Pre-Feasibility Study

ICE PLANT
(15 Tons)

Small and Medium Enterprise Development Authority

Government of Pakistan
www.smeda.org.pk
HEAD OFFICE
st
Waheed Trade Complex, 1 Floor , 36-Commercial Zone, Phase III, Sector XX, Khayaban-e-Iqbal, DHA Lahore
Tel: (042) 111-111-456, Fax: (042) 5896619, 5899756
Helpdesk@smeda.org.pk

REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE

PUNJAB
Waheed Trade Complex,
1st Floor, 36-Commercial Zone,
Phase III, Sector XX,
Khayaban-e-Iqbal, DHA Lahore.
Tel: (042) 111-111-456
Fax: (042) 5896619, 5899756
helpdesk@smeda.org.pk
SINDH NWFP BALOCHISTAN
5TH Floor, Bahria Ground Floor Bungalow No. 15-A
Complex II, M.T. Khan Road, State Life Building Chaman Housing Scheme
Karachi. The Mall, Peshawar. Airport Road, Quetta.
Tel: (021) 111-111-456 Tel: (091) 9213046-47 Tel: (081) 831623, 831702
Fax: (021) 5610572 Fax: (091) 286908 Fax: (081) 831922
Helpdesk-khi@smeda.org.pk helpdesk-pew@smeda.org.pk helpdesk-qta@smeda.org.pk

November, 2003
Pre-feasibility Study Ice Plant (15 Tons)

1 INTRODUCTION TO SMEDA
The 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.1
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 recommending changes in the regulatory environment by taking into
consideration other important aspects including financial aspects, niche marketing, technology
upgradation 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, urban 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 business
guidance through its 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 a better way.
This document is in the continuation of this effort to enable potential investors to make well-
informed investment decisions.

1
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.
Therefore, the content of this memorandum should not be relied upon for making any decision, investment or
otherwise. The prospective user of this memorandum is encouraged to carry out his/her own due diligence and
gather any information he/she considers necessary for making an informed decision.
The content of the information memorandum does not bind SMEDA in any legal or other form.
1
For more information on services offered by SMEDA, please contact our website: www.smeda.org.pk

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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, and production, finance and business
management.

3 PROJECT PROFILE
3.1 Project Brief
This project is related to setting up an ice plant of 15-tons capacity per day to cater to the needs
of the institutions such as hotels, restaurants, bakeries, dairy, fish seller’s etc. The proposed
project will manufacture ice blocks varying from 130 kg to 150 kg in weight.
3.2 Opportunity Rationale
Most of areas of Pakistan have long duration of summer due to which demand for ice is high for
more than six months of the year. As Pakistan is a developing country and large portion of the
population cannot afford refrigerators for domestic use. Another growing market for ice plants
are industries linked to food products i.e. fish, dairy, bakeries, restaurants etc. With this growing
demand a large number of ice plants are operating in the country.
There are approximately 1,300 ice plants operating in the Punjab, catering to the needs of
different institutional and domestic buyers. The total installed capacity of ice plants in Punjab is
approximately 432,669-tons of ice blocks per day2. The need of ice blocks is increasing due to
economic growth, as major buyers are institutional buyers (dairy, bakery, hotel, etc.), who buy in
bulk.
3.3 Market Entry Timing
The ice plant should be started up when the season begins in mid April and closed when it ends
up in September. The peak season is of four months i.e. from mid April to mid August. The rest
of the period i.e. two months is moderate season. The best time to enter into this business is in
the month of April.
3.4 Proposed Business Legal Status
It is recommended that this project should be started as sole proprietorship or partnership as this
does not involve heavy investment. Moreover, less complications and costs are involved in
forming, administering and running the sole proprietorship or partnership business. The tax rates
applicable for sole proprietorship is lower than private or public limited.
Most of the ice plants in the country are operating as sole proprietorship or partnership basis.

