Pre-Feasibility Study

EVENT MANAGEMENT COMPLEX

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
[email protected]

REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE

PUNJAB SINDH KPK BALOCHISTAN
3rd Floor, Building No. 3, 5TH Floor, Bahria Ground Floor Bungalow No. 15-A

Aiwan-e-Iqbal Complex, Complex II, M.T. Khan Road, State Life Building Chaman Housing Scheme
Egerton Road Lahore, Karachi. The Mall, Peshawar. Airport Road, Quetta.
Tel: (042) 111-111-456 Tel: (021) 111-111-456 Tel: (091) 9213046-47 Tel: (081) 831623, 831702
Fax: (042) 36304926-7 Fax: (021) 5610572 Fax: (091) 286908 Fax: (081) 831922
[email protected] [email protected] [email protected] [email protected]

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Table of Contents
1 DISCLAIMER.......................................................................................................................................... 2
2 EXECUTIVE SUMMARY ...................................................................................................................... 3
3 INTRODUCTION TO SMEDA............................................................................................................. 3
4 PURPOSE OF THE DOCUMENT........................................................................................................ 4
5 BRIEF DESCRIPTION OF PROJECT & PRODUCT........................................................................ 4
5.1 PRODUCT AND SERVICE MIX..................................................................................................................... 5
5.2 OVERALL SERVING AND OPERATIONAL CAPACITY................................................................................ 5
6 CRITICAL FACTORS ............................................................................................................................ 6
7 GEOGRAPHICAL POTENTIAL FOR INVESTMENT ..................................................................... 7
8 POTENTIAL TARGET CUSTOMERS / MARKETS........................................................................ 7
9 PROJECT COST SUMMARY................................................................................................................ 8
9.1 PROJECT ECONOMICS ................................................................................................................................. 8
9.2 PROJECT FINANCING................................................................................................................................... 8
9.3 PROJECT COST ............................................................................................................................................. 9
9.4 SPACE REQUIREMENT ................................................................................................................................ 9
9.5 MACHINERY & EQUIPMENT REQUIREMENT ....................................................................................... 10
9.6 FURNITURE, FIXTURES AND VEHICLE REQUIREMENT....................................................................... 11
9.7 OFFICE EQUIPMENT REQUIREMENT..................................................................................................... 12
9.8 HUMAN RESOURCE REQUIREMENT ...................................................................................................... 13
9.9 RAW MATERIAL REQUIREMENT ........................................................................................................... 13
9.10 UTILITIES AND OTHER COSTS................................................................................................................ 14
9.11 REVENUE GENERATION .......................................................................................................................... 15
10 CONTACTS – SUPPLIERS................................................................................................................. 15
11 USEFUL WEB LINKS.......................................................................................................................... 16
12 ANNEXURES ........................................................................................................................................ 17
12.1 INCOME STATEMENT............................................................................................................................... 17
12.2 BALANCE SHEET....................................................................................................................................... 18
12.3 CASH FLOW STATEMENT........................................................................................................................ 19
13 KEY ASSUMPTIONS........................................................................................................................... 20
13.1 OPERATING COST ASSUMPTIONS .......................................................................................................... 20
13.2 PRODUCTION COST ASSUMPTIONS ....................................................................................................... 20
13.3 REVENUE ASSUMPTIONS ........................................................................................................................ 20
13.4 FINANCIAL ASSUMPTIONS ...................................................................................................................... 21

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1 DISCLAIMER

This information memorandum is to introduce the subject matter and provide a

general idea and information on the said matter. 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 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, 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.

