Feasibility Report On ZeeQ Cables Pakistan

Course Instructor: Group Members: Muhammad Mudassar Faisal Saood Hassan Iqbal Program: Session: M.com (finance) (16) Group leader (40) (45) Mr.Muhammad Sajid Amin

2010-2012

Department of Commerce The Islamia University of Bahawalpur Bahawalnagar campus

Feasibility Report on ZeeQ Cables Pakistan

ZeeQ Cables Pakistan

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Dedication

We dedicate this entire work to our beloved parents and teachers who cooperate with us at each and every stage of life, and provide us shades to protect us from harmness of difficulties in life after the Almighty Allah.
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Feasibility Report on ZeeQ Cables Pakistan

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Preface
The Important Pillar Of Commerce Education in Bahawalnagar,the Department of Commerce has always tried to make its students be familiar with the different techniques in the field of Project Appraisal so that they can understand & present the concepts of Project Appraisal in the todays world of progress & development. The importance of principal work almost exists in every professional field. Practical knowledge makes man a technical person who enables to do every work efficiently regarding his profession. The very distributive feature of the degree of Business Administration is that it stresses more on the practical aspects of study especially the 4th semester. Our teachers have extremely realized this importance & they use all the tacts to expose us to the real field circumstances.

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Project

Appraisal

has

become

common

phenomenon now-a-days. We have tried our level best to fulfill the requirements of the topic. Every effort has been made to incorporate all the available means of information to make this assignment comprehensive and fruitful.

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ACKNOWLEDGEMENT
The Creator of this Universe, Almighty Allah, we with the supreme preference pay thanks to him for having being us in this universe as a human and most importantly a Muslim. We would like to pay our special regards and thanks to Respected Mr. Muhammad Sajid Amin who provides us guidance at each and every step, in completion of this report.and thanks to all my group members who coordinate to complete the project report.

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Our mission Statement

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Our Mission is to make people aware of high quality cables, by providing uncompromising quality to our consumers; we intend to make ZeeQ Cables the #1 Pakistani Cable manufacturers on a national scale, and later on the international platform as well.

TABLE OF CONTENTS
Serial #
1

Topic Description
Executive Summary

Page #
9

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2 3 4 5 6 7 8 9 10 11 12 13 14

Introduction of Company Market Analysis Technical Analysis Personnel Analysis Financial Analysis Assumption Underlying Statements Estimated Income Statements Estimated Balance Sheet Estimated Cash Flows Financial Ratios & Commentary SWOT Analysis Recommendations Conclusions

14 21 26 35 37 38 41 42 43 44 45 46 47

ZeeQ Cables Pakistan

ZeeQ Cables
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Executive Summary
Project appraisal on the Cable Manufacturing
Before going to brief details of the project appraisal it is hereby given some projected highlights of the company in the form of Executive Summary.

NAME OF THE PROJECT

ZeeQ Cables Pakistan

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Feasibility Report on ZeeQ Cables Pakistan NATURE OF INDUSTRY

Cable Manufacturing (A New Project) Private Firm Industrial Area Multan Road Bahawalpur Pakistan

CORPORATE STATUS LOCATION OF PROJECT

A start of the business required some experienced techniques to prepare the initial report, however with the help of our respected sir we, the student of M.com finance have been able to utilize the knowledge acquired from our respected teacher as well as from outside environment. We have selected the business of Cable Manufacturing with the hope and determination that it will grow over the years because it have lot of potential in the future market. This is also a challenging project and will be the test of our hidden qualities. ZeeQ CABLES is registered firm established with the objective of making a Power Cables in Industrial Area, district Bahawalpur and also to meet the power cables demand of the housing projects and industrial units in the local area as well as in the whole country with leading mission to export the products in foreign as well. Electric cables play an important role in current lives of human beings, because a lot of facilities used by humans are electrically equipped. When we comes to power cables, it really ease the living pattern of humans by transferring electricity from one place to another. We are going to produce three kinds of electric cables i.e. Single Core (240mm2), Double Core (10mm2) and Three Core (50mm2). Growth of sale is very important for our firm, we will be producing at 70% capacity in the started production year followed by 80% and 90% in coming years respectively of the total 100% production. The production estimates by utilizing 100% capacity of the three power cables is as under in the meters in following table;

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A B C

240mm2 Single core 10mm2 Two core 50mm2 Core Three

3060000 Meters 1360000 Meters 1700000 Meters

We will purchase imported plant machinery from local dealers, because in Pakistan there are local dealers available who sell that imported plant to local customers. Plant Machinery will reached at site at Oct 15, 2012. Our plant machinery installed on 30 Nov 2012. It will start its commercial operation on January 1st 2013.

