cut flower farm

8/17/2019 Cut Flower Farm

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Pre-Feasibility Study

(Cut Flower Farm)

Small and Medium Enterprises Development Authority

Ministry of Industries & ProductionGovernment of Pakistan

www.smeda.org.pk

HEAD OFFICE

4th Floor, Building No. 3, Aiwan-e-Iqbal Complex, Egerton Road,Lahore

Tel: (92 42) 111 111 456, Fax: (92 42) 36304926-7

[email protected]

REGIONAL OFFICE

Punjab REGIONAL OFFICE

Sindh REGIONAL OFFICE

Khyber Pakhtunkhwa REGIONAL OFFICE

Balochistan 3rd Floor, Building No. 3,Aiwan-e-Iqbal Complex,

Egerton Road Lahore,

Tel: (042) 111-111-456Fax: (042) 36304926-7

[email protected]

5th Floor, BahriaComplex II, M.T. Khan Road,

Karachi.

Tel: (021) 111-111-456Fax: (021) 35610572

[email protected]

Ground FloorState Life Building

The Mall, Peshawar.

Tel: (091) 111-111-456Fax: (091) 5286908

[email protected]

Bungalow No. 15-AChaman Housing Scheme

Airport Road, Quetta.

Tel: (081) 2831623, 2831702Fax: (081) 2831922

[email protected]

Note: All SMEDA Services / information related to PM's Youth Business Loan are Free of Cost

May, 2014

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Pre-feasibility Study Cut flower Farm – Marigold (Rs.1.46 Million)

Table of Content

1 Disclaimer .........................................................................................................2

2

Purpose of the document ............................................................................3

3 Introduction to SMEDA .................................................................................3

4

Introduction to Scheme ................................................................................3

5 Executive Summary .......................................................................................4

6 Brief Description of the project ..................................................................4

7 Critical Factors ................................................................................................5

8 Installed and Operational Capacity ...........................................................5

9

Geographic Potential for Investment ........................................................6

10 Potential Target Markets / Cities ................................................................6

11 Process Flow: ..................................................................................................6

12 Project Cost Summary ..................................................................................6

12.1 Project Economics ..................................................................................................... 7 12.2 Project Financing ....................................................................................................... 8 12.3

Project Cost ................................................................................................................ 8 12.4 Space Requirement ................................................................................................... 8 12.5 Machinery and Equipment ........................................................................................ 9

12.6

Furniture ...................................................................................................................... 9

12.7 Raw Material Requirement ....................................................................................... 9 12.8 Human Resource Requirement ............................................................................... 9 12.9 Revenue Generation ............................................................................................... 10 12.10 Other Costs ............................................................................................................... 10

13 Contacts - Suppliers, experts/consultants, Dev. Institutions ..........11

14 Annexure ........................................................................................................11

14.1 Income Statement .................................................................................................... 11 14.2 Project Balance Sheet ............................................................................................. 13 14.3 Cash Flow Statement .............................................................................................. 14 14.4

Useful Project Management Tips .......................................................................... 14

14.5

Useful Links .............................................................................................................. 14

15 Key Assumptions .........................................................................................16


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Pre-feasibility Study Cut Flower Farm - Marigold (Rs.1.46 Million)

1 DISCLAIMER

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

general idea and information on the subject. Although, the material included in thisdocument is based on data / information gathered from various reliable sources;

however, it is based upon certain assumptions which may differ from case to case.

The information has been provided on “as is where is basis” without any warranties

or assertions as to the correctness or soundness thereof. Although, due care and

diligence has been taken to compile this document, the contained information may

vary due to any change in any of the concerned factors, and the actual results may

differ substantially from the presented information. SMEDA, its employees or agents

do not assume any liability for any financial or other loss resulting from this

memorandum in consequence of undertaking this activity. The contained information

does not preclude any further professional advice. The prospective user of thismemorandum is encouraged to carry out additional diligence and gather any

information which is necessary for making an informed decision, including taking

professional advice from a qualified consultant / technical expert before taking any

decision to act upon the information.