Document Control

Document No. PREF-NO 133

Prepared by SMEDA-Punjab
Revision Date May 2016
For information [email protected]

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2 EXECUTIVE SUMMARY

This particular pre-feasibility is for setting up a medium level event management

complex that will provide the services of planning, organizing and executing small
and large scale events, such as marriage ceremonies, birthday parties and
anniversaries for individual clients as well as various corporate events. The
proposed business is service oriented and will help to ease the event management
burden of individual and corporate business entities.
The suggested event management complex comprises of two main halls, will have
an overall capacity of serving 800 persons per function with a variety of standard
menus. However, starting capacity utilization is estimated at 60%, with 5% growth
rate in subsequent years. For this project it is recommended to construct or
acquire a purpose built building in a metropolitan city, preferably in a densely
populated commercial area or newly developed housing society. The most critical
factors for success of the project entail entrepreneur’s knowledge of the industry,
appropriate location, commitment to quality services and competitive pricing.
Total project cost is estimated as Rs. 82.363 million with capital investment of Rs.
81.368 million and working capital Rs. 0.995 million. The projected IRR, Payback
and Net Present Value of the said project are 25%, 4.68 years and Rs. 37.38
million respectively. The legal business status of this project is proposed as ‘Sole
Proprietorship’.

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 ‘sectoral
research’ to identify policy, access to finance, business development services,
strategic initiatives and institutional collaboration and networking initiatives.
Preparation and dissemination of prefeasibility studies in key areas of investment
has been a successful 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

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capacity building programs of different types in addition to business guidance

through help desk services.

4 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, marketing, finance and business
management.
The purpose of this document is to facilitate potential investors in Event
Management Complex business 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 reveals 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 it’s successful
management.
Apart from carefully studying the whole document one must consider critical
aspects provided later on, which form basis of any investment decision.

5 BRIEF DESCRIPTION OF PROJECT & PRODUCT

Event management is a process of applying required professional skills in

organizing an event for a target audience to achieve the desired objective. The
purpose of an event management complex is to provide the services of planning,
organizing and executing various types of event both at small or large-scale level.
For instance wedding ceremonies, ceremonial parties, dinners, social gatherings,
business conferences, workshops, inaugurations and other related events where
an individual or a corporate client intends to invite the public.
The event organizers are responsible not only for preparing the food but also
setting up the dining area, waiting tables, setting up the stage and requisite decors
as per the requirement of clients.
The proposed project is for setting up a medium sized event management
complex that would operate as a specialized service provider of all event

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organizing / hosting requirements of both individual and corporate clients. With the
help of specialized team of professionals, proposed event management complex
will be fully equipped to make events more attractive and theme based through
provision of multiple stage setup, background props, entrance, reception, seating
arrangement, etc.
A purpose built building having a covered area of 9,600 square feet will be
constructed or acquired along with a parking facility of around 6,400 square feet in
the proximity of any residential or commercial locality of any major city for the said
complex. All necessary equipment such as kitchen utensils, burners, deep
freezers, air conditioners, tables, chairs, fixtures and other items are estimated to
be purchased to cater around 800 guests per event. The services of the event
organizing are offered at per-person basis with options of a standard one dish or
combination of different dish menus. Additionally, charges for other arrangements
and services will be based on the client’s requirements.
The project will provide employment opportunity to 09 individuals including owner
manager and contractual employees who will be engaged on event piece rate
basis. It is assumed that, necessary food item procurement will be made on event
day basis to maintain quality, reduce wastage and taste standardizations.

5.1 Product and Service Mix

This project is service based and mainly entails to provide the event organizing
services to both individual and corporate clients for hosting different types of
events and special occasions, mainly including the followings:
 Wedding Ceremonies (Reception, Mehndi, Ubton, etc.)
 Corporate Events (Business Conferences, Meetings, Workshops, Product
Launch, etc.)
 Ceremonial Parties (Birthday, Anniversaries, Dinners, etc.)
 Social Gatherings and Civic Events

According to the nature of events different combinations of menu mix are assumed
for this project; product service mix along with operational capacities is provided in
the succeeding section.

5.2 Overall Serving and Operational Capacity

For the proposed project, it is assumed that on an average 320 events will be
catered during a year with an average of 500 guests per event. However, the
proposed complex can serve up to a maximum of 800 guests per event.

