bahria cement limited final report final (2)

Bahria CEMENT LIMITED

PROJECT APPRAISAL REPORT

SUBMITTED BY: (Group 6)

Sunny Maghnani (16146)

Aatif Iqbal (15912)

Zulfiqar Mirani (12797)

Muhammad Raza (12252)

DATE:

10th April 2016

FACULTY:

Mr. Siddiq Khatri

Contents

INTRODUCTION: ............................................................................................................................................. 2

SPONSORS OF THE PROJECT: .................................................................................................................... 2

CORPORATE SETUP AND MANAGEMENT .............................................................................................. 3

PROJECT BRIEF: ............................................................................................................................................. 3

MARKET PROSPECTS: .................................................................................................................................. 4

OVERVIEW OF THE LOCAL MARKET:................................................................................................................4EMERGING TRENDS IN THIS SECTOR:.................................................................................................................5DEMAND SUPPLY ANALYSIS:..............................................................................................................................6

TECHNICAL PROSPECTS .............................................................................................................................. 9

MANUFACTURING PROCESS:...............................................................................................................................9TECHNOLOGY CHOSEN:....................................................................................................................................10LOCATION AND SITE:........................................................................................................................................11PRINCIPLE INPUTS:............................................................................................................................................11PRODUCT MIX AND LATEST DEVELOPMENTS:................................................................................................12PLANT CAPACITY:.............................................................................................................................................12APPROPRIATENESS AND ARRANGEMENT OF TECHNOLOGY:..........................................................................12STRUCTURE AND CIVIL WORK:........................................................................................................................12ENVIRONMENTAL ASPECTS...............................................................................................................................13PROPOSED IMPLEMENTATION SCHEDULE:......................................................................................................14

FINANCIAL PROSPECTS: ............................................................................................................................ 14

INCOME STATEMENT.........................................................................................................................................14CASH FLOW STATEMENTS................................................................................................................................16BALANCE SHEET................................................................................................................................................17SENSITIVITY ANALYSIS.....................................................................................................................................18DEBT SERVICE COVERAGE RATIO.........................................................................................................18BREAK EVEN..................................................................................................................................................19

ANNEXURE: (DEMAND AND SUPPLY) ..................................................................................................... 19

ANNEXURE: (TECHNICAL) ........................................................................................................................ 22

ANNEXURE: (FINANCIAL) .......................................................................................................................... 24

INTRODUCTION:The primary objective of this report is to assess the viability of the cement manufacturing project Bahria plans to install. Bahria plans to examine all the necessary aspects, which Bahria thinks are important to be considered before moving to such a hefty project. Bahria firstly plans on to cover the market analysis. This would include the demand for the product, past and projected market demarcations in order to assess the maximum share that can be made out of the market in Pakistan. An extensive survey of the cement industry has been performed and all the relevant secondary information that is required for the proper planning of the project is also included. The future demand for the product is also forecasted and the uncertainties within are also considered. Thereafter, a full-fledged marketing plan is also presented.

The appraisal also contains the technical analysis of the project. Bahria feels that a comprehensive analysis of the technical part not only saves time for the project, but also proves useful once the project is in the development phase. Bahria, therefore, takes into account the appropriate process that is to be used during the project along with the necessary technical arrangements that are to be catered. Bahria has carefully perused the product mix (White and Black cement) and detailed work is carried out on the plant capacity. Discussions on the location and its importance, along with all the intricacies that should be catered are also presented.

Bahria has then discussed and formulated a complete financial viability of the project. It presents the projected statements for the next ten years along with complete capital budgeting in the shape of NPV and IRR etc... Sensitivity analysis is also performed and best and worst case scenarios are taken well into the consideration. The project seems technically and financially quite sound.

CORPORATE SETUP AND MANAGEMENTOrganizational Chart

RECRUITMENT CRITERIA

1. Chief Executive Officer: An educational qualification of an Equivalent Master’s Degree in Corporate Finance from Pakistani or foreign Institute recognized by the Higher Education Commission of Pakistan, with at least 15 years of experience out of which 7 years as a Key Officer in the Manufacturing Industry.

2. Chief Financial Officer: An educational qualification of Chartered Accountant from the ICAP, with at least 15 years of experience out of which 7 years as a Key Officer in the Relevant Industry.

3. Chief Technical Officer: A Bachelor’s degree in Computer Science or related technical field with 10+ years hands-on software development experience. 7 years strategic information technology management experience and 5 years experience managing technical groups. Product management experience that includes leading, launching, and supporting multi-release, complex software products. Experience managing large- scale, application analysis, and design, development, and integration projects.

CHAIRMAN

BOARD OF DIRECTORS

CHIEF OPERATIONS

OFFICER

CHIEF FINANCIAL

OFFICER

CHIEF EXECUTIVE

OFFICER CHIEF TECHNICAL

OFFICER

CHIEF MARKETING

OFFICER

4. Chief Operations Officer: Business or Accounting degree mandatory, a master’s in business administration is preferred, CPA preferred. Minimum 10 years experience in a senior management role ideally with both external audit and in-house financial management experience gained in a high-growth organization. Experience either as an employee or board member of a nonprofit organization; must be familiar with nonprofit finance and accounting regulation. Proven track record of success facilitating progressive organizational change and development within a growing organization. Excellent judgment and creative problem solving skills including negotiation and conflict resolution skill. Strong mentoring, coaching experience to a team with diverse levels of expertise. Entrepreneurial team player who can multitask. Superior management skills; ability to influence and engage direct and indirect reports and peers. Self reliant, good problem solver, results oriented

5. Chief Marketing Officer:

5 – 8 years experience in the consumer goods industry. Experience in the outdoor goods area preferred. At least 10 years in a leadership role.

• A college degree or advanced degree in business, marketing or related disciplines.• A love for the outdoors.• The ability to create or influence innovative, non-traditional marketing, branding, and sales concepts and strategies. • The ability to forge strategic partnerships with customers who have the ability to grow market share with multiple retail channels and wide geographical distribution.• Successful experience developing, implementing, and evaluating media, public relations, public policy, and investor relations strategies and programs.• Proven experience as a self-starter working collaboratively and respectfully with a variety of constituencies and multiple interests to identify communications issues and opportunities.• Proven success in commercializing new products.• Strong leadership skills and ability to be diplomatically persuasive/assertive.• Strong communication skills including written and oral. • The ability to communicate conceptual ideas and establish team expectations.• The ability to lead and manage multiple projects simultaneously, set priorities, provide direction and focus while delegating to ensure rapid follow through.