For more information on services offered by SMEDA, please contact our website:

www.smeda.org.pk

SMEDA Services / Information related to PM’s Youth Business Loan are FREE OF COST - 2

http://www.smeda.org.pk/http://www.smeda.org.pk/http://www.smeda.org.pk/


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2 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, production, marketing, finance and business management.

The purpose of this document is to facilitate potential investors in Cut Flower Farm

by providing them with a general understanding of the business with the intention of

supporting potential investors in crucial investment decisions.

The pre-feasibility reports builds upon best practices developed by enterprises

through trial and error and industrial norms that provide practical guidance on

various aspects of starting and managing a successful business.

Apart from carefully studying the whole document one must consider critical aspectsprovided later on, which form basis of any investment decision.

3 INTRODUCTION TO SMEDA

The Small and Medium Enterprises Development Authority (SMEDA) was

established in October 1998 with an objective to provide fresh impetus to the

economy through development of Small and Medium Enterprises (SMEs).

With a mission "to assist in employment generation and value addition to the

national income, through development of the SME sector, by helping increase the

number, scale and competitiveness of SMEs", SMEDA has carried out ‘sectorial

research’ to identify policy, access to finance, business development services,

strategic initiatives and institutional collaboration and networking initiatives.

Preparation and dissemination of pre-feasibility studies in key areas of investment

has been a hallmark of SME facilitation by SMEDA.

Concurrent to the pre-feasibility studies, a broad spectrum of business development

services is also offered to the SMEs by SMEDA. These services include

identification of experts and consultants and delivery of need based capacity building

programs of different types in addition to business guidance through help desk

services.

4 INTRODUCTION TO SCHEME

‘Prime Minister’s Youth Business Loan’ program, for young entrepreneurs, with an

allocated budget of Rs. 5.0 Billion for the year 2013-14, is designed to provide

subsidised financing at 8% mark-up per annum for one hundred thousand (100,000)



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beneficiaries, through designated financial institutions, initially through the National

Bank of Pakistan (NBP) and the First Women Bank Ltd. (FWBL).

Loans from Rs. 0.1 million to Rs. 2.0 million with tenure up to 8 years inclusive of 1

year grace period, and a debt: equity of 90: 10 will be disbursed to SME

beneficiaries across Pakistan, covering; Punjab, Sindh, Khyber Pakhtunkhwa,Balochistan, Gilgit Baltistan, Azad Jammu & Kashmir and Federally Administered

Tribal Areas (FATA).

5 EXECUTIVE SUMMARY

Cut Flower Farm is proposed to be located at favorable flower growing areas in

Pakistan including Pattoki, Khanewal, Faisalabad, Dadu, Sukkur, Peshawar, Swat,

Quetta, Kalat, Ziarat, Pishin, Khanozai, Killa Saifullah etc.

The varieties included are Gladiolus, Mari Gold, Statice and Chrysanthemum.

Production Capacity of Gladiolus, Statice, Chrysanthemum and Marigold is 120,000Kg, having first year production capacity of 48,000 Kg at initial utilization of 40% in

year -01.

Total Cost Estimate is Rs. 1.46 Mill ion with fixed investment of Rs. 1.25 Million and

working capital of Rs. 0.21 Mil lion.

Given the cost assumptions IRR and payback are 69% and 2.09 years, respectively.

The most critical considerations or factors for success of the project are:

• One of the major competitive advantages of Balochistan is the tenure of

production. In Balochistan, flower plants can be produced for 8 months while inother provinces of Pakistan, such period is for 4 months only.

• Balochistan’s dry and cold climate offers better opportunities for growth of cut

flower. Quetta, Mastung, Kalat, Pishin, Killa Saifullah and Ziarat are some of the

areas recommended for starting such a farm in Balochistan.

