kamyab jawan youth entrepreneurship scheme pre-feasibility
TRANSCRIPT
Kamyab Jawan
Youth Entrepreneurship Scheme
Pre-Feasibility Study
Laundry and Dry Cleaning
Small and Medium Enterprises Development Authority
Ministry of Industries & Production
Government of Pakistan
www.smeda.org.pk
HEAD OFFICE
4th Floor, Building No. 3, Aiwan e Iqbal, Egerton Road,
Lahore
Tel 92 42 111 111 456, Fax 92 42 36304926-7
REGIONAL OFFICE
PUNJAB REGIONAL OFFICE
SINDH REGIONAL OFFICE
KPK REGIONAL OFFICE
BALOCHISTAN
3rd Floor, Building No. 3,
Aiwan e Iqbal, Egerton Road
Lahore,
Tel: (042) 111-111-456
Fax: (042)6304926-7
5TH Floor, Bahria
Complex II, M.T. Khan
Road, Karachi.
Tel: (021) 111-111-456
Fax: (021) 5610572
Ground Floor
State Life Building, The Mall,
Peshawar.
Tel: (091) 9213046-47
Fax: (091) 286908
Bungalow No. 15-A
Chaman Housing Scheme, Airport
Road, Quetta.
Tel: (081) 831623, 831702
Fax: (081) 831922
TABLE OF CONTENTS
1 DISCLAIMER .......................................................................................................................................... 1
2 PURPOSE OF THE DOCUMENT ........................................................................................................ 2
3 INTRODUCTION TO SMEDA ............................................................................................................. 2
4 INTRODUCTION TO SCHEME ........................................................................................................... 2
5 EXECUTIVE SUMMARY ....................................................................................................................... 3
6 BRIEF DESCRIPTION OF PROJECT & PRODUCT ........................................................................ 4
6.1 OPERATIONS PROCESS FLOW .........................................................................................................4
6.2 INSTALLED AND OPERATIONAL CAPACITY.....................................................................................6
7 CRITICAL FACTORS ............................................................................................................................. 8
8 GEOGRAPHICAL POTENTIAL FOR INVESTMENT ...................................................................... 9
9 POTENTIAL TARGET CUSTOMERS / MARKETS ......................................................................... 9
10 PROJECT COST SUMMARY ................................................................................................................ 9
10.1 PROJECT ECONOMICS .......................................................................................................................9
10.2 PROJECT FINANCING ..................................................................................................................... 10
10.3 PROJECT COST ............................................................................................................................... 10
10.4 MACHINERY AND EQUIPMENT REQUIREMENT ........................................................................... 10
10.5 FURNITURE & FIXTURES REQUIREMENT .................................................................................... 11
10.6 OFFICE EQUIPMENT REQUIREMENT ............................................................................................ 12
10.7 SPACE REQUIREMENT ................................................................................................................... 12
10.8 RAW MATERIAL REQUIREMENT .................................................................................................. 13
10.9 HUMAN RESOURCE REQUIREMENT ............................................................................................. 13
10.10 UTILITIES AND OTHER COSTS ...................................................................................................... 14
10.11 REVENUE GENERATIONS ............................................................................................................... 14
11 CONTACT DETAILS ........................................................................................................................... 15
12 ANNEXURES ........................................................................................................................................ 16
12.1 INCOME STATEMENT ..................................................................................................................... 16
12.2 BALANCE SHEET ............................................................................................................................ 17
12.3 CASH FLOW STATEMENT .............................................................................................................. 18
13 USEFUL WEB LINKS.......................................................................................................................... 19
14 KEY ASSUMPTIONS .......................................................................................................................... 20
14.1 OPERATING COST ASSUMPTIONS................................................................................................. 20
14.2 PRODUCTION COST ASSUMPTION ................................................................................................ 20
14.3 REVENUE ASSUMPTIONS............................................................................................................... 20
14.4 FINANCIAL ASSUMPTIONS ............................................................................................................ 20
Pre-Feasibility Study Laundry and Dry Cleaning
Small and Medium Enterprises Development Authority (SMEDA) 1
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 this
document 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 this memorandum 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.
In case the document is intended to be used for loan application under any
specified loan scheme, respective scheme parameters are to be incorporated
accordingly. In doing so, financial results may vary from results shown in this
document.
For more information on services offered by SMEDA, please contact our website:
www.smeda.org.pk
Pre-Feasibility Study Laundry and Dry Cleaning
Small and Medium Enterprises Development Authority (SMEDA) 2
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 Laundry and
Dry Cleaning business by providing them a general understanding of the
business with the intention of supporting potential investors in crucial investment
decisions.
