Pre-Feasibility Study

Marble Quarrying
Project

Pre-Feasibility Study – Marble

Quarry Project
 Pre-Feasibility Study – Marble Quarry Project 2010

Table of Contents
SUMMARY........................................................................................................................................................4
1. INTRODUCTION........................................................................................................................................5
1.1. OBJECTIVES..........................................................................................................................................5
2. MARBLE - THE PRODUCT......................................................................................................................6
2.1. MARKET POTENTIIAL.......................................................................................................................6
2.2. OPPORTUNITY RATIONALE...........................................................................................................6
2.3. NATURE OF WORK ON MARBLE...................................................................................................6
3. MINING AND QUARRING INDUSTRY..................................................................................................8
3.1. WORLD MARBLE TRADE..................................................................................................................8
3.2. PAKISTAN DIMENSIONAL STONE INDUSTRY...........................................................................8
3.3. CONTRIBUTION TOWARDS NATIONAL GDP..........................................................................10
3.4. REGIONAL DISTRIBUTION............................................................................................................10
4. SWOT ANALYSIS.....................................................................................................................................11
5. PROJECT COST........................................................................................................................................12
6. ASSUMPTIONS FOR FINANCIAL PROJECTIONS...........................................................................13
6.1. INFLATION EFFCTS.........................................................................................................................13
6.2. MACHINERY REQUIREMENTS......................................................................................................13
6.3. Building and Infrastructure................................................................................................................15
6.4. WORKING CAPITAL.........................................................................................................................16
6.5. OPERATING EXPENSES..................................................................................................................16
6.6. ADMINISTRATION MARKETING AND OTHER EXPENSES..................................................18
6.7. DEPRECIATION ON ASSETS..........................................................................................................19
6.8. Production Schedule and Pricing.....................................................................................................19
7. THE FINANCIALS....................................................................................................................................20
7.1. Projected Cash Flow Statement........................................................................................................20
7.2. Projected Income Statement..............................................................................................................21
7.3. Projected Balance Sheet.......................................................................................................................22
IMPORTANT CONTACTS...........................................................................................................................23

SUMMARY

1.1 This feasibility study is conducted for establishment of Marble Quarrying Project.

Page 2
 Pre-Feasibility Study – Marble Quarry Project 2010

1.2 The initial cost of the project is Rs. 102,368,150/=, including initial working capital of Rs. 10,868,150/=.

1.3 The project break-even sales are Rs. 38,631,732.

1.4 The internal rate of return is 51%.

1.5 Payback period of the project is approximately 2 years and 08 months.

1.6 Gross profit / (loss) for year 1, year 2, year 3, year 4 and year 5 is Rs. 13.1 million, 23.02 million, 42.04 million,
54.3 million and 63.09 million, respectively.

1.7 Gross profit / (loss) percentage is 27.48, 38.07, 49.63, 54.29 and 56.9 for year 1, year 2, year 3, year 4, and
year 5, respectively.

1.8 Net profit / (loss) before tax for year 1, year 2 year 3, year 4 and year 5 is Rs. 7.09 million, 16.55 million,
35.10 million, 46.95 million and 55.28 million, respectively.

1.9 Net profit / (loss) before tax percentage is 14.79, 27.38, 41.41, 46.94 and 49.88 for year 1, year 2, year 3,
year 4, and year 5 respectively.

1.10 Return on capital employed (ROCE) is 6.44 %, 13.9%, 27.6%, 27.7% and 37.23% for year 1, year 2, year 3,
year 4 and 5, respectively.

1.11 Return on owner’s equity (ROE) is 6.93 %, 16.18%, 34.30%, 34.40% and 42.06% for year 1, year 2, year 3,
year 4 and year 5, respectively.

1. INTRODUCTION
Marble is one of the emerging industries of Pakistan. According to estimates Pakistan has over 297 billion tons of
marble and granite reserves and more than 100 types of colours and verities of marble and granite are available
in Pakistan.

This study aims at providing ample information to the potential investors that would help them in preparing
realistic business plan for the Marble Quarry.

1.1. OBJECTIVES

This feasibility study aims at both financial and socio-economic viability with in-depth financial analysis and
sustainable socio-economic benefits.