2
Source: Directory of Punjab Industrial Establishment, 2002-03.
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3.5 Project Capacity and Rationale

The proposed project has a capacity of producing 300 ice blocks on the basis of 2 shifts of 12
hours.
3.6 Project Investment
The total cost of the project is Rs. 4.79 million. This amount includes the land, machinery,
building, water and electricity connection and salt required etc. The cost of land varies from area
to area.
3.7 Proposed Product Mix
The facility will produce 250-300 ice blocks of weight 130-150 kg as solid ice blocks in peak
season and 100-150 ice blocks in off-season.
3.8 Recommended Project Parameters
Capacity Human Resource Technology/Machinery Location
250 Ice 14 Local Areas close to the
Blocks/Day cities.
Financial Summary
Project Cost IRR NPV Payback Period Cost of Capital
(Wacc)
4.79 million 25% 1,337,614 4.75 16.8%
3.9 Proposed Location
It is recommended that the proposed project be installed in localities close to cities, so that the
ice blocks are accessible to the dealers and institutional buyers.
3.10 Key Success Factors/Practical Tips for Success
• The location plays an important role, as finished ice blocks should be easily accessible to
dealers.
• It is important that solid ice blocks are produced through proper freezing time utilization as
solid ice blocks are much heavier, more transparent and provides higher price in the market.
• Weather factor plays an important role, due to seasonal nature of the business i.e. In summers
the demand for ice blocks increases, while after mid September the temperature starts
changing & demand starts to fall, which means the entrepreneur should reduce the production
according to the demand of ice.
• One of the most important aspects for success of any business is minimizing the cost of
production, in case of ice plant this can be achieved by proper training of workers, which
would ensure reduction in raw material wastage and better maintenance of machinery etc.
• It is advisable to run the plant on natural gas, rather than electricity, as the major expense in
production of ice is electricity. The use of natural gas instead of electricity will reduce the
electricity expense approximately by half.

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3.11 Strategic Recommendations

In order to sell the ice blocks, it is recommended to develop a chain of dealers who buy the ice
blocks on regular basis. The dealer deposits a guarantee in the shape of cash security, keeping in
view the number of blocks to be purchased on daily basis. In case the dealer is unable to pick the
agreed number of blocks on a particular day, the amount is deducted from his security.

4 CURRENT INDUSTRY STRUCTURE

4.1 Current Industry Structure
Ice plants are installed with the capacity for daily production of 15, 25, 30 and 50 tons of ice
blocks in Pakistan. Mostly ice plants are operating with the production capacity of 15 and 30
tons of ice blocks in the country, while selling price is decided once in a month by the owners of
ice plants.
There are approximately 1300 ice plants operating in the Punjab, catering to the needs of
different institutional and domestic buyers. The details of installed ice plants in the Punjab are
given in the table below:
Table 4-1 Details of Ice Plants in the Punjab3
City No .Of Plants Production/Day
Attock 9 200-300 blocks
Bahawalpur 30 100-327 blocks
Chakwal 4 150-300 blocks
D.G.Khan 31 150-300 blocks
Faisalabad 79 100-600 blocks
Gujaranwala 62 100-300 blocks
Gujrat 19 100-400 blocks
Hafizabad 24 150-400 blocks
Jhang 70 100-300 blocks
Kasur 102 100-400 blocks
Khanewal 60 100-480 blocks
Khushab 19 150-300 blocks
Lahore 40 100-300 blocks
Layyah 30 150-180 blocks
Lodhran 13 200-580 blocks
Mandi Bahauddin 29 72-580 blocks
Mianwali 22 80-200 blocks
Multan 63 150-180 blocks
Muzaffargarh 74 160-370 blocks
Narowal 44 56-360 blocks
3
Source: Directory of Punjab Industrial Establishment, 2002-03.
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Okara 39 120-550 blocks

Rahim Yar Khan 47 220-780 blocks
Rajanpur 16 120-150 blocks
Sahiwal 45 100-320 blocks
Sargodha 81 100-300 blocks
Sheikhupura 95 140-514 blocks
Sialkot 11 100-360 blocks
Toba Tek Singh 51 117-990 blocks
Vehari 62 150-500 blocks
Rawalpindi 24 150-300 blocks
Jhelum 14 100-300 blocks