PROJECT BRIEF :

Name of the Company: BAHRIA CEMENT LIMITED

Product: Cement

Operating Capacity: 2 million tons per annum

Location: Hub, Karachi

MEANS OF FINANCING

AMOUNT (Rs. IN MILLION)

SOURCE

DEBT 2,594.28 HBL

SPONSOR 1,945.71 Malik Riaz Hussain

SHARE CAPITAL 1,945.71 IPOEstimated Total Cost: Rs. 6,485.7 million

Proposed Implementation Schedule:

The activities related to the overall establishment of the project are expected to take maximum about 4 years the breakup of the activities is as under:

Design phase 12 monthsConstruction phase 24 monthsProcurement & Installation ( Machinery) phase 12monthsTotal time frame (approx) 48 months

MARKET PROSPECTS:Overview of the Local Market:

Cement Industry in Pakistan

Cement Industry’s latest overview:

The superlative performance of the cement industry was issued by “The Pakistan Credit Rating Agency Limited” in February 2014.

The overview done by them indicates that this sector remains one of the hottest in terms of returns for the investors.

There are a total of 24 cement companies that are operating in Pakistan with combine production of about 46 million tons per annum. Following is the chart with names and capacities of these firms:

As on October 2015 Sr. No. Name Of Unit Operational

Capacity Cement

1 Askari Cement Limited - Wah 1,102,5002 Al-Abbas Cement Limited - Nooriabad, Dadu 945,000

3 Askari Cement - Nizampur 1,575,0004 Attock Cement Pakistan - Hub Chowki, Lasbela 1,795,500

5 Bestway Cement Limited - Hattar 1,228,5006 Bestway Cement Limited - Chakwal 3,600,0007 Bestway - Mustehkum Cement Limited - Hattar 1,086,7508 Cherat Cement Company Limited-Nowshera 1,102,5009 Dandot Cement Limited - Jehlum 504,00010 Dewan Hattar Cement Limited - Hattar 1,134,000

11 Dewan Hattar Cement Limited - Dhabeji 1,764,00012 D.G.Khan Cement Limited - D.G.Khan 2,110,50013 D.G.Khan Cement Limited - Chakwal 2,110,50014 Fauji Cement Company Limited - Fateh Jang 3,433,50015 Fecto Cement Limited - Sangjani 819,00016 Flying Cement Limited - Lilla 1,197,000

17 GharibWal Cement Limited - Jehlum 2,110,50018 Kohat Cement Company Limited - Kohat 2,677,500

19 Lafarge Pakistan Cement Company Limited - Chakwal 2,047,500

20 Lucky Cement Limited - Pezu 3,786,00021 Lucky Cement Limited - Indus Highway, Karachi 3,600,00022 Maple Leaf Cement Factory Limited - Daudkhel 3,370,50023 Pioneer Cement Limited - Khushab 2,030,25024 Thatta Cement Limited - Thatta 488,250

Total 45,618,750

The exports over the years have also improved phenomenally:

Export of Cement:

|------------------Cement-----------------|

FinancialYears

Afghanistan

Via Land

IndiaVia Sea &

Land

Other CountriesVia Sea

TotalExports

%ageIncr/(Decr)

|-------------------------------Quantity in Metric Tons-------------------------------|2001-2002 106,620 - - 106,620 100.00%

2002-2003 430,322 - - 471,822 342.53%

2003-2004 1,118,293 - - 1,118,293 137.02%

2004-2005

1,407,900 - 157,270 1,565,170 39.96%

2005-2006

1,413,994 - 91,165 1,505,159 -3.83%

2006-2007

1,725,476 - 1,111,405 3,227,854 114.45%

2007-2008

2,777,826 786,672 3,045,995 7,716,620 139.06%

2008-2009

3,148,306 634,455 6,061,035

10,752,486 39.34%

2009-2010 4,017,361 722,968 5,625,391 10,649,156 -0.96%

2010-2011 4,726,996 590,104 3,910,675 9,427,943 -11.47%

2011-2012 4,715,109 605,453 3,247,268 8,567,830 -9.12%

2012-2013 4,404,633 482,214 3,487,255 8,374,103 -2.26%

2013-2014 3,655,201 677,305 3,804,021 8,136,528 -3.37%

2014-2015 2,872,951 696,337 3,625,781 7,195,069 -11.57%

2015-2016

(4 Month)869,399 242,755 915,748 2,027,902 -27.31%

The exports are decreasing in the later years primarily because the demand within the country is increasing. This can also be taken as a prospect for the Bahria cement.

The number of the new comers in the market is constantly increasing. With only a handful of registered companies in the late 90s, today the cement industry has 24 registered companies, which are also members of APCMA. (Non-members are separate). Recently, Lucky cement is planning to install a new plant in a few months which has been considered.

The Government of Pakistan has imposed a restriction on producing more than a certain percentage. ( normally between 60-70% is allowed)

With a positive future outlook, the return is good, and there are no alarming risk factors currently in the industry.

Most of the firms in this sector are listed. Many of these firms are very well established, and hence, they are also listed on either or all of the three stock exchanges in the country.

Bahria cement will cover the geographical area of Sindh and mainly Karachi along with its outskirts as its major market prospect.

On the whole, this is a comprehensive report for all the direct and indirect stakeholders of the cement sector in Pakistan.

Demand Supply Analysis:Past Supply and Demand of Cement

The demand and supply of cement is shown in the table below.

Per year production of cement in Pakistan during last twenty five years (1990-2015):

Year Demand Supply Gap (Mn. Tonnes) (Mn. Tonnes) (Mn. Tonnes)1990-1991 8.89 7.29 1.60

1991-1992 8.89 7.71 1.18

1992-1993 8.89 8.32 0.57

1993-1994 9.05 8.14 0.91

1994-1995 10.17 8.38 1.79

1995-1996 10.17 9.43 0.74

1996-1997 12.50 9.65 2.85

1997-1998 15.53 9.19 6.34

1998-1999 16.41 9.62 6.79

1999-2000 16.38 9.94 6.44

2000-2001 15.53 9.93 5.60

2001-2002 16.10 9.94 6.16

2002-2003 16.32 11.45 4.87

2003-2004 17.28 13.66 3.62

2004-2005 17.91 16.35 1.56

2005-2006 20.83 18.55 2.28

2006-2007 30.50 24.26 6.23

2007-2008 37.68 30.29 7.38

2008-2009 42.28 31.31 10.97

2009-2010 45.34 34.22 11.13

2010-2011 42.37 31.43 10.97

2011-2012 44.64 32.51 12.13

2012-2013 44.64 33.43 11.21

2013-2014 44.64 34.28 10.36

2014-2015 45.62 35.40 10.22

Source: APCMA

How this gap was met in the past:

Considering the impositions of the Government, The APCMA has created cartels and they are allotted to all the companies in different proportions. The companies are supposed to produce according to these cartels. This data shows that there has always been a gap between demand and supply of cement, that is, both the upward and downward trends can be found. Demand is on the rise every year due to the increase in the construction activities, but what’s important to note is that, the supply is also increasing primarily because of the new entrants in the market every year. Other reasons behind the demand and supply shifts can be that at times gap has been reduced due to exports of cement to countries like Afghanistan, India and other countries; at times the gap increases as the supply curtails because the supplier in local or foreign market faces any one time event such as flood earth quake etc..