Page 3
 Pre-Feasibility Study – Marble Quarry Project 2010

2. MARBLE - The Product

Marble is a crystalline, compact variety of metamorphosed limestone, consisting primarily of calcite (CaCO3),
dolomite (CaMg (CO3)6 or a combination of both minerals. Pure calcite is white, but mineral impurities add
colour in variegated patterns. Extensive deposits are in Italy, India, Pakistan, Spain, Greece, Brazil, China,
Afghanistan, Turkey, Great Britain, and in the United States. Commercially the term Marble is extended to
include any rock composed of calcium carbonate that takes polish including ordinary limestone. The term is
further extended in the loose designation of stones such as alabaster, serpentine and other soft rocks. Specific
gravity of Marble ranges between 2.68 to 2.72, determining the density of the stone.

Marble is a durable stone in dry atmosphere only when protected from rain. The surface of Marble crumbles
readily when exposed to moist or acidic environment. Purest form of Marble is statuary Marble, which is white
with visible crystalline structure. The distinctive lustre of statuary Marble is caused by the reflection of
penetrated light from the surfaces of inner crystals.

2.1. MARKET POTENTIIAL

The international marble and granite trade was valued at $2.5 billion in 2005, with production of about 19.6
million tons. Italy is the world leader in marble, granite, and stone sector, exporting over 38% of finished material
and importing 18% of the world trade. Pakistan’s production is 1.3 m tons annually, with less than 10% exported
(0.03% of world trade in 2002). China, which is physically near the major mining sites in Pakistan, is the biggest
importer of Raw & Finished marble slabs and tiles (nearly double that of USA) in the world.

2.2. OPPORTUNITY RATIONALE

Pakistan has enormous mineral resources including Marble. Marble is used for both construction purposes and
Handicrafts manufacturing, whereas Onyx which is a semi- transparent and generally used by handicrafts
manufacturing industry.

Availability of high-quality Marble reserves in Pakistan in great quantities and the demand of its products in the
export markets i.e., European Union countries, Central Asian countries etc. make this sector highly attractive.
Foreign tourists are the main customers of the products made of marble and onyx and it has reached a record
Rs.763 million in 2004.

Formalization of PASDEC (Pakistan Stone Development Company) to for development Marble & Granite sector
indicates government’s interest in this sector which is a positive and encouraging gesture for the investors in this
industry.

2.3. NATURE OF WORK ON MARBLE

MARBLE OR CALCAREOUS STONES

Page 4
 Pre-Feasibility Study – Marble Quarry Project 2010

Restricted choice of Marble for external applications is due to its porosity. They hardly sustain colour and shine
due to rainfalls and environmental pollution etc. Marble is preferred over Granite for special works that include
sculptures, decorative items, fireplaces etc. due to their comparative softness.

USES OF DIMENSIONAL STONE

Major categories for usage of dimensional stones are architectural works, funeral trade and sculptures etc. In the
architectural work that include construction and structural works total share of the dimensional stone is 70%
while in the decorative, sculptures and memorial art etc. its share is 30%. According to their peculiar
characteristics, including weather effects, colour fading, load tolerance, edge cuts, water absorption, colour
choice, hygienic factor, hardness etc; various type of dimensional stones are used in different locations and
places.

3. MINING AND QUARRING INDUSTRY

3.1. WORLD MARBLE TRADE

From a global view point the natural stone industry is growing rapidly. Since the beginning of the 1990’s,
production has risen annually by an average 7.3% and international trade has even increased by an average
8.7%. Worldwide natural stone extraction is meanwhile estimated at 150 million tons gross per year. Annual
production after deduction of waste and cutting losses amounts to about 820 million square-meters – referred to
a slab thickness of 2 cm. The total production value is estimated at 40 billion US $.

Page 5
 Pre-Feasibility Study – Marble Quarry Project 2010

Technological changes in the last seventy years have increased the world production and consumption of
dimensional stone. There are over 40-dimensional stone producing countries in the world. Amongst the 12
largest producing countries, 6 are in Europe and the same number in Asia and Africa.

