Pre-Feasibility Study

PPRC PIPES MANUFACTURING UNIT

Small and Medium Enterprises Development Authority

Government of Pakistan
www.smeda.org.pk
HEAD OFFICE
6th Floor LDA Plaza Egerton Road, Lahore
Tel (042)111 111 456,
Fax: 36304926-7
helpdesk@smeda.org.pk
REGIONAL OFFICE

REGIONAL OFFICE

REGIONAL OFFICE

REGIONAL OFFICE

PUNJAB

SINDH

KHYBER PAKTUNKHWA

BALOCHISTAN

8th Floor LDA Plaza,

Egerton Road,
Lahore.
Tel: (042) 111 111 456,
Fax: (042) 36370474
helpdesk.punjab@smeda.org.pk

5TH Floor, Bahria Complex II,

M.T. Khan Road,
Karachi.
Tel: (021) 111-111-456
Fax: (021) 5610572
helpdesk.sindh@smeda.org.pk

Ground Floor
State Life Building The Mall,
Peshawar.
Tel: (091)111 111 456, 9213046-7
Fax: (091) 286908
helpdesk.NWFP@smeda.org.pk

Bungalow No. 15-A Chamn

Housing Scheme Airport Road,
Quetta.
Tel: (081) 2831623, 2831702
Fax: (081) 2831922
helpdesk.balochistan@smeda.org.pk

May, 2010

Pre-Feasibility Study

PPRC Pipes Manufacturing Unit

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.

DOCUMENT CONTROL
Document No.

PREF-112

Prepared by

SMEDA-Punjab

Issue Date

May, 2010

Issued by

Library Officer

PREF-112/May, 2010

Pre-Feasibility Study

PPRC Pipe Manufacturing Unit

Table of Contents
Executive summary........................................................................................................2
Introduction....................................................................................................................3
2.1
Project Brief ...........................................................................................................3
2.2
Project Rationale ....................................................................................................3
2.3
Proposed Capacity..................................................................................................4
2.4
Total Project Cost...................................................................................................4
3
Market/Industry Analysis...............................................................................................4
3.1
Market Size ............................................................................................................4
4
Current Industry Structure .............................................................................................4
5
Products Offered ............................................................................................................5
6
Production Process .........................................................................................................5
6.1
Manufacturing Process...........................................................................................6
7
Machinery Requirement.................................................................................................6
8
Production ......................................................................................................................7
8.1
Production Capacity of the Project ........................................................................7
8.2
Starting Production Capacity .................................................................................7
9
Human RESOURCE Requirement ................................................................................8
10
Other office equirement .............................................................................................8
11
Land & building .........................................................................................................9
12
Project Economics....................................................................................................10
13
financial analysis......................................................................................................11
13.1 Projected Income Statement.................................................................................11
13.2 Projected Balance Sheet.......................................................................................12
14
Key Assumptions .....................................................................................................14
15
ANNEXTURE .........................................................................................................16
Machinery Suppliers ............................................................................................................16
15.1 Qingdao Royal Machinery Co.,Ltd......................................................................16
15.2 Suzhou Caivi Plastic Technology Co., Ltd. .........................................................16
15.3 Zhangjiaganag Golden Far East Machinery Co. Ltd. ..........................................16
Raw Material Supplier .........................................................................................................16
15.4 Ijaz Brothers .........................................................................................................16
1
2

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PPRC Pipe Manufacturing Unit

