Photo Developing and Printing (Digital)

Pre-Feasibility Study
PHOTO DEVELOPING AND PRINTING LAB (Digital Technology)
Small and Medium Enterprise Development Authority

Government of Pakistan
www.smeda.org.pk
HEAD OFFICE 6 Floor LDA Plaza Egerton Road, Lahore Tel: 111-111-456, Fax:6304926-7 Website: www.smed.org.pk. [email protected]
th
REGIONAL OFFICE PUNJAB
REGIONAL OFFICE SINDH 5TH Floor, Bahria Complex II, M.T. Khan Road, Karachi. Tel: (021) 111-111-456 Fax: (021) 5610572 [email protected]
REGIONAL OFFICE NWFP Ground Floor State Life Building The Mall, Peshawar. Tel: (091) 9213046-47 Fax: (091) 286908 [email protected]
REGIONAL OFFICE BALOCHISTAN Bungalow No. 15-A Chaman Housing Scheme Airport Road, Quetta. Tel: (081) 831623, 831702 Fax: (081) 831922 [email protected]
8th Floor LDA Plaza Egerton Road, Lahore Tel: 111-111-456, Fax:6304926-7 Website: www.smed.org.pk. [email protected]
March, 2009
Photo Developing and Printing Lab (Digital Technology)
DISCLAIMER
The purpose and scope of this information memorandum is to introduce the subject matter and provide a general idea and information on the said area. All the material included in this document is based on data/information gathered from various sources and is based on certain assumptions. Although, due care and diligence has been taken to compile this document, the contained information may vary due to any change in any of the concerned factors, and the actual results may differ substantially from the presented information. SMEDA does not assume any liability for any financial or other loss resulting from this memorandum in consequence of undertaking this activity. The prospective user of this memorandum is encouraged to carry out additional diligence and gather any information he/she feels necessary for making an informed decision. For more information on services offered by SMEDA, please contact our website: www.smeda.org.pk
DOCUMENT CONTROL
Document No. Prepared by Approved by Issue Date Issued by PREF-74 SMEDA-Punjab Provincial Chief Punjab March, 2009 Library Officer
1 PREF-74/March, 2009/Rev 2
TABLE OF CONTENTS
1 2 3 4 INTRODUCTION TO SMEDA.................................................................................................... 4 PURPOSE OF THE DOCUMENT ............................................................................................... 4 CRUCIAL FACTORS & STEPS IN DECISION MAKING FOR INVESTMENT..................... 4 PROJECT PROFILE.................................................................................................................... 5 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 5 OPPORTUNITY RATIONALE ...................................................................................................... 5 PROJECT BRIEF ....................................................................................................................... 6 MARKET ENTRY TIMING ......................................................................................................... 6 PROPOSED BUSINESS LEGAL STATUS ....................................................................................... 6 PROJECT CAPACITY AND RATIONALE ....................................................................................... 6 PROJECT INVESTMENT ............................................................................................................. 6 PROPOSED LOCATION .............................................................................................................. 7 KEY SUCCESS FACTORS/PRACTICAL TIPS FOR SUCCESS ............................................................ 7 STRATEGIC RECOMMENDATIONS ............................................................................................. 7
SECTOR & INDUSTRY ANALYSIS........................................................................................... 9 5.1 5.2 5.3 5.4 GLOBAL PROSPECTIVE ............................................................................................................ 9 IMPORTS OF PHOTOGRAPHIC GOODS IN PAKISTAN:.................................................................. 10 LOCAL PROSPECTIVE ............................................................................................................ 11 LEGAL ISSUES REGARDING INDUSTRY ................................................................................... 12
MARKET INFORMATION ....................................................................................................... 13 6.1 6.2 MARKET POTENTIAL ............................................................................................................. 13 TARGET CUSTOMERS ............................................................................................................ 13
PRODUCTION PROCESS......................................................................................................... 14 7.1 7.2 7.3 7.4 7.5 7.6 PRODUCTION PROCESS FLOW ................................................................................................ 14 PRODUCT MIX OFFERED ........................................................................................................ 15 RAW MATERIAL REQUIREMENT ............................................................................................. 16 TECHNOLOGY AND PROCESSES .............................................................................................. 17 MACHINERY REQUIREMENT .................................................................................................. 18 MACHINE MAINTENANCE ...................................................................................................... 18
LAND & BUILDING REQUIREMENT .................................................................................... 18 8.1 8.2 8.3 8.4 8.5 LAND REQUIREMENT ............................................................................................................ 18 COVERED AREA REQUIREMENT ............................................................................................. 19 CONSTRUCTION COST ........................................................................................................... 19 RENT COST ........................................................................................................................... 19 UTILITIES REQUIREMENT ...................................................................................................... 19
9 10
HUMAN RESOURCE REQUIREMENT................................................................................... 19 FINANCIAL ANALYSIS............................................................................................................ 20 10.1 10.2 10.3 10.4 10.5 PROJECTED INCOME STATEMENT ........................................................................................... 20 REVENUES ............................................................................................................................ 21 DIRECT COST ........................................................................................................................ 21 OPERATING E XPENSES .......................................................................................................... 22 PROJECTED BALANCE SHEET ................................................................................................. 23 2
PREF-74/March, 2009/Rev 2
10.6 11
PROJECTED CASH FLOW STATEMENT ..................................................................................... 24
KEY ASSUMPTIONS................................................................................................................. 26 11.1 11.2 11.3 11.4 11.5 11.6 11.7 11.8 MACHINERY ASSUMPTIONS ................................................................................................... 26 OPERATING ASSUMPTIONS .................................................................................................... 26 ECONOMY RELATED ASSUMPTIONS ....................................................................................... 26 CASH FLOW ASSUMPTIONS.................................................................................................... 26 FINANCIALS ASSUMPTIONS ................................................................................................... 26 OPERATING COST ASSUMPTIONS ........................................................................................... 27 DIRECT COST ASSUMPTIONS ................................................................................................. 27 REVENUE ASSUMPTIONS ....................................................................................................... 27
INTRODUCTION TO SMEDA