Financial Highlights
2012
Gross Margin (%) Operating Margin (%) Net Margin (%) Current Ratio in times Equity Ratio Debt Service Coverage Ratio

2013
17.6% 5.5% 2.2% 1.20 16.2%

2014
17.6% 5.5% 2.3% 1.27 21.1%

17.6% 5.4% 2.0% 1.14 10.7%

5.7

8.1

10.2

Estimated cost of project (Rs in 000)

Fixed cost Initial Working Capital 151,044 21,000

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Total Cost

353965.601

Means of Finance
There are two types of means of finance. One is from sponsors contribution and other is taking debt from Bank. The ratio of debt and equity is of 60:40.
MEANS OF FINANCE Debt Habib Bank Ltd Total Debt Equity Paid-up Capital (Sponsors) 141586.2403 TOTAL EQUITY TOTAL DEBT & EQUITY In Rs("000") 212379.3604 212379.3604 212379.3604

141586.2403 141586.2403 353965.601

DEBT : EQUITY RATIO SPONSORS' STAKE

60 : 40 40.00%

Name of Financial Institution

The name of our lending instituition is Habib Bank Ltd which will provide us the entire loan which we need for the completion of our project. The mark up rate of the Bank is 18%.

Name of Sponsors
The sponsors of the project are professionally qualified and have valuable and extensive experience of business management regarding.They have good trading contacts and market reputations in the city.The project faces no problems in terms
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of marketing its products.The sponsors experience would assist the firm in its smooth and profitable operation. The sponsors are financially sound and capable to contribute their part of the equity in the proposed scheme. The managing partner of the firm has vast experience in the managing of this industrial organization
SR.NO. 1. 2. 3. NAME M.Mudassar Faisal Saood Hassan Iqbal STATUS Partner Partner Partner

The names of Machinery involved

Wire drawing Stranding machine Stranding machine Extruder small Extruder large Testing machine small Testing machine large Laying machine

Name of Civil Contractor

The name of civil contractor is Mr.Umar Draz.We will hire the services of this contractor for constructing our building and will pay him fee for his services and construction work.

Name of Machinery Supplier

The name of the machinery supplier is Mr. Shams & Corp Lahore, who will provide us the foreign machinery and all related import charges are being bear by the supplier.

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Address:
31 b Model Town N Block Lahore Pakistan

Implementation Schedule
The project is expected to be implemented within 6 months from the date of the submission of the proposal to the bank. The details of the activities along with time required are given as under:

ZeeQ Cables Pakistan IMPLEMENTATION SCHEDULE S.NO. ACTIVITIES 1 Acquiring of Land & leveling 2 3 4 5 6 7 8 9

Start Complete Engineering studies and designing Start of civil work Complete Order for local machinery Construction of building and civil work Start Complete Arrival of local machinery at site Erection and installation of machinery Start Complete Order for raw materials Trial run Start Complete Start of commercial production

MONTH 1st Jan 30th Jan 2nd Feb 10th Mar 15th Sep 1st Apr 30th Sep 15th Oct 20th Oct 30th Nov 20th Nov 10th Dec 25th Dec 1st Jan

YEAR 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2013

Sponsors stake is 40% and IRR is 43% of the project with a pay back period of 2 Years. Our feasibility shows us there is the great potential in this project, we have a good profitability ratio with increasing trend , and we also have a pay back period which is 2 years, its means we will recover our whole investment after the 2 years, and after the recovery period the chances of growth are very high.

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Feasibility Report on ZeeQ Cables Pakistan We hope our commercial production will start in 1st January 2013,if all the work has been done according to our prepared schedule.

Introduction Of Company
The proposed company ZeeQ Cables Pakistan will do a private business. Initially there will be three sponsors of the company which are the partners of the company also. The company will do a legal business with the compliance of corporate rules and regulations of Pakistan; profit earned by the company will be distributed among the members of the company. ZeeQ Cables Pakistan will produce three kinds of electric cables i.e. Single Core (240mm2), Double Core (10mm2) and Three Core (50mm2).The company will produce will be producing at 70% capacity in started production year followed by 80% and 90% in coming years respectively of the total 100% production.

