Pre-Feasibility Study
ICE PLANT
(15 Tons)
Small and Medium Enterprise Development Authority
Government of Pakistan
www.smeda.org.pk
HEAD OFFICE
Waheed Trade Complex, 1 Floor , 36-Commercial Zone, Phase III, Sector XX, Khayaban-e-Iqbal, DHA Lahore
Tel: (042) 111-111-456, Fax: (042) 5896619, 5899756
Helpdesk@smeda.org.pk
st
REGIONAL OFFICE
PUNJAB
Waheed Trade Complex,
1st Floor, 36-Commercial Zone,
Phase III, Sector XX,
Khayaban-e-Iqbal, DHA Lahore.
Tel: (042) 111-111-456
Fax: (042) 5896619, 5899756
helpdesk@smeda.org.pk
REGIONAL OFFICE
SINDH
REGIONAL OFFICE
NWFP
REGIONAL OFFICE
BALOCHISTAN
5TH Floor, Bahria
Complex II, M.T. Khan Road,
Karachi.
Tel: (021) 111-111-456
Fax: (021) 5610572
Helpdesk-khi@smeda.org.pk
Ground Floor
State Life Building
The Mall, Peshawar.
Tel: (091) 9213046-47
Fax: (091) 286908
helpdesk-pew@smeda.org.pk
Bungalow No. 15-A
Chaman Housing Scheme
Airport Road, Quetta.
Tel: (081) 831623, 831702
Fax: (081) 831922
helpdesk-qta@smeda.org.pk
November, 2003
Pre-feasibility Study
1
Ice Plant (15 Tons)
INTRODUCTION TO SMEDA
The Small and Medium Enterprise Development Authority (SMEDA) was established with the
objective to provide fresh impetus to the economy through the launch of an aggressive SME
support program.1
Since its inception in October 1998, SMEDA had adopted a sectoral SME development
approach. A few priority sectors were selected on the criterion of SME presence. In depth
research was conducted and comprehensive development plans were formulated after
identification of impediments and retardants. The all-encompassing sectoral development
strategy involved recommending changes in the regulatory environment by taking into
consideration other important aspects including financial aspects, niche marketing, technology
upgradation and human resource development.
SMEDA has so far successfully formulated strategies for sectors including, fruits and vegetables,
marble and granite, gems and jewelry, marine fisheries, leather and footwear, textiles, surgical
instruments, urban transport and dairy. Whereas the task of SME development at a broader scale
still requires more coverage and enhanced reach in terms of SMEDA’s areas of operation.
Along with the sectoral focus a broad spectrum of business development services is also offered
to the SMEs by SMEDA. These services include identification of viable business opportunities
for potential SME investors. In order to facilitate these investors, SMEDA provides business
guidance through its help desk services as well as development of project specific documents.
These documents consist of information required to make well-researched investment decisions.
Pre-feasibility studies and business plan development are some of the services provided to
enhance the capacity of individual SMEs to exploit viable business opportunities in a better way.
This document is in the continuation of this effort to enable potential investors to make wellinformed investment decisions.
1
DISCLAIMER
The purpose and scope of this information memorandum is to introduce the subject matter and provide a general
idea and information on the said area. All the material included in this document is based on data/information
gathered from various sources and is based on certain assumptions. Although, due care and diligence has been
taken to compile this document, the contained information may vary due to any change in any of the concerned
factors, and the actual results may differ substantially from the presented information. SMEDA does not assume any
liability for any financial or other loss resulting from this memorandum in consequence of undertaking this activity.
Therefore, the content of this memorandum should not be relied upon for making any decision, investment or
otherwise. The prospective user of this memorandum is encouraged to carry out his/her own due diligence and
gather any information he/she considers necessary for making an informed decision.
The content of the information memorandum does not bind SMEDA in any legal or other form.
1
For more information on services offered by SMEDA, please contact our website: www.smeda.org.pk
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Pre-feasibility Study
2
Ice Plant (15 Tons)
PURPOSE OF THE DOCUMENT
The objective of the pre-feasibility study is primarily to facilitate potential entrepreneurs in
project identification for investment. The project pre-feasibility may form the basis of an
important investment decision and in order to serve this objective, the document/study covers
various aspects of project concept development, start-up, and production, finance and business
management.