Projected performance of the key players (Attock, Dewan, Thatta, Lucky Etc.) in this Industry:

The forecasts of the key performing players have been made by one of the credible names in Journalism, namely, Bloomberg. Bloomberg has always kept an eye on this sector of the country, most specifically.

Bloomberg’s sources have concluded that gross profit margins of the major companies may be curtailed over the coming three years. The only unaffected firm will be Kohat cement, as its line depicts a steady increase, whilst all its other competitors will have to go through a lean patch. The primary reason for this trend is high production cost, citing increasing taxes/duties on this sector. Moreover, the heavy dependence on coal and its rising prices in the coming years, have also led to this graph (refer to annexure: demand and supply) showing a negative trend at large. But, the comforting sign is that all the players are trying to reduce coal/furnace oil usage and moving towards other forms of energy such as Biomass energy.

Emerging trends in this sector:Over the years, the Demand-Supply gap has kept on increasing. One cannot come to a conclusion that the steep rise in demand is primarily due to a healthy and fast economic pace of the country. Experts have termed this rise in demand mainly due to the increasing rate of population growth in Pakistan, thereby leading to more and more cement being needed for residential and commercial construction. Recently, the smuggling of cement from across the border has also increased, especially in Baluchistan province, where the demands are met by Iranian cement, which is apparently cheaper than the local cement. However, this has not deterred the local cement industry any which way, but checks need to be put in place to curb this act and ensure local demands is being met fully. Projected figures (refer to Demand and Supply Analysis) also indicate a steep rise in the cement demand. The graphs (annexure, demand and supply) are reminiscent of the fact that Pakistan’s cement exports can enjoy a huge off-take, if taken seriously. Many of our major players in the industry are looking towards increasing the local dispatches, which are showing an increasing trend. The first graph (refer annexure Demand and Supply) illustrates that from FY08-FY12; the exports were steady and looked a good proportion of the total cement dispatches. However, beyond FY12 and projections about the future shows worrying signs in terms of the export of cement.

Although the total dispatches are increasing, which is a positive thing, the exports are relatively declining each passing year. This implies, the lost foreign exchange reserves that might have been possible, if the exports were steady (like in previous years), let alone increasing. The most relevant and appropriate explanation to this is the rising local cement prices. Our cement in the international market is becoming all the more expensive, and this has a lot to do with all the operational charges/taxes levied on this industry. It is one of the most heavily taxed and heavily regulated industries in Pakistan. The second graph (refer to annexure Demand and Supply) is taken from the official website of State Bank of Pakistan, it reveals facts most of which are alarming for the industry at large. Despite the overall increasing numbers of Pakistan’s total exports, cement sectors’ contribution to the total exports has hovered around a mere 2%-3%, which can be improved easily by increasing the production. Furthermore, future projections in a

previous graph do not depict a good situation for cement sector’s exports in the coming years. Having such vast information enables the cement sectors’ key players to attend to this problem and try to improve the situation. Summarizing the SBP’s graph, we see that of the total exports, most of it is exported from the North Zone. The most logical conclusion to this is the fact that North Zone also accounts for the most production, hence contributing more to the overall exports.

To conclude it all, it is imperative for the cement industry to look for opportunities beyond the local market. Because that is another way, which will benefit Pakistan at large, and also allow room for growth to the firms involved in this sector.

Future Demand and Supply of Cement

The Trend Projection Method is used to calculate future demand of cement. This method involves determining the trend of consumption by analysing past consumption statistics of cement consumption and projecting future consumption by extrapolating the trend. Bahria Cement’s projections are readily supported by those made by the APCMA (An association supported all the major cement companies in Pakistan. Chairman is Mr Tabba). The table below projects the five year demand of the cement in Pakistan using the trend projection method.

Future Demand and Supply Gap:

Year Projected Demand (Million Tons)

Projected Supply (Million Tons)

Projected Gap (Million Tons)

2016 46.24 36.18 10.06

2017 46.87 36.97 9.9

2018 47.51 37.78 9.73

2019 48.16 38.61 9.55

2020 48.81 39.46 9.35

Source: APCMA

Reasons for increase in Demand/ Supply:

Firstly, the augmenting population and the economic boom in the infrastructure and construction industries.

Secondly, demand of cement would increase in Pakistan and other countries after the completion of Economic Corridor between Pakistan and China (CPEC) because the development will start in that premises and cement demand will increase.

Thirdly, the calamity of earthquake brings increase in cement demand.

Forecasted demand for cement that is showing increasing trend. Forecasting is performed on the basis of trend projection method. Past rates of increase are (1.37% for demand) and (2.21% for supply). Following the past trend, demand will further increase.

CONCLUSION

Demand for cement is fairly high in the country, and as the formerly mentioned information suggests, there is room for a lot more production. Holistically, the Demand Supply Analysis show there is an excellent prospect market for Bahria cement ltd. Bahria Cement Ltd. aims to be a principal producer of cement in Pakistan and plans to achieve this landmark within a decade.

TECHNICAL PROSPECTSManufacturing Process:

The quarry is the starting point of manufacturing cement

Cement plants are usually located closely either to hot spots in the market or to areas with sufficient quantities of raw materials. The aim is to keep transportation costs low. Basic constituents for cement (limestone and clay) are taken from quarries in these areas.

A two-step process

Basically, cement is produced in two steps: first, clinker is produced from raw materials. In the second step cement is produced from cement clinker. The first step can be a dry, wet, semi-dry or semi-wet process according to the state of the raw material.

Making clinker

In the manufacture of cement, clinker occurs as lumps or nodules, usually 3 millimetres (0.12 in) to 25 millimetres (0.98 in) in diameter, produced by sintering (fused together without melting to the point of

liquefaction) limestone and alumina-silicate materials such as clay during the cement kiln stage. The raw materials are delivered in bulk, crushed and homogenised into a mixture which is fed into a rotary kiln. This is an enormous rotating pipe of 60 to 90 m long and up to 6 m in diameter. This huge kiln is heated by a 2000°C flame inside of it. The kiln is slightly inclined to allow for the materials to slowly reach the other end, where it is quickly cooled to 100-200°C.

Four basic oxides in the correct proportions make cement clinker: calcium oxide (65%), silicon oxide (20%), alumina oxide (10%) and iron oxide (5%). These elements mixed homogeneously (called “raw meal” or slurry) will combine when heated by the flame at a temperature of approximately 1450°C. New compounds are formed: silicates, aluminates and ferrites of calcium. Hydraulic hardening of cement is due to the hydration of these compounds.