The need to come up with pre-feasibility reports for undocumented or minimally
documented sectors attains greater imminence as the research that precedes
such reports reveal certain thumb rules; best practices developed by existing
enterprises by trial and error, and certain industrial norms that become a guiding
source regarding various aspects of business set-up and it’s successful
management.
Apart from carefully studying the whole document one must consider critical
aspects provided 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 ‘sectoral
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 successful 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.
Pre-Feasibility Study Laundry and Dry Cleaning
Small and Medium Enterprises Development Authority (SMEDA) 3
4 INTRODUCTION TO SCHEME
Prime Minister’s ‘Kamyab Jawan – Youth Entrepreneurship Scheme’, for young
entrepreneurs between the age group of 21 - 45 years, is designed to provide
subsidized financing through the National Bank of Pakistan, Bank of Punjab and
Bank of Khyber under the guidance and supervision of the State Bank of Pakistan.
The loans will be disbursed to SME beneficiaries across Pakistan, covering;
Punjab, Sindh, Khyber Pakhtunkhwa, Balochistan, Gilgit Baltistan and Azad
Jammu & Kashmir. The Program aims to provide 25% of the loans to women
entrepreneurs.
Loans provided through Kamyab Jawan Program are segregated in two tiers: Tier
1 loans fall in the range of Rs. 100,000 to Rs. 500,000, with Debt:Equity 90:10 and
6% markup to borrower, and, Tier 2 loans are from Rs. 500,000 to Rs. 5 Million,
with Debt:Equity 80:20 and 8% markup to borrower. Both loans are for a period of
up to 8 years with a grace period of 1 year.
Application forms are available both in branches and dedicated websites of
National Bank of Pakistan, Bank of Punjab and Bank of Khyber.
5 EXECUTIVE SUMMARY
The Importance of Laundry and Dry Cleaning is often under estimated by the
business community of Pakistan. This business is service-oriented and carries
large potential for investment in the metropolitan cities. The life style of people in
Pakistan has changed over the years. Now a days, people are more conscious
about their clothes and use more sophisticated measures for cleaning clothes.
Beside households, commercial businesses, such as the Hotel Industry,
Restaurants and other corporations also need the services of laundry and dry
cleaning on day-to-day basis.
This particular pre-feasibility is intended to provide general information for setting
up an integrated laundry and dry-cleaning unit. It provides a range of services
related to domestic and commercial sector consumers. These services range from
washing, drying and pressings of fabric wears to complex and more professional
services like cleaning sensitive stuff, blankets, curtains, shirwanis and other home
accessories.
The proposed “Laundry and Dry Cleaning” unit will have an installed capacity of
washing and dry cleaning of 81,180 units per annum. However, initial operational
capacity is assumed to be 50% during first year with a gradual increase of 5% in
the subsequent years up to maximum capacity utilization of 90%. It is suggested to
open the shop in a populated and developed area or nearby to newly developing
housing societies.
Pre-Feasibility Study Laundry and Dry Cleaning
Small and Medium Enterprises Development Authority (SMEDA) 4
The proposed business venture entails a total investment of about Rs 4.62 million.
This includes a capital investment of Rs. 3.65 million and a sum of Rs. 0.97 million
as working capital. The project is financed through 80% debt and 20% equity. The
project NPV is around Rs 16.83 million, with an IRR of 43 % and payback period
of 3.33 years. The legal business status of this project is proposed as Sole
Proprietorship.
6 BRIEF DESCRIPTION OF PROJECT & PRODUCT
Due to growing number of working parents, changing life styles of urban
population and busy schedules of daily life in metropolitan cities, families prefer to
utilize outsourced dry cleaning and laundry services. Additionally, most of the
cloths of winter season cannot be washed or cleaned inside home due to their
stuff. Therefore, people always prefer to get those cloths washed from dry
cleaners. Beside households, Commercial business also needs the services of
laundry and dry cleaning business. Business like Hotel Industry, Restaurants and
other office’s require the laundry services on day-to-day basis. These factors have
attributed significantly towards the growth of laundry and dry cleaning businesses
in the country.
This pre‐feasibility study focuses on establishing a laundry and dry cleaning unit in
any metropolis of Pakistan. The proposed unit will provide a wide range of
washing, dry cleaning and pressing services for fabric wears to complex and more
professional services like cleaning sensitive stuff, blankets, curtains, shirwanis and
other home accessories to both the domestic. Target customers of these services
will comprise of both households and commercial consumers (i.e. hotels,
restaurants, banquet halls, caterers, hostels, hospitals and others). Commercial
customers will be playing a significant role in the success of proposed business.