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Capacity utilization during year one is worked out at 60% with 05% increase in
subsequent years up to the maximum capacity utilization of 90%.
Table 1: Capacity Utilization
Product Capacity Capacity Capacity
Distribution of Events Mix Utilization Utilization Utilization
(60%) (90%)
Wedding Ceremonies 60% 96,000 57,600 86,400
One Dish with Chicken 40% 38,400 23,040 34,560
One Dish with mutton 40% 38,400 23,040 34,560
One Dish with Beef 10% 9,600 5,760 8,640
Mehndi Event 10% 9,600 5,760 8,640
Corporate Events 20% 32,000 19,200 28,800
Economy Pack 40% 12,800 7,680 11,520
Medium Pack 40% 12,800 7,680 11,520
Premium Pack 20% 6,400 3,840 5,760
Ceremonial Parties 10% 16,000 9,600 14,400
Lunch Buffet 35% 5,600 3,360 5,040
Dinner Buffet 35% 5,600 3,360 5,040
Hi-Tea 30% 4,800 2,880 4,320
Civic Events & Social 10% 16,000 9,600 14,400
Gathering
Buffet Cum-HI Tea 100% 16,000 9,600 14,400

6 CRITICAL FACTORS

Following are the factors critical for the success of this business venture:
Industry knowledge and prior experience of entrepreneur.
Ability to generate work orders through networking, direct marketing
and negotiating long term contracts.
Development of strong linkages with raw material suppliers for sourcing
quality material on time coupled with economical prices.
Location consideration for providing easy access to the
customers. Competitive pricing for the quality of services offered.

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Extensive digital, print and outdoor advertising is necessary for

promotion.
Consistent and accurate fulfillment of clients’ wishes.
Professionalism and courteous customer services.

Market intelligence is also very critical as ‘know how’ about new

happenings in the market helps make accurate and confident decision-
making.
Consistency of services including ornamentation, time management,
cleanliness and food quality.
Selection of experts for designing of sets, event
themes. Hall interior and layout of services.
Good relationship with the customers is the key for repeated sales.

7 GEOGRAPHICAL POTENTIAL FOR INVESTMENT

All metropolitan cities of Pakistan such as Lahore, Karachi, Islamabad, Peshawar,

Quetta, Sialkot, Faisalabad, Multan, Quetta, Abbottabad, Rawalpindi, etc. and sub-
urban areas with large population are viable locations for investment in the event
management business. The trend of event management is rapidly increasing in the
big cities, which act as a motivation for the investors.
However, it is suggested that this business should be undertaken in the
commercial markets of middle-income community or newly developed areas.

8 POTENTIAL TARGET CUSTOMERS / MARKETS

The proposed project of event management complex will cater to the needs of
middle and upper middle class families and individuals as well as corporate sector
including but not limited to:
Educational institutions
Private organizations
Public sector organization
Business firms

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9 PROJECT COST SUMMARY

A detailed financial model has been developed to analyze the commercial viability
of Event Management Business. Various cost and revenue related assumptions
along with results of the analysis are outlined in this section.
The projected Income Statement, Cash Flow Statement and Balance Sheet are
also attached as annexure.

9.1 Project Economics

All the figures in this financial model have been calculated for estimated sales of
Rs. 80.25 million in the year one. The capacity utilization during year one is
worked out at 60% with 05% increase in subsequent years up to the maximum
capacity utilization of 90% with 288 functions.
The following table shows internal rate of return, payback period and net present
value of the proposed venture:
Table 2: Project Economics
Description Details

Internal Rate of Return (IRR) 25%

Payback Period (yrs.) 4.68

Net Present Value (Rs.) 37,384,584

9.2 Project Financing

Following table provides details of the equity required and variables related to
bank loan:
Table 3: Project Financing
Description Details
Total Equity (50%) Rs. 41,181,520
Bank Loan (50%) Rs. 41,181,520
Markup to the Borrower (%age / Annum) 14%
Loan Tenure (Years) 5

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9.3 Project Cost

Following fixed and working capital requirements have been identified for
operations of the proposed business:
Table 4: Project Cost
Description Amount Rs.
Capital Cost
Land 40,000,000
Building / Infrastructure 30,507,653
Machinery & Equipment 2,364,510
Furniture & Fixture 5,257,000
Office Vehicles 1,545,000
Office Equipment 88,000
Pre-operating Cost 1,495,000
Legal, Licensing, (NOCs), Medical 110,800
Total Capital Cost 81,367,963
Working Capital
Raw Material Inventory 455,077
Equipment Spare Part Inventory 40,000
Cash 500,000
Total Working Capital 995,077
Total Project Cost 82,363,040