Small and Medium Enterprise Development Authority (SMEDA) was established with the objective to provide fresh impetus to the economy through the launch of an aggressive SME support program. Since its inception in October 1998, SMEDA had adopted a sectoral SME development approach. A few priority sectors were selected on the criterion of SME presence. In depth research was conducted and comprehensive development plans were formulated after identification of impediments and retardants. The all-encompassing sectoral development strategy involved recommending changes in regulatory environment by taking into consideration other important aspects including finance, marketing, technology and human resource development. SMEDA has so far successfully formulated strategies for sectors including fruits and vegetables, marble and granite, gems and jewelry, marine fisheries, leather and footwear, textiles, surgical instruments, transport and dairy. Whereas the task of SME development at a broader scale still requires more coverage and enhanced reach in terms of SMEDAs areas of operation.
PURPOSE OF THE DOCUMENT
This particular pre-feasibility is regarding business of photo developing and printing, which comes under service sector. The objective of the pre-feasibility is primarily to provide potential entrepreneurs information on various aspects of the project including industry analysis, technical requirements, marketing, labor requirements and financial analysis.
CRUCIAL FACTORS & STEPS IN DECISION MAKING FOR INVESTMENT
A SWOT Analysis is a strategic planning tool used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or business venture. Strengths and weaknesses are internal where as opportunities and threats originate from the external envoirnement. Following are major strengths, weaknesses, opportunities and threats of photo developing and printing business in Pakistan. 3.1 Strengths Digital technology has Information-intensive applications. It provides quick turnaround. Easy availibility of resources (technological, skilled human resource, raw material, infrastructure etc.) Availibility of low cost and user friendly cameras. Affordable development and printing of photographs. Fast developing and printing.
3.2 Weakness With increase in use of digital cameras, consumers can now view theirs photos on PC by directly attaching their digital cameras with a computer. Machinery cost of a digital lab is much higher as compared to conventional labs. It is difficult to implement. Due to world recession, raw material prices has increased. 3.3 Opportunity New applications keep on coming due to innovation in technology. In future, digital cameras and their accessories can be placed in shop for selling purpose. Great potential, since there are not many (very few) digital photo development labs operating in Pakistan. Growing trend of photography in Pakistan. 3.4 Threat Cost inhibits growth, so huge amount of money required for adaptation of new technology. Potential users may be unconvinced by advantages.
PROJECT PROFILE
"Photography" is derived from the Greek words photos ("light") and graphein ("to draw") The word was first used by the scientist Sir John F.W. Herschel in 1839. It is a method of recording images by the action of light, or related radiation, on a sensitive material. After introduction of user-friendly and affordable digital cameras, digital photography has become a popular phenomenon, world-wide. This pre-feasibility will facilitate to understand the newly emerging business of digital photo developing labs. In addition to the conventional services of developing and printing of negative rolls, this technology is enabling us to process photos from slides and digital media. 4. 1 Opportunity Rationale
Photography has emerged itself as a basic need of the day. Camera is being used more or less in every house in Pakistan and world over. It is the cheapest medium to save the moments of life. It is also the need/requirement of many big industries, like film, newspapers, advertising and fashion. Many experts see digital photo printing as the next wave in printing technology. The same consumer, who probably one or two years ago did not feel any need for digital printing is now far more interested. As a result there has been a tremendous increase in photo developing labs with digital technology in last few years.
4. 2
Project Brief
The photo printing and developing business comes under service sector and it provides variety of services like developing, printing, enlarging, framing, mounting of photographs and sale of cameras & photo accessories (i.e. flashes, film rolls, albums, camera batteries, camera bags etc.). Moreover a studio will also be established along with the shop and lab, where clients can have there snaps exposed. 4. 3 Market Entry Timing Demand for the digital labs is increasing at a rapid pace and there are very few currently operating in Pakistan. Therefore, it is advisable to enter this business at earliest. Moreover, photo labs can be established at any time of the year, all seasons are suitable for market entry but for more fast business earning it would be advisable to start business in wedding season. 4. 4 Proposed Business Legal Status An enterprise can be a proprietorship or a partnership and even it can be registered under company law with Security and Exchange Commission of Pakistan. Selection totally depends upon the choice of the entrepreneur. Legal status recommended for this business type is sole proprietorship/partnership, as registering sole ownership requires less legal requirement. Similarly a lower income tax rate is applicable to sole proprietorship than that of any other form of companies. 4. 5 Project Capacity and Rationale The proposed digital lab has capacity to print 1180 prints (4x 6) in one hour. Although shop will operate for eleven hours daily but the lab will only operate for eights hours (single shift) a day. 4. 6 Project Investment Follow is the breakup of investment required for the project: Table 4-1: Investment breakup Sr.# 1. 2. Description Capital cost Working Capital Total Capacity 1180 prints (4x 6)/hour Project Cost 11.17M Rupees 9,917,500 1,260,124 11,177,624 Human Technology/Machinery Location Resource 9 Imported Machinery Metropolitan Financial Summary IRR NPV Payback Period 40.38% 10.6M 2.80 Years
Table 4-2: Recommended Project Parameters
4. 7
Proposed Location
Location of unit is primary concern in this business. It should ideally be located near residential blocks of metropolitans, where majority population belongs to middle and/or higher income bracket. Other suitable location can be concentrated markets for photo labs and related arcades (e.g. Nisbat Road and Chamberlain Road in Lahore). 4. 8 Key Success Factors/Practical Tips for Success Customer care, well in time service and maintaining good quality can ensure success of any business. Photo developing and printing is service based business where combination of good quality of product and exclusive service can play distinctive role in ultimate success of the business. Entrepreneur can be innovative in many ways to facilitate clients. Giving customer best value for his money is primary success factor for photo developing business. Photo-image processing is the most critical step in photography. The final images, or prints, that determine whether consumers continue to spend their discretionary income on photography are a direct result of the quality of photo/image processing. Regardless of the camera, film processing equipment, processing chemicals and photographic paper used." Photo-image processing will be the most critical step in keeping clients coming back. Strategic Recommendations
4. 9
4.9.1 Marketing Regular and sustained marketing is required for a successful business of photo developing and printing. Few useful marketing and promotional tips are as under: Referral marketing is most suitable medium for promoting service sector businesses including photo developing and printing. Take care of your customers and they will promote your business through word of mouth. Know your customers needs and design your product and services in accordance with their requirements. Provide in time service to customers. Timely delivery is a major consideration for the clients. Use promotional sales to increase traffic flow. This technique is useful to gain competitive edge over others. Local marketing channels like cable network advertisements and leaflets distribution can be used to increase traffic flow. 4.9.2 Pricing Following are the currently market prices charged for services being offered by photo printing and developing labs:
Table 4-3: Developing Sr. # 1 Sr. # 1 Sr. # 1 2 3 4 5 6 7 6 7 8 Media Type Film roll Media Type CD writing from negative Print Prints 4R (4X6) Prints 5R (5X7) Prints 6R (6X8) Prints 8R (8X10) Prints (8X12) Prints 10R (10X12) Prints (10X15) Prints (12X16) Prints (12X18) Prints (12X36) Service charges per roll Rs. 20 Service charges per roll Rs. 150 Service charges per print (Rs.) 8 10 40 80 90 100 120 200 225 400
Table 4-4: Scanning and Image Recording
Table 4-5: Printing
4.9.3 Product Packaging Traditionally, negatives are placed in a plastic sheet (specifically made for the purpose) and presented to the client along with an album and the photographs in a printed envelop. Album, negative wallet and envelope are complimentary and client is not charged for them. Following are the current market prices at which lab will purchase above mentioned packing material: Table 4-6: Market Prices of Packing Material Sr. # 1 2 3 Item Album Negative wallet Envelope Total Purchase price per unit (Rs.) 4.80 1.0 1.5 7.3
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5. 1
SECTOR & INDUSTRY ANALYSIS