6.1 Operations Process Flow
Liquid solvent and small amount of water are added to the machine. The machine
then stirs clothes in a manner similar to a domestic washing machine to remove
dirt, oil, and stains. Once clean, the clothes are then manually transferred to a
dryer (laundry procedure), then pressed and shaped.
The production operation mainly comprises of two separate processes i.e. laundry
and dry cleaning, as exhibited in the following diagram. Brief explanation of these
processes are as follows:
Tagging: The clothes are firstly tagged with a specific number, mentioned in the
invoice given to customers. This procedure is used for identification of clothes for
particular customers.
Pre-Feasibility Study Laundry and Dry Cleaning
Small and Medium Enterprises Development Authority (SMEDA) 5
Sorting: After tagging the clothes are arranged in different sets. Some people sort
by color, others sort by fabric type.
Washing: The clothes are washed in a washing machine using detergents such
as, detergents, washing powders, soaps and etc. This procedure is only applied
for the laundry services.
Dry Cleaning: In this process, the sensitive, expensive and only dry clean
recommended clothes are cleaned. For this purpose, chemical is used to clean the
clothes, which is known as Perclon.
Drying: The clothes washed in a laundry procedure are dried using dryers.
Steam Pressing: In this process both the clothes either washed or dry-cleaned are
pressed and shaped using steam press equipment.
Packing: Once pressed, the clothes are properly hanged and covered in the plastic
wrap and then tagged so that they can be easily identified.
Pre-Feasibility Study Laundry and Dry Cleaning
Small and Medium Enterprises Development Authority (SMEDA) 6
Process Flow Diagram
6.2 Installed and Operational Capacity
The proposed dry cleaning facility will have an installed capacity of processing
around 248 kg of clothes per day. Accordingly, the unit will have an overall
installed capacity processing 81,180 units per annum. Maximum utilization of the
unit is assumed to be 90%, whereas capacity utilization during first year of
operation is worked out at 50% with gradual increase of 5% annually. Details of
the project capacity are as follow:
Tagging
Sorting
Washing
Dry Cleaning
Drying
Steam Pressing
Packing
Bleach for White Cloths
Detergents & Washing Soap
Perclon (Chemical Applied)
Pre-Feasibility Study Laundry and Dry Cleaning
Small and Medium Enterprises Development Authority (SMEDA) 7
Table 1: Project Operational Capacities
Description Details
Working hours per day 8 hours
Operating shift per day 1
Working days per annum 330 days
Maximum clothes dry clean per day 246 units of clothes
Maximum weight of clothes per day 248 Kg
Maximum weight of clothes per batch 62 Kg
Hours utilized per batch (Laundry & Dry cleaning) 2 hours
Product Mix Wise Installed and Operational Capacity
Weight wise and unit wise distribution of product mix per day of the proposed
laundry and dry cleaning shop is as follows:
Table 2: Weight / Unit Wise Distribution of Product Mix per Day
Description Average Weight
Per Unit (Kg)
Average
Number of
Units Per Day
Average
Weight Per Day
(Kg)
Trousers 0.35 30.00 10.50
Coats (all Kinds)(winter) 2.00 15.00 30.00
Shirts 0.18 40.00 7.20
Jackets/sweater 2.25 15.00 33.75
Dupta 0.05 20.00 1.00
Shalwar Qameez 0.45 40.00 18.00
Blankets 2.25 08.00 18.00
Bed sheets 0.35 20.00 07.00
Curtain 1.25 08.00 10.00
Others(avg.) 2.25 50.00 112.50
Total 11.38 246 247.95
The proposed distribution of product mix is determined on average basis, which
will be affected through seasonal variations.
Details of product mix wise operational and installed capacities are provided in the
table below:
Pre-Feasibility Study Laundry and Dry Cleaning
Small and Medium Enterprises Development Authority (SMEDA) 8
Table 3: Product Mix Wise Installed and Operational Capacity
Items Description % Of Total
Production
Total
Production
Capacity in
Units
(Annually)
Operational
Capacity
50 % (Year
1)
Maximum
Operational
Capacity
90 %
Fabric Wear
Trousers 12.20% 9,900 4,950 8,910
Coats (all
Kinds)(winter) 6.10% 4,950 2,475 4,455
Shirts 16.26% 13,200 6,600 11,880
Jackets/sweater 6.10% 4,950 2,475 4,455
Dupta 8.13% 6,600 3,300 5,940
Shalwar Qameez 16.26% 13,200 6,600 11,880
Blankets 3.25% 2,640 1,320 2,376
Bed sheets 8.13% 6,600 3,300 5,940
Curtain 3.25% 2,640 1,320 2,376
Others(avg.) 20.33% 16,500 8,250 14,850
Total 100% 81,180 40,590 73,062
7 CRITICAL FACTORS
Following are the factors critical for the success of this business venture:
Warranty of clothes from damages and any type of color fading.