3
PROJECT PROFILE
3.1
Project Brief
This project is related to setting up an ice plant of 15-tons capacity per day to cater to the needs
of the institutions such as hotels, restaurants, bakeries, dairy, fish seller’s etc. The proposed
project will manufacture ice blocks varying from 130 kg to 150 kg in weight.
3.2
Opportunity Rationale
Most of areas of Pakistan have long duration of summer due to which demand for ice is high for
more than six months of the year. As Pakistan is a developing country and large portion of the
population cannot afford refrigerators for domestic use. Another growing market for ice plants
are industries linked to food products i.e. fish, dairy, bakeries, restaurants etc. With this growing
demand a large number of ice plants are operating in the country.
There are approximately 1,300 ice plants operating in the Punjab, catering to the needs of
different institutional and domestic buyers. The total installed capacity of ice plants in Punjab is
approximately 432,669-tons of ice blocks per day2. The need of ice blocks is increasing due to
economic growth, as major buyers are institutional buyers (dairy, bakery, hotel, etc.), who buy in
bulk.
3.3
Market Entry Timing
The ice plant should be started up when the season begins in mid April and closed when it ends
up in September. The peak season is of four months i.e. from mid April to mid August. The rest
of the period i.e. two months is moderate season. The best time to enter into this business is in
the month of April.
3.4
Proposed Business Legal Status
It is recommended that this project should be started as sole proprietorship or partnership as this
does not involve heavy investment. Moreover, less complications and costs are involved in
forming, administering and running the sole proprietorship or partnership business. The tax rates
applicable for sole proprietorship is lower than private or public limited.
Most of the ice plants in the country are operating as sole proprietorship or partnership basis.
2
Source: Directory of Punjab Industrial Establishment, 2002-03.
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3.5
Ice Plant (15 Tons)
Project Capacity and Rationale
The proposed project has a capacity of producing 300 ice blocks on the basis of 2 shifts of 12
hours.
3.6
Project Investment
The total cost of the project is Rs. 4.79 million. This amount includes the land, machinery,
building, water and electricity connection and salt required etc. The cost of land varies from area
to area.
3.7
Proposed Product Mix
The facility will produce 250-300 ice blocks of weight 130-150 kg as solid ice blocks in peak
season and 100-150 ice blocks in off-season.
3.8
Recommended Project Parameters
Capacity
250 Ice
Blocks/Day
Human Resource
14
Project Cost
IRR
4.79 million
25%
3.9
Technology/Machinery
Local
Financial Summary
NPV
Payback Period
1,337,614
4.75
Location
Areas close to the
cities.
Cost of Capital
(Wacc)
16.8%
Proposed Location
It is recommended that the proposed project be installed in localities close to cities, so that the
ice blocks are accessible to the dealers and institutional buyers.
3.10
Key Success Factors/Practical Tips for Success
•
The location plays an important role, as finished ice blocks should be easily accessible to
dealers.
•
It is important that solid ice blocks are produced through proper freezing time utilization as
solid ice blocks are much heavier, more transparent and provides higher price in the market.
•
Weather factor plays an important role, due to seasonal nature of the business i.e. In summers
the demand for ice blocks increases, while after mid September the temperature starts
changing & demand starts to fall, which means the entrepreneur should reduce the production
according to the demand of ice.
•
One of the most important aspects for success of any business is minimizing the cost of
production, in case of ice plant this can be achieved by proper training of workers, which
would ensure reduction in raw material wastage and better maintenance of machinery etc.
•
It is advisable to run the plant on natural gas, rather than electricity, as the major expense in
production of ice is electricity. The use of natural gas instead of electricity will reduce the
electricity expense approximately by half.
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3.11
Ice Plant (15 Tons)
Strategic Recommendations
In order to sell the ice blocks, it is recommended to develop a chain of dealers who buy the ice
blocks on regular basis. The dealer deposits a guarantee in the shape of cash security, keeping in
view the number of blocks to be purchased on daily basis. In case the dealer is unable to pick the
agreed number of blocks on a particular day, the amount is deducted from his security.