Global Prospective
In this new era where the time is running fast, the Global market is also showing fast developing trends. People have turned from conventional methods to digital technology for better and faster results. Market demand has lead to stronger digital intentions as the conventional methods are inflexible and produce static prints. Digital equipment increases the opportunity to expand services for all sizes of photo-finishing laboratories because it can process and print film and scan the images onto computer CDs or for use online. This trend increases the importance of connectivity between the imaging industry and the information technology industry. Based on InfoTrends report1, it is revealed that; Worldwide revenue from low end (sub-$1,000) digital camera sales is forecast to reach $11.8 billion in 2007. Worldwide unit shipments of low end digital cameras will reach 24 million units in 2002, capturing 28% of total worldwide camera sales (not including one-time use cameras). Unit volume is forecast to grow at a compound annual growth rate of 16% to reach 51 million units in 2007. Digital camera sales are expected to experience a compounded annual growth rate of 15 percent over the next four years, reaching 82 million units by 2008. Based on IDC report2, it is revealed that; Between 2005 and 2009, digital prints are expected to grow 26% annually, from 60 billion to 152 billion. And by 2009, digital print revenue could grow to $107 billion (it's about $38 billion currently). Best of all, atleast from the industry's point of view, more than 55% of those prints will be created at a retail location.3 Positive growth is expected in the consumer photofinishing market. Even though film usage will decline, the bright future of digital camera shipments will increase the number of images captured, shared and received. Digital camera images captured, shared and received worldwide will grow an average of 35% for 2003-2008. Digital cameras will continue to be the largest generator of digital images despite the greater forecasted proliferation of camera phones. Prints from digital images will surpass film prints in 2006 and will account for 71% of total worldwide prints by 2008.
1 2
www.infotrends.com/Revenue from Worldwide Digital Camera Sales to Reach $11_8 Billion in 2007.htm www.IDC.com/Bright Future of Digital Cameras to Boost Consumer Photofinishing Market, IDC Expects 3 Photo Industry Sees Future In Printing/technology analysis firm IDC Research,2005-2009 9 PREF-74/March, 2009/Rev 2
5. 2
Imports of photographic goods in Pakistan4:
Following are the major imports of photographic goods done in Pakistan. The data will give a fair idea of the prospects of this industry in Pakistan:
YEARS COMMODITY COMMODITY CODE 370231 Colour photo film,rolls width < 105mm Unexposed photographic paper, textile roll > 370310 610mm wid Unexposed colour photographic paper, board 370320 or textile Chemicals preparation for photographic 370790 uses,nes 370231 Colour photo film,rolls width < 105mm Unexposed photographic paper, textile roll > 370310 610mm wid Unexposed colour photographic paper, board 370320 or textile Chemicals preparation for photographic 370790 uses,nes 370231 Colour photo film,rolls width < 105mm Unexposed photographic paper, textile roll > 370310 610mm wid Unexposed colour photographic paper, board 370320 or textile Chemicals preparation for photographic 370790 uses,nes 370231 Colour photo film,rolls width < 105mm Unexposed photographic paper, textile roll > 370310 610mm wid Unexposed colour photographic paper, board 370320 or textile Chemicals preparation for photographic 370790 uses,nes 370231 Colour photo film,rolls width < 105mm Unexposed photographic paper, textile roll > 370310 610mm wid Unexposed colour photographic paper, board 370320 or textile Chemicals preparation for photographic 370790 uses,nes TRADE (USD) 1,610,099
2,040,885 5,964,209 4,579,290
WEIGHT (KG) 45,999

