%
Repair and maintenance growth rate 5%
Insurance of Plant and Machinery 4.50%
Insurance of Vehicle 3.00%
Insurance of Stock 2.00%
Insurance of Stores and Spares 5.00%
Depreciation (straight line method) 10%

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Table 12-6 Operating Assumptions

Administrative expense growth rate 10%
Income Tax (percentage of Net Profit) 35%
Table 12-7 Contingency Expense Assumptions
Erection and Installation 5%
Machinery 3%
Furniture and Fixture 1%
Pre-operating Expenses 5%
Vehicles 5%
Table 12-8 Cash Flow Assumptions
Accounts Receivable in days 7
Accounts Payable in days 7
Raw Material Inventory (days) 30
Stores and Spares Inventory (days) 30
Salaries and other expenses payable 30
Minimum Cash Required Rs.109,000
Advance rent 6 months

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