EXECUTIVE SUMMARY

The Poly Propylene Random Copolymer (PPRC) Pipes Manufacturing Unit is a project of
plastic sector. PPRC pipe production line is mainly used in the residential water supply
systems, industrial water transportation and other extensive application of various
diameters. PPRC pipe is the latest product in the overall history of pipe manufacturing. It is
economical, non-corrosive, high temperature resistant, lower flow resistance, ease of
installation, reduced breakage and leakage, stain free nature and so on. PPRC pipes are
prevailing rapidly because of their multiple usages and advantages. Hot & cold water
facilities served for civil buildings, such as: houses, air ports, hospitals, hotels, offices,
schools, etc. Due to its smooth rust less inner surface no foreign particle can stay in it &
the quality and quantity of the water supplied remains the same. The high molecular
weight of PPRC makes it highly resistant and an excellent energy saver as compared to
metallic pipes.
The exceptional heat stability and its corrosion resistance coupled with the ease of
installation makes PPRC pipes the most reliable plumbing system for the hot and cold
water applications with a long life service. Another more competitive advantage of PPRC
plumbing system is its joints, which are fused together by a sophisticated fusion machine
without any additional jointing aid. In this pre-feasibility study, all the calculations have
been based on a pipe size of 25mm, 32mm and 40 mm.
A PPRC Pipe manufacturing unit with a proposed capacity of around 230 ton needs a
capital investment estimated at Rs. 15.691 million for Construction of Facility and
Purchasing machinery & equipment. In addition to this, an estimated sum of Rs. 2.485
million is required as Working Capital. The total project cost is estimated at Rs. 18.176
million. Projected IRR, Net Present Value and Payback of this project are 47%, Rs. 35.65
million and 3.56 years respectively.

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INTRODUCTION

2.1 Project Brief

The proposed project entails setting up of a PPRC Pipe manufacturing Unit, which has a
product range of 25mm, 32mm and 40mm. PPRC Plumbing system is used for under
ground hot and cold water supply system, made up of Poly Propylene Random Copolymer
(PPRC). PPRC pipe is almost non-reactive with most of the Chemicals and this plumbing
system is durable for the supply of certain chemicals and gasses as well.
The proposed unit is capable of producing quality products, which can be sold in the local
market as well as in the foreign market. The objective of this pre-feasibility study is to
provide information for setting up a PPRC pipes manufacturing unit
2.2 Project Rationale
Demand for PPRC Pipes is influenced by general economic conditions as well as the
number of new houses built and old houses renovated. New housing also presents
opportunities for new kitchens, bath rooms and latrine facilities. Housing is one of the
basic human requirements, as every family needs a roof. Providing shelter to every family
has become a major issue as a result of rapid urbanization and higher population growth.
PPRC pipes are prevailing rapidly because of their multiple usages and advantages. Hot &
Cold water facilities served for civil buildings, such as:
Residential Apartments, Public Housing
Commercial Buildings, Shopping Centers
Schools, Hospitals, Laboratories
Hotels, Resorts, Entertainment Parks, Halls, Theaters. etc
Chemical Sewerage & Drainage systems
Liquid Chemicals flow system in chemical, pharmaceuticals and food processing
industries.
The development in civil works is a continuous process and the civil works related
industries are developing day by day. Most of the PPRC Pipes manufacturing units are part
of small-scale industry. Within the small scale and cottage industry of Pakistan, PPRC pipe
manufacturing is a small sector and needs further attention, both from the public and
private sector. The market for PPRC pipes exists in almost every part of the country. There
are a few major market players and the small units cater the remaining market. In recent
times, due to setting up of a few quality units, it is evident that local sales & exports can
also be increased by this sector in the near future. This shows that the potential for new
entrants exists in this sector. There is a need that special attention to be given to quality
products are to be manufactured and concentrated marketing efforts are to be made to
achieve the objective
PPRC pipes system provides a large number of benefits in handling cold and hot water,
amongst many of its features are:
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Long durability due to the high resistance to aggressive elements, which gives the
system extremely long service life.
Easy connectivity over a complex network
No perforation caused by electrical currents
Safe environment with recyclable ability
Heat preservation and energy saving abilities. The heat conductivity of PPRC pipes
are much lesser than metals and hence offer significantly high levels of heat
preservation for transported fluids
Easy to handle products - Light weight compared to the metallic piping systems

2.3 Proposed Capacity

The production capacity of the proposed project is aprox. 230 tons PPRC Pipes per year.
2.4 Total Project Cost
The estimated cost of the project is about Rs. 18.176 million.