4
CURRENT INDUSTRY STRUCTURE
4.1
Current Industry Structure
Ice plants are installed with the capacity for daily production of 15, 25, 30 and 50 tons of ice
blocks in Pakistan. Mostly ice plants are operating with the production capacity of 15 and 30
tons of ice blocks in the country, while selling price is decided once in a month by the owners of
ice plants.
There are approximately 1300 ice plants operating in the Punjab, catering to the needs of
different institutional and domestic buyers. The details of installed ice plants in the Punjab are
given in the table below:
Table 4-1
Details of Ice Plants in the Punjab3
City
Attock
Bahawalpur
Chakwal
D.G.Khan
Faisalabad
Gujaranwala
Gujrat
Hafizabad
Jhang
Kasur
Khanewal
Khushab
Lahore
Layyah
Lodhran
Mandi Bahauddin
Mianwali
Multan
Muzaffargarh
Narowal
3
No .Of Plants
9
Production/Day
200-300 blocks
30
4
31
79
62
19
24
70
102
60
19
40
30
13
29
22
63
74
44
100-327 blocks
150-300 blocks
150-300 blocks
100-600 blocks
100-300 blocks
100-400 blocks
150-400 blocks
100-300 blocks
100-400 blocks
100-480 blocks
150-300 blocks
100-300 blocks
150-180 blocks
200-580 blocks
72-580 blocks
80-200 blocks
150-180 blocks
160-370 blocks
56-360 blocks
Source: Directory of Punjab Industrial Establishment, 2002-03.
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Okara
Rahim Yar Khan
Rajanpur
Sahiwal
Sargodha
Sheikhupura
Sialkot
Toba Tek Singh
Vehari
Rawalpindi
Jhelum
5
Ice Plant (15 Tons)
39
47
16
45
81
95
11
51
62
24
14
120-550 blocks
220-780 blocks
120-150 blocks
100-320 blocks
100-300 blocks
140-514 blocks
100-360 blocks
117-990 blocks
150-500 blocks
150-300 blocks
100-300 blocks
MARKET INFORMATION
5.1
Target Customers
The target customers for ice plant can be divided into two categories:
• Domestic users, such as people living in rural areas & suburbs of cities, where access to
refrigerators is difficult due to lower purchasing power.
• Second category is institutional buyers, who buy in bulk, such as government organizations,
factories, hotels, restaurants, bakeries, fish sellers, dairy plants etc.
5.2
Market Potential
Institutional buyers sell the bulk of the ice block production, in institutions related to food
industry. Business sectors, which utilize ice in the country, include the following:
5.2.1 Fish Meat & Allied Products
During 2000-2001 about 654,500 Mt tons of over 50 different varieties of fish and 30,000 Mt
tons of shrimps were produced. Of this production, share of marine sector was 473,000 Mt tons
and inland contribution was 181,500 Mt tons. Out of the total 40% fish was locally consumed,
35% small sized non-edible fish was dried into fish meal to supplement the poultry feed, while
10% fish was salted and dried and another 15% was frozen.
5.2.2 Dairy Plants
Pakistan is ranked 5th biggest amongst milk producing countries in the world with annual milk
production of 26.28 million tons in 2000-2001. About 75% of the total milk is produced in
Punjab, 14% in Sindh, 10% in NWFP and only 1% in Baluchistan.
In Pakistan 97.5% milk is distributed through traditional milk seller (Gowala) system. About
58% milk is supplied to urban areas in raw form in most unhygienic conditions but with the
growing awareness of hygiene in the public, there has been a gradual improvement in the system.
At present only 17 milk plants are in operation, which mean that approximately 3 per cent of
total milk production is processed. The processing capacity of these plants in around 0.65 million
liters per day.
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Ice Plant (15 Tons)
5.2.3 Other Institutional Buyers (Bakeries, Motels & Hotels etc.)
Other potential institutional buyers of ice are bakeries, confectioners, hotels which buy ice
blocks in bulk. There are approximately 70 different leading chain bakeries in different cities of
Pakistan, while approximately 145 fish retail outlets are operating in different major cities of
Pakistan, while more than 520 motels and hotels are operating in different areas of Pakistan.