Dimensional stone processing is being done with different levels of technology in different countries but a few
leading countries such as Italy, China, Spain, Japan, Taiwan, Portugal, Germany, France, USA, and Greece have
developed highly efficient technology with good forward and backward linkages. India has also improved this
sector considerably in the last two decades. Consumption on the other hand is more widespread phenomena
with over 50 countries of the world making use of dimensional stone in considerable quantities. The quarrying
and working of stone, already practiced in ancient times by the Egyptians and the Greeks, was greatly developed
in Italy under the Romans. However, towards the end of the 18th century, economic activity in the stone sector
developed for the first time with the invention of gunpowder and the use of mechanical cutting. Dimensional
stones are produced in more than 42 countries of the world while 12 of these producers are dominant in the
international market i.e., 6 European countries and 3 each from Asia and Africa. Technological advances in the
last seventy years had increased the world production and consumption of dimensional stones to 150 million
tons while, consumption came to about 8.8 billion square feet (820 million square meters), generating overall
turnover of $40 billion2. Most of the world consumption comes from material that is quarried in different
countries than those where it is eventually installed. The leading producers -- China, India, Italy, Spain and
Portugal account for 53% of world quarrying production. The driving force in the sector was international trade,
which is just under 29.6 million tons and equal to about 4.8 billion square feet (450 million equivalent square
meters) and has reached US$ 8.6 billions mark in 2004 with an annual average increase of 13% while China has
shown the largest increase in its export value i.e., almost 28% annually over 4 years. Italy, China and Spain are
the major players in the international market and exported more than 55% of the dimensional stone’s products
(blocks and processed) by value. Other major exporters include Brazil, Spain, India, Turkey and Portugal.

As far as product composition is concerned, in case of marble, 53% is exported directly from the mines while
other 47% includes 45% of indoor and outdoor floorings and stairs while 55% in handicrafts and other
construction materials. Major importers of Marble products (processed and unprocessed) are Italy, USA, Japan,
Germany, Italy and China and more than 60% of the products are directed toward these countries.

3.2. PAKISTAN DIMENSIONAL STONE INDUSTRY

Marble is included in the list of largest minerals extracted among coal, chromite’s, rock salt, limestone, china
clay, dolomite, fire clay, gypsum, silica sand etc. Since 1990 mining & quarrying as consistently contributed 0.5
percent to the Gross Domestic Product. Production of Marble has grown substantially in the last twenty-five
years with total standing at about 5 million tons in 2003. It has been accompanied with high quarry wastage
ranging from 61-73% in addition to poor quality, mainly due to unwieldy blasting techniques.

Processing industry is using wide array of technological options for basic as well as finishing stage, all vintage age.
Due to technological imbalance, wastages are around 52% to 55%. Presently the processing industry relies upon
local manufacturers of machinery and equipment with a very few calibrated and high efficiency machines from
reputable international suppliers.

The Marble Processing industry is closely related to the development of building materials, the modernization
and vitalization of which leads to the progress of the tile industry. It shows a trend towards increasing use in
modern architecture. The tile manufacturing industry uses such natural resources such as marble, feldspar, silica,
clay, which are richly available in the world over. The project envisages tiles manufacturing unit of marble based
on its abundant availability in Pakistan. Its process technology is relatively simple, with the result that the

Page 6
 Pre-Feasibility Study – Marble Quarry Project 2010

investment cost of the construction of production facilities is also comparatively low, while it is a labour-
intensive industry having the effect of increased employment. So, it becomes one of the essential basic
industries to be fostered in the developed countries. The trend shows increase in export of marble tiles,
contributing to fostering the business as one of the important export-oriented industries. Its export has high
merit in countries, where the construction of high buildings is brisk with the progress towards urbanization or
where urbanization is projected. Exports of marble have an increasing trend over the period.

Source (Export Promotion Bureau)

3.3. CONTRIBUTION TOWARDS NATIONAL GDP

Page 7
 Pre-Feasibility Study – Marble Quarry Project 2010

3.4. REGIONAL DISTRIBUTION

Currently in Pakistan, Quarrying of Marble is being carried out in Baluchistan, NWFP, Sindh, Punjab, and FATA &
Northern Areas. Details of some potential areas bearing huge reserves of marble are as under: -

REGIONAL DISTRIBUTION
PROVINCE /
RESERVES POTENTIAL AREA
REGION
Quetta, Mastung, Loralai, Bolan, Chaghi, Zhob, Khuzdar,
Baluchistan Marble & Limestone
Lasbella, Sibi, Ziarat etc.
Baluchistan Granite Chaghi, Zhob
Buner, Dir, Chital, Mardan, Nowshera, Swabi, Malakand,
NWFP Marble & Limestone
Manshera etc
NWFP Granite Buner, Dir, Manshera, Chitral
Punjab Limestone Khushab, Mianwali, DG Khan, Kohat etc
Sindh Granite Nagar Parkar
Sindh Limestone / Marble Dadu, Thatta,
Northern Areas Granite & Marble Gilgit, Chillas, Hunza, Skurdu
Mohammad Agency, Bajore Agency, North
FATA Marble & Granite
Waziristan, South Waziristan