Products of Company

Single Core Cable

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Two core Cable

Three core cable

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Feasibility Report on ZeeQ Cables Pakistan Over the last years the potential and scope of power cables has increased due to new industrial structures, improvement in the technology and the preferably the investment in the real state like in housing projects etc.

Power Cables Industry

There are almost 923 small and large scale production cables manufacturing companies (Source from Pakistan Business Pages) are being working in Pakistan, trying to fulfil the demand of local needs and exporting the products to the foreign as well. Newage Cables, Pakistan Cables are one of the largest cable manufactures in Pakistan having their provincial contribution 79% and 85% respectively of the whole cables manufacturers. To lead the industry like other top quality power cable producers, we are determined to provide 99.9% pure copper cables and 100% conductivity of the conductors to our customers to reduce the wastage of electricity.

Location of the Project

The project is proposed to be setup in Industrial Area, Multan Road Bahawalpur Pakistan. The site enjoys the following advantages: Easy availability of raw material and contact with suppliers Availability of communication facilities like telephone, telex, etc Access to main road, sources of power, water, fuel, etc. Availability of skilled and unskilled manpower. Free from other environmental hazards like water-logging, floods salinity, etc.

Power Cables and Company Strategy

Power Cables have copper strands inside them through which the electricity flows. If the conductivity of the copper is not 100%, the flow faces resistance causing wastage of electricity. THIS WASTAGE GETS BILLED! The structure of our cables allows electricity to flow smoothly through the wires without any Department of Commerce M.com Finance

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Feasibility Report on ZeeQ Cables Pakistan resistance. Some cable companies in Pakistan offer cheap cables that are made with low grade material. The result is low conductivity and high resistance causing current leakages, increased power bills and risk of damage to health and property. ZeeQ Cables will alleviate all these problems and will offers VALUE RETURN to its customers in short and long term.

The Management Beliefs

Leadership
We value leaders of high integrity, energy and enthusiasm who have the necessary managerial, professional and people skills to inspire a group or an organization to set high goals and achieve them willingly. We believe that leadership skills need to be strengthened at all levels within our organization and that managerial and professional competence is a necessary foundation.

Teamwork and Partnership

We believe that high performing teams containing appropriate diversity can achieve what individuals alone cannot. Consciously using the diversity of style, approach and skills afforded by teams is strength we must continue building into our organization.

Quality and Continuous Improvements

We believe that quality and strong commitment to continuous improvements are essential to our ongoing success. To this end, we define quality as understanding the customers expectations, agreeing on performance and value, and providing products and services that meet expectations 100 percent of the time. Our motto is, Quality in all we do.

Ethics and Integrity

We do care how results are achieved and will demonstrate honest and ethical behavior in all our activities. Choosing the course of highest integrity is our intent and we will establish and maintain the highest professional and personal standards. A well-founded reputation for scrupulous dealing is itself a priceless asset.

Open Communication
We value communications that are courteous and open and that enables each of us to do our jobs more effectively by providing information that contributes to the quality of Department of Commerce M.com Finance

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Feasibility Report on ZeeQ Cables Pakistan our judgment and decision making. Effective communication should provide the means for gaining understanding of the companys overall objectives and plans and of the thinking behind them.

Innovation
Success requires us to continually strive to produce break through ideas that result in improved solutions and services to customers. We encourage challenges to the status quo and seek organizational environment s in which ideas are generated, nurtured and developed.

Individual Growth and Development

We strongly believe in the dignity and value of people. We must consistently treat each other with respect and strive to create an organizational environment in which individuals are encouraged and empowered to contribute, grow and develop them and help to develop each other.

Enjoyment and Fun

We believe that excitement, satisfaction and recognition are essential elements of a healthy, creative and high performing work environment. Having fun in our work should be a normal experience for everyone

Financial Plan
The critical energy crisis in the country is going to be worse and worse, recently our visit to National Bank operational manager, he stated to us that the State Bank of Pakistan announced a policy not to issue the project loans in current situation, because it will have a downside effect on the existing industries of the company. However in order to complete our assignment we came to know the terms and conditions of the project financing from Habib Bank and decided to take loan from this bank according to agreed terms and conditions. MEANS OF FINANCE Debt Habib Bank Ltd Total Debt Equity Paid-up (Sponsors) Capital 141586.2403 141586.2403 In Rs("000") 212379.3604 212379.3604 212379.3604

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Feasibility Report on ZeeQ Cables Pakistan TOTAL EQUITY TOTAL DEBT & EQUITY DEBT : EQUITY RATIO SPONSORS' STAKE 141586.2403 353965.601 60 : 40 40.00%

Land
The proposed land required is in the Industrial area of Bahawalpur Multan Road which is heart of the different industries sector in this area having G.T road side advantages. Our total area of the land is 110 marlas having 29920 Sqr feets with 130 feet width (front) and 230 feet length.