Prime business location for proposed dry cleaning.
Reasonable and competitive charges, positioned against competitors.
On time delivery of clothes can leave good impression on the customers.
Technical and efficient labor
Right product mix, proper inventory management, emphasis on customer
services.
Employing and retaining skilled labor.
Advertisement on local cable and banners. Existing dry cleaners are not
advertising for their services.
Pre-Feasibility Study Laundry and Dry Cleaning
Small and Medium Enterprises Development Authority (SMEDA) 9
8 GEOGRAPHICAL POTENTIAL FOR INVESTMENT
The recommended location for setting up the proposed laundry and dry-cleaning
shop will be a commercial market of developed or developing housing societies
having a considerable population concentration.
Considering to that, major cities for instance Karachi, Lahore, Peshawar, Quetta,
Rawalpindi, Islamabad, Multan, Sialkot, Faisalabad, Hyderabad and etc., with
large urban base would be the potential investment areas for the proposed
business.
9 POTENTIAL TARGET CUSTOMERS / MARKETS
The major target market for the dry-cleaning services will depend on the location
where dry cleaning business is situated. The target customers for proposed
business will not only be general public but also the commercial sector i.e. hostels,
catering companies, film industry and hospitals.
10 PROJECT COST SUMMARY
A detailed financial model has been developed to analyze the commercial viability
of laundry and dry-cleaning workshop and retailing. Various costs 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
also attached as annexure.
10.1 Project Economics
All the figures in this financial model have been calculated for estimated sales of
Rs. 10.77 million in the year one. The capacity utilization during year one is
worked out at 50% with 5% increase in subsequent years up to the maximum
capacity utilization of 90%.
The following table shows Internal Rate of Return, Payback Period and Net
Present Value of the proposed venture:
Table 4: Project Economics
Description Details
Internal Rate of Return (IRR) 43%
Payback Period (Yrs.) 3.33
Net Present Value (Rs.) 16,832,205
Pre-Feasibility Study Laundry and Dry Cleaning
Small and Medium Enterprises Development Authority (SMEDA) 10
10.2 Project Financing
Following table provides details of the equity required and variables related to
bank loan:
Table 5: Project Financing
Description Details
Total Equity (20%) Rs. 924,837
Bank Loan (80%) Rs. 3,699,348
Interest Rate 8%
Tenure of the Loan (Years) 8
Grace Period (Years) 1
10.3 Project Cost
Following fixed and working capital requirements have been identified for
operations of the proposed business:
Table 6: Project Cost
Description Amount Rs.
Capital Cost
Machinery & Equipment 2,570,000
Furniture & Fixtures 289,000
Office Equipment 107,500
Office Vehicle 600,000
Pre-operating Costs 89,111
Total Capital Cost 3,655,611
Equipment Spare Part Inventory 33,825
Raw Material Inventory 276,572
Upfront Building Rent 210,000
Cash 448,178
Total Working Capital 968,574
Total Project Cost 4,624,185
10.4 Machinery and Equipment Requirement
Following tables provides list of machinery and equipment required for an average
size laundry and dry-cleaning shop:
Pre-Feasibility Study Laundry and Dry Cleaning
Small and Medium Enterprises Development Authority (SMEDA) 11
Table 7: Machinery and Equipment Required
Description No. Cost Per Unit
(Rs.) Total Cost (Rs.)
Washing Machine 42"*60" (60kg) 1 340,000 340,000
Hydro Extractor 24*12 (25kg) 1 120,000 120,000
Dryer Machine 48*42 (60kg) 1 125,000 125,000
Dry Clean Machine 30*18 (10kg) 1 650,000 650,000
Steam Press 1 50,000 50,000
Form Finisher Recondition 1 75,000 75,000
Cotton Press 1 200,000 200,000
Boiler 1 250,000 250,000
Steam Ironing Vacuums Table
Boiler with Compressor 1 60,000 60,000
Generator 1 700,000 700,000
Total Machinery & Equipment 1 2,570,000
The required machinery and equipment is locally manufactured and easily
available in Pakistan. These machines can also be imported from Italy, Germany,
China and Japan. However, the prices of new imported machinery are 2 to 3 times
higher than local machinery. The normal market trend is to use second hand
imported machines, which are easily available. The price of second-hand imported
machine and first hand local made machine is almost equal.
Accordingly, the machinery cost estimates in this pre-feasibility study are based on
second hand imported machines.