MARKET/INDUSTRY ANALYSIS

3.1 Market Size

PPRC Pipes are being sold in almost every city of the country. Small manufacturers have
taken the major share of the market in small cities. However, the major players have
occupied the market of major cities. In major cities the customers are quality conscious and
ready to pay for quality products.
Majority of the population of the country lives in the rural areas and small cities and major
producers need to pay special attention to the prices of their products, as the small markets
are price sensitive. The local products are fulfilling the demands of the local market,
however, in major cities imported PPRC pipes are also being sold, but it is in little
proportion as compared to the total market demand

CURRENT INDUSTRY STRUCTURE

Because of the high demand of PPRC Pipes, there has been an increase in small
manufacturing units of PPRC pipes exist in the main cities of the country i.e. Lahore,
Gujranwala, Faisalabad, Multan & Karachi. The PPRC pipe manufacturing industry of
Pakistan is a small-scale industry. It comprises mainly of small units and there are only a
few units, which have a significant market presence. These market leaders are producing
PPRC pipes under trademarks of Dadex, Minhas, Paklite Advance PPRC Pipes & Fittings
and Chattaan etc.
Presently, PPRC pipes imported from China, Iran and Turkey dominate the sales in the
local markets, whereas the local PPRC Pipes have a small share in the local market, the
reason being the unavailability of good quality PPRC pipes.
It is worth noticing that the market leaders have monopoly in major market. The new
entrants have tried to break this monopoly and provided a good variety of quality products
in the local market, which have been well received. Some of the new entrants that produce
high quality products have taken share of the market, but still there is a need for more
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industrial units to come into the field and produce high quality products in order to fulfill
the local market demand as well as to increase the exports.

PRODUCTS OFFERED

The proposed project will be capable of making PPRC Pipes with manufactured sizes of 25
mm, 32mm and 40mm pipes.

PRODUCTION PROCESS

Figure 6-1

Process Flow Diagram of PPRC Pipes Manufacturing

Raw
Material

Extrusion

Haul Off

Cooling

Cutting

Inspection

Packing/Storing

Shipping

Market

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6.1 Manufacturing Process

PPRC Pipes manufacturing process involves following basic stages:a. Extrusion Process
To get blended compound by integration the color in predetermined ratio with PPRC
resin. Mixing is done at high speed mixer at high temperature. The melted compound is
passed through a warm die fixed to the extruder to get a specific size and quality of
pipe.
b. Haul Off
Extruder is pulled by a machine that is called Haul Off. This machine is also called
take up machine/unit. Haul off is used to give proper shape to pipe. This machine
worked under a fixed command/time. Haul off machine basically consist of rollers.
c. Cooling
After Extruder and Haul Off the next process is to cool down the hot pipe. This soft
pipe is cooled down by putting water in cooling tank. After cooling the pipes, PPRC
pipe transforms an unbending form.
d. Cutting
After maturing pre decided/desired lengths an automatic machine come into force and
cut the pipes as per the standard length of 13 feet.
e. Final Inspection & Packing
This is the last process of production. Finished products are inspected and only those
complying to the standards are considered passed. Passed products are carefully packed
and then send to the customers.

MACHINERY REQUIREMENT

Following list of machinery would be required for the PPRC manufacturing unit:
Table 7-1

Machinery Requirement

Extruder
Mould (Pipe)
Vacuum tank
Hauling off
Cutter
Stacker
Freight Charges
Misc. Charges (Erection &
Installation)
Generator (165 KVA Made in
China)
Total

Unit
1 unit
1 set
1 set
1 set
1 set
1 unit

Cost (Rs.)
1,020,000
340,000
425,000
323,200
246,500
42,500
119,000

503,200
1 Set

800,000

800,000
3,819,200

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Total Cost (Rs.)