6
PRODUCTION PROCESS
6.1
Production Process Flow
Cleaning of Sheet
Steel Ice Containers
Placing of Containers
in Water Tank
containing Nacl
Filling of Sheet Steel
Ice Containers with
water while vertically
floating in Nacl Tank
Temp Reduced to –17°C to –20°C
Extracting of Ice Blocks
from Sheet Steel
Containers
Movement of Ice Blocks
by hooks
Delivery of Ice Blocks
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6.2
Ice Plant (15 Tons)
Product Mix Offered
The proposed project will produce Ice blocks weighing from 130-150kg.
6.3
Raw Material Requirement
The basic raw material required for producing ice blocks is water, common salt. These raw
materials are readily available in the local market. Replenishment needed during maintenance are
ammonia gas and compressor oil.
7
MACHINERY REQUIREMENT
The main equipment required for running the ice plant is compressor, capacitor, condenser, and
electric motors, WAPDA connection power transformer etc.
Table 7-1
Machinery Requirement Details
Description
Qty Cost/Unit Total Amount
Ammonia Compressor 7x7 marked Javed, driven wheels and 1
98,000
98,000
all lines fitted
Ammonia Condenser atmosphere type with 2" pipe, 1200 ft 6
27,500
165,000
seamless from Grade-1 material pipe(Toyota Made Patta)
Electric motor 75 HP, 1450 RFM CHINA
1
65,000
65,000
Brine Tank suitable for 240 Ice Cans, 4 mm Pak made sheets, 1
198,000
198,000
supported by eagle iron without sawdust.
Cooling Coil V-type 4" pipe & 1500 ft. pipe 1" (Toyota Patta) 1
145,000
145,000
Brine Agitator 18" fan Matal with imported shaft and pulley
1
15,000
15,000
Accumulator for parallel supply of ammonia
1
15,000
15,000
Crane & Trolley universal type with railing channel & girder
1
38,000
38,000
Ammonia Valves for complete plant.
1
27,000
27,000
Ammonia Pipes for complete plant.
1
28,000
28,000
Oil Separator buffer type.
1
16,000
16,000
4 gauge suction, discharge, oil pressure
1
4,000
4,000
Wood Work for Ice Cans, Tank Cover
240
229
55,000
Ice Cans of 1.5 mm British gauge welded size 11" x 22" x 48" 240
1,100
264,000
Nut, bolts & washers complete with foundation, bolt etc.
1
30,000
30,000
Receiver fittings with all safety measure ammonia inspection 1
35,000
35,000
glass and oil drain device.
Bends, Union, Nipples, Tee, & flange different size complete 1
25,000
25,000
with Motor Sliding Rail, Motor Pulley & V-Belt etc.
Blower no. 59 complete with pipe line and fittings
1
20,000
20,000
Rubber pipes, brass valves
1
10,000
10,000
Water fitting pipes complete
1
20,000
20,000
Electric motors 7.5 H.P (J.E.C. Pak made).
2
10,000
20,000
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Ice Plant (15 Tons)
China Switch Gunz starters and switchboard with local cable
complete switchboard open type etc.
Centrifugal Pump size 2.5" x3" with 7.5 H.P electric motor
Erection Charges for complete plant and machinery
Grand Total
Table 7-2
Qty
1
1
1
1
1
20,000
20,000
20,000
20,000
1,398,000
Cost/Unit
800,000
350,000
300,000
Total Cost
800,000
350,000
300,000
1,450,000
Qty
4
8
4
12
1
3
Cost/Unit
1,500
1,000
1,500
250
8,000
5000
Total Cost
6,000
8,000
6,000
3,000
8,000
15000
46,000
Office Vehicle Details
Description
Suzuki Pick-up
Motorcycle (Pak Hero)
Bicycle (Chinese)
Total Vehicle Cost
7.1
65,000
Furniture & Fixture Details
Description
Tables
Chairs
Fans
Lights
Fax Machine
Telephone
Total Furniture & Fixtures
Table 7-4
65,000
Other Equipment Details
Other Equipment Details
Generator 100 KVA
Transformer 100 KVA
Water Bore Diameter 3” – 4”
Total Equipment Cost
Table 7-3
1
Qty
1
1
1
Cost/Unit
395,000
41,000
3,200
Total Cost
395,000
41,000
3,200
439,200
Technology and Processes
7.1.1 Technology/Process Options
The machinery used for the ice plant is local. It includes compressor, condenser, water tank
suitable for 250-300 ice cans, brine agitator, accumulator for parallel supply of ammonia, crane
and trolley, oil separator, ice cans of size 11” x 22” x 48”, electric motor 75 HP etc.