5 MARKET INFORMATION
5.1 Target Customers
The target customers for ice plant can be divided into two categories:
• Domestic users, such as people living in rural areas & suburbs of cities, where access to
refrigerators is difficult due to lower purchasing power.
• Second category is institutional buyers, who buy in bulk, such as government organizations,
factories, hotels, restaurants, bakeries, fish sellers, dairy plants etc.
5.2 Market Potential
Institutional buyers sell the bulk of the ice block production, in institutions related to food
industry. Business sectors, which utilize ice in the country, include the following:
5.2.1 Fish Meat & Allied Products
During 2000-2001 about 654,500 Mt tons of over 50 different varieties of fish and 30,000 Mt
tons of shrimps were produced. Of this production, share of marine sector was 473,000 Mt tons
and inland contribution was 181,500 Mt tons. Out of the total 40% fish was locally consumed,
35% small sized non-edible fish was dried into fish meal to supplement the poultry feed, while
10% fish was salted and dried and another 15% was frozen.
5.2.2 Dairy Plants
Pakistan is ranked 5th biggest amongst milk producing countries in the world with annual milk
production of 26.28 million tons in 2000-2001. About 75% of the total milk is produced in
Punjab, 14% in Sindh, 10% in NWFP and only 1% in Baluchistan.
In Pakistan 97.5% milk is distributed through traditional milk seller (Gowala) system. About
58% milk is supplied to urban areas in raw form in most unhygienic conditions but with the
growing awareness of hygiene in the public, there has been a gradual improvement in the system.
At present only 17 milk plants are in operation, which mean that approximately 3 per cent of
total milk production is processed. The processing capacity of these plants in around 0.65 million
liters per day.

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5.2.3 Other Institutional Buyers (Bakeries, Motels & Hotels etc.)

Other potential institutional buyers of ice are bakeries, confectioners, hotels which buy ice
blocks in bulk. There are approximately 70 different leading chain bakeries in different cities of
Pakistan, while approximately 145 fish retail outlets are operating in different major cities of
Pakistan, while more than 520 motels and hotels are operating in different areas of Pakistan.

6 PRODUCTION PROCESS
6.1 Production Process Flow
Cleaning of Sheet
Steel Ice Containers

Placing of Containers
in Water Tank
containing Nacl

Filling of Sheet Steel

Ice Containers with
water while vertically
floating in Nacl Tank

Temp Reduced to –17°C to –20°C

Extracting of Ice Blocks

from Sheet Steel
Containers

Movement of Ice Blocks

by hooks

Delivery of Ice Blocks

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6.2 Product Mix Offered

The proposed project will produce Ice blocks weighing from 130-150kg.
6.3 Raw Material Requirement
The basic raw material required for producing ice blocks is water, common salt. These raw
materials are readily available in the local market. Replenishment needed during maintenance are
ammonia gas and compressor oil.

7 MACHINERY REQUIREMENT
The main equipment required for running the ice plant is compressor, capacitor, condenser, and
electric motors, WAPDA connection power transformer etc.
Table 7-1 Machinery Requirement Details
Description Qty Cost/Unit Total Amount
Ammonia Compressor 7x7 marked Javed, driven wheels and 1 98,000 98,000
all lines fitted
Ammonia Condenser atmosphere type with 2" pipe, 1200 ft 6 27,500 165,000
seamless from Grade-1 material pipe(Toyota Made Patta)
Electric motor 75 HP, 1450 RFM CHINA 1 65,000 65,000
Brine Tank suitable for 240 Ice Cans, 4 mm Pak made sheets, 1 198,000 198,000
supported by eagle iron without sawdust.
Cooling Coil V-type 4" pipe & 1500 ft. pipe 1" (Toyota Patta) 1 145,000 145,000
Brine Agitator 18" fan Matal with imported shaft and pulley 1 15,000 15,000
Accumulator for parallel supply of ammonia 1 15,000 15,000
Crane & Trolley universal type with railing channel & girder 1 38,000 38,000
Ammonia Valves for complete plant. 1 27,000 27,000
Ammonia Pipes for complete plant. 1 28,000 28,000
Oil Separator buffer type. 1 16,000 16,000
4 gauge suction, discharge, oil pressure 1 4,000 4,000
Wood Work for Ice Cans, Tank Cover 240 229 55,000
Ice Cans of 1.5 mm British gauge welded size 11" x 22" x 48" 240 1,100 264,000
Nut, bolts & washers complete with foundation, bolt etc. 1 30,000 30,000
Receiver fittings with all safety measure ammonia inspection 1 35,000 35,000
glass and oil drain device.
Bends, Union, Nipples, Tee, & flange different size complete 1 25,000 25,000
with Motor Sliding Rail, Motor Pulley & V-Belt etc.
Blower no. 59 complete with pipe line and fittings 1 20,000 20,000
Rubber pipes, brass valves 1 10,000 10,000
Water fitting pipes complete 1 20,000 20,000
Electric motors 7.5 H.P (J.E.C. Pak made). 2 10,000 20,000