1,020,000
340,000
425,000
323,000
246,500
42,500
119,000

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PPRC Pipe Manufacturing Unit

PRODUCTION

For the purpose of this project, the extruder machine with total capacity of 100 kg/hour
will be used for the production of PPRC Pipes. PPRC pipe production/extrusion line/PPRC
pipe making machinery is used to produce PPR pipes for cold and hot water supply. It's
composed of vacuum feeding machine, hopper dryer, single screw extruder, mould, make
line co-extruder, vacuum calibration and cooling tank, extended spraying cooling tank,
haul off machine, cutter and stacker. PPRC cool and hot water pipe extrusion line is used
by single screw extruder for extruding the pipes with various tube diameters and the wall
thickness.
8.1 Production Capacity of the Project
As the maximum capacity of PPRC Pipes (without wastage) is 230 tons per year and the
percentage share of 25mm, 32mm and 40mm pipes in total production capacity are 60%,
25% & 15% accordingly. Table 8-1 summarizes the sizes of the three sizes of PPRC pipes
being recommended in this pre-feasibility study.
Table 8-1
Size Chart of PPRC Pipe
Size
25 mm
32 mm
40 mm

Wall Thickness
4.2 mm
5.4 mm
6.7 mm

Length
13 ft
13 ft
13 ft

Net Weight (Kgs)

1.00
1.60
2.70

8.2 Starting Production Capacity

The starting production capacity of the project will be 100 kg pipe per hour and in an 8
hour shift total 800 kg pipe will be produced.
Following table shows the product mix of the project at the desired production level of
pipe sizes.
Table 8-2
Product Mix Production
Production Mix

Production
Percentages

25 mm
32 mm
40 mm
Total Production

60%
25%
15%
100%

Daily
Production
(Pipes)
457
119
43
619

Annual
Production (Pipes)
137,143
35,714
12,699
185,556

The starting capacity utilization is 50%. The maximum capacity level that can be achieved
is 95%.

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HUMAN RESOURCE REQUIREMENT

The total HR required for this project is as follows:

Table 9-1

Human Resource Requirement

Production Manager
Accountant
Extruder Operators
Store In charge
Helpers
Guards
Marketing & Purchase Officer
Total

Number
of
Personnel
1
1
1
1
5
2
1

Monthly Salary
(Rs)
25,000
15,000
10,000
8,000
7,500
8,000
15,000
126,500

Annual Salary in
(Rs)
300,000
180,000
120,000
96,000
450,000
192,000
180,000
1,518,000

10 OTHER OFFICE EQUIREMENT

Total office equipment and furniture required for the project is mentioned below:
Table 10-1

Office Equipment
Unit
2
1
2
2
1

Computer
Printer
UPS
Telephone Set
Fax Machine
Total
Table 10-2

Cost / Unit
25,000
14,000
8,500
1,000
12,000

Total Cost (Rs.)

50,000
14,000
17,000
2,000
12,000
95,000

Furniture & Fixture

Office Table
Chairs
Computer Table
Computer Chairs
Sofa Set
Office Cabinet
Electrical Wiring & Lighting
Air Conditioner
Total

Unit
3
6
2
2
1
1

Cost / Unit
12,000
3,500
10,000
2,500
10,000
25,000

35,000

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Total Cost (Rs.)

36,000
21,000
20,000
5,000
10,000
25,000
25,000
70,000
212,000

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PPRC Pipe Manufacturing Unit

11 LAND & BUILDING

For the proposed project, an area of about 9,200 sq. ft. is required. It is recommended that
the land should be bought. The details of the area required for different activities are given
below:
Table 11-1

Land Cost

Description
Land (2.04 Kanals)
Table 11-2

Rate per Kanal in (Rs)

1,800,000

Total Cost in (Rs)

3,680,000

Building Covered Area Requirement

Description
Management building
Production Area
Raw Material Store
Finished goods store
Loading area
Total Construction Cost

Area (sq. ft) Construction (Rs./sq. .ft)

400
6,000
900
1,200
700
9,200

1,300
850
700
700
700

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Total in (Rs)
520,000
5,100,000
630,000
840,000
490,000
7,580,000

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12 PROJECT ECONOMICS
Capital Investment
Land
Building/Infrastructure
Machinery & equipment
Furniture & fixtures
Office equipment
Pre-operating costs
Total Capital Costs

Rs. In actuals
3,680,000
7,580,000
3,819,200
212,000
95,000
305,000
15,691,200

Working Capital
Equipment spare part inventory
Raw material inventory
Cash
Total Working Capital