9.4 Space Requirement

The space requirement for the proposed event management complex is calculated
on the basis of minimum viable land required considering facilities such as Hall
area, Kitchen area, Storage and Parking area, etc. Space required for event
management complex is 18,000 sq. ft.
It is proposed that building may be purchased to get maximum profit out of the
business and minimize the risk factor. The details of space requirement of the
building is given below:

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Table 5: Space Requirment

Description Estimated Unit Cost Total Cost

Area (Sq ft) (Rs.) (Rs.)
Hall Area 9,600 2,700 25,920,000
Kitchen 400 600 240,000
Parking for Vehicles 6,400 200 1,280,000
Office 300 2,500 750,000
Store 600 1,000 600,000
Bridal Room 200 2,700 540,000
Rooms for Staff 100 1,500 150,000
Wash Room 250 1,200 300,000
Open Area 150 200 30,000
Boundary Wall (Running Feet) 537 1,300 697,653
Total Construction Cost 30,507,653

9.5 Machinery & Equipment Requirement

Following table provides list of machinery and equipment required for the proposed
project:
Table 6: Machinery & Equipment Requirment
Description Quantity Unit Cost Total Cost
(Rs.) (Rs.)
Cone Dish 71 5,000 355,000
Cone Dish Spoon 142 50 7,100
Full Size Plates 850 200 170,000
Small Size Plates 850 180 153,000
Rice Spoons 850 30 25,500
Tea Spoons 850 25 21,250
Glass 850 40 34,000
Forks 850 30 25,500
Dinning Knife 850 30 25,500
Tea Cup 850 150 127,500
Serving Bowls 42 100 4,200
Serving Bowls Spoons 42 30 1,260
Serving Dish 42 100 4,200
Water Drum 08 4,000 32,000
Deep Freezer 06 56,000 336,000

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Juicer & Blender 08 5,000 40,000

Summer Bar 16 4,000 64,000
Korma Daig 20 4,500 90,000
Biryani Daig 12 4,500 54,000
Sweet Daig 08 4,500 36,000
Daig Spoon 20 500 10,000
Daig Cover 40 200 8,000
Water Bowl 10 500 5,000
Water Tub 08 1,000 8,000
Burners 20 2,000 40,000
Small Size Knife 15 200 3,000
Large Size Knife 15 300 4,500
Basket for Rice 05 2,000 10,000
BBQ Setup 01 10,000 10,000
Gas Cylinder 06 10,000 60,000
Generator (100 KVA) 01 600,000 600,000
Total 2,364,510

The costing for machinery and equipment is undertaken considering the fact that
there is easy and cheaper access to the requirement in local market. However,
with regards to utensils, the entrepreneur can also choose from international
brands such as Ikea, Harrods, The Alpha Collection, though the cost may be
higher. Chinese brands have also gained popularity over the years and can also
be considered.

9.6 Furniture, Fixtures and Vehicle Requirement

Details of the furniture, fixtures and vehicle required for the project are given
below:
Table 7: Furniture, Fixture and Vehicle Requirement
Description Quantity Unit Cost Total Cost
(Rs.) (Rs.)
Furniture
Round Tables 100 4,500 450,000
Buffet Table 40 2,500 100,000
Round Table Cover 500 500 250,000

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Round Table Top 500 150 75,000