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China Switch Gunz starters and switchboard with local cable 1 65,000 65,000
complete switchboard open type etc.
Centrifugal Pump size 2.5" x3" with 7.5 H.P electric motor 1 20,000 20,000
Erection Charges for complete plant and machinery 1 20,000 20,000
Grand Total 1,398,000
Table 7-2 Other Equipment Details
Other Equipment Details Qty Cost/Unit Total Cost
Generator 100 KVA 1 800,000 800,000
Transformer 100 KVA 1 350,000 350,000
Water Bore Diameter 3” – 4” 1 300,000 300,000
Total Equipment Cost 1,450,000
Table 7-3 Furniture & Fixture Details
Description Qty Cost/Unit Total Cost
Tables 4 1,500 6,000
Chairs 8 1,000 8,000
Fans 4 1,500 6,000
Lights 12 250 3,000
Fax Machine 1 8,000 8,000
Telephone 3 5000 15000
Total Furniture & Fixtures 46,000
Table 7-4 Office Vehicle Details
Description Qty Cost/Unit Total Cost
Suzuki Pick-up 1 395,000 395,000
Motorcycle (Pak Hero) 1 41,000 41,000
Bicycle (Chinese) 1 3,200 3,200
Total Vehicle Cost 439,200
7.1 Technology and Processes

7.1.1 Technology/Process Options

The machinery used for the ice plant is local. It includes compressor, condenser, water tank
suitable for 250-300 ice cans, brine agitator, accumulator for parallel supply of ammonia, crane
and trolley, oil separator, ice cans of size 11” x 22” x 48”, electric motor 75 HP etc.
7.1.2 Merits & demerits of a particular technology
The local machinery is readily available in the market at a very reasonable price. One of the
benefits of using locally manufactured machinery is availability of spare parts and it’s easier to
find operators to operate these machines.

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7.2 Machine Maintenance

The maintenance process starts after mid of October. Normally, it takes one month for the
overhauling of plant, during which the plant is closed for one month.

8 HUMAN RESOURCE REQUIREMENT

The manpower required for operating the ice plant during the peak season is as follows:
Table 8-1 Direct Labor Requirement Details
Description Qty Salary Total Monthly Salary
Foreman 1 6,000 6,000
Machine Operator 1 5,000 5,000
Labor 6 3,500 21,000
Total Direct Labor Cost 32,000
Table 8-2 Administrative Staff Details
Description Qty Salary Total Monthly Salary
Owner/CEO 1 15,000 15,000
Accounts Officer 1 4,000 4,000
Security Guard 2 2,000 4,000
Driver 1 2,500 2,500
Office Boy 1 1,500 1,500
Administrative Staff 27,000

9 LAND & BUILDING REQUIREMENT

9.1 Land Requirement
The land requirement for the proposed ice plant having 15-ton capacity is 4,500 sq. ft (1 Kanal).
9.2 Covered Area Requirement
The covered area detail for the proposed project and construction cost detail is given in table
below:
Table 9-1 Covered Area Requirement Details
Description No. Sq .ft Rs/Sq. ft Total Cost
Office Area 1 144 250 36,000
Machine Room 1 320 250 80,000
Main Hall 1 3,240 200 648,000
Free Area 796
Total Building Cost 4,500 764,000

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9.3 Recommended Mode

It is recommended that land should be acquired for the project, as it would be difficult to setup
such a project at a rented place due to high machinery & installation cost.
9.4 Suitable Location
It is recommended that the proposed project be installed in localities close to cities or in
industrial areas, so that the ice blocks are easily accessible to the dealers and institutional buyers.
Such a project can also be a viable project in the smaller cities.
9.5 Utilities and Infrastructure Requirement
Basic utilities like electricity, gas and water are required for operating the ice plant. The plant
must be closed to a metal led road