7.1.2 Merits & demerits of a particular technology
The local machinery is readily available in the market at a very reasonable price. One of the
benefits of using locally manufactured machinery is availability of spare parts and it’s easier to
find operators to operate these machines.
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7.2
Ice Plant (15 Tons)
Machine Maintenance
The maintenance process starts after mid of October. Normally, it takes one month for the
overhauling of plant, during which the plant is closed for one month.
8
HUMAN RESOURCE REQUIREMENT
The manpower required for operating the ice plant during the peak season is as follows:
Table 8-1
Direct Labor Requirement Details
Description
Foreman
Machine Operator
Labor
Total Direct Labor Cost
Table 8-2
Qty
1
1
2
1
1
Salary
Total Monthly Salary
15,000
15,000
4,000
4,000
2,000
4,000
2,500
2,500
1,500
1,500
27,000
Administrative Staff Details
Description
Owner/CEO
Accounts Officer
Security Guard
Driver
Office Boy
Administrative Staff
9
1
1
6
Salary
Total Monthly Salary
6,000
6,000
5,000
5,000
3,500
21,000
32,000
Qty
LAND & BUILDING REQUIREMENT
9.1
Land Requirement
The land requirement for the proposed ice plant having 15-ton capacity is 4,500 sq. ft (1 Kanal).
9.2
Covered Area Requirement
The covered area detail for the proposed project and construction cost detail is given in table
below:
Table 9-1
Covered Area Requirement Details
Description
Office Area
Machine Room
Main Hall
Free Area
Total Building Cost
No.
1
1
1
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Sq .ft
144
320
3,240
796
4,500
Rs/Sq. ft
250
250
200
Total Cost
36,000
80,000
648,000
764,000
Pre-feasibility Study
9.3
Ice Plant (15 Tons)
Recommended Mode
It is recommended that land should be acquired for the project, as it would be difficult to setup
such a project at a rented place due to high machinery & installation cost.
9.4
Suitable Location
It is recommended that the proposed project be installed in localities close to cities or in
industrial areas, so that the ice blocks are easily accessible to the dealers and institutional buyers.
Such a project can also be a viable project in the smaller cities.
9.5
Utilities and Infrastructure Requirement
Basic utilities like electricity, gas and water are required for operating the ice plant. The plant
must be closed to a metal led road
10 PROJECT ECONOMICS
10.1
Project Cost
Description
Land Cost
Building/Infrastructure
Machinery & Equipment
Office Equipment & Furniture
Vehicle
Pre-operating Costs
Total Capital Expenditure
Working Capital
Raw Material Inventory
Equipment Spare parts Inventory
Cash
Total Working Capital
Total Project Cost
10.2
Amount in (Rs.)