10.5 Furniture & Fixtures Requirement
Details of the furniture and fixture required for the project are given below:
Table 8: Furniture & Fixtures Requirement
Description Quantity Unit Cost (Rs.) Total Cost
(Rs.)
Iron Racks (10/15 ft) 10 7,500 75,000
Counter Table 2 8,000 16,000
Chairs 5 4,000 20,000
Pre-Feasibility Study Laundry and Dry Cleaning
Small and Medium Enterprises Development Authority (SMEDA) 12
Stool 4 1,000 4,000
Fan 5 4,000 20,000
Exhaust Fan 4 4,500 18,000
Water Dispenser 1 15,000 15,000
Electric wiring & lighting 1 30,000 30,000
Air conditioners (1.5 ton Split) 1 75,000 75,000
Air Cooler for Workshop 1 16,000 16,000
Total 289,000
10.6 Office Equipment Requirement
Following office equipment will be required for proposed laundry and dry-cleaning
shop:
Table 9: Office Equipment Requirement
Description Quantity Unit Cost
(Rs.)
Total Cost
(Rs.)
Laptop (Used) 1 40,000 40,000
POS software with Printer 1 30,000 30,000
Telephone 1 2,500 2,500
UPS with Battery 1 35,000 35,000
Total 107,500
10.7 Space Requirement
In order to reduce the initial capital expenditure, the proposed laundry and dry
clean shop is proposed to be set-up on a rental premises. The space should be
rented in a commercial market to ensure the easy accessibility of customers.
For the proposed machinery, office, furniture & fixture and other equipment’s,
approximately 1,000 square feet area is required. Following is the covered area
requirement split into various sections. It is recommended that customer dealing
office area should be separate from the machine and working area.
Table 10: Space Requirement
Sections Total Area (sq. ft.)
Laundry Shop 500
Working, Machine Area and Store 500
Pre-Feasibility Study Laundry and Dry Cleaning
Small and Medium Enterprises Development Authority (SMEDA) 13
Total Covered Area 1,000
Rent of the proposed unit is assumed as Rs. 70,000 per month.
10.8 Raw Material Requirement
Raw material used for the purpose of dry cleaning of clothes is Perclon chemical.
Perchloroethylene, or perclon, is the dominant chemical solvent used in dry
cleaning. Perclon (Perchloroethylene) is a liquid chemical that consists of 40%
alcohol, 50% kerosene oil and 10% liquid used to save the color fading of clothes.
Perclon (Perchloroethylene) is a clear, colorless liquid and evaporates quickly.
Bleach is also used especially for white clothes. Detergent is used for simple
washing i.e. washing soap and surf. The main raw materials required along with
their usage are listed below. The annual requirement of each raw material is
based on an assumption of 100 kg fabric weight.
Table 11: Raw Material Requirement
Description Quantity
Required
Rate Per
Liter (Rs.) Total Cost (Rs.)
Perclon 20 Liter 290 5,800
Bleach 2.5 Liter 70 175
Tar Pine Oil 10 Liter 135 1,350
Detergent and Soda Ash 2 Kg 70 140
Sulphuric Acid 3 Kg 100 300
Total 7,765
10.9 Human Resource Requirement
In order to run operations of laundry and dry cleaning smoothly, details of human
resources required along with number of employees and monthly salary are
recommended as under:
Table 12: Human Resource Requirment
Description No. of Employees Monthly Salary per
Person (Rs.)
Shop Manager 1 40,000
Workshop Manager 1 35,000
Technical Staff (Machine Operator) 1 25,000
Pre-Feasibility Study Laundry and Dry Cleaning
Small and Medium Enterprises Development Authority (SMEDA) 14
Helper (Machine Operator) 2 20,000
Press Operator 4 18,000
Shop Boy 2 17,500
Packing Man 1 17,500
Total 12
10.10 Utilities and Other Costs
An essential cost to be borne by the business is the cost of electricity; a three-
phase commercial electricity connection is required. The annual electricity
expenses are estimated as Rs. 895,680 in first year with 10% increase in
subsequent years. This project also requires marketing and promotional activities
for which approximately Rs. 107,679 will be spent on marketing and promotion
expenses in year 1. Moreover, some miscellaneous office expenses occur every
year, which includes (stationary expense, tea and entertainment expense for loyal
customers and employees, commuting expense and other non-recurring
expenses).
10.11 Revenue Generations
Based on the capacity utilization of laundry and dry cleaning, sales revenue during
the first year of operations is estimated as under:
Table 10: Revenue Generation – Year 1
Description of Items No. Of Units Processed
Sale Price / Unit (Rs.) *
Sales Revenue (Rs.)