Area in Sr. No. Rate percentages of cost of land

Rs ("000")

Description

Marlas

Unit Cost

Total Cost

Land

110

100,000

11,000

Registration

110

1%

1,000

110

Stamp Duty District Council corporation Fee Development and leveling Charges

110

2%

2,000

220

110

1%

1,000

110

110

5%

5,000

550

TMO Fee

110

2%

2,000

220

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Total Cost of Land

111,000

12,210

Building
The contractor of our building and civil work Mr.Umar Draz describe us there will be a boundary wall of having 8 height one side struck pointing and from other side pluster.It has 2 feet high iron angles on top of walls with barbered wire. Administration block will be constructed on the basis of modern combined hall having separated offices with glasses wall. In other areas there is manufacturing section combined with interlink gates following by stores and open uncovered area.

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Rate Per Unit 2100 2100 2100 2100 2100 900 1100 1800 400 1,800 2100

Unit of

Covered Marla 5 9 10 15 15 5 3 6 22 20 Area 1,360 2,448 2,720 4,080 4,080 1,360 816 1,632 5,984 5,440 720

Rs ("000") Total Cost 2856 5140.8 5712 8568 8568 1224 897.6 2937.6 2393.6 9792 1512

Description Wire Drawing Section Stranding Section Extrusion Section Raw Material Store Finish Goods Store Work shop Labortary Administration Block Open Area

Building RCC RCC RCC RCC RCC RCC RCC RCC Open area

Construction Square feet Square feet Square feet Square feet Square feet Square feet Square feet Square feet Square feet Square feet Square feet(720)

Parking Area RCC Boundary Walls RCC Total Cost of Building and Civil Works

110

30640

49,602

The manufacturing Section will be constructed with the point kept in mind that there is vibration create during running of the machinery so the wall will have 18 inches width to protect the building from this effect.

Implementation Schedule
The acquiring and leveling of land will be as according to schedule is on 1st of Jan 2012 and all related work complete on the 30th of Jan 2012. Engineering studies and designing of civil work started from 1st Feb 2012 and be in finished situation at 10th of March 2012. The order for required machinery for proper working of plant made at 15 Sep 2012 and the MAchinary arrived at 15 Oct 2012.The errection and installation complete on 20 Oct 2012.Construction of building and civil works completed at 1st April 2012. Department of Commerce M.com Finance

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Feasibility Report on ZeeQ Cables Pakistan The order of raw material made at 20Nov 2012 and after its proper storage and control the trial run durated from 10th to 25th of Dec 2012,finally the commercial production will start from the right beginning of the year 2013 i.e. 1st Jan.

Market Analysis
The demand of power cables is not altered by the direct effect of the economic condition of country and is relatively consistent over the years due to the establishment and repair work of the industries and construction of the new residential projects irrespective of the fact that the economic condition of the country is not good for the last 5 years or so.There are thousands of products in the cable industry, our specifications consist of three products and demand for these products is very complicated to measure. However the industry trend about these products is very positive and according to Fast Cables and Newage Cables Lahore the demand of these products is very high.

Future Potential
The current electricity crisis have brought down the domestic demand of power cables, however according to the future trends as the electricity shortfall is promised to be balanced the demand of power cables will increase to some high extent.