Buffet Table Clothes 200 400 80,000
Skirting Buffet Tables 200 300 60,000
Chairs 1,000 1,500 1,500,000
Chair Covers 2,400 200 480,000
Chair Cover Ribbon 2,400 50 120,000
Stage Couch 2 60,000 120,000
Wooden Stage 2 50,000 100,000
Stage Red Runner 4 4,500 18,000
Stage Renovation 2 30,000 60,000
Furniture for Office 1 50,000 50,000
Hall Divider 1 25,000 25,000
Pedestal Fan 6 2,500 15,000
Bracket Fans 48 3,000 144,000
Instant Geyser 2 10,000 20,000
Electric Wiring & Lighting (Outdoor & 1 200,000 200,000
Office)
Air conditioner (4 ton Split) 10 129,000 1,290,000
Air conditioner (1.5 ton split) 1 60,000 60,000
Air conditioner (1 ton split) 1 40,000 40,000
Vehicle 1 1,545,000 1,545,000
Total Furniture & Fixtures 6,802,000

9.7 Office Equipment Requirement

Following office equipment will be required for the proposed project:

Table 8: Office Equipment Requirement
Description Quantity Unit Cost Total Cost
(Rs.) (Rs.)
Laptop 01 50,000 50,000
Digital Camera 01 15,000 15,000
Telephone Sets 02 1,500 3,000
Computer Printer 02 10,000 20,000
Total 88,000

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9.8 Human Resource Requirement

Detail of human resource required along with proposed monthly salary is

recommended as under:
Table 9: Human Resource Requirment
Description No. of Employees Monthly Salary
per person (Rs.)
Owner / Manager 01 35,000
Admin / Marketing Officer 01 25,000
Accountant 01 20,000
Storekeeper 01 14,000
Sweeper 02 13,000
Security Guard 03 15,000
Total 09

9.9 Raw Material Requirement

The raw material for daily operations of event management complex includes:

Chicken

Mutton

Beef

Rice Oil

Spices

Milk

Other ingredients such as flavors and food colors.

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Decorative items for stage designing, stall designing and theming.

These include flowers, flower decorations, hanging decorations,
balloons, back drops, banners etc.

An estimated sales contribution of raw material with regards to food category is

shown below:
Table 10: Raw Material Contribution
Product Persons Raw Weighted
Distribution of Events Material Avg.
Mix
Cost Cost
Wedding Ceremonies 60% 96,000 317
One Dish with Chicken 40% 38,400 448 179
One Dish with mutton 40% 38,400 598 239
One Dish with Beef 10% 9,600 498 50
Mehndi Event 10% 9,600 598 60
Corporate Events 20% 32,000 98
Economy Pack 40% 12,800 350 140
Medium Pack 40% 12,800 500 200
Premium Pack 20% 6,400 750 150
Ceremonial Parties 10% 16,000 74
Lunch Buffet 35% 5,600 700 245
Dinner Buffet 35% 5,600 900 315
Hi-Tea 30% 4,800 600 180
Civic Events & 10% 16,000 80
Social Gathering
Buffet Cum-HI Tea 100% 16,000 800 800
569

9.10 Utilities and Other Costs

An essential cost to be borne by the project is the cost of utilities. The water, gas,
telephone expenses are estimated to be around Rs. 94,750 per month.

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9.11 Revenue Generation

Based on the capacity utilization of 60%, sales revenue during the first year of
operations is estimated as under:
Table 11: Revenue Generation – Year 1
Distribution of Product Persons Sales Persons In Revenue
Year 1 Generation In
Events Mix Price
(60%) Year 1
Wedding Ceremonies 60% 96,000 57,600
650 23,040 14,976,000
One Dish with Chicken 40% 38,400
One Dish with mutton 40% 38,400 1,000 23,040 23,040,000
750 5,760 4,320,000
One Dish with Beef 10% 9,600
Mehndi Event 10% 9,600 800 5,760 4,608,000
19,200
Corporate Events 20% 32,000
500 7,680 3,840,000
Economy Pack 40% 12,800
700 7,680 5,376,000
Medium Pack 40% 12,800
1,000 3,840 3,840,000
Premium Pack 20% 6,400
9,600
Ceremonial Parties 10% 16,000
1,000 3,360 3,360,000
Lunch Buffet 35% 5,600
1,200 3,360 4,032,000
Dinner Buffet 35% 5,600
800 2,880 2,304,000
Hi-Tea 30% 4,800
9,600
Civic Events & Social 10% 16,000
Gathering
1,100 9,600 10,560,000
Buffet Cum-HI Tea 100% 16,000
80,256,000
Total Revenue