6 BRIEF DESCRIPTION OF THE PROJECT

Following have been addressed as per pre-feasibility study for a Four acre farm:

• Location: The Cut Flower Farm is proposed to be located at favourable flower

growing areas in Pakistan and particularly in Balochistan including DistrictQuetta, Kalat, Ziarat, Pishin / Khanozai, Killa Saifullah and any other temperate

area.

• Product: The farm would produce cut flowers to fulfil the local demand of cut

flower varieties including Gladiolus, Mari Gold, Statice and Chrysanthemum.



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• Target Market: The target market for the Cut Flower Farm is local. Major buyers

of cut flower are in larger cities such as Karachi, Peshawar, Lahore and

Islamabad and domestic market is Quetta, whereas, other potential areas of

Balochistan can also be targeted based upon demand.

• Employment Generation: The proposed project will provide direct employment

to 06 people. Financial analysis shows the unit shall be profitable from the very

first year of operation.

7 CRITICAL F ACTORS

• Establishment of the farms in areas where basic infrastructure including waterand electricity are available.

• Farming should be done on scientific grounds, taking care of input

requirements and pest management techniques.

• Well-trained / experienced staff will add to the efficiency of the farm.

• Producer should be aware of ever-changing fashion in terms of flower color

and varieties.

• Special attention towards healthy and certified seeds / bulbs, land

preparation, sowing pattern, water management, fertilizer application and

marketing is required.

8 INSTALLED AND OPERATIONAL C APACITY

Total farm area is assumed to be Four (04) Acres. Cultivation of Gladiolus, Statice,

Chrysanthemum and Marigold will be distributed on the farm area respectively.

Table 1: Production at 40% Capacity

Production Capacity (Units) 120,000

Initial capacity utilization 40%

Production per year 48,000

Production lost to Petals 9,600

Production quantity sold (Flowers) 38,400

Production quantity sold (Petals) 24

The proposed project is for farming of Gladiolus, Statice, Chrysanthemum and

Marigold varieties and will generate revenues from sale of these varieties. Additional

revenues will be generated from the sale of Gladiolus Corms which will start from the

third year.



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Table 2: Product MixProduct Production Capacity Per

Year @ 100 %Sales Price (Rs.)

Gladiolus, Statice,Chrysanthemum and MariGold

120,000 kg 20 – 35/kg

9 GEOGRAPHIC POTENTIAL FOR INVESTMENT

Pakistan is a country conducive to small scale farming where floriculture provides an

opportunity for enhancing income from available land resources.

Floriculture is an upcoming opportunity in the country since it requires less water and

provides more per acre income than traditional crops. It can play a major role in the

economy. It can become an important sector such as Horticulture, Livestock &Fisheries.

Favorable growing areas particularly including Pattoki, Khaniwal, Faisalabad, Dadu,

Sukkur, Peshawar, Swat, Quetta, Kalat, Ziarat, Pishin, Khanozai, Killa Saifullah etc.

One of the major competitive advantages of Balochistan is the tenure of production.

In Balochistan, flower plants can be in produced for 8 months while in other

provinces of Pakistan, such period is for 4 months only.

10 POTENTIAL T ARGET M ARKETS / CITIES

Major buyers of cut flowers are in large cities such as Karachi, Peshawar, Lahore,and Islamabad. Main local target market is Quetta, whereas, other potential areas ofBalochistan can also be targeted based on demand.

11 PROCESS FLOW:

The Flower process will be as under:

12 PROJECT COST SUMMARY

A detailed financial model has been developed to analyze the commercial viability of

“Cut Flower Farm - Gladiolus, Mari Gold, Statice and Chrysanthemum” under the

Land

LevelingSowing Watering Early Stage

Plants

Visual

InspectionPlucking Packing

Distribut



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Prime Minister’s Youth Business Loan. Various cost and revenue related

assumptions along with results of the analysis are outlined in this section.

The projected Income Statement, Cash Flow Statement and Balance Sheet are

attached as appendix.