Page 8
 Pre-Feasibility Study – Marble Quarry Project 2010

4. SWOT ANALYSIS

STRENGTH
a) Large deposits of superior quality Marble in the country.
b) Large variety of types and colours.
c) Accessibility to major Marble deposits.
d) Significant number of mines.
e) Availability of hard working & low-cost granite processing labour.
f) Availability of improved technology.
g) Good entrepreneurial and mechanical skills available within the country
h) Availability of required infrastructure facilities

WEAKNESSES
a) Untimely and inappropriate arrangement of finance.
b) Constraint of research and development and production capabilities due to absence of
economies of large scale and research and development.
c) Use of Primitive method of quarrying
d) Lack of quality production
e) Incapability of meeting consistent supply
f) Low production because of non - scientific quarrying
g) Incapability of product grading
h) Poor infrastructure due to which trucks may not carry heavy loads in the hilly areas.

OPPORTUNITIES
a) Rehabilitation in Afghanistan.
b) Higher Value of Pakistani Marble internationally
c) Large and established world markets.
d) Ample opportunity for exports.
e) Growing size of middle-income group in Pakistan
f) Export potential for Central Asian Republics and Middle East
g) On average 38% of the marble excavated from the mines in any country is exported in the same
year which shows high potential for export. This figure is at 3% for Pakistan.
h) Marble industry has been defined as zero-rated by the custom authorities of Pakistan, therefore,
has no import tariffs and custom duty on import of machinery, specialized trucks and other tools.
I. Usage of Marble wastage, by handicraft manufacturers.

THREATS
a) Lack of high - skilled work force like Master Quarry.
b) Huge cost sophisticated equipment
c) Smuggling and dumping from Iran, India and China.
d) Continuous depreciation of rupee against top world currencies

5. Project Cost

Page 9
 Pre-Feasibility Study – Marble Quarry Project 2010

Initial cost of the project has been estimated as follows.

Project Cost

DESCRIPTION COST (Rs.)

Plant, Machinery and Equipment 82,000,000
Building and civil works 3,000,000
Furniture and Fixtures 1,000,000
12,200,000

NET INITIAL WORKING CAPITAL 12,200,000

Page 10
 Pre-Feasibility Study – Marble Quarry Project 2010

6. ASSUMPTIONS FOR FINANCIAL PROJECTIONS

6.1. INFLATION EFFCTS

No Inflationary effects have been taken while preparing the projections. If it is taken it will result positive effects
on financial results.

6.2. MACHINERY REQUIREMENTS

A balanced mix of imported & local machinery has been selected to maintain optimum level of productivity and
efficiency. The machinery selected is well proven in the filed and extensively used in the marble and granite
sector. Following is the detail of plant, machinery and equipment.

MACHINERY REQUIREMENTS

S. Unit Cost
Machinery Details for Model Quarry Sets Quantity Total Cost Rs.
No Rs.

1 Chain Saw complete with tool kit

50 KW and Above
Min. Arm Length 3.40 meters
Spare Widia (price & quantity should be mentioned 1 11,000,000 11,000,000
separately). Each set containing for 1 year
Consumption/1500 hrs. according to Chain on
3.40 meters arm,
Diamond Wire Saw (with operational & maintenance
2 1
manuals and part books & toolkit)
50 HP (Fixed RPM)
a Additional Rail Length 3m 1 2 2,200,000 4,400,000
b Spare fly wheel and guides for diamond wire 1
d Spare Fly Wheel Protection Rubber 500
metre
e. Spare driving pulley with Guides 2
Diamond Wire Saw (with operational & maintenance
3 1
manuals and part books & toolkit)
25 HP (Fixed RPM) 2 1,200,000 2,400,000
a Additional Rail Length 3m 1
b Spare Fly wheel with guide for diamond wire 1
c Spare driving pulley 1
Diamond Wire 28 beads/m with accessories 500 7,000 3,500,000
4 500mtr
(Sintered)
a Wire cutter 1
b Hydraulic Manual Press 1
c Wire assembling machine 1
d Steel cable with spacer, springs & locks for 1000
reassembling 1000m diamond wire (4.9mm) metre
(Complete Accessories for assembling of