Rs. In actuals
1,939,950
545,293
2,485,244

Total Investment

18,176,443

Initial Financing
Debt
Equity

Equity
61%
3.28
36,938,863

IRR
Payback Period (yrs)
Net Present Value

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Rs. In actuals
9,088,222
9,088,222

50%
50%

Project
47%
3.56
35,650,548

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PPRC Pipe Manufacturing Unit

13 FINANCIAL ANALYSIS
13.1 Projected 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

30,857,143
25,964,796
4,892,346

40,731,429
32,869,509
7,861,920

52,272,000
40,462,524
11,809,476

65,713,371
48,803,053
16,910,318

81,320,297
57,955,405
23,364,892

94,421,901
64,589,984
29,831,917

103,864,091
68,211,000
35,653,091

114,250,500
72,052,036
42,198,463

125,675,550
76,127,973
49,547,577

138,243,105
80,454,820
57,788,284

General administration & selling expenses

Administration expense
Utilities expense
Office expenses (stationary, etc.)
Promotional expense
Professional fees (legal, audit, etc.)
Depreciation expense
Amortization expense
Subtotal
Operating Income

552,000
401,695
55,200
617,143
30,857
791,620
61,000
2,509,515
2,382,832

605,744
441,864
60,574
814,629
40,731
791,620
61,000
2,816,162
5,045,758

664,720
486,051
66,472
1,045,440
52,272
791,620
61,000
3,167,574
8,641,901

729,438
534,656
72,944
1,314,267
65,713
791,620
61,000
3,569,638
13,340,680

800,457
588,121
80,046
1,626,406
81,320
791,620
61,000
4,028,970
19,335,922

878,390
646,933
87,839
1,888,438
94,422
791,620
4,387,643
25,444,274

963,912
711,627
96,391
2,077,282
103,864
791,620
4,744,695
30,908,395

1,057,759
782,790
105,776
2,285,010
114,250
791,620
5,137,205
37,061,258

1,160,744
861,068
116,074
2,513,511
125,676
791,620
5,568,694
43,978,883

1,273,756
947,175
127,376
2,764,862
138,243
791,620
6,043,032
51,745,252

Other income
Earnings Before Interest & Taxes

99,302
2,482,133

196,080
5,241,838

363,755
9,005,657

749,783
14,090,463

1,430,199
20,766,121

2,522,236
27,966,510

4,087,468
34,995,863

6,098,925
43,160,183

8,563,492
52,542,375

11,879,037
63,624,289

Interest expense
Earnings Before Tax

2,482,133

1,347,366
3,894,472

1,089,188
7,916,468

786,534
13,303,929

431,742
20,334,379

64,115
27,902,395

34,995,863

43,160,183

52,542,375

63,624,289

Taxable earnings for the year

Tax
NET PROFIT/(LOSS) AFTER TAX

2,482,133
620,533
1,861,600

3,894,472
973,618
2,920,854

7,916,468
1,979,117
5,937,351

13,303,929
3,325,982
9,977,947

20,334,379
5,083,595
15,250,784

27,902,395
6,975,599
20,926,796

34,995,863
8,748,966
26,246,898

43,160,183
10,790,046
32,370,137

52,542,375
13,135,594
39,406,782

63,624,289
15,906,072
47,718,217

Revenue
Cost of goods sold
Gross Profit

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13.2 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

Assets
Current assets
Cash & Bank
Accounts receivable
Finished goods inventory
Raw material inventory
Total Current Assets

545,293
1,939,950
2,485,244

2,291,898
1,542,857
216,373
2,566,554
6,617,683

3,310,397
3,579,429
273,913
3,301,231
10,464,969

7,082,608
4,650,171
337,188
4,159,551
16,229,518

14,339,764
5,899,269
406,692
5,159,143
25,804,867

26,523,073
7,351,683
482,962
6,003,952
40,361,670

45,540,813
8,787,110
538,250
6,619,357
61,485,530

71,243,992
9,914,300
568,425
7,297,841
89,024,558

103,011,016
10,905,730
600,434
8,045,870
122,563,049

141,660,198
11,996,302
634,400
8,870,572
163,161,472

197,740,854
13,195,933
670,457
211,607,244

Fixed assets
Land
Building/Infrastructure
Machinery & equipment
Furniture & fixtures
Office equipment
Total Fixed Assets