Growing Demand
Supply and Demand of Electricity in Pakistan Supply and Demand Position: 2008-2015 (MW)
2008 Existing Generation 15,903 2009 15,903 2010 15,903 2011 15,903 2012 15,903 2013 15,903 2014 15,903 2015 15,903

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Proposal / Committed 530 Generation

4,235

7,226

10,115

10,556

13,307

13,520

14,607

Total Existing/Committed Generation

16,484

20,138

23,129

26,018

26,459

29,210

29,423

30,510

Expected Available 13,146 Generation

16,110

18,503

20,814

21,167

23,368

23,538

24,408

Demand Peak)

(Summer

16,484

17,868

19,352

20,874

22,460

24,126

25,919

28,029

Surplus/Deficit Generation

-3,338

-1,758

-849

-60

-1,293

-758

-2,381

-3,621

Source: Private Power and Infrastructure Board - Govt. of Pakistan. This statistical report about energy crises in Pakistan tell us that the generation of the electricity is lower as compare to the consumption, so due to this our sale of the cables will effect, and if we go toward the world market , that tell us about growing demand of the electricity cables ,there are some statistical figure about the world demand of cables and its consumption

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We analyze that there is the % changes of production in the world market, now we see the consumption pattern in the cables , after it we will go to the decision whether we should go toward world market or not ?

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There is the demand of cables in the world market, and we hope so we will enter in the world market as a reliable and quality manufacturer

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Target Market
Our consumers cannot be specified as we will serve everyone who uses electricity. However, our customers will mainly contractors, architects, consultants, and general people who are constructing their own houses/offices as well. Our customers will also include large factories that will purchase our product for the effective and efficient running of their machinery. Sugar, Textile, Cement, Oil, Aviation, and Telecommunication industries are only a few of the many that will choose our products due to our superior quality and affordability.

Price of Products

Products Sale Price

240mm2 3,050

10mm2 400

50mm2 1,940

Cost Price

1,623

368

1,256

Profit

1,427

32

682

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Distribution Channel

Direct to business

Factory

Distributor

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Export Dealers

Technical Analysis

Retailer

The emergence of new technology is always being welcomed with both hands in every sector of the industry, as far as the cable manufacturing machinery is concerned the latest machines are being developed in different countries like china, India, Italy etc for the purpose of reducing the per unit cost and to improve the efficiency of manufacturing process.

Machines Involved
Wire Drawing:
The basic purpose of this machine is to reduce the size of large copper rods in order to meet the requirement of required copper rod sizes for the manufacturing of cable conductors.

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Stranding machine:
This machine is used to twist and combine wires of coppers of different sizes for removing the effect of electric flux created during the pass of electricity in the cables.

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Extruder
This machine is used for the covering or insulation of cooper conductor in the presence of PVC (poly vinyl chloride, a material used to protect the copper conductor) for protecting copper conductor which transfer electricity by external environment.

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Testing machine
This machine is used to test the samples of manufactured power cables for their proper conductivity requirement. The capacity or the load a cable can carry is tested at this stage.

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Laying machine
This machine is used for the laying of manufactured cables in roles of required sizes.

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Manufacturing Process
The large size copper rods are bring in initial stage to the wire drawing section for the purpose of reducing their sizes to manufacture the conductors of different required sizes. These copper wires of reduced sizes are then comes to stranding section for the purpose of twisting the the copper wires in order to minimize or cancel the effect of electric magnetic flux that produced during the transfer of electricity. There is a process after twisting involved is testing the conductivity or capacity of cables with the testing machines installed in the quality section or lab. The twisted copper wires are then comes to extruder of relevant size of copper bobbins to insulate or cover these wires with PVC (Poly Vinyl Chloride) in a particularly two type of insulation i.e simple insulation of different cores of cables and sheathing or bedding. The insulated cables then pulled by a large force machine which is called laying machine for transfer of finished cables.

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Process Flow Diagram

Copper Rods in Different Size

Wire Drawing Section

Required Sizes of Conductor Copper Wires

Raw Material (Copper Rods & PVC) Twisted Conductor Copper Wires

Stranding Section

Extrusion Section (Insulation)

PVC Insulated cable Conductors

Laying Section

Finished Rolls of Cables

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Raw Material Required

The raw material required for the manufacturing of power cables is copper for conductor and PVC (Poly Vinyl Chloride) for external insulation and sheathing of power cables.

Copper
It is a ductile metal, with very high thermal and electrical conductivity. Pure copper is rather soft and malleable, and a freshly exposed surface has a reddish-orange color. It is used as a thermal conductor, an electrical conductor.

PVC
Polyvinyl chloride is the third most widely produced plastic, after polyethylene and polypropylene.[2] PVC is widely used in construction because it is cheap, durable, and easy to assemble. PVC production is expected to exceed 40 million tons by 2016. PVC is commonly used as the insulation on electric wires; the plastic used for this purpose needs to be plasticized.