12.1 Project Economics

The total project investment is Rs. 1.46 Million which includes Capital Cost of Rs.

1.25 Mil lion and Working Capital of Rs. 0.21 Mil lion.

All the figures in this financial model have been calculated for a total farm area

assumed to be Four (04) Acres. Cultivation of the cut flowers is expected to yield

120,000 Gladiolus, Statice, Chrysanthemum and Marigold over a distributed area of

04 Acres, respectively.

Yield covered by Cut Flower Farm of Gladiolus, Statice, Chrysanthemum and

Marigold in year one will be 48,000 at initial capacity of 40%.

The following table shows internal rates of return and payback period.

Table 3 - Project Economics

Description Details

Internal Rate of Return (IRR) 69%

Payback Period (Yrs) 2.09

Net Present Value – NPV (Rs.) 3,202,684

Since floriculture sector in Pakistan is not highly developed there are great variations

in the production and consumption cycle of cut flowers. The production cycle is

especially dependent upon the natural environment and weather. Similarly, the

consumption cycle is influenced by marriages, religious (URS) and political

occasions. Due to these reasons it is difficult to forecast the actual requirement for

cut flowers. Similarly, due to the perishable nature of the product, appropriate

infrastructure and transportation also plays an important role in marketing and

profitability of cut flowers.

Focus on healthy and certified seeds/ bulbs, land preparation, sowing pattern, water

management, fertilizer application, hiring of skilled personal, pest management,

ever-changing fashion in terms of flower color and varieties, along with marketing is

required to avoid project losses.



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12.2 Project Financing

Following table provides details of the equity required and variables related to bankloan:

Table 4: Project Financing

Description Details

Total Equity (10%) Rs.146,766

Bank Loan (90%) Rs.1,320,898

Annual Markup to the Borrower 8%

Tenure of the Loan (Years) 8

Grace Period (Years) 1

12.3 Project Cost

Following requirements have been identified for operations of the proposedbusiness.

Table 5: Capital Investment for the Project

Capital Investment Rs.

Land On lease

Machinery & equipment 16,000

Land tillage and saplings 850,400

Furniture & fixtures 20,000

Pre-operating costs 364,791

Total Capital Costs 1,251,191

Working Capital Rs.

Raw material inventory 16,473

Upfront land lease rent 100,000

Cash 100,000

Total Working Capital 216,473

Total Investment 1,467,664

12.4 Space Requirement

Total required land for this project is Four (04) acres, most of which will be used for

farming. Land would be leased for the project, however, investors with own land can

generate more income from the project.



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12.5 Machinery and Equipment

Following table provides a list of equipment required for planting, managing and

harvesting the farm.

Table 7: List of Machinery & Equipment

Items Total Cost Rs

Shovels, pickaxes, Cutters , Cart& Misc tools etc

16,000

Total 16,000

12.6 Furniture

Since this is a field oriented project, therefore, no office equipment will be required.

However, there is a provision for purchase of rudimentary furniture.

Table 8: Furniture Cost

Description Total Cost(Rs.)

Furniture 20,000

Total 20,000

12.7 Raw Material Requirement

Cost is determined for different cut flower varieties by adding their seed / bulb cost

with labour, pesticides, fertilizer etc.

Table 9: Cost of Material

Material Cost (Rs.) Unit Total AnnualCost (Rs.)

Pesticide Sprays 20,000 4 80,000

Fertilizers 25,000 4 100,000

Water 25,000 4 100,000

Weeding 25,000 4 100,000

Total 380,000

12.8 Human Resource Requirement

Table 10: Human Resource Requirement

Descrip tion No. of Employees Salary/month

Supervisor / MarketingOfficer

1 20,000

Farm Worker (Mali) FullTime

5 50,000



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Total Staff 6 70,000

Supervisor / Marketing Officer will be responsible for overseeing on-farm activities

and marketing / sales of the cut flower.