500,000
764,000
2,848,000
54,000
439,200
65,000
4,670,200
10,742
4,851
100,000
115,593
4,785,792
Project Returns
Description
NPV
IRR
Pay Back Period
10.3
Details
1,337,614
25%
4.75
Project Financing
Description
Equity Financing
Debt Financing
Total
Percentage
50%
50%
10
PREF-71/November, 2003/1
Amount in Rs
2,392,896
2,392,896
4,785,792
Pre-feasibility Study
Ice Plant (15 Tons)
11 FINANCIAL ANALYSIS
11.1
Project Cost
SMEDA
Project Cost
Project Cost
Land Cost
Building/Infrastructure
Machinery & Equipment
Office Equipment & Furniture
Vehicle
Pre-operating Costs
Total Capital Expenditure
500,000
764,000
2,848,000
54,000
439,200
65,000
4,670,200
WORKING CAPITAL
Raw Material Inventory
Equipment Spare parts Inventory
Cash
10,742
4,851
100,000
Total Working Capital
115,592
Total Capex
4,785,792
Financing Detail
Equity Financing
Debt Financing
Total
2,392,896
2,392,896
4,785,792
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Pre-feasibility Study
11.2
Ice Plant (15 Tons)
Projected Income Statement
SMEDA
Projected Income Statement
Revenue
Year 1
5,335,875
Year 2
5,497,018
Year 3
5,719,659
Year 4
6,010,829
Year 5
6,379,991
Year 6
6,839,543
Year 7
7,069,485
Year 8
7,210,874
Year 9
7,355,092
Year 10
7,502,194
Net Revenue
5,335,875
5,497,018
5,719,659
6,010,829
6,379,991
6,839,543
7,069,485
7,210,874
7,355,092
7,502,194
COST OF GOOD SOLD
Raw Material Cost
Direct Labor (Production Staff)
Direct Electricity
236,313
321,000
1,773,129
250,482
353,100
1,861,786
268,695
388,410
1,954,875
291,749
427,251
2,052,619
320,785
469,976
2,155,250
357,440
516,974
2,263,012
387,329
568,671
2,376,163
418,839
625,538
2,494,971
460,235
688,092
2,619,719
518,689
756,901
2,750,705
Total
2,330,442
2,465,367
2,611,980
2,771,619
2,946,011
3,137,426
3,332,163
3,539,348
3,768,046
4,026,295
Gross Profit
3,005,433
3,031,651
3,107,679
3,239,210
3,433,980
3,702,118
3,737,322
3,671,526
3,587,045
3,475,898
324,000
53,359
81,627
12,960
372,320
6,500
356,400
54,970
85,708
14,256
372,320
6,500
392,040
57,197
89,993
15,682
372,320
6,500
431,244
60,108
94,493
17,250
372,320
6,500
474,368
63,800
99,218
18,975
372,320
6,500
521,805
68,395
104,178
20,872
372,320
6,500
573,986
70,695
109,387
22,959
372,320
6,500
631,384
72,109
114,857
25,255
372,320
6,500
694,523
73,551
120,600
27,781
372,320
6,500
763,975
75,022
126,630
30,559
372,320
6,500
850,765
890,154
933,731
981,915
1,035,181
1,094,071
1,155,847
1,222,425
1,295,274
1,375,006
Operating Income (Earning Before Interest & Taxes)
2,154,668
2,141,497
2,173,948
2,257,295
2,398,800
2,608,046
2,581,474
2,449,101
2,291,771
2,100,893
Interest expense on long term debt
Earning Before Taxes
287,148
1,867,520
241,948
1,899,549
191,324
1,982,624
134,625
2,122,670
71,123
2,327,677
2,608,046
2,581,474
2,449,101
2,291,771
2,100,893
Taxes
Net Profit After Taxes
527,632
1,339,888
538,842
1,360,707
567,918
1,414,705
616,935
1,505,736
688,687
1,638,990
786,816
1,821,230
777,516
1,803,958
731,185
1,717,916
676,120
1,615,651
609,312
1,491,580
1,339,888
2,700,595
2,700,595
4,115,300
4,115,300
5,621,036
5,621,036
7,260,026
7,260,026
9,081,256
9,081,256
10,885,214
10,885,214
12,603,130 14,218,781
12,603,130 14,218,781
15,710,361
15,710,361
GENERAL ADMINISTRATION & SELLING EXPENSE
Administration Staff
Machine Maintenance Cost
Fixed Electricity Expense
Communication Expense (Telephone, Fax, Internet etc.)