329,391 791,595 1,165,699
QUANTITY NAME Number of items weight in kilograms weight in kilograms weight in kilograms Number of items Number of items Number of items weight in kilograms Number of items Weight in kilograms Weight in kilograms weight in kilograms Number of items Weight in kilograms Weight in kilograms weight in kilograms Number of items Weight in kilograms Weight in kilograms Weight in kilograms
QUANTITY 1,460,301 329,391 791,595 1,165,699 65,604 97,308 289,778 1,032,682 376,356 170,579 494,872 2,187,328 1,059,552 163,127 403,427 1,237,723 1,367,364 109,347 344,327 1,030,519
2003
793,125 1,540,592 4,550,002 4,486,634 402,739 823,041 3,609,595 4,040,238 1,136,367 1,051,770 3,085,328 4,267,113 1,599,831 579,245 2,470,168 3,653,187
0 0 0 1,032,682 15,203 170,579 494,872 2,187,328 25,531 163,127 403,427 1,237,723 44,667 109,347 344,327 1,030,519
2004
2005
2006
2007
www.comtrade.un.org
5. 3
Local Prospective
Photo printing business is emerging as one of the good business ventures in Pakistan. Pakistan is one of those countries where use of camera is gaining popularity, as it is the cheapest medium to save the moments of life. Unfortunately neither is there any data available about the exact number of minilabs operating in Pakistan nor about their contribution to GDP. There are total 3505 minilabs working in Pakistan (140 Fuji, 160 Konica, 30 Kodak, 20thers). Number of small photo studios exists mostly in unorganized sector which do not have minilab facility. There is an association of this industry operating under name of Pakistan Photofinishers Association. The head office is in Peshawar and Lahore zone office is located at 86 Chamberlain Road, Lahore. The cluster of this business in Lahore is at Chamberlain Road and Nisbat Road. According to an estimate there are around 150 minilabs in Lahore. Major players are: Konica (source LED) Fuji (source Laser)
5.3.1 Major Industry Players of Lahore & surrounding areas Following is the list of major players in the market of Lahore: Table 5-1: Major Industry Players Sr # 1 2 3 4 5 6 7 8 Name Imperial Digital Color Lab Ikram Digital Color Lab Konica Express Amfahas AB Digital Insta Digital Color Lab Crown Digital Color Lab Master Rana Color Lab Location Chamberlain Road ,Lahore Chamberlain Road, Lahore Liberty Gulberg, Lahore Liberty, Lahore Chamberlain Road, Lahore Garhishahu, Lahore Shiekhupura Kasur
Fuji, Head Office, Karachi 11
PREF-74/March, 2009/Rev 2
5. 4
Legal Issues Regarding Industry
Photo printing business like any other business activity must be registered with income tax department and sales tax department. Prevailing rate of income tax for sole proprietorship is in various slabs max 25%. Rates are as follows: Table 5-2: Income Tax Brackets S/No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Taxable income Where taxable income does not exceed Rs. 100,000 Where taxable income exceeds Rs. 100,000 but does not exceed Rs. 110,000 Where taxable income exceeds Rs. 110,000 but does not exceed Rs. 125,000 Where taxable income exceeds Rs. 125,000 but does not exceed Rs. 150,000 Where taxable income exceeds Rs. 150,000 but does not exceed Rs. 175,000 Where taxable income exceeds Rs. 175,000 but does not exceed Rs. 200,000 Where taxable income exceeds Rs. 200,000 but does not exceed Rs. 300,000 Where taxable income exceeds Rs. 300,000 but does not exceed Rs. 400,000 Where taxable income exceeds Rs. 400,000 but does not exceed Rs. 500,000 Where taxable income exceeds Rs. 500,000 but does not exceed Rs. 600,000 Where taxable income exceeds Rs. 600,000 but does not exceed Rs. 800,000 Where taxable income exceeds Rs. 800,000 but does not exceed Rs. 10,00,000 Where taxable income exceeds Rs. 10,00,000 but does not exceed Rs. 13,00,000 Where taxable income exceeds Rs. 13,00,000 Rate of tax 0% 0.50% 1.00% 2.00% 3.00% 4.00% 5.00% 7.50% 10.00% 12.50% 15.00% 17.50% 21.00% 25.00%
Note: No tax shall be charged if the income of a woman taxpayer does not exceed Rs. 125,000 Where the taxable income, in a tax year, of a taxpayer aged 60 years or more on the first day of that tax year does not exceed 500,000 rupees, his tax liability on such income shall be reduced by 50%.
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6. 1
MARKET INFORMATION
Market Potential
The market for photo developing and printing industry in Pakistan has been developing steadily over the years and a mushroom growth of minilabs has been observed in all the cities. Still a good potential is available for new labs, as population of big cities and use of digital camera are increasing day by day. Moreover there are very few digital photo processing labs operating in Pakistan, while their demand is rapidly raising 6. 2 Target Customers The customer of this industry can be categorized as follows: Retail customers Small photo studio owners not having minilabs News papers Professional photographers Surveyors etc
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7. 1
PRODUCTION PROCESS
Production Process Flow
Negative film roll Chemical process for developing negatives
Digital photos
Slides
Negative
Scanning
Scanning Saving images on computer
Printing photographs
Photographs are saved on CDs and presented to clients along with prints
7. 1. 1 I nput phot o f i l m a. b. c. d. e. f. g. h. i. a. b. c. d. e. f. g. a. b. c. d. e. f. g. h. i. 7. 2 Film is accepted from customer Film passes through processor containing chemical baths. The negative is produced. Negative image is transferred to photographic paper Photographic paper passes through a series of chemical baths. Photographic prints are produced. Prints and negatives are assembled into final package Prints may be stored on any digital medium like CD, ZIP, FLOPPY etc Finished product is delivered to customer. Digital media like digital camera, CD etc is accepted from customer Digital image saved and forwarded to equipment. Digital image is transferred to photographic paper Photographic paper passes through a series of chemical baths. Photographic prints are produced. Prints are assembled into final package Finished product is delivered to customer. Slide positive is accepted from customer Scanning of image from slide Digital image saved and forwarded to equipment. Digital image is transferred to photographic paper Photographic paper travels through a series of chemical baths. Photographic prints are produced. Prints are assembled into final package Digital image can also be stored on digital device like CD, ZIP or Floppy on clients request. Finished product is delivered to customer. Product Mix Offered
7.1.2 Input digital image
7.1.3 Input Slides
The Photo developing and printing unit will offer following broad categories of products and services to its customers: Photo developing and printing (digital input and film input) Photo enlargement (maximum 30X 40) Sale of film rolls, albums, cameras, batteries and allied accessories Exposing Photos Framing and mounting High resolution scanning service CD writing of photos Digital processing and customizing photographs
7. 3
Raw Material Requirement
The raw materials required for minilabs are: 7.3.1.1 Photographic paper Photographic paper rolls are available in various sizes (length and width), most commonly used is of 610 feet x 6 inches and costs approximately Rs.4,600/-. This paper is sufficient to print 1830 prints or 51 rolls of 4x6 size. Rates of various sizes of photographic papers are as follows: Table 7-1: Prices of Photographic Paper Sr. # 1 2 3 4 5 Paper roll 610 ft (6) 610 ft (5) 575 ft (6) 275 ft (8) 275 ft (10) For print sizes 4X6 5X7 6X8 8X10, 8X12 10X12, 10X15 Cost per roll Rs. 4,600 Rs. 4,100 Rs. 4,600 Rs. 3,700 Rs. 4,600
7.3.1.2 Chemicals There are two main types of chemicals used in the process, developing chemicals and printing chemicals. Chemicals required at developing stage are film developer, film bleach, film fixer, and film stabilizer and at printing stage are paper developer, paper bleach, and paper stabilizer. Table 7-2: Prices of Chemicals available at FUJI Sr. # 1 2 3 Type Developer Kit CP-47L, CP-43 CP 49E, PCx2 Bleach P-2R Quantity 2.5 liters 4 liters Cost per container Rs. 733 Rs.3,375 Rs. 1,561
It is difficult to calculate the consumption of these chemicals in quantitative terms. According to experts, average cost of chemicals consumed for printing and developing of a film roll of 36 snaps is as follow: Table 7-3: Cost of Chemicals (Approximate) Sr. # 1 2 Type Chemicals at developing Chemicals at printing Total Cost per roll Rs. 25 Rs. 10 Rs. 35
The chemical process generates silver as waste. This wastage is sold at the rate of Rs. 25 to 35 per liter, depending upon the silver proportion in it. For the purpose of this feasibility wastage sale has been ignored in financials.
These raw materials are easily available in all the cities of Pakistan. Following are the major suppliers of machinery and raw material in Lahore and Karachi: Table 7-4: Suppliers of Machinery and Raw Material Sr. # 1 Company Name FUJI FILM PAKISTAN Contacts 37D PECHS Karachi Tel: 021-4535502. West Pakistan Investment Ltd Building Patiala Ground Lahore Tel: 042-7237704-6 Patiala Ground, Lahore Bahria Complex M.T Khan Road, Karachi Tel: 021-5610150 Empress Road, Lahore 1/1 Mission Road, Lahore Tel: 042-7223693 42-Chamberlain Road, Lahore Tel: 042-7226361
3 4
EM-AEY ENTERPRISES (DNP) KODAK
5 6 7. 4
PPM CHEMICALS (PVT) LTD UNICOLOR Technology and Processes
7.4.1 Technology/Process Options Two main types of technologies are available these days: Conventional minilabs Digital minilabs 7.4.2 Merits & demerits of these technologies Conventional minilabs only take photo prints from film rolls, while digital minilabs allows photos to be produced on photo paper using digital technologies. Pictures can be manipulated in many ways before it is printed. Digital lab can print images from CDs, digital cameras, slide film and negative films. Besides printing, an image can also be copied to CDs and Floppy disks on customers demand. Digital minilabs are costly as compared to conventional minilabs. Digital technology was introduced in 1998. In Pakistan this technology arrived in year 2001. Digital minilabs with good market repute are Fuji 355, Konica R-1 Super, Kodak Noritsu 2901, Kodak Noritsu 3001, Fuji LP 7100 and Fuji LP 7500. These machines cost in range of Rs. 4.00 million to Rs. 9.00 million and have production capacity between 1,000 and 1,200 prints per hour. Traditionally, the rates charged for digital prints are higher than that of conventional prints. Labs with digital technology are charging Rs. 8 for 4x6 print as compared to Rs. 6 of conventional labs. Clients are willing to pay this extra premium for better quality prints of digital labs.
7. 5
Machinery Requirement
Machine and equipment required for a digital photo developing and printing lab are listed as follow: Table 7-5: Machine and Equipment Sr. # 1. 2. 3. Description Minilab Fuji Frontier LP7500 Film processor FP 560 B Exposing studio equipment (Professional Camera, lights, backgrounds, stands etc) Split AC Furniture/fixtures/glass work Computer Scanner Printer Generator Total No. of Units 1 1 1 Cost per unit 7,500,000 1,000,000 90,000 Total cost 7,500,000 1,000,000 90,000 Availability Local Local Local
4. 5. 6. 7. 8. 9.
2 1 1 1 1
35,000 265,000 35,000 7,500 15,000 780,000
70,000 265,000 35,000 7,500 15,000 780,000 9,762,500
Local Local Local Local Local Local
Major supplier of machinery used in processing and developing of photographs are listed under the caption suppliers of machinery and raw material 7. 6 Machine Maintenance Generally these machines require less but regular maintenance and cleanliness. Spare parts and after sale service is easily available in all the big cities. For this pre feasibility, the machine maintenance cost is assumed at 1% of machine cost.
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8. 1
LAND & BUILDING REQUIREMENT