10 PROJECT ECONOMICS
10.1 Project Cost
Description Amount in (Rs.)
Land Cost 500,000
Building/Infrastructure 764,000
Machinery & Equipment 2,848,000
Office Equipment & Furniture 54,000
Vehicle 439,200
Pre-operating Costs 65,000
Total Capital Expenditure 4,670,200
Working Capital
Raw Material Inventory 10,742
Equipment Spare parts Inventory 4,851
Cash 100,000
Total Working Capital 115,593
Total Project Cost 4,785,792
10.2 Project Returns
Description Details
NPV 1,337,614
IRR 25%
Pay Back Period 4.75
10.3 Project Financing
Description Percentage Amount in Rs
Equity Financing 50% 2,392,896
Debt Financing 50% 2,392,896
Total 4,785,792
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11 FINANCIAL ANALYSIS
11.1 Project Cost

Project Cost SMEDA

Project Cost
Land Cost 500,000
Building/Infrastructure 764,000
Machinery & Equipment 2,848,000
Office Equipment & Furniture 54,000
Vehicle 439,200
Pre-operating Costs 65,000
Total Capital Expenditure 4,670,200

WORKING CAPITAL
Raw Material Inventory 10,742
Equipment Spare parts Inventory 4,851
Cash 100,000

Total Working Capital 115,592

Total Capex 4,785,792

Financing Detail
Equity Financing 2,392,896
Debt Financing 2,392,896
Total 4,785,792

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11.2 Projected Income Statement

Projected Income Statement SMEDA

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Revenue 5,335,875 5,497,018 5,719,659 6,010,829 6,379,991 6,839,543 7,069,485 7,210,874 7,355,092 7,502,194

Net Revenue 5,335,875 5,497,018 5,719,659 6,010,829 6,379,991 6,839,543 7,069,485 7,210,874 7,355,092 7,502,194

COST OF GOOD SOLD

Raw Material Cost 236,313 250,482 268,695 291,749 320,785 357,440 387,329 418,839 460,235 518,689
Direct Labor (Production Staff) 321,000 353,100 388,410 427,251 469,976 516,974 568,671 625,538 688,092 756,901
Direct Electricity 1,773,129 1,861,786 1,954,875 2,052,619 2,155,250 2,263,012 2,376,163 2,494,971 2,619,719 2,750,705

Total 2,330,442 2,465,367 2,611,980 2,771,619 2,946,011 3,137,426 3,332,163 3,539,348 3,768,046 4,026,295

Gross Profit 3,005,433 3,031,651 3,107,679 3,239,210 3,433,980 3,702,118 3,737,322 3,671,526 3,587,045 3,475,898

GENERAL ADMINISTRATION & SELLING EXPENSE

Administration Staff 324,000 356,400 392,040 431,244 474,368 521,805 573,986 631,384 694,523 763,975
Machine Maintenance Cost 53,359 54,970 57,197 60,108 63,800 68,395 70,695 72,109 73,551 75,022
Fixed Electricity Expense 81,627 85,708 89,993 94,493 99,218 104,178 109,387 114,857 120,600 126,630
Communication Expense (Telephone, Fax, Internet etc.) 12,960 14,256 15,682 17,250 18,975 20,872 22,959 25,255 27,781 30,559
Depreciation expense 372,320 372,320 372,320 372,320 372,320 372,320 372,320 372,320 372,320 372,320
Amortization of pre-operating costs 6,500 6,500 6,500 6,500 6,500 6,500 6,500 6,500 6,500 6,500

Total Operating Expenses 850,765 890,154 933,731 981,915 1,035,181 1,094,071 1,155,847 1,222,425 1,295,274 1,375,006

Operating Income (Earning Before Interest & Taxes) 2,154,668 2,141,497 2,173,948 2,257,295 2,398,800 2,608,046 2,581,474 2,449,101 2,291,771 2,100,893

Interest expense on long term debt 287,148 241,948 191,324 134,625 71,123 - - - - -
Earning Before Taxes 1,867,520 1,899,549 1,982,624 2,122,670 2,327,677 2,608,046 2,581,474 2,449,101 2,291,771 2,100,893

Taxes 527,632 538,842 567,918 616,935 688,687 786,816 777,516 731,185 676,120 609,312
Net Profit After Taxes 1,339,888 1,360,707 1,414,705 1,505,736 1,638,990 1,821,230 1,803,958 1,717,916 1,615,651 1,491,580