Direct Labour The labour requirement for the project is as follow:

No. Employees 8 of Salary 18,000 10,000 7,000 35,000 Total Salary 144,000 200,000 35,000 379,000

Machine Operator Machine 20 Worker Packaging 5 Worker Total Direct 33 Labour

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Factory Overhead
The project consist of heavy machinery which requires large capacity of electric connection,so in order to meet the requirement in the absence of electricity there is also a Caterpillar 400 KV generator.

Description Fixed Cost:

In Rs. ("000")

Power: @ 353/240/KW/Month Insurance: @ 5% of machinery indirect labor cost Maintenance and Depreciation: Machinery depreciation factory building depreciation Maintenance of Building @ 5% of Cost of Building Maintenance of Machinery 5% of the cost Total Fixed Cost Variable Manufacturing Expenses: Fuel Chargers 45 liter/hr Power:@ 18/ 115200units/Month Total Variable Cost 4hours daily

1,016.64 2,580 3,240

5,160 2,480.08 2,480 2,580 1,9536.8

4,896 19,35,360 19,40,256

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Personnel Analysis
Management
is the process of coordinating and overseeing the work activities of others so that organizational goals are accomplished efficiently and effectively with and through others people. So to coordinate and evaluate the each department there is need to assign jobs individually, following is the Admn and other Staff for the Project. Total Monthly Salary 100,000 40,000 80,000 25,000 40,000 40,000 72,000 14,000 8,000 7,000 426000

Designation

No. of Monthly Employees Salary 100,000 40,000 80,000 25,000 40,000 40,000 18,000 7,000 8,000 7,000 365000

Annual Salary Rs. ("000") 1,200 480 960 300 480 480 864 168 96 84 5112

Chairman 1 Personal Secretary 1 Admin Manager 1 Production Manager 1 Selling & Marketing Manager 1 Accounts & Finance Manager 1 Assistants 4 Office Boy 2 Cook 1 Phone Operator 1 Total 10

The indirect staff of the plant and their salary is as under;

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Status

Total

Salary

Grand Total

Indirect Labor Work shop Incharge Technician Work shop Helper Laboratary Incharge Laboratary Incharge Assistant Inventory Controller (Raw Material) Inventory Controller (F.Goods) Store Keeper Receptionist Office Boy Gate Keeper Total indirect Labour

2 2 2 1 1 1 1 2 1 2 4 19

20,000 25,000 10,000 30,000 20,000 20,000 20,000 8,000 12,000 7,000 7,000 179,000

40,000 50,000 20,000 30,000 20,000 20,000 20,000 16,000 12,000 14,000 28,000 270,000

Management Commitment
Top management demonstrates its commitment to the development and implementation of the quality management system and continually improving its effectiveness by: Communicating the importance of meeting customer requirements as well as statutory and regulatory requirements. Establishing the quality policy. Review and approve quality objectives. Conducting management reviews.

Customer Focus
Top management, through its internal systems, ensures that customer requirements and needs are determined and are met with the aim of enhancing customer satisfaction.

Financial Analysis

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Feasibility Report on ZeeQ Cables Pakistan The Financial Structure of the project appraisal consisting of the equity provided by the sponsors and the debt provided by the National Bank .

Cost of the Project

Sr.No. 1 2 3 4 5 6 7 8 9 10 Add: Description Land Building Machinery Installation & Erection 12% Machinery Insurance 5% of Cost of Machinery Intrest during Construction Vahicles Furniture and Fixture Office Equipment Pre-operating expenses Total Estimated Fixed Cost Net Initial Net Working Capital Total Estimated Cost of Project LC 12,210 49,602 51,600 of 6,192 2,580 13,571 953 100 14236.400 4 151,044 21000 6,192 2,580 30,878 13,571 953 100 14,236 151,044 21,000 353965.6 FC ("000") Total cost 12,210 49,602 51,600

Means of Finance
MEANS OF FINANCE Debt Habib Bank Ltd Total Debt Equity Paid-up Capital (Sponsors) 141586.2403 TOTAL EQUITY TOTAL DEBT & EQUITY DEBT : EQUITY RATIO In Rs("000") 212379.3604 212379.3604 212379.3604

141586.2403 141586.2403 353965.601 60 : 40

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The amount of debt is provided by Habib Bank limited at the mark up rate of 18% and the remaining portion of the total cost of the project is acquired by Equity participation of the sponsors in which the stake of sponsors is 40%.