The final product of this phase is called “clinker”. These solid grains are then stored in huge silos. This is the end of phase one.

From clinker to cement

The second phase is handled in a cement grinding mill, which may be located in a different place to the clinker plant. Gypsum (calcium sulphates) and possibly additional cementitious (such as blast furnace slag, coal fly ash, natural pozzolanas, etc.) or inert materials (limestone) are added to the clinker. All constituents are ground leading to a fine and homogenous powder. End of phase two. The cement is then stored in silos before being dispatched either in bulk or bagged.

Technology Chosen:

a) Sources of technology and supplier:

The technology, named HXJQ Cement Plant, will be imported from China. “Xinxiang Great Wall Machinery” will provide “Bahria Cement Company Ltd”, a turnkey contract of cement plant of 2 Million tons of cement per annum. The cement plant will be based on dry process. Our supplier has supplied their technologies and machineries to various countries including Pakistan, Australia, Japan, Russia, Iran, Brazil, India, and South Korea.

b) Machineries and Equipment:

For the information related to machineries and equipment used refer to annexures (technical).

Location and Site:The project is proposed to locate at Hub, Karachi .Proximity to raw materials and markets are the important factors that we have examined in order to determine the location of the cement

plant. “Bahria Cement” would be situated at Hub, Karachi. The location has been chosen after considering the following factors:

1. Labor availability and considerations.2. Infrastructure and transportation facilities.3. General living conditions.

Proximity to raw material

This area is close to the limestone, which is the basic ingredient to manufacture cement The other inputs will also be available at lower costs

Labour situation

As the literacy rate is low so we can easily get labor at cheap rates. All the types of labor unskilled, semi-skilled and skilled, required for the project are

easily available within the vicinity of the project site.

1. Employees and labor: Unskilled labour: Rs. 12000-14000 per month Skilled labour:

POSITION SALARIES AND REMUNERATIONS (Range in PKR/month)

Managerial Officers 30,000- 200,000

Executive Officers 800,000- 1,500,000

Directors 2,000,000- 3,500,000

Principle Inputs:2. Raw material

Limestone is the major raw material used in the manufacturing of cement. For further details of the raw materials used refer to Annexures (Technical).

3. Energy

a) Coal: No coal will be required for cement manufacturingb) Electricity would be needed 5 Mega Watts which we are acquiring from K-Electric

but it has load shedding issue therefore at the same time we have bought generator and transformer for operations to carry on. 12 quarts of water is required on daily basis which will be acquired from KMC Karachi Municipal Corporation.

c) Diesel: diesel would be used in generatord) Furnace oil: No oil is required

Plant Capacity:The proposed plant capacity is 2,000,000 tons per annum .The Company would work for 300 days per year on a 2 shift basis.

Appropriateness and Arrangement of Technology:The post of the raw material (cement) are available in Karachi so

Technologies which can easily be installed in the tough lands of the province are selected.

The machinery can easily be operated by the labors available in Karachi. The capacity level that the project requires is fulfilled by this technology. The technology utilizes the local raw materials. The cost of acquiring this technology is in our budget. The technology that we choose does not affect our environment.

Structure and Civil Work:Land, Building and Civil works

Cement production relatively requires wider space than any construction materials production plants. Site area of 10,000 m2 is required for the plant under consideration. The area will consist of plant, production buildings and auxiliary buildings.

Building and structures

Office EquipmentComputer Printer TelephoneFax Machine

Furniture & FixtureFurnitureAir conditioners

Infrastructure Requirements

The following important infrastructure resources would be required for the successful plant operations.

Water Phone Lines Electricity Road network Natural Gas Security Support

Hub is selected because it has nearly all the resources available to some extent.

Environmental AspectsThe cement plant generates dust which contains heavy metals like nickel, cobalt, lead, and chromium, pollutants hazardous to the biotic environment with adverse impact for vegetation, human and animal health and ecosystems. Nitrogen oxide (NOX) emissions are generated in the high temperature combustion process of the cement kiln. Sulfur dioxide (SO2) emissions in cement manufacturing are primarily associated with the content of volatile or reactive sulfur in the raw materials and in fuels. Combustion of fuel and de-carbonation of limestone produces greenhouse gas emissions especially CO2. Air emissions, solid wastes are also generated.

Some treatment to reduce the environmental hazards:

1. Maintaining secondary air flow as low as possible (e.g. oxygen reduction).2. Using low NOX burners to avoid localized emission hot spots.3. Use of wet or dry scrubbers.4. Selection of fuel source and quarried materials with lower sulfur content.5. Economical fuel consumption cement production like blended cement, as less fuel emits

less gas per ton of final product.6. Energy efficient process selection and operation like dry or pre-heater or pre-calciner.

CONCLUSION

Considering all the technical aspects of the projects, the experts have concluded that the project is technically sound and all the key areas that are to be considered are taken in to consideration.

Financial Prospects:

COST OF PROJECT (RS in millions)

Land 300Building 650Plant and Machiney 4,000Misc Fixed Assets 200Pre operative expenses 300Preliminary expenses 150Contigency margin 560Margin for Working Capital 325.7 6,485.7Project Financing Sponsor

1,945.71Share Capital 1,945.71Term Loan 2594.28 6,485.7

Summary of Income Statement

PKR IN MILLIONSPARTICULARS 1 2 3 4 5 6 7 8 9 10

SALES REVENUE 8320 10400 12480 12480 12480 12480 12480 12480 12480 12480OPERATING PROFIT 3351.8 4399.7 5447.5 5444.7 5441.8 5438.8 5435.6 5432.3 5428.7 5425NET PROFIT

1810.03 2444.6 3083.3 3098.8 3114.2 3129.5 3144.8 3159.9 3174.9 3189.9RETAINED EARNINGS 1810.03 2200.1 2713.3 2634 2584.8 2597.5 2610.2 2622.7 2635.2 2647.6

RATIOS

Gross profit Margin (%)1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00

54.40 54.50 54.56 54.54 54.51 54.49 54.46 54.44 54.41 54.38

Operating Profit Margin (%)1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00

40.29 42.30 43.65 43.63 43.60 43.58 43.55 43.53 43.50 43.47

Net profit Margin (%)1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00

21.76 23.51 24.71 24.83 24.95 25.08 25.20 25.32 25.44 25.56

Return on Equity(%)1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00

46.51 62.82 79.23 79.63 80.03 80.42 80.81 81.20 81.59 81.97

Time Interest Earned (In Times)

1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00 9.82 13.18 17.06 18.72 20.75 23.27 26.49 30.75 36.64 45.34

Summary of Cash Flow StatementsFor the Year Ended, June 30.