10 CONTACTS – SUPPLIERS

Name Of Supplier Address Phone / Fax

Kitchen 'N' 102-A, Allama Iqbal Road Butt (92 42) 36366589-90
Lane, Garhi Shahu, Lahore,
Restaurant Systems (92 42) 36305989
Punjab, Pakistan

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Kitchen Care Plot# 103, Golden Plaza F-7, Blue (92 51) 32875226
Area, Islamabad, Capital, Pakistan (92 51) 32277176

Kehkashan Shopping Arcade (92 21) 35862978

Prestige Kitchens Block-7, Clifton, Karachi 75600,
(92 21) 5871814
Sindh, Pakistan

11 USEFUL WEB LINKS

Small & Medium Enterprises Development www.smeda.org.pk

Authority (SMEDA)
Government of Pakistan www.pakistan.gov.pk

Ministry of Industries & Production www.moip.gov.pk

Ministry of Education, Training & Standards in http://moptt.gov.pk

Higher Education
Government of Punjab www.punjab.gov.pk

Government of Sindh www.sindh.gov.pk

Government of Khyber Pakhtunkhwa www.khyberpakhtunkhwa.gov.pk

Government of Balochistan www.balochistan.gov.pk

Government of Gilgit Baltistan www.gilgitbaltistan.gov.pk

Government of Azad Jamu Kashmir www.ajk.gov.pk

Security Commission of Pakistan (SECP) www.secp.gov.pk

Federation of Pakistan Chambers of Commerce www.fpcci.com.pk

and Industry (FPCCI)
State Bank of Pakistan (SBP) www.sbp.org.pk

Punjab Small Industries Corporation www.psic.gop.pk

Sindh Small Industries Corporation www.ssic.gos.pk

Pakistan Food Association www.pakistanfoodassociation.org

Punjab Food Authority www.punjabfoodauthority.gov.pk

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12 ANNEXURES

12.1 Income Statement

Statement Summaries SMEDA

Income Statement
Rs. in actuals
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Revenue 80,256,000 95,638,400 113,294,720 133,525,920 156,670,413 183,108,545 213,267,599 234,594,359 258,053,795 ##########

Cost of goods sold 59,316,159 70,674,089 83,710,444 98,647,329 115,734,487 135,252,603 157,516,997 173,268,696 190,595,566 ##########
Gross Profit 20,939,841 24,964,311 29,584,276 34,878,591 40,935,926 47,855,942 55,750,603 61,325,663 67,458,229 74,204,052
General administration & selling expenses

Administration expense 2,039,400 2,243,340 2,467,674 2,714,441 2,985,886 3,284,474 3,612,922 3,974,214 4,371,635 4,808,799
Rental expense - - - - - - - - - -
Utilities expense 120,000 132,000 145,200 159,720 175,692 193,261 212,587 233,846 257,231 282,954
Travelling & Comm. expense (phone, fax, etc.) 495,000 544,500 598,950 658,845 724,730 797,202 876,923 964,615 1,061,076 1,167,184
Office vehicles running expense 154,500 169,950 186,945 205,640 226,203 248,824 273,706 301,077 331,184 364,303
Office expenses (stationary, etc.) 138,600 152,460 167,706 184,477 202,924 223,217 245,538 270,092 297,101 326,812
Promotional expense 1,605,120 1,912,768 2,265,894 2,670,518 3,133,408 3,662,171 4,265,352 4,691,887 5,161,076 5,677,183
Insurance expense - - - - - - - - - -
Professional fees (legal, audit, etc.) 160,512 191,277 226,589 267,052 313,341 366,217 426,535 469,189 516,108 567,718
Depreciation expense 2,614,134 2,614,134 2,614,134 2,614,134 2,614,134 3,109,422 3,109,422 3,109,422 3,109,422 3,109,422
Amortization expense 310,080 310,080 310,080 310,080 310,080 11,080 11,080 11,080 11,080 11,080
Property tax expense - - - - - - - - - -
Miscellaneous expense - - - - - - - - - -
Subtotal 7,637,346 8,270,508 8,983,173 9,784,906 10,686,397 11,895,868 13,034,065 14,025,421 15,115,913 16,315,455
Operating Income 13,302,496 16,693,802 20,601,103 25,093,684 30,249,529 35,960,074 42,716,538 47,300,242 52,342,316 57,888,598
Other income - - - - - - - - - -