Semi-skilled workers are required to look after the plants, watering, fertilizerapplication, de-weeding, insecticide use, planting and harvesting at the farm.

12.9 Revenue Generation

Table 11: Revenue Assumptions

Product Unit Sales Price

(Rs./Unit)

First Year SalesRevenue (Rs)

Gladiolus, Statice,Chrysanthemum and

Marigold

38,400 35 1,334,000

Petals (Kg.) 24 20 480

Total Sales Revenue 1,334,480

Price range for cut flower is Rs. 20 – 35 per kg. Sales growth rate is assumed to

increase at 10% per annum. Increase in cost of goods sold is assumed to be 12%,

as it is anticipated that some of the bulbs will be available for re-use within two

years. Initial capacity of project is assumed at 40% of total available capacity and

growth in capacity utilization is projected at 25% per annum.

12.10 Other Costs

Table 12: Misc Expenses

Operating Expense / annum (Rs.)

Administration Expense / annum 240,000

Land lease/rental expense / annum 100,000

Travelling expense 40,344

Communication expense 24,000

Depreciation expense 88,640

Amortization expense 36,479

Subtotal 529,463



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13 CONTACTS - SUPPLIERS, EXPERTS/CONSULTANTS, DEV. INSTITUTIONS

Mr. Fahim Ahmed Malghani

Horticulturist/Cold Chain SpecialistVegetable Botanist Agriculture Research Institute

Agriculture & Cooperatives Department, Government of BalochistanQuetta

Cell: 0334 4058071



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14 ANNEXURE

14.1 Income Statement

Statement Summaries SMEDA

Income Statement

Rs. in actuals

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Revenue 1,344,480 2,403,258 3,050,289 3,355,318 3,690,850 4,059,935 4,465,928 4,912,521 5,403,773 5,944,150 Cost of goods sold 617,680 874,352 942,325 1,014,581 1,094,622 1,183,357 1,281,804 1,391,100 1,512,520 1,647,487

Gross Profit 726,800 1,528,906 2,107,964 2,340,737 2,596,227 2,876,577 3,184,124 3,521,421 3,891,253 4,296,663

General administration & selling expenses

Administration expense 240,000 244,800 249,696 254,690 259,784 264,979 270,279 275,685 281,198 286,822

Rental expense 100,000 110,000 121,000 133,100 146,410 161,051 177,156 194,872 214,359 235,795

Utilities expense - - - - - - - - - -

Trave ll ing & Comm. expense (phone , fax, etc. ) 64 ,334 96,578 116,478 126,129 136,704 148,296 161,006 174,944 190,233 207,007

Office vehicles running expense - - - - - - - - - -

Office expenses (stationary, etc.) - - - - - - - - - -

Promotional expense - - - - - - - - - -

Insurance expense - - - - - - - - - -

Professional fees (legal, audit, etc.) - - - - - - - - - -

Depreciation expense 88,640 88,640 88,640 88,640 88,640 88,640 88,640 88,640 88,640 88,640

Amortization expense 36,479 36,479 36,479 36,479 36,479 36,479 36,479 36,479 36,479 36,479

Property tax expense - - - - - - - - - -

Miscellaneous expense - - - - - - - - - -

Subtotal 529,454 576,497 612,293 639,038 668,017 699,445 733,560 770,619 810,909 854,743

Operating Income 197,346 952,409 1,495,671 1,701,699 1,928,211 2,177,132 2,450,564 2,750,801 3,080,344 3,441,921

Other income - - - - - - - - - -

Gain / (loss) on sale of assets - - - - - - - - - -

Earnings Before Interest & Taxes 197,346 952,409 1,495,671 1,701,699 1,928,211 2,177,132 2,450,564 2,750,801 3,080,344 3,441,921

Interest expense 109,634 100,371 88,196 75,011 60,732 45,267 28,519 10,381 - -

Earnings Before Tax 87,713 852,038 1,407,475 1,626,688 1,867,479 2,131,865 2,422,045 2,740,420 3,080,344 3,441,921