PKR IN MILLIONS

PARTICULARS CONS.P 1 2 3 4 5

NET SURPLUS325.7 2154.119 2660.09 3172.08 3174.32 3125.14

CLOSING CASH BALANCE 325.7 2479.819 5139.91 8311.99 11486.31 14611.45

Summary of Balance sheetAs of June 30

PKR IN MILLIONS

PARTICULARS CONS.P 1 2 3 4 5

TOTAL ASSETS 6485.7 8865.719 10980.61 13608.6 15983.1 18309.45

TOTAL LIABILITIES AND EQUITIES 6485.7 8865.719 10980.61 13608.6 15983.1 18309.45

Sensitivity AnalysisSensitivity Analysis NPV IRR

1. Base case (WACC at 14%)13731.62

35%

2. If COGS increase by 10% (WACC at 14%)11007.34

29%

3. If Sales revenue decreases by 10% (WACC at 14%)7746.871

21%

4. If COGS increases by 10% and sales decreases by 10%5022.57

15%(WACC at 14%)

The project is safe if there is change in the Sales and COGS considering the buffer.

DEBT SERVICE COVERAGE RATIO

YearsDSCR( In Times)

1 9.82 9.83 12.54 13.25 14.16 157 168 179 18.9

10 20.8

The Bahria Cement would generate at least 9.8 times cash to pay its debt obligations.

BREAK EVEN

3rd year, maximum capacity 60%

Commercial Break even 16.90%Cash Break even 11.56%

ANNEXURE: (DEMAND AND SUPPLY)

Huge potential in untapped export markets:

Emerging trends in this sector:

Market Shares:

Technical Annexure:1. Raw material

Calcium Silicon Aluminium IronLimestone Clay Clay Clay

Marl Marl Shale Iron oreCalcite Sand Fly ash Mill scale

Aragonite Shale Aluminium ore refuse ShaleShale Fly ash Blast furnace dust

Sea Shells Rice hull ash Cement kiln dust Slag

2. Energy

e) Coalf) Electricityg) Dieselh) Furnace oil

3. Employees and labor:

a) General Managerb) Secretaryc) Administrative & Financed) Accountante) Marketing & sales personsf) Production & Technical Headg) Supervisorsh) Instrumentation Engineeri) Mechanical Engineerj) Electrical Engineerk) Techniciansl) Laboratory Techniciansm) Unskilled workersn) Purchasero) Store keeperp) clerksq) Guards

c) Machineries and Equipments:

I. Drilling RigII. LoadersIII. CrusherIV. Bucket ElevatorV. SilosVI. Grinding MillVII. Dust collectorVIII. PumpsIX. Roller millX. Dump truckXI. FanXII. Pre heaterXIII. Vertical shaft kilnXIV. Grate coolerXV. Bucket elevatorXVI. Storage tanksXVII. Clinker GrindingXVIII. Air separatorsXIX. Power supply systemXX. Fuel storage tanksXXI. Water supply unitXXII. Compressed air system

ANNEXURE: (FINANCIAL)

ASSUMPTIONS UNDERLYING FINANCIAL PROJECTIONS

Basic assumptions underlying financial projections:

1. The construction period will last for 4 years.2. The installed capacity is 2 million tons per annum.3. The expected capacity utilization will be 40% in the first year, 50% in the second year,

60% in the year and beyond.4. The sales realization per 1 ton of cement is Rs 10400 (Rs 520 per bag having 50kilo gram

cement).5. The cost of raw material is 20% of sales.6. The cost of utilities is 15% of sales.7. Factory overhead is Rs 50 million per year. It will increase by 5% subsequently in each

year.8. Salaries/wages are 5% of sales and other costs are also 5 % of sales.9. Administrative expense are 2.5% of sales.10. Selling expenses are 2% of sales.11. Depreciation rate is 5% on building, 15% on plant & machinery and 20% on Misc. fixed

assets the basis on straight line method.12. The term loan will be paid in 20 equal half yearly installments, with the first installment

falling due at the end of third year. The interest rate on outstanding loan is 11%.13. The bank finance for working capital is also 8%.14. The current assets requirements are expected to be as follows:

Raw material 2 months Stock in process 0.05 months Finished goods 1 month Book debt 1 month

15. Trade credit for raw materials is 2 month.16. Preliminary expenses are written off in 10 equal annual installments.17. Workers fund is 7.5%18. Dividend is paid from the second year @ 10%, third year @ 12%, fourth year @ 15%,

and @ 17% for fifth and the following years.19. Tax rate @35%

Bahria CementIncome Statement

For theYear Ended, June,30, ( In Rs Millions)

Years 1 2 3 4 5 6 7 8 9 10Installed Capacity 2 2 2 2 2 2 2 2 2 2Capacity Utilization 40% 50% 60% 60% 60% 60% 60% 60% 60% 60%Production (Qty) 0.8 1 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 *10400 *10400 *10400 *10400 *10400 *10400 *10400 *10400 *10400 *10400Net production for sale 8320 10400 12480 12480 12480 12480 12480 12480 12480 12480Sales Revenue 8320 10400 12480 12480 12480 12480 12480 12480 12480 12480Less: COGS Rawmaterial 1664 2080 2496 2496 2496 2496 2496 2496 2496 2496Utilities 1248 1560 1872 1872 1872 1872 1872 1872 1872 1872Labor 416 520 624 624 624 624 624 624 624 624Factory overhead 50 52.5 55.13 57.88 60.77 63.81 67 70.35 73.87 77.56Others 416 520 624 624 624 624 624 624 624 624 Total COGS 3794 4732.5 5671.1 5673.9 5676.8 5679.8 5683 5686.4 5689.9 5693.6 Gross profit 4526 5667.5 6808.9 6806.1 6803.2 6800.2 6797 6793.7 6790.1 6786.4 Less: Operating cost Amin..expense 208 260 312 312 312 312 312 312 312 312Selling Expense 166.4 208 249.6 249.6 249.6 249.6 249.6 249.6 249.6 249.6Depreciation Expense 784.8 784.8 784.8 784.8 784.8 784.8 784.8 784.8 784.8 784.8Amortization Expense 15 15 15 15 15 15 15 15 15 15 T. Operating expenses 1174.2 1267.8 1361.4 1361.4 1361.4 1361.4 1361.4 1361.4 1361.4 1361.4 EBIT / Operatin profit 3351.8 4399.7 5447.5 5444.7 5441.8 5438.8 5435.6 5432.3 5428.7 5425 Interest on term loan 285.38 263.97 235.43 206.89 178.36 149.82 121.28 92.75 64.21 35.67Interest on bank borrow 55.97 69.91 83.85 83.9 83.88 83.9 83.92 83.93 83.95 83.97Total interest 341.35 333.88 319.28 290.79 262.24 233.72 205.2 176.68 148.16 119.64