Page 11
 Pre-Feasibility Study – Marble Quarry Project 2010

1000-meter wire)
e. Joints and sleeves for 1000-meter wire 1000mtr

Stitch drills with one Jack hammer designed for 20

feet drilling equipped with 3-meter-long guide bar
5 1 Sets
(with operational & maintenance manuals and part
books) 1 2,000,000 2,000,000
a. Horizontal 2
b. Vertical 1
c. With Fixing Wedges & Chains
Manual Jack Hammers
6 1
(similar as being used in 5(a) & 5(b)
Spare set of springs, Pauls, air piston, riffle bar & oiler
a 1 2 50,000 100,000
(according to jack hammer specification)
Integral drill rods (80,160,240,400,560 & 640 cm) 4nos
b 8 sets
each
Sharpening Grinder pneumatic (with operational &
7 maintenance manuals and part books) for Drill Rods 1
1 600,000 600,000
and Button Bits Sharpening
a Grinding Wheels 20
Compressor 650 -750CFM (with operational &
8 1
maintenance manuals and part books)
Air hose wire breaded rubber pipe (high pressure) 800
a. (1’’ dia & ¾’’ dia air hose pipe) and Air Tank 2000ltr-1 meters 1 4,000,000 4,000,000
No each
Oil filters as specified with compressor (2000hrs
b. 8 sets
consumption)
Hydraulic Jacking Plant with Jacking Capacity of 300
9 tons (along with operational & maintenance manuals 1
and part books) 1 650,000 650,000
a Cylinders (small size) 2
b Cylinders (large size) 2
10 Plugs and Feathers 1
a Plugs & feathers small (1.5 feet) 100 1 200,000 200,000
b Plugs & feathers large (2.3 feet) 100
Hydro pushing plant (with operational &
11 maintenance manuals and part books) with Pushing 1
Capacity of up to 250 to 300 tons 1 625,000 625,000
a Rubber Bags (500x500 mm) 100
b Rubber Bags (1000x1000 mm) 100
DTH pneumatic (with operational & maintenance
manuals and part books) Model 180 with Atlas Capco
12 1
Hammer Cop-32 air consumption 5100 litter per
minute and 7 bar pressure Or Equivalent
a Drilling bits dia 90mm 2 1 1,500,000 1,500,000
b Consumable hammer 2
c Spare key 1
d Drill Rods with each DTH Machine 20mtr

Page 12
 Pre-Feasibility Study – Marble Quarry Project 2010

Generator 250 KVA Prime Power (with operational &

13 maintenance manuals and part books) Complete with 1
Canopy and Trolley 1 2,000,000 2,000,000
Fast Moving Consumable Part (Air Filters/ Fuel filters
a 8set
etc) for One year Consumption
Generator Control Panel / Distribution Box and Cables
b 1 500,000 500,000
(Annex-A)
Excavator 350 HP (with operational & maintenance
14 1 1 17,000,000 17,000,000
manuals and part books) 350- 400 HP
a Quarry bucket (as suited with machine) (additional) 1 1 2,100,000 2,100,000
b Hydraulic Hammer suited with machine 1 1 2,500,000 2,500,000
c Quarry Hook/Ripper 1 1 1,600,000 1,600,000
Fast Moving Consumable Part (Air Filters/ Fuel filters
d 1
etc) for One year Consumption
Wheel Loader 35 tons (with operational &
15 maintenance manuals and part books) 350 to 400 HP 1 1 17,000,000 17,000,000
350- 400 HP
a Forklift (as suited with machine model) 1 1 1,500,000 1,500,000
b Quarry Bucket (additional) 1 1 2,000,000 2,000,000
c Tire Safety Chains 1 1 1,500,000 1,500,000
Fast Moving Consumable Part (Air Filters/ Fuel filters
d
etc) for One year Consumption
16 Welding Plant 1 1 2,000,000 2,000,000
17 Gas Welding Plant with Complete kit 1 50,000 50,000
18 Welding Plant electric 1 15,000 15,000
19 Oxygen Cylinder 1 15,000 15,000
20 Water Pump 5.5 HP (3'x3') 1 150,000 150,000
21 Diesel Tank 1 100,000 100,000
22 Gas Welding Plant with Complete kit 1 15,000 15,000
23 Water Pump 6.5 HP (petrol) 1 15,000 15,000
24 Generator 15 KVA 1 765,000 765,000
25 Water Tank 1500 Gallon 1 200,000 200,000
Total 82,000,000

6.3. Building and Infrastructure

Following is the detail of building and civil works

Detail of Building and Civil Works

COVERED AREA
DESCRIPTION RATE COST
SQUARE FEET
Offices/Prefabricated Containers 800 1,000 800,000
Residential Setup /Prefabricated Containers 2,000 1,000 2,000,000