Land Requirement
The proposed photo developing and printing unit requires an area of approximately 640 sq ft. It is recommended to start this business at rented premises rather at owned premises.
8. 2
Covered Area Requirement
Following table gives detail of covered area requirementas for the lab: Table 8-1: Lab area requirements Sr. # 1 2 3 4 8. 3 Description Lab Studio Sales/customer area Owner room Total Construction Cost Sq ft. 126 300 120 94 Units 1 1 1 1 Area Sq ft 126 300 120 94 640
It is assumed that the renovation cost would be approximately Rs. 400 per sq ft. Total renovation cost of 640-sqft area will be Rs. 265,000/8. 4 Rent Cost Building will be acquired on rent, will cost around Rs. 35,000 per month in recommended areas of Lahore. For the purpose of this feasibility it is assumed that a premise is rented on same. 8. 5 Utilities Requirement The necessary utilities are electricity and telephone. A three-phase commercial electricity connection is required. Current rate of electricity for these connections is Rs 11.00 per kilowatt-hour.
HUMAN RESOURCE REQUIREMENT
Skilled machine men are easily available at competitive salaries. Number of workers required for each department along with their salaries are given below: Table 9-1: Human Resource Description Sr. # 1 2 3 4 5 6 7 8 Positions Manager Machine men Assistant operator Cashier/Accountant Helper Graphic designer Computer operator Security guard Total No. of employees 1 1 1 1 1 1 1 2 9 Salary/month (Rs.) 25000 15,000 10,000 8,000 6,000 10,000 8,000 8,000 98,000
Annual salary 300,000 180,000 120,000 96,000 72,000 120,000 96,000 192000 1,176,000
Photo Developing and Printing Lab
10 FINANCIAL ANALYSIS
10.1 Projected Income Statement
Rupees (000) Year - X 34,731 17,852 16,879 7,650 9,228 9,228 2,307 6,921 49,113 56,034
Year - I Revenue* Direct cost* Gross Profit Operating Expenses: Operating Profit Financial Charges Profit before Taxation Taxation Profit after Taxation Acc. Profit b/f 14,925 7,398 7,527 4,243 3,284 956 2,329 582 1,747 -
Year - II 23,507 11,906 11,602 4,516 7,086 754 6,332 1,583 4,749 1,747
Year - III 24,683 12,520 12,162 4,753 7,409 553 6,856 1,714 5,142 6,495
Year - IV 25,917 13,168 12,749 5,030 7,719 352 7,367 1,842 5,525 11,637 17,162
Year - V 27,213 13,850 13,363 5,349 8,013 151 7,863 1,966 5,897 17,162 23,059
Year - VI 28,573 14,569 14,005 5,691 8,313 8,313 2,078 6,235 23,059 29,294
Year - VII 30,002 15,326 14,676 6,101 8,575 8,575 2,144 6,431 29,294 35,725
Year - VIII 31,502 16,124 15,378 6,562 8,816 8,816 2,204 6,612 35,725 42,337
Year - IX 33,077 16,965 16,112 7,077 9,035 9,035 2,259 6,776 42,337 49,113
Un-appropriated Profit c/f 1,747 6,495 11,637 * NOTE The figure of revenue and cost are exclusive of sales tax
10.2 Revenues
Revenue Revenue from printing and developing Revenue from enlargements Revenue from film roll, cameras, batteries and other accessories Revenue from Studio/exposing Revenue from Albums/framing Revenue from scanning, CD writing total revenue Year 1 Year 2 Year 3 9,691,733 15,264,480 16,027,704 2,422,933 3,816,120 4,006,926 969,173 1,526,448 969,173 1,526,448 484,587 763,224 387,669 610,579 14,925,269 23,507,299 1,602,770 1,602,770 801,385 641,108 24,682,664 Year 4 16,829,089 4,207,272 1,682,909 1,682,909 841,454 673,164 25,916,797 Year 5 17,670,544 4,417,636 1,767,054 1,767,054 883,527 706,822 27,212,637 Year 6 18,554,071 4,638,518 1,855,407 1,855,407 927,704 742,163 28,573,269 Year 7 19,481,774 4,870,444 1,948,177 1,948,177 974,089 779,271 30,001,933 Year 8 20,455,863 5,113,966 2,045,586 2,045,586 1,022,793 818,235 31,502,029 Year 9 21,478,656 5,369,664 2,147,866 2,147,866 1,073,933 859,146 33,077,131 Year 10 22,552,589 5,638,147 2,255,259 2,255,259 1,127,629 902,104 34,730,987
10.3 Direct Cost