Tax 4,386 105,305 188,621 221,503 257,622 297,279 340,806 388,563 439,551 493,788

NET PROFIT/(LOSS) AFTER TAX 83,327 746,733 1,218,854 1,405,185 1,609,857 1,834,585 2,081,239 2,351,858 2,640,793 2,948,133

Balance brought forward 83,327 830,060 2,048,913 3,454,098 5,063,956 6,898,541 8,979,780 11,331,637 13,972,430

Total profit available for appropriation 83,327 830,060 2,048,913 3,454,098 5,063,956 6,898,541 8,979,780 11,331,637 13,972,430 16,920,563

Dividend - - - - - - - - - -

Balance carried forward 83,327 830,060 2,048,913 3,454,098 5,063,956 6,898,541 8,979,780 11,331,637 13,972,430 16,920,563



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14.2 Project Balance Sheet


Balance Sheet

Rs. in actuals

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Assets

Current assets

Cash & Bank 100,000 268,599 1,064,795 2,377,932 3,894,189 5,630,006 7,603,909 9,838,828 12,359,711 15,440,919 19,380,665

Accounts receivable - 18,418 25,669 37,353 43,874 48,261 53,088 58,396 64,236 70,660 77,726

Finished goods inventory - - - - - - - - - - -

Equipment spare part inventory - - - - - - - - - - - Raw material inventory 16,473 40,615 50,341 62,020 76,409 94,136 115,975 142,882 176,030 216,869 -

Pre-paid annual land lease 100,000 110,000 121,000 133,100 146,410 161,051 177,156 194,872 214,359 235,795 -

Pre-paid building rent - - - - - - - - - - -

Pre-paid lease interest - - - - - - - - - - -

Pre-paid insurance - - - - - - - - - - -

Total Current Assets 216,473 437,632 1,261,806 2,610,406 4,160,882 5,933,454 7,950,128 10,234,978 12,814,337 15,964,242 19,458,391

Fixed assets

Land - - - - - - - - - - -

Building/Infrastructure - - - - - - - - - - -

Saplings & Land Tillage 850,400 765,360 680,320 595,280 510,240 425,200 340,160 255,120 170,080 85,040 -

Machinary & Equipment 16,000 14,400 12,800 11,200 9,600 8,000 6,400 4,800 3,200 1,600 -

Furniture & fixtures 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 -

Office vehicles - - - - - - - - - - -

Office equipment - - - - - - - - - - -

Total Fixed Assets 886,400 797,760 709,120 620,480 531,840 443,200 354,560 265,920 177,280 88,640 -

Intangible assets

Pre-operation costs 364,791 328,312 291,833 255,354 218,875 182,396 145,916 109,437 72,958 36,479 0

Legal, licensing, & training costs - - - - - - - - - - -

Total Intangible Assets 364,791 328,312 291,833 255,354 218,875 182,396 145,916 109,437 72,958 36,479 0

TOTAL ASSETS 1,467,664 1,563,704 2,262,759 3,486,239 4,911,596 6,559,050 8,450,605 10,610,335 13,064,575 16,089,361 19,458,391

Liabilities & Shareholders' Equity

Current liabilities

Accounts payable - 9,793 20,277 23,066 26,119 29,605 33,591 38,156 43,392 49,410 45,357

Export re-finance facility - - - - - - - - - - -

Short term debt - - - - - - - - - - -

Other liabilities - - - - - - - - - - - Total Current Liabilities - 9,793 20,277 23,066 26,119 29,605 33,591 38,156 43,392 49,410 45,357

Other liabilities

Lease payable - - - - - - - - - - -

Deferred tax - 2,919 91,440 252,135 441,297 661,729 916,499 1,208,960 1,542,779 1,920,755 2,345,704

Long term debt 1,320,898 1,320,898 1,174,215 1,015,358 843,316 656,994 455,207 236,673 - - -