Initial Net Working Capital requirement

Initial Net Working Capital Current Assets Cash Account Recevable 10% of the Sale Raw Material Total Current Assest Less : Current Liabilities in ("000") 6,000 9000 6000 0 21000 0 0 Net Initial working Capital 21000 Rs,

Important Assumptions
Some of the important assumption regarding the production, cash flow, expenses, depreciation and financing assumption are listed in the following tables.

Production Assumptions
Maximum Attainable Capacity In Percentage Capacity Utilization (1st Year) In Percentage Production Capacity In Units (70% in first year) Production Capacity Utilization Growth Rate 100% 70% 4284 KM of 3 products 10% per year

Cash Flow Assumptions

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Feasibility Report on ZeeQ Cables Pakistan Accounts Receivables Accounts Payable 10% of sales 30% of Raw Material

Expense Assumptions
Machine Maintenance Pre-Operational Expense Wages Growth Rate 5% of the cost Rs. 14236.40037 5%

Deprecation Expense Assumptions

Plant & Machinery Depreciation Rate Furniture & Fixtures Depreciation Rate Vehicle Depreciation Rate Building 10% 10% 15% 5%

Financing Assumptions
Debt Equity Tax Rate 60% 40% 35%

IRR

39%
Payback period
The initial investment will be recovered in the 2 years time period.

ESTIMATED INCOME STATEMENTS

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E S T I M A T E D

I N C O M E

S T A T E M E N T S

For the year ending Dec 31, Efficiency Assumed : SALES COST OF GOODS SOLD : - Raw Materials Direct Labour Factory overhead Total Manufacturing cost Add: Opening inventory Less: Ending inventory Cost of Goods Sold GROSS PROFIT OPERATING EXPENSES Depriciation on Equipment & Furniture Depriciation on Vahicles Admin & General Expenses Selling Expenses 10% of the sale Total Operating Expenses OPERATING PROFIT NON OPERATING EXPENSES Financial Expenses Amortzn. of Prelim. Exp Workers Welfare Fund Interest on Borrwings Sub-Total PRE-TAX PROFIT Income Tax NET PROFIT 2%

2012 70% 8115800 6205780.26 4548 1391391.76 7601720.02 0 912206.4024 6689513.6 1,426,286

2013 80% 10381900 7092320.297 4775.4 1587371.04 8684466.737 912206.4024 1042136.008 8554537.13 1,827,363

2014 90% 11699400 7978860.335 5014.17 1783350.32 9767224.825 1042136.008 1172066.979 9637294 2,062,106

197 2,036 8590 811580 984,718 441568.0321 79,38 7 2847.280074 8831.360643 102,25 9 193,32 5 248242.9065 248242.9065 86885.01727 161,357.89

197 4,071 9878.5 1038190 1,259,975 567388.3686 71,529 2847.280074 11347.76737 130,812 216,536 350852.0125 350852.0125 122798.2044 228053.8082

197 6,107 11360.275 1169940 1,421,592 640514.221 63,77 8 2847.280074 12810.28442 147,412 226,848 413666.694 413666.694 144783.343 268883.351

0.35

ESTIMATED BALANCE SHEET

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As on Dec, 31 ASSETS Cash Accounts Receivables(10% of sale) Inventory Raw Material Finished Goods Total Current Assets Plant & Machinery Vahicles Building Furniture & Fixture Office Equipment Less: Acc, Depriciation Net Fixed Assets Land Total Fixed Assets: Preliminary Expenses: Total Assets: LIABILITIES & EQUITY Current Liabilities Account Payable Current borrowings against A/R Interest charges Workers Welfare Fund Dividends Payable Total Current Liabilities: Long-term Liabilities HABIB BAMK LIMITED Total Long-term Liabilities EQUITY provision for bed debts Paid up Capital Add: Retained earnings Total Equity: Total Liabilities & Equity:

Constructn. 187,922 9,000 6,000 202,922

2013 (305,663) 811,580 1,551,445 912,206 2,969,569 51,600 13,571 49,602 953 507 9,872 106,360 12,210 118,570 11,389 3,099,528

2014 (179,121) 1,038,190 1,773,080 1,042,136 3,674,285 51,600 13,571 49,602 953 507 19,745 96,488 12,210 108,698 8,542 3,791,525