Page 13
 Pre-Feasibility Study – Marble Quarry Project 2010

Bathrooms 200 1,000 200,000

Total 3,000 3,000,000

Following is the detail of furniture, fixtures & Office Equipment’s

Detail of Furniture, Fixtures & Office Equipment’s

UNIT TOTAL
ITEM QTY
COST COST
Beds, Mattress and Blankets 30 8000 240,000
Chairs 20 3000 60,000
Tables (10 @ Rs 2,000) 10 5000 50,000
Cabinets 8 20000 160,000
Office equipment’s (including 2 Computers @ Rs. 80,000) 3 80000 240,000
Printer, Photo Copier, Scanner, Camera, Fridge, 5 50000 250,000
Total 76 1,000,000

Whereas the Mine development expenses are taken as Rs. 2,000,000/-

6.4. WORKING CAPITAL

Net Initial Working capital is calculated based on following assumptions:

Operating Expenses
First Six months operating expenses excluding depreciation have been taken in working capital computation.

Administration Marketing and Other Expenses

First three months administration, marketing and other expenses excluding depreciation and technical institute
expenses, have been taken.

Accrued Expenses
Normally it takes 30 days to deposit the utilities bills. One-month utilities, wages, salaries and benefits have been
taken as accrued expenses in the working capital computation.

Accounts Receivable
Accounts receivable are estimated at 60 days of net sales.

6.5. OPERATING EXPENSES

Salaries
NO. OF SALARIES ANNUAL
S. No STAFF
EMPLOYEES PER MONTH SALARIES

Page 14
 Pre-Feasibility Study – Marble Quarry Project 2010

1 Quarry Master 1 60,000 720,000

Engineers
2 Mining 1 50,000 600,000
3 Mechanical 2 50,000 1,200,000
Supervisors and others
4 Compressor operator 1 20,000 240,000
5 Excavator Operator 1 20,000 240,000
6 Drill/Chain / Wire saw operator 5 20,000 1,200,000
7 Loader operator 1 25,000 300,000
8 Heavy duty drivers 2 15,000 360,000
9 Storekeeper 1 20,000 240,000
10 Electrician 1 20,000 240,000
11 Labour’s 10 10,000 1,200,000
Total 26 310,000 6,540,000
Salaries are increased @ 10% per annum.

a). Fuel power and lubricant

Fuel Power
and Lubricant
Litte Pri
rs/K ce
gs Per
Con Litr
ITE sum e/k
M ptio g
n
Per
ann
um
Die 100, 72
sel 000
Lu 1,20 25
bri 0 0
ca
nt
oil
Hy 1,20 50
dra 0 0
uli
c
oil
Gr 1,20 20
eas 0 0

Page 15
 Pre-Feasibility Study – Marble Quarry Project 2010

e
Ye
ar
s
1 2 3 4 5
Capaci 10 50 60 80 90 95
ty 0 % % % % %
Utiliza %
tion
Diesel 7, 3,6 4,3 5,7 6,4 6,8
20 00, 20, 60, 80, 40,
0, 000 00 00 00 00
00 0 0 0 0
0
Lubrica 30 150 18 2 2 2
nt oil 0, ,00 0, 4 7 8
00 0 00 0, 0, 5,
0 0 0 0 0
0 0 0
0 0 0
Hydrau 60 300 36 4 5 5
lic oil 0, ,00 0, 8 4 7
00 0 00 0, 0, 0,
0 0 0 0 0
0 0 0
0 0 0
Grease 24 120 14 1 2 2
0, ,00 4, 9 1 2
00 0 00 2, 6, 8,
0 0 0 0 0
0 0 0
0 0 0

4,170,000 5,004,000 6,672,000 7,506,000 7,923,000

4,170,000 5,004,000 6,672,000 7,506,000 7,923,000

It is taken at actual based upon the capacity utilization and are increased @ 10% per annum in subsequent years.

Stores spares and loose tools

The Plant will be maintained, and spares and stores are consumed for this @ 1.8% of plant and machinery with
5% increase in coming years

Carriage outwards

Page 16
 Pre-Feasibility Study – Marble Quarry Project 2010

Carriage outwards is taken as Rs.1200 per ton.

Repair and maintenance

Cost of repair and maintenance is assumed @ 5% of fixed assets excluding land and plant and machinery with 5%
increase in coming years

Water charges
Water charges are assumed at a lump sum amount of 30,000 per annum with 5% increase in coming years

Insurance
Insurance will be necessary to cover in case of accidents etc. 0.75% of plant and machinery and 2% of vehicles
value will be charged with 5% increase in coming years.