Balance brought forward 2,700,595 4,115,300 5,621,036 7,260,026 9,081,256 10,885,214 12,603,130 14,218,781 15,710,361
Total profit available for appropriation 1,339,888 2,700,595 4,115,300 5,621,036 7,260,026 9,081,256 10,885,214 12,603,130 14,218,781 15,710,361

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11.3 Projected Balance Sheet

Project Balance Sheet SMEDA

Const. Year Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
CURRENT ASSETS
Cash in Bank 100,000 1,203,725 2,513,333 3,823,323 5,164,290 6,571,162 8,749,533 10,920,933 13,009,897 14,995,901 16,891,251
Raw Material Inventory 10,742 11,386 12,213 13,261 14,581 16,247 17,606 19,038 20,920 23,577 -
Machine Spareparts Inventory 4,851 4,997 5,200 5,464 5,800 6,218 6,427 6,555 6,686 6,820 -
Accounts Recievable - 242,540 249,864 259,984 273,220 290,000 310,888 321,340 327,767 334,322 341,009
Total Current Asset 115,592 1,462,648 2,780,610 4,102,033 5,457,891 6,883,627 9,084,454 11,267,866 13,365,270 15,360,620 17,232,260

FIXED ASSETS
Land Cost 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000
Building & Infrastructure 764,000 725,800 687,600 649,400 611,200 573,000 534,800 496,600 458,400 420,200 382,000
Machinery & Equipment 2,848,000 2,563,200 2,278,400 1,993,600 1,708,800 1,424,000 1,139,200 854,400 569,600 284,800 (0)
Office Equipment & Furniture 54,000 48,600 43,200 37,800 32,400 27,000 21,600 16,200 10,800 5,400 -
Vehicle 439,200 395,280 351,360 307,440 263,520 219,600 175,680 131,760 87,840 43,920 -
Total Fixed Assets 4,605,200 4,232,880 3,860,560 3,488,240 3,115,920 2,743,600 2,371,280 1,998,960 1,626,640 1,254,320 882,000

INTANGIBLE ASSETS
Pre-Operational Costs 65,000 58,500 52,000 45,500 39,000 32,500 26,000 19,500 13,000 6,500 -
Total Intangible Assets 65,000 58,500 52,000 45,500 39,000 32,500 26,000 19,500 13,000 6,500 -

TOTAL ASSETS 4,785,792 5,754,028 6,693,170 7,635,773 8,612,811 9,659,727 11,481,734 13,286,326 15,004,910 16,621,440 18,114,260

CURRENT LIABILITIES
Accounts Payable - 5,013 5,313 5,700 6,189 6,805 7,582 8,216 8,884 9,763 11,002
Total Current Liabilities - 5,013 5,313 5,700 6,189 6,805 7,582 8,216 8,884 9,763 11,002

OTHER LIABILITIES
Long Term Debt 2,392,896 2,016,231 1,594,366 1,121,877 592,690 0 0 0 0 0 0
Total Long Term Liabilities 2,392,896 2,016,231 1,594,366 1,121,877 592,690 0 0 0 0 0 0

SHAREHOLDER'S EQUITY
Paid-up Capital 2,392,896 2,392,896 2,392,896 2,392,896 2,392,896 2,392,896 2,392,896 2,392,896 2,392,896 2,392,896 2,392,896
Retained Earnings 1,339,888 2,700,595 4,115,300 5,621,036 7,260,026 9,081,256 10,885,214 12,603,130 14,218,781 15,710,361
Total Equity 2,392,896 3,732,784 5,093,491 6,508,197 8,013,932 9,652,922 11,474,152 13,278,110 14,996,026 16,611,677 18,103,258

TOTAL CAPITAL & LIABILITIES 4,785,792 5,754,028 6,693,170 7,635,773 8,612,811 9,659,727 11,481,734 13,286,326 15,004,910 16,621,440 18,114,260

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11.4 Projected Cash Flow Statement