Direct cost Printing and developing Packing cost Enlargements Film roll, cameras, batteries and other accessories Studio/exposing Albums/framing Scanning, CD writing Total direct cost Year 1 3,939,545 236,003 1,453,760 726,880 484,587 363,440 193,835 7,398,049 Year 2 6,204,718 371,700 2,404,156 1,202,078 801,385 601,039 320,554 11,905,629 Year 3 6,514,954 409,799 2,524,363 1,262,182 841,454 631,091 336,582 12,520,425 Year 4 6,840,701 451,804 2,650,582 1,325,291 883,527 662,645 353,411 13,167,961 Year 5 7,182,749 498,114 2,783,111 1,391,555 927,704 695,778 371,081 13,850,092 Year 6 7,541,887 549,171 2,922,266 1,461,133 974,089 730,567 389,635 14,568,748 Year 7 7,918,902 605,455 3,068,379 1,534,190 1,022,793 767,095 409,117 15,325,932 Year 8 8,314,979 667,525 3,221,798 1,610,899 1,073,933 805,450 429,573 16,124,157 Year 9 8,730,642 735,939 3,382,888 1,691,444 1,127,629 845,722 451,052 16,965,317 Year 10 9,167,207 811,376 3,552,033 1,776,016 1,184,011 888,008 473,604 17,852,256
10.4 Operating Expenses