EBT3010.45 4065.8 5128.2 5153.9 5179.6 5205.1 5230.4 5255.6 5280.6 5305.4

Less: Workers Funds225.784 304.94 384.61 386.54 388.47 390.38 392.28 394.17 396.04 397.91

2784.67 3760.9 4743.6 4767.4 4791.1 4814.7 4838.1 4861.4 4884.5 4907.5

less tax (35%)974.633 1316.3 1660.3 1668.6 1676.9 1685.1 1693.3 1701.5 1709.6 1717.6

EAT / Net profit1810.03 2444.6 3083.3 3098.8 3114.2 3129.5 3144.8 3159.9 3174.9 3189.9

Less: dividend 0 244.46 370 464.82 529.42 532.02 534.61 537.18 539.74 542.28

Retained Earnings1810.03 2200.1 2713.3 2634 2584.8 2597.5 2610.2 2622.7 2635.2 2647.6

Bahria CementCash Flow Statement

For theYear Ended, June,30, (In Rs Million)

YearsConstruction 1 2 3 4 5

period Sourses of funds EBIT 3351.8 4399.7 5447.5 5444.7 5441.8Depreciation 784.8 784.8 784.8 784.8 784.8Amortization 15 15 15 15 15 Sponsers 1945.71 Share Capital (IPO) 1945.71 Inc in term loan 2594.28 Inc in Bank borrowing 699.7 174.2 174.1 0 1 Total 6485.7 4851.3 5373.7 6421.4 6244.5 6242.6 Uses of funds Capital Expenditure 6010 Preliminary Expenses 150 Inc in Working capital 1025.7 254.6 255.7 0 1Interest paid on term loan 285.38 263.97 235.43 206.89 178.36Interest paid on bank borrowing 55.97 69.91 83.85 83.9 83.88Term loan repayment 129.714 259.43 259.43 259.43 259.43workers funds paid 225.784 304.94 384.61 386.54 388.47Tax paid 974.633 1316.3 1660.3 1668.6 1676.9Dividend paid 0 244.46 370 464.82 529.42

Total 61602697.181

2713.61

3249.32 3070.18 3117.46

Opening Cash balance 0 325.72479.82

5139.91 8311.99

11486.31

Net Cash surplus 325.72154.119

2660.09

3172.08 3174.32 3125.14

Ending Cash balance 325.72479.819

5139.91

8311.99

11486.31

14611.45

Bahria Cement

Balance SheetsAs on June,30 (In Rs

Millions)

YearsConstruction 1 2 3 4 5

Period Assets Fixed Assets Gross block 6010 6010 6010 6010 6010 6010less: Accumulated dep. 0 784.8 1569.6 2354.4 3139.2 3924Net fixed Assets 6010 5225.2 4440.4 3655.6 2870.8 2086 Current Assets Working capital 0 1025.7 1280.3 1536 1536 1537

Cash balance 325.72479.819 5139.91

8311.99

11486.3 14611.45

preliminary exp. 150 135 120 105 90 75

Total 6485.78865.71

910980.6

113608.

615983.

1 18309.45 Liabilities and Equities

Sponsers 1945.71 1945.71 1945.711945.71

1945.71 1945.71

Share capital (IPO) 1945.71 1945.71 1945.711945.71

1945.71 1945.71

Reserves and Surplus 0 1810.03 4010.156723.43

9357.39 11942.17

Term loan 2594.28 2464.572205.142

1945.71

1686.29 1426.858

Bank borrowing 0 699.7 873.9 1048 1048 1049

Total 6485.7 8865.7210980.61

13608.6

15983.1 18309.45

PLANT AND MACHINERY COST Amount In Rs (000’s)

Machinery CostPlant Cost 1,450,000

Transportation cost 200,000Installation cost 1,000,000

Generator 10 KVA 350,000Transformer 50 KV 1,000,000

Total Cost RS 4,000,000

MISCELLANEOUS FIXED ASSETS

Office Equipment

Description Qty Cost / unit Total Amount

Computer 3 50,000 150,000Printer 2 6,000 12,000

Telephone 7 2000 14,000Fax Machine 2 12,000 24,000

Total 200,000

LAND COST (Amount in Rs)

Description Cost/Acre Total acre Total CostLand 10,000,000 30 300,000,000

BUILDING AND CONSTRUCTION COST

Description Cost Area in sq.ft Total CostOffice Building 900 5000 4,500,000

Warehouse 400 2500 1,000,000Processing Hall 400 2500 1,000,000

Total 6,500,000

Pre-operative and Preliminary Costs

DescriptionDrafting Memorandum of association, article of

association, Brokerage fees, advertisements, publicity expenses, stamp duty. 150,000

Travelling expenses, Establishment expenses, interest, insurance and miscellaneous expenses. 300,000

Total 450,000

Working Capital Requirement

(In Rs Millions)Years

Item Norms 1 2 3 4 5 6 7 8 9 10

(months)

Raw material 2277.3

346.7 416 416 416 416 416 416 416 416

Stock in process 0.0515.81

19.72

23.63 23.6

23.65

23.67

23.68

23.69

23.71

23.72

Finished goods 1316.2

394.4

472.6

472.8

473.1

473.3

473.6

473.9

474.2

474.5

Book debts 1693.3

866.7

1040

1040

1040

1040

1040

1040

1040

1040

Total current assets 1303

1627

1952

1952

1953

1953

1953

1954

1954

1954

Less: Margin for W.C 25%325.7

406.9

488.1

488.1

488.2

488.2

488.3

488.4

488.5

488.5

from long term debt Less: Trade credit for R.M 2

277.3

346.7 416 416 416 416 416 416 416 416

Bank Finance for W.C 699.7

873.9

1048

1048

1049

1049

1049

1049

1049

1050

Interst on bank finance 8%

55.97

69.91

83.85

83.87

83.88 83.9

83.92

83.93

83.95

83.97

Depreciation schedule

(In Rs Millions)

Description CostPre.Op. exp. C.M Total

Dep. rate Dep

Land 300 17.48 32.62 350.1 0% 0Building 650 37.86 70.68 758.54 5% 37.93Plant & M. 4000 233.01 434.95 4667.96 15% 700.19Misc. FA 200 11.65 21.75 233.4 20% 46.68Capital Exp. 5150 300 560 6010 784.8

Interest Schedule on Term Loan

(In Rs Millions)

year

Principal at beg.