Fabric Wear
Trouser 4,950 175 866,250
Coats (All Kinds) 2,475 350 866,250
Shirts 6,600 150 990,000
Jacket / Sweater 2,475 280 693,000
Dupatta 3,300 130 429,000
Shalwar Qameez 6,600 200 1,320,000
Home and Miscellaneous Fabrics
Blankets 1,320 430 567,600
Bed Sheets 3,300 430 1,419,000
Pre-Feasibility Study Laundry and Dry Cleaning
Small and Medium Enterprises Development Authority (SMEDA) 15
Curtain 1,320 240 316,800
Others (Avg.) 8,250 400 3,300,000
Total 40,590 10,767,900
* Avg of Laundry & Dry Cleaning prices.
11 CONTACT DETAILS
In order to facilitate potential investors, contact details of private sector service
providers relevant to the proposed project be given. In Lahore, there are
approximately 5 to 6 manufactures of laundry and dry-cleaning machines, as
mentioned below:
i. Abdul Waheed at Canal Park Gulberg
ii. Nirwana (Pvt) Ltd at Gulberg Arcade
iii. Mushtaq Engineering Works at Township
iv. 786 Washing Lab & Research Centre in Nishtar Colony Ferozpur Road
v. Usman Enterprises at Yateem Khana (Cell No: 0322-4553261)
Pre-Feasibility Study Laundry and Dry Cleaning
Small and Medium Enterprises Development Authority (SMEDA) 16
12 ANNEXURES
12.1 Income Statement
Calculations 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 10,767,900 12,733,042 14,932,385 17,390,007 20,132,277 23,188,070 26,588,986 30,369,608 34,567,760 37,160,342
Cost of sales
Raw Material Requirment 3,176,797 3,739,091 4,364,538 5,059,227 5,829,787 6,683,434 7,628,026 8,672,112 9,824,993 10,512,742
Packing Cost 142,065 167,211 195,180 226,246 260,706 298,880 341,122 387,813 439,369 470,125
Operation costs 1 (direct labor) 1,554,000 1,709,400 1,880,340 2,068,374 2,275,211 2,502,733 2,753,006 3,028,306 3,331,137 3,664,251
Operating costs 2 (machinery maintenance) 202,950 245,570 294,683 351,164 415,995 490,280 575,261 672,337 783,074 861,382
Operating costs 3 (direct electricity) 706,680 777,348 855,083 940,591 1,034,650 1,138,115 1,251,927 1,377,119 1,514,831 1,666,314
Operating costs 4 (direct water) 180,000 198,000 217,800 239,580 263,538 289,892 318,881 350,769 385,846 424,431
Operating costs 5 (direct gas) 540,000 594,000 653,400 718,740 790,614 869,675 956,643 1,052,307 1,157,538 1,273,292
Total cost of sales 6,502,492 7,430,619 8,461,025 9,603,923 10,870,501 12,273,009 13,824,866 15,540,764 17,436,789 18,872,537
Gross Profit 4,265,408 5,302,423 6,471,360 7,786,084 9,261,777 10,915,061 12,764,121 14,828,844 17,130,971 18,287,805
General administration & selling expenses
Administration expense 1,620,000 1,782,000 1,960,200 2,156,220 2,371,842 2,609,026 2,869,929 3,156,922 3,472,614 3,819,875
Administration benefits expense 162,000 178,200 196,020 215,622 237,184 260,903 286,993 315,692 347,261 381,988
Building rental expense 840,000 924,000 1,016,400 1,118,040 1,229,844 1,352,828 1,488,111 1,636,922 1,800,615 1,980,676
Electricity expense 189,000 207,900 228,690 251,559 276,715 304,386 334,825 368,308 405,138 445,652
Travelling expense 81,000 89,100 98,010 107,811 118,592 130,451 143,496 157,846 173,631 190,994
Communications expense (phone, fax, mail, internet, etc.) 121,500 133,650 147,015 161,717 177,888 195,677 215,245 236,769 260,446 286,491
Office vehicles running expense 210,000 231,000 254,100 279,510 307,461 338,207 372,028 409,231 450,154 495,169
Office expenses (stationary, entertainment, janitorial services, etc.) 162,000 178,200 196,020 215,622 237,184 260,903 286,993 315,692 347,261 381,988
Promotional expense 107,679 118,447 130,292 143,321 157,653 173,418 190,760 209,836 230,819 253,901
Depreciation expense 416,650 416,650 416,650 416,650 416,650 489,911 489,911 489,911 489,911 489,911
Amortization of pre-operating costs 17,822 17,822 17,822 17,822 17,822 - - - - -