Year - I Year - II Year - III Year - IV Year - V Year - VI Year - VII Year - VIII Year - IX Year - X
Administrative Salaries Rent legal & Audit Fee Entertainment Telephone, Fax and Postage Electricity Advertisement and promotional Repair and maintenance Traveling conveyance Printing and stationery Depreciation Amortization
1,176,000 600,000 25,000 74,626 74,626 744,360 298,505 98,125 74,626 74,626 981,250 21,000 4,242,746
1,293,600 660,000 27,500 117,536 117,536 818,796 235,073 107,938 116,017 117,536 883,125 21,000 4,515,658
1,422,960 726,000 30,250 123,413 123,413 900,676 246,827 118,731 121,622 123,413 794,813 21,000 4,753,118
1,565,256 798,600 33,275 129,584 129,584 990,743 259,168 130,604 127,488 129,584 715,331 21,000 5,030,218
1,721,782 878,460 36,603 136,063 136,063 1,089,817 272,126 143,665 133,625 136,063 643,798 21,000 5,349,066
1,893,960 966,306 40,263 142,866 142,866 1,198,799 285,733 158,031 140,045 142,866 579,418 5,691,154
2,083,356 1,062,937 44,289 150,010 150,010 1,318,679 300,019 173,834 146,760 150,010 521,476 6,101,380
2,291,691 1,169,230 48,718 157,510 157,510 1,450,547 315,020 191,218 153,779 157,510 469,329 6,562,063
2,520,860 1,286,153 53,590 165,386 165,386 1,595,602 330,771 210,340 161,118 165,386 422,396 7,076,987
2,772,946 1,414,769 58,949 173,655 173,655 1,755,162 347,310 231,374 168,787 173,655 380,156 7,650,418
10.5 Projected Balance Sheet

Rupees (ooo) Year - X 3,421 -
Year - 0 Tangible Fixed Assets Preoperational expenses Current Assets: Security deposit Advance rent Cash in Hand / Bank 9,813 105
Year - I 8,831 84
Year - II 7,948 63
Year - III 7,153 42
Year - IV 6,438 21
Year - V 5,794 -
Year - VI 5,215 -
Year - VII 4,693 -
Year - VIII 4,224 -
Year - IX 3,802 -
300 300 660 1,260 11,178
300 3,331 3,631 12,546
300 8,317 8,617 16,628
300 13,218 13,518 20,713
300 18,426 18,726 25,185
300 23,939 24,239 30,033
300 30,825 31,125 36,340
300 37,853 38,153 42,846
300 45,014 45,314 49,538
300 52,297 52,597 56,398
300 59,687 59,987 63,408
Owners Equity: Capital Accumulated Profit Long Term Loan Current Liabilities: Current Portion of Long Term Loan Accounts Payable
5,589 5,589
5,589 1,747 3,353
5,589 6,495 2,236
5,589 11,637 1,118
5,589 17,162 -
5,589 23,059 -
5,589 29,294 -
5,589 35,725 -
5,589 42,337 -
5,589 49,113 -
5,589 56,034 -
11,178
1,118 740 1,858 12,546
1,118 1,191 2,308 16,628
1,118 1,252 2,370 20,713
1,118 1,317 2,435 25,185
1,385 1,385 30,033
1,457 1,457 36,340
1,533 1,533 42,846
1,612 1,612 49,538
1,697 1,697 56,398
1,785 1,785 63,408
10.6 Projected Cash Flow Statement

Rupees (ooo) Year 0 Profit before Financial Charges & Taxation Amortization Depreciation Working Capital Change Cash form other Sources Owners Bank Finance Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
5,589 5,589 11,178 11,178
3,284 21 981 4,287 1,040 5,327 5,327
7,086 21 883 7,990 451 8,441 8,441
7,409 21 795 8,225 61 8,286 8,286
7,719 21 715 8,455 65 8,520 8,520
8,013 21 644 8,678 68 8,746 8,746
8,313 579 8,893 72 8,965 8,965
8,575 521 9,096 76 9,172 9,172
8,816 469 9,285 80 9,365 9,365
9,035 422 9,457 84 9,541 9,541
9,228 380 9,608 89 9,697 9,697
Total Sources Applications: Fixed Assets Preoperational Expenses Working Capital Re -Payment of Loan Tax
9,813 105 1,260 11,178 660 660
2,073 582 2,656 2,671 660 3,331
1,872 1,583 3,455 4,986 3,331 8,317
1,671 1,714 3,385 4,901 8,317 13,218
1,470 1,842 3,311 5,208 13,218 18,426
1,269 1,966 3,234 5,512 18,426 23,939
2,078 2,078 6,886 23,939 30,825
2,144 2,144 7,028 30,825 37,853
2,204 2,204 7,161 37,853 45,014
2,259 2,259 7,283 45,014 52,297
2,307 2,307 7,390 52,297 59,687
Cash Increase/(Decrease) Opening Balance Closing Balance