Prin. at 1st

Principal at

Interst Interest Total Pricipal Outstanding

half 2nd half1st half

2nd half Interest paid Principal

12594.28 2594.28 2464.57 142.69 142.69 285.38 129.714 2464.57

22464.57 2334.856 2205.142 135.55 128.42 263.97 259.43 2205.142

32205.142 2075.428 1945.714 121.28 114.15 235.43 259.43 1945.714

41945.714 1816 1686.286 107.01 99.88 206.89 259.43 1686.286

51686.286 1556.572 1426.858 92.75 85.61 178.36 259.43 1426.858

61426.858 1297.144 1167.43 78.48 71.34 149.82 259.43 1167.43

71167.43 1037.716 908.002 64.21 57.07 121.28 259.43 908.002

8 908.002 778.288 648.574 49.94 42.81 92.75 259.43 648.574

9648.574 518.86 389.146 35.67 28.54 64.21 259.43 389.146

10389.146 259.432 129.718 21.4 14.27 35.67 259.43 129.718

WACC Calculations

Cost of debt= 11%

Tax rate = 35 %

Weight age of debt = 40% or 0.4

Wight age of equity= 60 % or 0.6

Cost of equity =?

Cost of equity= Rf + (Rm-Rf)*beta

= 0.06 + (0.18-0.06)*1

Cost of Equity = 18%

WACC = 0.11 * (1-0.35) * 0.4 + 0.18*0.6

= 0.0286 + 0.108

WACC = 13.66%

Rounded off to 14%

Relevant Cash flows, NPV AND IRR COMPUTATIONS

Bahria CementRelevant Cash Flows

(In Rs Millions)

Bahria cement have assumed that there won't be any loss on contribution.

Years 0 1 2 3 4 5 6

1. Capital Investment 6160

2. Level of Net Working Capital (Ending) 325.7 406.9 488.1 488.11 488.2 488.25 488.3

3. Sales 8320 10400 12480 12480 12480 12480

4. All costs (COGS + operating expenses) 4968.2 6000.3 7032.5 7035.3 7038.2 7041.2

including Dep. plus amortization

6. Profit before tax 3351.8 4399.7 5447.5 5444.7 5441.8 5438.8

7. Less: Welfare Funds (7.5%) 225.78 304.94 384.61 386.54 388.47 390.38

8.Less tax (35%) 974.63 1316.3 1660.3 1668.6 1676.9 1685.1

9. Profit after tax 2151.4 2778.5 3402.6 3389.56 3376.43 3363.32

10. Net salvage value

11. Recovery of net working capital

12. Capital Investment -6160

13. Operating Cash Inflow 2951.2 3578.3 4202.4 4189.36 4176.23 4163.12

14. Net Working Capital -325.7 81.2 81.2 0.01 0.09 0.05 0.05

15.Terminal Cash Inflow

16. Relevant Cash flow-6485.7 2870 3497.1 4202.4 4189.27 4176.18 4163.07

Years 7 8 9 10

1. Capital Investment

2. Level of Net Working Capital (Ending) 488.4 488.5 488.55 0

3. Sales 12480 12480 12480 12480

4. All costs (COGS + operating expenses) 7044.4 7047.8 7051.3 7055

including Dep. plus amortization

6. Profit before tax 5435.6 5432.2 5428.7 5425

7. Less: Welfare Funds (7.5%) 392.28 394.17 396.04 397.91

8.Less tax (35%) 1693.3 1701.5 1709.6 1717.6

9. Profit after tax 3350.02 3336.53 3323.06 3309.49

10. Net salvage value 200

11. Recovery of net working capital 325.7


13. Operating Cash Inflow 4149.82 4136.33 4122.86 4109.29

14. Net Working Capital 0.1 0.1 0.05 0

15.Terminal Cash Inflow 525.7

16. Relevant Cash flow 4149.72 4136.23 4122.81 4634.99

If COGS increases by 10%

Years 0 1 2 3 4 5 6 1. Capital Investment 6160 2. Level of Net Working Capital (Ending) 325.7 406.9 488.1 488.11 488.2 488.25 488.33. Sales 8320 10400 12480 12480 12480 124804. All costs (COGS + operating expenses) 5347.6

6473.55

7599.61

7602.69

7605.88

7609.18

Including Dep. plus amortization

6. Profit before tax 2972.43926.45

4880.39

4877.31

4874.12

4870.82

7. Less: Welfare Funds (7.5%) 225.784 304.94 384.61 386.54 388.47 390.38

8.Less tax (35%) 974.633 1316.3 1660.3 1668.6 1676.9 1685.1

9. Profit after tax 1771.98

2305.21

2835.48

2822.17

2808.75

2795.34

10. Net salvage value 11. Recovery of net working capital 12. Capital Investment -6160

13. Operating Cash Inflow 2571.78

3105.01

3635.28

3621.97

3608.55

3595.14

14. Net Working Capital -325.7 81.2 81.2 0.01 0.09 0.05 0.0515.Terminal Cash Inflow

16. Relevant Cash flow-6485.7

2490.58

3023.81

3635.27

3621.88 3608.5

3595.09

Years 7 8 9 10



3. Sales 12480 12480 12480 12480

4. All costs (COGS + operating expenses) 7612.7 7616.44 7620.29 7624.36


6. Profit before tax 4867.3 4863.56 4859.71 4855.64


8.Less tax (35%) 1693.3 1701.5 1709.6 1717.6

9. Profit after tax 2781.72 2767.89 2754.07 2740.13




13. Operating Cash Inflow 3581.52 3567.69 3553.87 3539.93



16. Relevant Cash flow 3581.42 3567.59 3553.82 4065.63

If Sales Decreases by 10%

Years 0 1 2 3 4 5 6 1. Capital Investment 6160

2. Level of Net Working Capital (Ending) 325.7 406.9 488.1488.11 488.2

488.25 488.3

3. Sales by 10% 7488 9360 11232 11232 11232 11232

4. All costs (COGS + operating expenses) 4968.2

6000.3

7032.5 7035.3

7038.2

7041.2

Including Dep. plus amortization 6. Profit before tax 2519. 3359. 4199. 4196.7 4193. 4190.