Subtotal 3,927,651 4,276,969 4,661,219 5,083,893 5,548,836 6,115,711 6,678,291 7,297,129 7,977,851 8,726,645
Operating Income 337,756 1,025,454 1,810,142 2,702,190 3,712,941 4,799,350 6,085,830 7,531,715 9,153,120 9,561,160
Gain / (loss) on sale of office vehicles - - - - 240,000 - - - -
Earnings Before Interest & Taxes 337,756 1,025,454 1,810,142 2,702,190 3,952,941 4,799,350 6,085,830 7,531,715 9,153,120 9,561,160
Interest expense on long term debt (Project Loan) 304,945 283,806 249,884 213,165 173,420 130,398 83,830 33,423 - -
Subtotal 304,945 283,806 249,884 213,165 173,420 130,398 83,830 33,423 - -
Earnings Before Tax 32,811 741,648 1,560,258 2,489,025 3,779,522 4,668,952 6,002,000 7,498,292 9,153,120 9,561,160
Tax - 24,165 124,039 267,805 564,880 820,685 870,699 1,394,402 1,973,591 2,116,405
NET PROFIT/(LOSS) AFTER TAX 32,811 717,483 1,436,219 2,221,220 3,214,642 3,848,267 5,131,301 6,103,891 7,179,529 7,444,755
Pre-Feasibility Study Laundry and Dry Cleaning
Small and Medium Enterprises Development Authority (SMEDA) 17
12.2 Balance Sheet
Calculations SMEDA
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
Current assets
Cash & Bank 448,178 672,531 1,272,404 2,508,391 4,454,279 6,341,345 9,785,170 14,398,566 19,853,651 27,079,161 37,794,301
Accounts receivable 206,508 225,351 265,285 309,941 359,803 415,401 477,314 546,178 622,687 687,804
Equipment spare part inventory 33,825 42,975 54,148 67,753 84,274 104,289 128,484 157,674 192,826 222,714 -
Raw material inventory 276,572 358,078 459,772 586,247 743,091 937,091 1,176,486 1,471,269 1,833,548 2,158,086 -
Pre-paid building rent 210,000 231,000 254,100 279,510 307,461 338,207 372,028 409,231 450,154 495,169 -
Total Current Assets 968,574 1,511,091 2,265,776 3,707,186 5,899,045 8,080,735 11,877,569 16,914,054 22,876,357 30,577,817 38,482,105
Fixed assets
Machinery & equipment 2,570,000 2,313,000 2,056,000 1,799,000 1,542,000 1,285,000 1,028,000 771,000 514,000 257,000 -
Furniture & fixtures 289,000 260,100 231,200 202,300 173,400 144,500 115,600 86,700 57,800 28,900 -
Office vehicles 600,000 480,000 360,000 240,000 120,000 966,306 773,045 579,784 386,522 193,261 -
Office equipment 107,500 96,750 86,000 75,250 64,500 53,750 43,000 32,250 21,500 10,750 -
Total Fixed Assets 3,566,500 3,149,850 2,733,200 2,316,550 1,899,900 2,449,556 1,959,645 1,469,734 979,822 489,911 -
Intangible assets
Pre-operation costs 89,111 71,289 53,467 35,644 17,822 - - - - - -
Total Intangible Assets 89,111 71,289 53,467 35,644 17,822 - - - - - -
TOTAL ASSETS 4,624,185 4,732,230 5,052,442 6,059,380 7,816,768 10,530,291 13,837,214 18,383,788 23,856,180 31,067,728 38,482,105
Current liabilities
Accounts payable 75,233 89,481 105,641 123,967 144,754 168,337 195,105 225,508 257,528 227,150
Total Current Liabilities - 75,233 89,481 105,641 123,967 144,754 168,337 195,105 225,508 257,528 227,150
Other liabilities
Long term debt (Project Loan) 3,699,348 3,699,348 3,287,830 2,842,389 2,360,229 1,838,324 1,273,397 661,902 - - -
Total Long Term Liabilities 3,699,348 3,699,348 3,287,830 2,842,389 2,360,229 1,838,324 1,273,397 661,902 - - -
Shareholders' equity
Paid-up capital 924,837 924,837 924,837 924,837 924,837 924,837 924,837 924,837 924,837 924,837 924,837
Retained earnings 32,811 750,294 2,186,514 4,407,734 7,622,376 11,470,643 16,601,944 22,705,834 29,885,363 37,330,118
Total Equity 924,837 957,648 1,675,132 3,111,351 5,332,571 8,547,213 12,395,480 17,526,781 23,630,671 30,810,200 38,254,955
TOTAL CAPITAL AND LIABILITIES 4,624,185 4,732,230 5,052,442 6,059,380 7,816,768 10,530,291 13,837,214 18,383,788 23,856,180 31,067,728 38,482,105
Liabilities & Shareholders' Equity
Assets
Pre-Feasibility Study Laundry and Dry Cleaning