Total Long Term Liabilities 1,320,898 1,323,817 1,265,655 1,267,493 1,284,612 1,318,722 1,371,706 1,445,633 1,542,779 1,920,755 2,345,704

Shareholders' equity

Paid-up capital 146,766 146,766 146,766 146,766 146,766 146,766 146,766 146,766 146,766 146,766 146,766

Retained earnings - 83,327 830,060 2,048,913 3,454,098 5,063,956 6,898,541 8,979,780 11,331,637 13,972,430 16,920,563

Total Equity 146,766 230,093 976,826 2,195,680 3,600,865 5,210,722 7,045,308 9,126,546 11,478,404 14,119,197 17,067,329

TOTAL CAPITAL AND LIABILITI 1,467,664 1,563,704 2,262,759 3,486,239 4,911,596 6,559,050 8,450,605 10,610,335 13,064,575 16,089,361 19,458,391

- - - - - - - - - - -



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14.3 Cash Flow Statement

- - - - - - - - - - -


Cash Flow Statement

Rs. in actuals

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Operating activities

Net profit - 83,327 746,733 1,218,854 1,405,185 1,609,857 1,834,585 2,081,239 2,351,858 2,640,793 2,948,133

Add: depreciation expense - 88,640 88,640 88,640 88,640 88,640 88,640 88,640 88,640 88,640 88,640

amortization expense - 36,479 36,479 36,479 36,479 36,479 36,479 36,479 36,479 36,479 36,479

Deferred income tax - 2,919 88,521 160,695 189,161 220,432 254,770 292,462 333,818 377,976 424,949

Accounts receivable - (18,418) (7,252) (11,684) (6,521) (4,387) (4,826) (5,309) (5,840) (6,424) (7,066)

Finished good inventory - - - - - - - - - - -

Equipment inventory - - - - - - - - - - -

Raw material inventory (16,473) (24,142) (9,726) (11,679) (14,389) (17,727) (21,840) (26,906) (33,149) (40,839) 216,869

Pre-paid building rent - - - - - - - - - - -

Pre-paid lease interest - - - - - - - - - - -

Advance insurance premium - - - - - - - - - - -

Accounts payable - 9,793 10,484 2,789 3,053 3,486 3,986 4,565 5,236 6,017 (4,053)

Other liabilities - - - - - - - - - - -

Cash provided by operations (16,473) 178,599 953,879 1,484,094 1,701,609 1,936,780 2,191,795 2,471,169 2,777,043 3,102,643 3,703,952

Financing activities

Change in long term debt 1,320,898 - (146,683) (158,857) (172,042) (186,322) (201,786) (218,535) (236,673) - -

Change in short term debt - - - - - - - - - - -

Change in export re-finance facility - - - - - - - - - - -

Add: land lease expense - 100,000 110,000 121,000 133,100 146,410 161,051 177,156 194,872 214,359 235,795

Land lease payment (100,000) (110,000) (121,000) (133,100) (146,410) (161,051) (177,156) (194,872) (214,359) (235,795) -

Lease principal repayment - - - - - - - - - - -

Issuance of shares 146,766 - - - - - - - - - - Purchase of (treasury) shares - - - - - - - - - - -

Cash provided by / (used for) financing 1,367,664 (10,000) (157,683) (170,957) (185,352) (200,963) (217,892) (236,250) (256,160) (21,436) 235,795

Investing activities

Capital expenditure (1,251,191) - - - - - - - - - -

Acquisitions - - - - - - - - - - -

Cash (used for) / provided by investing (1,251,191) - - - - - - - - - -

NET CASH 100,000 168,599 796,196 1,313,137 1,516,257 1,735,817 1,973,903 2,234,919 2,520,883 3,081,207 3,939,747

Cash balance brought forward 100,000 268,599 1,064,795 2,377,932 3,894,189 5,630,006 7,603,909 9,838,828 12,359,711 15,440,919

Cash available for appropriation 100,000 268,599 1,064,795 2,377,932 3,894,189 5,630,006 7,603,909 9,838,828 12,359,711 15,440,919 19,380,665

Dividend - - - - - - - - - - -

Cash carried forward 100,000 268,599 1,064,795 2,377,932 3,894,189 5,630,006 7,603,909 9,838,828 12,359,711 15,440,919 19,380,665



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14.4 Useful Project Management Tips

Technology

• Quality Assurance Equipment & Standards: Products quality standards/check

need to be defined.