3,680,000
7,580,000
3,819,200
212,000
95,000
15,386,200

3,680,000
7,201,000
3,437,280
190,800
85,500
14,594,580

3,680,000
6,822,000
3,055,360
169,600
76,000
13,802,960

3,680,000
6,443,000
2,673,440
148,400
66,500
13,011,340

3,680,000
6,064,000
2,291,520
127,200
57,000
12,219,720

3,680,000
5,685,000
1,909,600
106,000
47,500
11,428,100

3,680,000
5,306,000
1,527,680
84,800
38,000
10,636,480

3,680,000
4,927,000
1,145,760
63,600
28,500
9,844,860

3,680,000
4,548,000
763,840
42,400
19,000
9,053,240

3,680,000
4,169,000
381,920
21,200
9,500
8,261,620

3,680,000
3,790,000
7,470,000

Intangible assets
Pre-operation costs
Total Intangible Assets
TOTAL ASSETS

305,000
305,000
18,176,443

244,000
244,000
21,456,263

183,000
183,000
24,450,929

122,000
122,000
29,362,857

61,000
61,000
38,085,586

51,789,769

72,122,009

98,869,417

131,616,288

171,423,091

219,077,244

1,418,219
1,418,219

2,990,703
2,990,703

3,722,129
3,722,129

4,526,414
4,526,414

5,394,108
5,394,108

6,158,455
6,158,455

6,658,965
6,658,965

7,035,699
7,035,699

7,435,721
7,435,721

7,371,656
7,371,656

9,088,222
9,088,222

9,088,222
9,088,222

7,589,550
7,589,550

5,832,701
5,832,701

3,773,198
3,773,198

1,358,903
1,358,903

9,088,222
9,088,222
18,176,443

9,088,222
1,861,600
10,949,822
21,456,263

9,088,222
4,782,454
13,870,676
24,450,929

9,088,222
10,719,806
19,808,027
29,362,857

9,088,222
20,697,752
29,785,974
38,085,586

9,088,222
35,948,536
45,036,758
51,789,769

Liabilities & Shareholders' Equity

Current liabilities
Accounts payable
Total Current Liabilities
Other liabilities
Long term debt
Total Long Term Liabilities
Shareholders' equity
Paid-up capital
Retained earnings
Total Equity
TOTAL CAPITAL AND LIABILITIES

12
PREF-112/May, 2010

9,088,222
56,875,333
65,963,554
72,122,009

9,088,222
83,122,230
92,210,452
98,869,417

9,088,222
115,492,368
124,580,589
131,616,288

9,088,222
154,899,149
163,987,371
171,423,091

9,088,222
202,617,366
211,705,588
219,077,244

Pre-Feasibility Study

PPRC Pipe Manufacturing Unit

13.3 Projected Cash Flow Statement

Statement Summaries

SMEDA

Cash Flow Statement

Year 0

Year 1

Operating activities
Net profit
Add: depreciation expense
amortization expense
Deferred income tax
Accounts receivable
Finished good inventory
Raw material inventory
Accounts payable
Cash provided by operations

(1,939,950)
(1,939,950)

Financing activities
Change in long term debt
Issuance of shares
Cash provided by / (used for) financing activitie

9,088,222
9,088,222
18,176,443

Investing activities
Capital expenditure
Cash (used for) / provided by investing activitie

(15,691,200)
(15,691,200)

NET CASH

545,293

1,861,600
791,620
61,000
(1,542,857)
(216,373)
(626,604)
1,418,219
1,746,605

1,746,605

Year 2

Year 3

Year 5

Year 6

2,920,854
791,620
61,000
(2,036,571)
(57,539)
(734,676)
1,572,483
2,517,171

5,937,351
791,620
61,000
(1,070,743)
(63,275)
(858,320)
731,426
5,529,060

9,977,947
791,620
61,000
(1,249,097)
(69,504)
(999,592)
804,285
9,316,658

15,250,784
791,620
61,000
(1,452,415)
(76,270)
(844,810)
867,694
14,597,604

20,926,796
791,620
(1,435,426)
(55,288)
(615,405)
764,347
20,376,644

(1,498,672)
(1,498,672)