Gain / (loss) on sale of assets - - - - 1,599,004 - - - - -

Earnings Before Interest & Taxes 13,302,496 16,693,802 20,601,103 25,093,684 31,848,533 35,960,074 42,716,538 47,300,242 52,342,316 57,888,598
Interest expense 5,765,413 4,893,201 3,898,879 2,765,352 1,473,131 - - - - -

Earnings Before Tax 7,537,083 11,800,602 16,702,224 22,328,332 30,375,401 35,960,074 42,716,538 47,300,242 52,342,316 57,888,598
Tax 1,717,030 3,182,343 4,867,012 6,800,745 9,576,716 11,485,085 13,797,069 15,364,044 17,087,716 18,983,755

NET PROFIT/(LOSS) AFTER TAX 5,820,052 8,618,259 11,835,212 15,527,587 20,798,685 24,474,989 28,919,468 31,936,198 35,254,600 38,904,843

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12.2 Balance Sheet

Statement Summaries SMEDA

Balance Sheet
Rs. in actuals
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Assets

Current assets
Cash & Bank 500,000 3,539,508 7,516,454 13,606,738 22,124,580 28,845,233 55,389,625 86,300,817 119,908,801 156,630,207 201,516,690
Accounts receivable - - - - - - - - - - -
Finished goods inventory - - - - - - - - - - -
Equipment spare part inventory 40,000 50,050 62,255 77,040 94,913 116,476 142,444 164,522 190,023 219,477 -
Raw material inventory 455,077 596,530 777,324 1,007,746 1,300,664 1,672,166 2,142,339 2,592,231 3,136,599 3,795,285 -
Pre-paid annual land lease - - - - - - - - - - -
Pre-paid building rent - - - - - - - - - - -
Pre-paid lease interest - - - - - - - - - - -
Pre-paid insurance - - - - - - - - - - -
Total Current Assets 995,077 4,186,088 8,356,033 14,691,524 23,520,157 30,633,875 57,674,408 89,057,571 123,235,424 160,644,969 201,516,690
Fixed assets

Land 40,000,000 40,000,000 40,000,000 40,000,000 40,000,000 40,000,000 40,000,000 40,000,000 40,000,000 40,000,000 40,000,000
Building/Infrastructure 30,507,653 28,982,271 27,456,888 25,931,505 24,406,123 22,880,740 21,355,357 19,829,975 18,304,592 16,779,209 15,253,827
Machinery & equipment 2,364,510 2,128,059 1,891,608 1,655,157 1,418,706 4,200,036 3,661,806 3,123,577 2,585,348 2,047,119 1,508,890
Furniture & fixtures 5,257,000 4,731,300 4,205,600 3,679,900 3,154,200 2,628,500 2,102,800 1,577,100 1,051,400 525,700 -
Office vehicles 1,545,000 1,236,000 927,000 618,000 309,000 2,488,238 1,990,590 1,492,943 995,295 497,648 -
Office equipment 88,000 70,400 52,800 35,200 17,600 112,313 89,850 67,388 44,925 22,463 -
Total Fixed Assets 79,762,163 77,148,030 74,533,896 71,919,762 69,305,629 72,309,826 69,200,404 66,090,982 62,981,561 59,872,139 56,762,717
Intangible assets

Pre-operation costs 1,495,000 1,196,000 897,000 598,000 299,000 - - - - - -

Legal, licensing, & training costs 110,800 99,720 88,640 77,560 66,480 55,400 44,320 33,240 22,160 11,080 -
Total Intangible Assets 1,605,800 1,295,720 985,640 675,560 365,480 55,400 44,320 33,240 22,160 11,080 -
TOTAL ASSETS 82,363,040 82,629,838 83,875,569 87,286,846 93,191,265 102,999,102 126,919,132 155,181,793 186,239,144 220,528,188 258,279,406