Excise duty and Royalty

Excise duty is taken @ Rs. 5/- per ton and royalty charges are taken as @ Rs. 30 per ton

Contingencies
Contingencies are assumed to be 5% of fuel, power and lubricant cost and stores consumed.

6.6. ADMINISTRATION MARKETING AND OTHER EXPENSES

Salaries are increased @ 10% per annum

Salaries

No. of Monthly Annual

S. No STAFF
Employees Salaries Salaries
1 Project Manager 1 80,000 960,000
2 Accounts Officer 1 40,000 480,000
3 Marketing Officer 1 40,000 480,000
4 Drivers 2 10,000 240,000
5 Peon 2 10,000 240,000
6 Security Guards 3 10,000 360,000
TOTAL 10 190,000 2,760,000

• Electricity o Electricity needs will be catered from Generator cost already accounted for in
Operating Expenses.

• Communication o Communication includes telephone, telex and fax charges of office and
managers. These are taken @ 2500 per month with 5% increase in coming years.

• Printing & Stationary o Printing and stationery includes leaflets, cards, and stationery required by
administration staff. These are taken @ Rs. 3,000 per month with 5% increase in coming years.

• Legal and Professional Charges o These include audit, tax and consultancy charges and are taken
@ Rs. 200,000/- per annum with 5% increase in coming years.

Page 17
 Pre-Feasibility Study – Marble Quarry Project 2010

• Newspapers and Periodicals o These are taken @ Rs. 6,000/- per month with 5% increase in
coming years.

• Entertainment o Refreshment for customers and employees of office @ Rs. 10,000/- per month

• Bank Charges o Bank charges include TT, DD and other bank charges. These are taken @ 0.5% of
sales.

6.7. DEPRECIATION ON ASSETS

Depreciation on the assets has been charged at the following rates:

Plant and Machinery - 20%

Building - 5%
Furniture & Fixtures - 10%
Vehicles - 20%

6.8. Production Schedule and Pricing

Sale price per ton has been taken as Rs. 12,000/-, Rs. 10,000/- and Rs. 8,000/- for large medium and
small squared blocks respectively.

Quarry at 100% efficiency will produce following tons.

Sale Price
Sales price per
Production (tons)
ton
Squared Blocks (Large) 20% of Production 2,000 12,000
Squared Blocks (Medium) 40% of Production 4,000 10,000
Squared Blocks (Small) 40% of Production 4,000 8,000
Total Production 10,000

PRODUCTION SCHEDULE

Years
Description
1 2 3 4 5
Capacity Utilization 100% 50% 60% 80% 90% 95%
Production per year 10,000 5,000 6,000 8,000 9,000 9,500
Squared Blocks (Large) 20% of Production 2,000 1,000 1,200 1,600 1,800 1,900
Squared Blocks (Medium) 40% of Production 4,000 2,000 2,400 3,200 3,600 3,800

Page 18
 Pre-Feasibility Study – Marble Quarry Project 2010

Squared Blocks (Small) 40% of Production 4,000 2,000 2,400 3,200 3,600 3,800
10,000 5,000 6,000 8,000 9,000 9,500

TAXATION
No tax has been taken in the first three years as initial depreciation allowance is available. In 4 th and 5th year tax
@ 25% of net profits is taken.

7. The Financials

7.1. Projected Cash Flow Statement

MODEL QUARRY PROJECTED CASH FLOW STATEMENT

Year 1 Year 2 Year 3 Year 4 Year 5
CASH FLOW FROM OPERATING
ACTIVITIES
Profit / (Loss) before taxation 7,098,700 16,559,290 35,107,956 46,950,435 55,289,802
Adjustment for - Depreciation 17,350,000 17,350,000 17,350,000 17,350,000 17,350,000
Adjustment for - Financial charges 240,000 302,400 423,360 500,094 554,271
Profit before working capital
24,688,700 34,211,690 52,881,316 64,800,529 73,194,073
changes
Accounts receivable (4,000,000 (1,040,000) (2,016,000) (1,278,900) (902,948)
)
Stores and Spares (369,000) (18,450) (19,373) (20,341) (21,358)
(4,369,000 (1,058,450) (2,035,373) (1,299,241) (924,306)
)
Increase/(Decrease) in accrued
807,500 13,125 80,356 88,307 97,048
liabilities
21,127,200 33,166,365 50,926,299 63,589,595 72,366,815
Payment of financial charges (240,000) (302,400) (423,360) (500,094) (554,271)
Payment of tax - - (11,737,609) (13,822,451)
-
Net cash flow from operating
20,887,200 32,863,965 50,502,939 51,351,892 57,990,094
activities
CASH FLOW FROM INVESTING
ACTIVITIES
Purchase of fixed assets (91,500,000) - -
- - -
Net cash flow from Investing (91,500,000) - -