Depreciation expense
Amortization of pre-operating costs
Total Operating Expenses
Balance brought forward
Total profit available for appropriation
12
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11.3
Ice Plant (15 Tons)
Projected Balance Sheet
SMEDA
Project Balance Sheet
Const. Year
CURRENT ASSETS
Cash in Bank
Raw Material Inventory
Machine Spareparts Inventory
Accounts Recievable
Total Current Asset
FIXED ASSETS
Land Cost
Building & Infrastructure
Machinery & Equipment
Office Equipment & Furniture
Vehicle
Total Fixed Assets
INTANGIBLE ASSETS
Pre-Operational Costs
Total Intangible Assets
TOTAL ASSETS
CURRENT LIABILITIES
Accounts Payable
Total Current Liabilities
OTHER LIABILITIES
Long Term Debt
Total Long Term Liabilities
Year 1
Year 2
Year 3
Year 4
Year 5
100,000
10,742
4,851
115,592
1,203,725
11,386
4,997
242,540
1,462,648
2,513,333
12,213
5,200
249,864
2,780,610
3,823,323
13,261
5,464
259,984
4,102,033
5,164,290
14,581
5,800
273,220
5,457,891
6,571,162
16,247
6,218
290,000
6,883,627
500,000
764,000
2,848,000
54,000
439,200
4,605,200
500,000
725,800
2,563,200
48,600
395,280
4,232,880
500,000
687,600
2,278,400
43,200
351,360
3,860,560
500,000
649,400
1,993,600
37,800
307,440
3,488,240
500,000
611,200
1,708,800
32,400
263,520
3,115,920
65,000
65,000
58,500
58,500
52,000
52,000
45,500
45,500
4,785,792
5,754,028
6,693,170
-
5,013
5,013
2,392,896
2,392,896
2,392,896
-
Year 7
Year 8
8,749,533
17,606
6,427
310,888
9,084,454
10,920,933
19,038
6,555
321,340
11,267,866
13,009,897
20,920
6,686
327,767
13,365,270
14,995,901
23,577
6,820
334,322
15,360,620
500,000
573,000
1,424,000
27,000
219,600
2,743,600
500,000
534,800
1,139,200
21,600
175,680
2,371,280
500,000
496,600
854,400
16,200
131,760
1,998,960
500,000
458,400
569,600
10,800
87,840
1,626,640
500,000
420,200
284,800
5,400
43,920
1,254,320
39,000
39,000
32,500
32,500
26,000
26,000
19,500
19,500
13,000
13,000
6,500
6,500
-
7,635,773
8,612,811
9,659,727
11,481,734
13,286,326
15,004,910
16,621,440
18,114,260
5,313
5,313
5,700
5,700
6,189
6,189
6,805
6,805
7,582
7,582
8,216
8,216
8,884
8,884
9,763
9,763
11,002
11,002
2,016,231
2,016,231
1,594,366
1,594,366
1,121,877
1,121,877
592,690
592,690
0
0
0
0
0
0
0
0
0
0
0
0
2,392,896
2,700,595
5,093,491
2,392,896
4,115,300
6,508,197
2,392,896
5,621,036
8,013,932
2,392,896
7,260,026
9,652,922
2,392,896
9,081,256
11,474,152
2,392,896
10,885,214
13,278,110
2,392,896
12,603,130
14,996,026
2,392,896
14,218,781
16,611,677
2,392,896
15,710,361
18,103,258
6,693,170
7,635,773
8,612,811
9,659,727
11,481,734
13,286,326
15,004,910
16,621,440
18,114,260
SHAREHOLDER'S EQUITY
Paid-up Capital
Retained Earnings
Total Equity
2,392,896
2,392,896
1,339,888
3,732,784
TOTAL CAPITAL & LIABILITIES
4,785,792
5,754,028
13
PREF-71/November, 2003/1
Year 6
Year 9
Year 10
16,891,251
341,009
17,232,260
500,000
382,000
(0)
882,000
Pre-feasibility Study
11.4
Ice Plant (15 Tons)
Projected Cash Flow Statement
SMEDA
Projected Cash Flows
Year-0
Operating activities
Net profit
Add: depreciation expense
amortization of pre-operating costs
Raw material inventory
Machine Spareparts Inventory
Accounts Recievables
Accounts payable
Cash provided by operations
Financing activities
Long Term Debt Repayment
Additions of New Long Term Debt
Issuance of shares
Cash provided by / (used for) financing activitie
Year 1
-