Small and Medium Enterprises Development Authority (SMEDA) 18
12.3 Cash Flow Statement
Calculations SMEDA
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 32,811 717,483 1,436,219 2,221,220 3,214,642 3,848,267 5,131,301 6,103,891 7,179,529 7,444,755
Add: depreciation expense 416,650 416,650 416,650 416,650 416,650 489,911 489,911 489,911 489,911 489,911
amortization of pre-operating costs 17,822 17,822 17,822 17,822 17,822 - - - - -
Accounts receivable (206,508) (18,844) (39,933) (44,656) (49,862) (55,598) (61,914) (68,864) (76,509) (65,117)
Equipment inventory (33,825) (9,150) (11,173) (13,605) (16,521) (20,015) (24,195) (29,190) (35,152) (29,888) 222,714
Raw material inventory (276,572) (81,506) (101,694) (126,476) (156,844) (194,000) (239,395) (294,783) (362,278) (324,538) 2,158,086
Pre-paid building rent (210,000) (21,000) (23,100) (25,410) (27,951) (30,746) (33,821) (37,203) (40,923) (45,015) 495,169
Accounts payable 75,233 14,248 16,160 18,327 20,786 23,583 26,769 30,403 32,020 (30,378)
Cash provided by operations (520,397) 224,353 1,011,392 1,681,428 2,428,047 3,375,277 4,008,752 5,224,891 6,116,987 7,225,509 10,715,140
Financing activities
Project Loan - principal repayment - (411,519) (445,441) (482,160) (521,905) (564,927) (611,495) (661,902) - -
Additions to Project Loan 3,699,348 - - - - - - - - - -
Issuance of shares 924,837 - - - - - - - - - -
Cash provided by / (used for) financing activities 4,624,185 - (411,519) (445,441) (482,160) (521,905) (564,927) (611,495) (661,902) - -
Investing activities
Capital expenditure (3,655,611) - - - - (966,306) - - - - -
Acquisitions
Cash (used for) / provided by investing activities (3,655,611) - - - - (966,306) - - - - -
NET CASH 448,178 224,353 599,874 1,235,987 1,945,888 1,887,066 3,443,825 4,613,396 5,455,085 7,225,509 10,715,140
Pre-Feasibility Study Laundry and Dry Cleaning
Small and Medium Enterprises Development Authority (SMEDA) 19
13 USEFUL WEB LINKS
Prime Minister’s Office, www.pmo.gov.pk
Prime Minister’s Kamyab Jawan Program, www.kamyabjawan.gov.pk
Small and Medium Enterprise Development Authority, www.smeda.org.pk
State Bank of Pakistan (SBP), www.sbp.org.pk
National Bank of Pakistan (NBP), www.nbp.com.pk
Bank of Punjab (BoP), www.bop.com.pk
Bank of Khyber (BoK), www.bok.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 Gilgit Baltistan, www.gilgitbaltistan.gov.pk
Government of Azad Jamu Kashmir, www.ajk.gov.pk
Securities & Exchange Commission of Pakistan (SECP), www.secp.gov.pk
Federation of Pakistan Chambers of Commerce and Industry (FPCCI)
www.fpcci.org.pk
Technical Education & Vocational Training Authority (TEVTA),
www.tevta.gop.pk
Punjab Vocational Training Council (PVTC), www.pvtc.gop.pk
Pre-Feasibility Study Laundry and Dry Cleaning
Small and Medium Enterprises Development Authority (SMEDA) 20
14 KEY ASSUMPTIONS
14.1 Operating Cost Assumptions
Description Details
Administration Benefit Expenses 10% of Administration Expenses
Communication Expenses 7.5% of Administration Expenses
Office Expenses 10% of Administration Expenses
Depreciation Method Straight Line
Depreciation Rate 10% on Furniture & Fixtures
10% on Office Equipment
14.2 Production Cost Assumption
Description Amount / Percentage
Cost of Goods Sold Growth Rate 7%
Machinery Maintenance Per Unit Rs. 5.00
Direct Water Rs. 15,000 per month
Direct Gas Rs. 45,000 per month
14.3 Revenue Assumptions
Description Details
Growth in Sales Price 7.5%
Day Operational / Year 330
Production Capacity in First Year 50%
Percentage Increase in Production Capacity
Every Year 5%
Maximum Production Capacity 90%
14.4 Financial Assumptions
Description Details
Debt 80%
Equity 20%
Interest Rate on Debt 8%
Debt Tenure 8 Years
Grace Period 1 Year