Page 19
 Pre-Feasibility Study – Marble Quarry Project 2010

activities - - -
CASH FLOW FROM FINANCING
ACTIVITIES
Equity contribution 102,368,150 - -
- - -
Payment of Profits - (35,259,567) (35,231,523) (64,955,034)
- -
Net cash flow from financing activity 102,368,150 - (35,259,567) (35,231,523) (64,955,034)
-
Net cash flow for the year 10,868,150 20,887,200 32,863,965 15,243,372 16,120,369 6,964,940)
Cash and bank balances at the
10,868,150 31,755,350 64,619,315 79,862,687 95,983,056
beginning of year -
Cash and bank balances at the end
10,868,150 31,755,350 64,619,315 79,862,687 95,983,056 89,018,116
of the year

7.2. Projected Income Statement

MODEL QUARRY - PROJECTED PROFIT AND LOSS ACCOUNT

Year 1 Year 2 Year 3 Year 4 Year 5
SALES 48,000,000 60,480,000 84,672,000 100,018,800 110,854,17
0
Operating cost (34,810,80 (37,457,41 (42,650,06 (45,716,265) (47,761,937
0) 0) 5) )
GROSS PROFIT 13,189,200 23,022,590 42,021,936 54,302,535 63,092,233
Administration marketing and other expenses 6,090,500 6,463,300 6,913,980 7,352,100 7,802,430
Income from training institute - - - - -
NET PROFIT BEFORE TAX 7,098,700 16,559,290 35,107,956 46,950,435 55,289,802
Provision for taxation 25% - - - (11,737,609) (13,822,451
)
PROFIT / (LOSS) AFTER TAX 7,098,700 16,559,290 35,107,956 35,212,826 41,467,352
Un- appropriated profit / (loss) b/f - 7,098,700 23,657,990 23,506,378 23,487,682
7,098,700 23,657,990 58,765,946 58,719,205 64,955,034
Appropriation of profits - - 35,259,567 35,231,523 64,955,034
Un-appropriated profit / (loss) carried forward to
balance sheet 7,098,700 23,657,990 23,506,378 23,487,682 -

Page 20
 Pre-Feasibility Study – Marble Quarry Project 2010

7.3. Projected Balance Sheet

MODEL QUARRY - PROJECTED BALANCE SHEET

Years
Year 0
1 2 3 4 5
CAPITAL AND LIABILITIES (PKR)

CAPITAL AND RESERVES

Equity 102,368,15 102,368,15 102,368,15 102,368,15 102,368,15 102,368,15
0 0 0 0 0 0
Accumulated profit / loss 7,098,700 23,657,990 23,506,378 23,487,682 -
102,368,15 109,466,85 126,026,14 125,874,52 125,855,83 102,368,15
0 0 0 8 2 0
CURRENT LIABILITIES

Accrued liabilities - 807,500 820,625 900,981 989,288 1,086,335

Total Liabilities 102,368,15 110,274,35 126,846,76 126,775,50 126,845,12 103,454,48

0 0 5 9 0 5
ASSETS
FIXED ASSETS
Fixed Assets 91,500,000 91,500,000 91,500,000 91,500,000 91,500,000 91,500,000
Less: Accumulated
- 17,350,000 34,700,000 52,050,000 69,400,000 86,750,000
depreciation
91,500,000 74,150,000 56,800,000 39,450,000 22,100,000 4,750,000
CURRENT ASSETS
Accounts receivable - 4,000,000 5,040,000 7,056,000 8,334,900 9,237,848
Store and spares - 369,000 387,450 406,823 427,164 448,522
Cash and bank balances 10,868,150 31,755,350 64,619,315 79,862,687 95,983,056 89,018,116
10,868,150 36,124,350 70,046,765 87,325,509 104,745,12 98,704,485
0
Total Assets 102,368,15 110,274,35 126,846,76 126,775,50 126,845,12 103,454,48
0 0 5 9 0 5

Page 21