8 7 5 8 8

7. Less: Welfare Funds (7.5%) 225.78

304.94

384.61 386.54

388.47

390.38

8.Less tax (35%) 974.63

1316.3

1660.3 1668.6

1676.9

1685.1


1738.5

2154.6

2141.56

2128.4

2115.3

10. Net salvage value 11. Recovery of net working capital 12. Capital Investment -6160

13. Operating Cash Inflow (17+dep+amort.) 2119.2

2538.3

2954.4

2941.36

2928.2

2915.1

14. Net Working Capital-325.7 81.2 81.2 0.01 0.09 0.05 0.05


16. Relevant Cash flow

-6485.7 2038

2457.1

2954.4

2941.27

2928.2

2915.1

Years 7 8 9 10



3. Sales by 10% 11232 11232 11232 11232

4. All costs (COGS + operating expenses) 7044.4 7047.8 7051.3 7055


6. Profit before tax 4187.6 4184.2 4180.7 4177


8.Less tax (35%) 1693.3 1701.5 1709.6 1717.6

9. Profit after tax2102.02 2088.53 2075.06 2061.49




13. Operating Cash Inflow (17+dep+amort.)2901.82 2888.33 2874.86 2861.29



16. Relevant Cash flow2901.72 2888.23 2874.81 3386.99

IF Sales decreases by 10% and COGS increasesBy 10%

Years 0 1 2 3 4 5 1. Capital Investment 6160

2. Level of Net Working Capital (Ending) 325.7 375.5450.42 450.48

450.5

450.6

3. Sales by 10% 7488 9360 1123211232

11232

4. All costs (COGS by 10% + operating exp)

5347.6

6473.6 7599.6

7603 7606

6. Profit before tax 2140.4

2886.5 3632.4

3629 3626

7. Less: Welfare Funds (7.5%) 225.78

304.94 384.61

386.5

388.5

8.Less tax (35%) 974.63

1316.3 1660.3

1669 1677


1265.2 1587.5

1574 1561

10. Net salvage value 11. Recovery of net working capital (295-52) 12. Capital Investment -6162 13. Operating Cash Inflow (EAT+dep+amort.)

1739.8 2065 2387.3

2374 2361

14. Net Working Capital-325.7 81.2 81.2 0.01

0.09 0.05


16. Relevant Cash flow

-6485.7

1658.6

1983.8 2387.3

2374 2361

Years 6 7 8 9 10 1. Capital Investment 2. Level of Net Working Capital (Ending) 450.6 450.7 450.8 450.9 0

8 5 3 1

3. Sales by 10%11232

11232

11232

11232

11232

4. All costs (COGS by 10% + operating exp)

7609.2

7612.7

7616.4

7620.3 7624

6. Profit before tax3622.8

3619.3

3615.6

3611.7 3608

7. Less: Welfare Funds (7.5%)390.38

392.28

394.17

396.04 397.9

8.Less tax (35%)1685.1

1693.3

1701.5

1709.6 1718

9. Profit after tax1547.3

1533.7

1519.9

1506.1 1492

10. Net salvage value 20011. Recovery of net working capital (295-52) 325.712. Capital Investment

13. Operating Cash Inflow (EAT+dep+amort.)2347.1

2333.5

2319.7

2305.9 2292

14. Net Working Capital 0.05 0.1 0.1 0.05 015.Terminal Cash Inflow 525.7

16. Relevant Cash flow2347.1

2333.4

2319.6

2305.8 2818

At Base Case WACC: 14%

Relevant Cash Flow: 0 1 2 3 4 5-6485.7 2869.983 3497.06 4202.38 4189.27 4176.18

Present Values: -6485.7 2517.529 2690.874 2836.487 2480.384 2168.977

6 7 8 9 10

4163.07 4149.72 4136.23 4122.81 4634.99

1896.639 1658.383 1449.993 1267.797 1250.26

Sum of Present Values: 20217.32Net Present Value: 13731.62

IRR: 35%

If COGS increases by 10%, WACC: 14%

Relevant Cash Flow: 0 1 2 3 4

-6485.7 2490.5 3023.8 3635.23621.8

8

Present Values: -6485.7 2184.7 2326.7 2453.7 2144.4

5 6 7 8 9 103608.5 3595.09 3581.42 3567.59 3553.82 4065.63

1874.142

1637.875

1431.269

1250.651

1092.828

1096.679

Sum of Present Values:14232.5

7

Net Present Value:7746.87

1

IRR: 21%

Sales decrease by 10%, WACC: 14%


-6485.7 2037.98 2457.06 2954.38 2941.27

Present Values: -6485.7

1787.704

1890.628

1994.122

1741.478

5 6 7 8 9 102928.18 2915.07 2901.72 2888.23 2874.81 3386.99

1520.805

1328.067

1159.636

1012.495

884.0269

913.6196


7


1

IRR: 21%

If Sales revenue decreases by 10 % and COGS increases by 10%


-6485.71 1658.583 1983.81 2387.27 2373.88

Present Values: -6485.71 1454.897 1526.477 1611.339

1405.528

5 6 7 8 9 10

2360.5 2347.09 2333.42 2319.592305.8

2 2817.63

1225.97

1069.303

932.5217

813.1533

709.058

760.0383


9


5

IRR: 15%

Debt Service Coverage Ratio (in Times)

Formula

EBT + Depreciation + Amortization + Interest on long term loan + Lease payments(if any) / Repayment of debt + Interest on term debt + lease rental (if any)Repayment of debt + Interest on term debt + lease rental ( if any)

Year 1 2 3 4 5

4095.63/415.094 5129.57/523.4

6163.43/494.86

6160.59/466.32 6157.76/437.79

9.87 9.8 12.45 13.21 14.07

6 7 8 9 10

6154.72/409.25

6151.48/380.71

6148.15/352.18

6144.61/323.64 6140.87/295.1

15.04 16.16 17.46 18.99 20.81

Year EBT Dep. Amort. Interest on Repayment on term debt term debt

13010.45 784.8 15 285.38 129.714

24065.8 784.8 15 263.97 259.43

35128.2 784.8 15 235.43 259.43

45153.9 784.8 15 206.89 259.43

55179.6 784.8 15 178.36 259.43

65205.1 784.8 15 149.82 259.43

75230.4 784.8 15 121.28 259.43

85255.6 784.8 15 92.75 259.43

95280.6 784.8 15 64.21 259.43

105305.4 784.8 15 35.67 259.43

Break even

Maximum capacity 60%3rd year (In Rs Millions)

FixedVariable

costs costs 1 Raw Materials 100% variable 0 2,496

2 Utilities 80% variable, 20% fixed 374 1,498

3 Labor 75% variable, 25% fixed 156 468

4 Factory Overhead 50% variable, 50% fixed 27.565 27.565

5 Others 80% variable, 20% fixed 74.88 299.52

6 Administration exp. 100% fixed 312 0

7 Selling expense 80% variable, 20% fixed 50 199

8 Depreciation exp. 100% fixed 785 0

9 Amortization exp. 100% fixed 15 0

10 Interest 100% fixed 319 0

Total 2113.45 4988.09

11 Principal Repayment 130

1. Commercial Fixed costs / (Sales -Variable costs) *100

break even

2113 / (12480 - 4989) * 100

28.21%

28.21% * 60%

16.93%

2. Cash Break even F.costs - Dep - Amortization + Principal Repayment /

( Sales - Variable costs) *100

2113 - 785 - 15 + 130 / (12480 - 4988) *100

19.27%

19.27% * 60%

11.56%

bahria cement limited final report final (2)

Documents