Projected Cash Flows SMEDA

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 - 1,339,888 1,360,707 1,414,705 1,505,736 1,638,990 1,821,230 1,803,958 1,717,916 1,615,651 1,491,580
Add: depreciation expense 372,320 372,320 372,320 372,320 372,320 372,320 372,320 372,320 372,320 372,320
amortization of pre-operating costs - 6,500 6,500 6,500 6,500 6,500 6,500 6,500 6,500 6,500 6,500
Raw material inventory (10,742) (644) (828) (1,048) (1,320) (1,666) (1,359) (1,432) (1,882) (2,657) 23,577
Machine Spareparts Inventory (4,851) (146) (202) (265) (336) (418) (209) (129) (131) (134) 6,820
Accounts Recievables - (242,540) (7,325) (10,120) (13,235) (16,780) (20,889) (10,452) (6,427) (6,555) (6,686)
Accounts payable - 5,013 301 386 489 616 778 634 668 878 1,240

Cash provided by operations (15,592) 1,480,390 1,731,473 1,782,479 1,870,154 1,999,562 2,178,371 2,171,400 2,088,964 1,986,003 1,895,351

Financing activities
Long Term Debt Repayment (376,665) (421,865) (472,489) (529,187) (592,690) - - - - -
Additions of New Long Term Debt 2,392,896
Issuance of shares 2,392,896
Cash provided by / (used for) financing activitie 4,785,792 (376,665) (421,865) (472,489) (529,187) (592,690) - - - - -

Investing activities
Capital expenditure (4,670,200)
Cash (used for) / provided by investing activities (4,670,200) - - - - - - - - - -

NET CASH 100,000 1,103,725 1,309,608 1,309,990 1,340,967 1,406,872 2,178,371 2,171,400 2,088,964 1,986,003 1,895,351

Cash balance brought forward - 100,000 1,203,725 2,513,333 3,823,323 5,164,290 6,571,162 8,749,533 10,920,933 13,009,897 14,995,901
Cash available for appropriation 100,000 1,203,725 2,513,333 3,823,323 5,164,290 6,571,162 8,749,533 10,920,933 13,009,897 14,995,901 16,891,251

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Pre-feasibility Study Ice Plant (15 Tons)

12 KEY ASSUMPTIONS
12.1 Production Assumptions
No. of Days Operational 330
No. of Days (Peak Season) 200
No. of Days (Off-season) 130
No. of Hours Per Shift 12
No. of Shift Per Day 2
No. of Shift Per Day (Peak Season) 2
No. of Shift Per Day (Off-season) 1
Weight/Ice Block (In Kgs) 150
Maximum Capacity Per Shift (Ice Blocks) 150
Maximum Capacity Per Shift (Ice Blocks) Peak Season 150
Maximum Capacity Per Shift (Ice Blocks) Off-season 75
Maximum Attainable Capacity in Percentage 100%
Capacity Utilization (1st Year) 85%
Maximum Attainable Capacity in Units 69,750
Growth in Capacity 1%
12.2 Raw Material Usage Assumptions
Ammonia (NH3) Consumption (Pound)/ Ice Block 0.08
NACL usage in Kg/ Ice Block (kgs) 50
NACL replenishment charges 10%
Ice Blocks per Compressor Oil Drum 15,000
Price Growth Rate of Raw Material 5%
Wastage Rate 5%
12.3 Raw Material Price
Price Per NH3 Pound (Rs) 30
Price Per Kg NACL (Salt) (Rs) 1
Compressor Oil Per Drum (Rs) 18,000
12.4 Cash flow Assumptions
Raw Material Inventory Cycle (In Days) 15
Machine Spare parts Inventory Cycle (In Days) 30
Accounts Receivables Cycle (In Days) 15
Accounts Payable Cycle (In Days) 15
Initial Cash in Bank 100,000

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Pre-feasibility Study Ice Plant (15 Tons)

12.5 Expense Assumptions

Communication Expense (% of Admin. Exp.) 4%
Machine Maintenance (% of Sale) 1%
Pre-Operational Expense 65,000
Pre-Ops (Discount Period) 10
Wages Growth Rate 10%
Electricity Rate per kW 6.6
Electricity Tariff Growth Rate 5%
12.6 Depreciation Expense
Building Depreciation Rate 5%
Plant & Machinery Depreciation Rate 10%
Furniture & Fixtures Depreciation Rate 10%
Vehicle Depreciation Rate 10%
12.7 Financing Assumption
Debt 50%
Equity 50%
Interest Rate on Long Term Debt 12.0%
Debt Tenure 5
Payment Per Year 1
Return on Equity 25%
WACC (Weighted Average Cost of Capital) 16.8%
Tax Rate Sole Proprietorship

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