Rupees Year - I Year - II Year - III Year - IV Year - V Year - VI Year - VII Year - VIII Year - IX (ooo) Year - X
10. 7
Project Ratio Analysis
Income: Net sales/revenue Profit before tax Profit after tax Retained earnings in business Financial Position: Current assets Less current liabilities Net working capital Tangible Fixed assets net Less long term debts other liabilities Represented by: Equity Ratios: Current assets to liabilities Profit before tax to sale/revenue (%) Return on fixed assets (%) Return on equity (%) Debt to equity: Debt Equity
14,925 2,329 1,747 1,747
23,507 6,332 4,749 6,495
24,683 6,856 5,142 11,637
25,917 7,367 5,525 17,162
27,213 7,863 5,897 23,059
28,573 8,313 6,235 29,294
30,002 8,575 6,431 35,725
31,502 8,816 6,612 42,337
33,077 9,035 6,776 49,113
34,731 9,228 6,921 56,034
3,631 (1,858) 1,773 8,831 (3,353)
8,617 (2,308) 6,308 7,948 (2,236)
13,518 (2,370) 11,148 7,153 (1,118)
18,726 (2,435) 16,292 6,438 -
24,239 (1,385) 22,854 5,794 -
31,125 (1,457) 29,668 5,215 -
38,153 (1,533) 36,620 4,693 -
45,314 (1,612) 43,702 4,224 -
52,597 (1,697) 50,900 3,802 -
59,987 (1,785) 58,202 3,421 -
7,335
12,084
17,226
22,751
28,648
34,883
41,314
47,926
54,702
61,623
1.95 15.6% 19.8% 23.8% 31.4 68.6 100.0
3.73 26.9% 59.7% 39.3% 15.6 84.4 100.0
5.70 27.8% 71.9% 29.8% 6.1 93.9 100.0
7.69 28.4% 85.8% 24.3% 100.0 100.0
17.50 28.9% 101.8% 20.6% 100.0 100.0
21.36 29.1% 119.6% 17.9% 100.0 100.0
24.89 28.6% 137.0% 15.6% 100.0 100.0
28.10 28.0% 156.5% 13.8% 100.0 100.0
31.00 27.3% 178.2% 12.4% 100.0 100.0
33.60 26.6% 202.3% 11.2% 100.0 100.0
11 KEY ASSUMPTIONS
11.1 Machinery Assumptions Capacity of minilab machine (Prints/Hour) Capacity per day -(impressions) approximately Repair and maintenance cost (% of equipment cost having growth 10%) Number of prints per roll 11.2 Operating Assumptions Hours operational per day Days operational per month Days operational per year No of shifts per day Annual capacity utilization for year 1 Annual capacity utilization for year 2 Annual growth in capacity utilization (year 3 onwards) 11.3 Economy Related Assumptions Electricity cost growth rate Salary growth rate Rent growth rate Markup rate on long-term loan Raw material price growth rate Revenue price growth rate 11.4 Cash Flow Assumptions Accounts payable average Advance rent (period) 11.5 Financials Assumptions Project life (Years) Debt Equity Interest rate on long-term debt Debt tenure (Years) Debt payments per year Discount rate (weighted Avg. cost of capital for NPV) 10 50% 50% 18% 5 2 20% 30 days 6 months 10% 10% 10% 16% 5% 5% 8 hours 25 days 300 days Single 40% 60% 5% p.a. 1,180 8,000 1% 36
11.6 Operating Cost Assumptions Telephone Expenses (percentage of annual revenue) Entertainment (percentage of annual revenue) Amortization of deferred cost Advertisement first year (percentage of annual revenue) Advertisement year two and onwards (percentage of annual revenue) Traveling and conveyance (percentage of annual revenue) Printing and stationery (percentage of annual revenue) 11.7 Direct Cost Assumptions Chemical used in negative development Chemical used in printing Printing paper Packing charges Enlargements (percentage of enlargement revenue) Film roll, cameras, batteries and other accessories (percentage of accessories revenue) Studio/exposing (percentage of studio/exposing revenue) Albums/framing (percentage of album/framing revenue) Scanning, CD writing (percentage of scanning and CD writing revenue) 11.8 Revenue Assumptions Printing (4 x 6) Film roll (negative) developing Revenue from enlargements (percentage of printing/developing revenue) Revenue from film roll, cameras, etc. (percentage of printing/developing revenue) Revenue from Studio/exposing (percentage of printing/developing revenue) Revenue from Albums/framing (percentage of printing/developing revenue) Revenue from scanning, CD writing (percentage of printing/developing revenue) Rs.245/roll Rs.20/roll 25% 10% 10% 5% 4% Rs.25/roll Rs.10/roll Rs.90/roll Rs.7.5/roll 60% 75% 50% 75% 50% 0.5% 0.5% 20% 2% 1% 0.5% 0.5%

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Pre-Feasibility Study

PHOTO DEVELOPING AND PRINTING LAB (Digital Technology)

Small and Medium Enterprise Development Authority

REGIONAL OFFICE PUNJAB

Photo Developing and Printing Lab (Digital Technology)

Photo Developing and Printing Lab (Digital Technology)

Photo Developing and Printing Lab (Digital Technology)

PROJECTED CASH FLOW STATEMENT ..................................................................................... 24

Photo Developing and Printing Lab (Digital Technology)

PURPOSE OF THE DOCUMENT

CRUCIAL FACTORS & STEPS IN DECISION MAKING FOR INVESTMENT

Photo Developing and Printing Lab (Digital Technology)

Photo Developing and Printing Lab (Digital Technology)

Table 4-2: Recommended Project Parameters

Photo Developing and Printing Lab (Digital Technology)

Photo Developing and Printing Lab (Digital Technology)

Table 4-4: Scanning and Image Recording

Table 4-5: Printing

Photo Developing and Printing Lab (Digital Technology)

SECTOR & INDUSTRY ANALYSIS

Photo Developing and Printing Lab (Digital Technology)

Imports of photographic goods in Pakistan4:

WEIGHT (KG) 45,999

Photo Developing and Printing Lab (Digital Technology)

Fuji, Head Office, Karachi 11

Photo Developing and Printing Lab (Digital Technology)

Legal Issues Regarding Industry

Photo Developing and Printing Lab (Digital Technology)

Photo Developing and Printing Lab (Digital Technology)

Scanning Saving images on computer

Photo Developing and Printing Lab (Digital Technology)

7.1.2 Input digital image

7.1.3 Input Slides

Photo Developing and Printing Lab (Digital Technology)

Raw Material Requirement

Photo Developing and Printing Lab (Digital Technology)

EM-AEY ENTERPRISES (DNP) KODAK

PPM CHEMICALS (PVT) LTD UNICOLOR Technology and Processes

Photo Developing and Printing Lab (Digital Technology)

35,000 265,000 35,000 7,500 15,000 780,000

70,000 265,000 35,000 7,500 15,000 780,000 9,762,500

Local Local Local Local Local Local

LAND & BUILDING REQUIREMENT

Photo Developing and Printing Lab (Digital Technology)

Covered Area Requirement

HUMAN RESOURCE REQUIREMENT

Photo Developing and Printing Lab

Photo Developing and Printing Lab

10.3 Direct Cost

Photo Developing and Printing Lab

10.4 Operating Expenses

Photo Developing and Printing Lab

10.5 Projected Balance Sheet

Year - III 7,153 42

Year - VII 4,693 -

Year - VIII 4,224 -

300 300 660 1,260 11,178

300 3,331 3,631 12,546

300 8,317 8,617 16,628

300 13,218 13,518 20,713