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 10
(10,742)
(4,851)
-
1,339,888
372,320
6,500
(644)
(146)
(242,540)
5,013
1,360,707
372,320
6,500
(828)
(202)
(7,325)
301
1,414,705
372,320
6,500
(1,048)
(265)
(10,120)
386
1,505,736
372,320
6,500
(1,320)
(336)
(13,235)
489
1,638,990
372,320
6,500
(1,666)
(418)
(16,780)
616
1,821,230
372,320
6,500
(1,359)
(209)
(20,889)
778
1,803,958
372,320
6,500
(1,432)
(129)
(10,452)
634
1,717,916
372,320
6,500
(1,882)
(131)
(6,427)
668
1,615,651
372,320
6,500
(2,657)
(134)
(6,555)
878
1,491,580
372,320
6,500
23,577
6,820
(6,686)
1,240
(15,592)
1,480,390
1,731,473
1,782,479
1,870,154
1,999,562
2,178,371
2,171,400
2,088,964
1,986,003
1,895,351
2,392,896
2,392,896
4,785,792
Investing activities
Capital expenditure
(4,670,200)
Cash (used for) / provided by investing activities (4,670,200)
(376,665)
(421,865)
(472,489)
(529,187)
(592,690)
-
-
-
-
-
(376,665)
(421,865)
(472,489)
(529,187)
(592,690)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
NET CASH
100,000
1,103,725
1,309,608
1,309,990
1,340,967
1,406,872
2,178,371
2,171,400
2,088,964
1,986,003
1,895,351
Cash balance brought forward
Cash available for appropriation
100,000
100,000
1,203,725
1,203,725
2,513,333
2,513,333
3,823,323
3,823,323
5,164,290
5,164,290
6,571,162
6,571,162
8,749,533
8,749,533
10,920,933
10,920,933
13,009,897
13,009,897
14,995,901
14,995,901
16,891,251
14
PREF-71/November, 2003/1
Pre-feasibility Study
Ice Plant (15 Tons)
12 KEY ASSUMPTIONS
12.1
Production Assumptions
No. of Days Operational
No. of Days (Peak Season)
No. of Days (Off-season)
No. of Hours Per Shift
No. of Shift Per Day
No. of Shift Per Day (Peak Season)
No. of Shift Per Day (Off-season)
Weight/Ice Block (In Kgs)
Maximum Capacity Per Shift (Ice Blocks)
Maximum Capacity Per Shift (Ice Blocks) Peak Season
Maximum Capacity Per Shift (Ice Blocks) Off-season
Maximum Attainable Capacity in Percentage
Capacity Utilization (1st Year)
Maximum Attainable Capacity in Units
Growth in Capacity
12.2
Raw Material Usage Assumptions
Ammonia (NH3) Consumption (Pound)/ Ice Block
NACL usage in Kg/ Ice Block (kgs)
NACL replenishment charges
Ice Blocks per Compressor Oil Drum
Price Growth Rate of Raw Material
Wastage Rate
12.3
0.08
50
10%
15,000
5%
5%
Raw Material Price
Price Per NH3 Pound (Rs)
Price Per Kg NACL (Salt) (Rs)
Compressor Oil Per Drum (Rs)
12.4
330
200
130
12
2
2
1
150
150
150
75
100%
85%
69,750
1%
30
1
18,000
Cash flow Assumptions
Raw Material Inventory Cycle (In Days)
Machine Spare parts Inventory Cycle (In Days)
Accounts Receivables Cycle (In Days)
Accounts Payable Cycle (In Days)
Initial Cash in Bank
15
30
15
15
100,000
15
PREF-71/November, 2003/1
Pre-feasibility Study
12.5
Ice Plant (15 Tons)
Expense Assumptions
Communication Expense (% of Admin. Exp.)
Machine Maintenance (% of Sale)
Pre-Operational Expense
Pre-Ops (Discount Period)
Wages Growth Rate
Electricity Rate per kW
Electricity Tariff Growth Rate
12.6
4%
1%
65,000
10
10%
6.6
5%
Depreciation Expense
Building Depreciation Rate
Plant & Machinery Depreciation Rate
Furniture & Fixtures Depreciation Rate
Vehicle Depreciation Rate
12.7
5%
10%
10%
10%
Financing Assumption
Debt
Equity
Interest Rate on Long Term Debt
Debt Tenure
Payment Per Year
Return on Equity
WACC (Weighted Average Cost of Capital)
Tax Rate
50%
50%
12.0%
5
1
25%
16.8%
Sole Proprietorship
16
PREF-71/November, 2003/1