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12.3 Cash Flow Statement

Statement Summaries SMEDA
Cash Flow Statement
Rs. in actuals
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 - 5,418,772 8,140,067 11,268,739 14,859,957 20,015,333 23,559,446 27,853,130 30,763,226 33,964,331 37,485,547
Add: depreciation expense - 2,614,134 2,614,134 2,614,134 2,614,134 2,614,134 3,109,422 3,109,422 3,109,422 3,109,422 3,109,422
amortization expense - 310,080 310,080 310,080 310,080 310,080 11,080 11,080 11,080 11,080 11,080
Deferred income tax - - - - - - - - - - -
Accounts receivable - - - - - - - - - - -
Finished good inventory - - - - - - - - - - -
Equipment inventory (40,000) (10,050) (12,205) (14,785) (17,873) (21,563) (25,967) (22,079) (25,501) (29,454) 219,477
Raw material inventory (455,077) (141,453) (180,794) (230,421) (292,918) (371,502) (470,174) (449,891) (544,368) (658,686) 3,795,285
Pre-paid building rent - - - - - - - - - - -
Pre-paid lease interest - - - - - - - - - - -
Advance insurance premium - - - - - - - - - - -
Accounts payable - 1,078,111 207,963 239,159 274,608 314,872 360,584 409,531 294,125 324,713 265,672
Other liabilities - - - - - - - - - - -
Cash provided by operations (495,077) 9,269,595 11,079,244 14,186,905 17,747,988 22,861,353 26,544,391 30,911,193 33,607,983 36,721,406 44,886,483
Financing activities

Change in long term debt 41,181,520 (6,230,086) (7,102,299) (8,096,620) (9,230,147) (10,522,368) - - - - -
Change in short term debt - - - - - - - - - - -
Change in export re-finance facility - - - - - - - - - - -
Add: land lease expense - - - - - - - - - - -
Land lease payment - - - - - - - - - - -
Change in lease financing - - - - - - - - - - -
Issuance of shares 41,181,520 - - - - - - - - - -
Purchase of (treasury) shares - - - - - - - - - - -
Cash provided by / (used for) financing act 82,363,040 (6,230,086) (7,102,299) (8,096,620) (9,230,147) (10,522,368) - - - - -
Investing activities

Capital expenditure (81,367,963) - - - - (5,618,331) - - - - -

Acquisitions - - - - - - - - - - -
Cash (used for) / provided by investing act (81,367,963) - - - - (5,618,331) - - - - -

NET CASH 500,000 3,039,508 3,976,946 6,090,285 8,517,841 6,720,654 26,544,391 30,911,193 33,607,983 36,721,406 44,886,483

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13 KEY ASSUMPTIONS

13.1 Operating Cost Assumptions

Description Details
Administration Benefit Expenses 3% of Administration Cost
7% of Administration
Office Expenses (Stationery, Entertainment etc)
expenses
Communication Expenses 15% of Administration Cost
Promotional Expenses 0.5% of Revenue
Professional Fee 0.2% of Revenues
Depreciation Method Accelerated depreciation
0% on Land
10% on Machinery
Depreciation Rate 20% on Office Equipment
10% on Furniture & Fixture
20% on Office Vehicles
Inflation Growth Rate 10%
Electricity Price Growth Rate 10%
Salaries Growth Rate 10%

13.2 Production Cost Assumptions

Description Details

Cost of Goods sold Growth Rate 10% per year

Maintenance Cost Rs. 10 / Person

13.3 Revenue Assumptions

Description Details
Growth in Sales Price 10%
Per Function Serving Capacity 800 Persons
Average Function Capacity 500 Persons
Function in Year 1 (60%) 192 Functions
Production Capacity in First Year 60%
Percentage Increase in Production Capacity every
05%
Year
Maximum Production Capacity 90%

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13.4 Financial Assumptions

Description Details

Debt 50%
Equity 50%
Interest Rate on Debt 14%
Debt Tenure 5 Years
Debt Payment / Year 1

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