(1,756,849)
(1,756,849)

(2,059,503)
(2,059,503)

(2,414,295)
(2,414,295)

(1,358,903)
(1,358,903)

1,018,499

3,772,211

13
PREF-112/May, 2010

Year 4

7,257,155

12,183,309

19,017,740

Year 7

26,246,898
791,620
(1,127,190)
(30,175)
(678,484)
500,510
25,703,179

Year 8

32,370,137
791,620
(991,430)
(32,009)
(748,029)
376,734
31,767,024

Year 9

39,406,782
791,620
(1,090,573)
(33,966)
(824,702)
400,021
38,649,182

Rs. In actuals
Year 10

47,718,217
791,620
(1,199,630)
(36,057)
8,870,572
(64,065)
56,080,657

25,703,179

31,767,024

38,649,182

56,080,657

Pre-Feasibility Study

PPRC Pipe Manufacturing Unit

14 KEY ASSUMPTIONS
Table 144-1 Operating Assumptions
Hours operational per day
Days operational per month
Days operational per year

8
25
300

Table 144-2 Production Assumptions

Annual production capacity (Kg.)
Capacity utilization (1st Year)
Capacity growth rate (yearly)
Maximum Capacity utilization
Production Wastage

230,400
50%
10%
95%
5%

Table 144-3 Economic Assumptions

Electricity growth rate
Wages growth rate
Office equipment growth
Machine maintenance growth rate

10%
10%
5%
5%

Table 144-4 Cash Flow Assumptions

Accounts Receivable cycle (in days)
Accounts Payable cycle (in days)
Raw material inventory (in days)
Finished Goods inventory (in days)

30
30
30
3

Table 144-5 Expense Assumptions

Professional fees (audit, legal etc.)
Office Expenses (stationery, entertainment, etc.)
Promotional Expenses

0.1% of Revenue
10% of Administration Expense
2% of revenue

Table 144-6 Depreciation Rates

Depreciation Method
Building & infrastructure
Machinery & Equipments
Furniture & Fixtures

Straight Line
5%
10%
10%
14

PREF-112/May, 2010

Pre-Feasibility Study

PPRC Pipe Manufacturing Unit

Table 144-7 Financial Assumptions

Project life (Years)
Debt: Equity
Interest rate on long term debt
Discount rate for calculation of NPV

10
50:50
16%
20%

Table 144-8 Raw Material Consumption Per pipe

Size
25 mm
32 mm
40 mm
Weighted Avg. price

Weight (Kg)
1.05
1.68
2.84

Rate
194
194
194

Total Cost (Rs.)

203.70
325.91
549.98
250.92

Table 14-9 Product Average Sale Price

Size
25 mm
32 mm
40 mm
Weighted Avg. price

Price (Rs)
270
432
729
332.59

15

PREF-112/May, 2010

Pre-Feasibility Study

PPRC Pipe Manufacturing Unit

15 ANNEXTURE
MACHINERY SUPPLIERS
15.1 Qingdao Royal Machinery Co.,Ltd
Tel/fax 0086-532-87258022
http://www.87257222.com
E-mail: royalplastmach1@87257222.com
15.2 Suzhou Caivi Plastic Technology Co., Ltd.
Zone A, No. 3, Zhenxing Road, Economic Developmet Zone,
Zhangiiangang, China
Tel/fax 0086-512-58156669
http://www.caivi.com.cn/
15.3 Zhangjiaganag Golden Far East Machinery Co. Ltd.
Chengfeng industrial Park, Zhaofong Town, Zhongjagang, Jiangsu, China.
Tel/fax 0086-512-58603308
http://www.jydjx.com/

RAW MATERIAL SUPPLIER

15.4 Ijaz Brothers

1st floor Bhagwan Das Building , Rutan Chan road, Chowk Shah Alam,
Lahore
Tel 042-37220883, 042-37225831
Fax 042-7225376
E-mail: anjumchemicalcorp@hotmail.com

16

PREF-112/May, 2010