Marketing

• Product Development & Packaging: Experts may be engaged for product /

service and packaging design & development.

• Ads & Point of Sale Promotion: Business promotion and dissemination through

banners and launch events is highly recommended. Product brochures from

good quality ser vice providers can be developed.

• Sales & Distribution Network: Expert's advice and distribution agreements are

required.

• Price - Bulk Discounts, Cost plus Introductory Discounts: During the

introductory phase price may be lower and used as a promotional tool. Product

cost estimates should be carefully documented before price setting. Government

controlled prices shall be displayed, where applicable.

Human Resources

• Lis t of Human Resource (As per Section 12.8)

• Adequacy & Competencies: Recruitment of skilled and experienced staff

should be considered an investment.

• Performance Based Remuneration: Performance based remuneration should

be offered to incentivize workers.

• Training & Skill Development: Training and skill development of employees

and exposure to best practices should be undertaken. Least cost options for

Training and Skill Development (T&D) may be linked with compensation benefits

and awards.

14.5 Useful Links

• Prime Minister’s Office

www.pmo.gov.pk

• Small & Medium Enterprises Development Author ity (SMEDA)

www.smeda.org.pk

• National Bank of Pakistan (NBP)



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www.nbp.com.pk

• First Women Bank Limited (FWBL)

www.fwbl.com.pk

• Government of Pakistan

www.pakistan.gov.pk

• Ministry of Industries & Production

www.moip.gov.pk

• Government of Punjab

www.punjab.gov.pk

• Government of Sindh

www.sindh.gov.pk

• Government of Khyber Pakhtunkhwa

www.khyberpakhtunkhwa.gov.pk

• Government of Balochistan

www.balochistan.gov.pk

• Government of Gilgi t Baltistan

www.gilgitbaltistan.gov.pk

• Government of Azad Jammu & Kashmir

www.ajk.gov.pk

• Trade Development Authority of Pakistan (TDAP)

www.tdap.gov.pk

• Securities & Exchange Commission of Pakistan (SECP)

www.secp.gov.pk

• Federation of Pakistan Chambers of Commerce and Industry (FPCCI)

www.fpcci.com.pk

• State Bank of Pakistan (SBP)

www.sbp.org.pk



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15 KEY ASSUMPTIONS

Production Related Assumptions

Production Capacity (Units) 120,000

Initial capacity utilization 40%

Production per year 48,000Production lost to Patel (@ 20%) 9,600

Production quantity sold (Flowers) 38,400

Production quantity sold (Flowers in kgs. for petals) 24

Revenue Assumption

Production Capacity 40,000 3 120,000

Sale price per Flower in year 1 Rs. 35

Sale price per Kg. petals Rs. 20

Sale price growth rate 10%

Production capacity utilization - Year 1 40%

Production capacity utilization growth rate 25%

Maximum capacity utilization 75%

Financial Assumptions

Description 90 %

Equity 10 %

Debt 90%

Debt Tenure (Years) 8

Interest Rate / annum 8%Grace Period (Years) 1

Depreciation Rates

Furniture 10 %

Machinery and Equipment 10 %

Cash Flow Assumptions

Accounts Receivables Cycle (days) 5

Accounts Payable Cycle (days) 15

Cash in Hand Rs. 100,000



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Economy Related assumptions

Inflation rate 10 %

Electricity growth rate 10 %

Water price growth rate 2 %

Wage growth rate 2 %

cut flower farm

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