2015 4,289 1,169,940 1,994,715 1,172,067 4,341,011 51,600 13,571 49,602 953 507 29,617 86,615 12,210 98,825 5,695 4,445,531

136,807 136,807 14,236 353,966

1,861,734 568,106 79,387 8,831 80,679 2,598,738 212,379 212,379 169,903 169,903

2,127,696 726,733 71,529 11,348 114,027 3,051,333 127,428 127,428

2,393,658 818,958 63,778 12,810 134,442 3,423,646 84,952 84,952

2% 141,586 26,985 141,586 353,966 3,099,528

162,316 141,586 288,098 330,887 3,791,525

183,079.80 141,586 588,869 612,764 4,445,531

ESTIMATED CASH FLOWS

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For the year ending Dec 31 SOURCES Operating Profit Add Back: Depreciation Amortization Funds from Operations Other Income HABIB BANK LTD. Increase in Current Liabilities Paid up Capital TOTAL SOURCES APPLICATION OF FUNDS Investment in Fixed Assets: -Preliminary Exp Repayment of : Mark up on debt Interest charges Taxes Increase in current Assets: TOTAL cash surpuls (deficit) Add: Ending Balance

Const. Yr. 212,379

2013 441,568 9,872 2,847 454,288

2014 567,388 9,872 2,847 580,108

2015 640,514 9,872 2,847 653,234

2,598,738 141,586 353965.601 3053025.53

452,595 1,032,703

372,312 1025546.384

136,807 14,236 86,885 15,000 166,044 187,922 187,922 2,847 79,387 102,259 122,798 3,275,231 3,546,610 (493,585) 187,922 (305,663) 71,529 130,812 144,783 578,175 906,161 126,542 (305,663) (179,121) 483,316 842,137 183,410 (179,121) 4,289 63,778 147,412 2,847 2,847

Net Cash Inflow/(Out Flow)

Financial Ratios
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2012
Gross Margin (%) Operating Margin (%) Net Margin (%)

2013
17.6% 5.5% 2.2%

2014
17.6% 5.5% 2.3%

17.6% 5.4% 2.0%

Our Gross Margin ratio will increase for the upcoming years as we will be producing larger capacity as compare to the production years which will have a direct effect on the operating margin of the company. The operating margin will also increase by efficient production

2012
Current Ratio times in

2013

2014

1.14 10.7%

1.20 16.2%

1.27 21.1%

Equity Ratio

The current ratio will be stable during the years as the current assets will be utilized efficiently, a slight decrease is due to the increase in the current liabilities was relatively greater than the current assets, as the profit will increase the equity will also increase to some proportion.

2012
Debt Service Coverage Ratio

2013

2014

5.7

8.1

10.2

In corporate finance, it is the amount of cash flow from operations available to meet annual interest and principal payments on debt. Our ratio is increasing means our operation funds are increasing and are more enough to pay the markup debt.

SWOT ANALYSIS
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The origins of the SWOT analysis model This remarkable piece of history as to the origins of SWOT analysis was provided by Albert S Humphrey, one of the founding fathers of what we know today as SWOT analysis. I am indebted to him for sharing this fascinating contribution. Albert Humphrey died on 31 October 2005.

Strength
Right products, quality and reliability Superior product performance vs competitors Better product life and durability Spare manufacturing capacity Product innovations ongoing

Weaknesses
Customer lists not tested No direct marketing experience We would be a small player

Opportunities
Market developments Technology development and innovation Local competitors have poor products Could extend to overseas Can surprise competitors

Threats
Political effects Environmental effects Market demand

Recommendations
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The 99.9% pure copper cables are preferred in the in usage to eliminate the wastage of electricity. This requires the raw material to be pure especially the copper and the company should capture its market share by having good quality of its cables, providing its customers the confidence that usage will reduce their element of risk in the wastage of electricity and its reliability can make them comfortable while deciding to purchase from the ZeeQ Cables Pakistan.

Energy Crisis and Suggestions

Pakistan is in the grip of a serious energy crisis that is affecting all sectors of the economy and the various segments of the society. As the situation stands to-day, there are hardly any immediate solutions to resolve the issue. A change of attitude and a change of life style is needed at the national level which should be triggered by the ruling elite and followed by all segments of the society that have access to electricity. At best there could be some short and long-term solutions to the crisis but they need immediate planning and execution with an enormous investment. However, government is taking some steps for this energy crisis, but I think there one step that was the privatization of K.S.E was the hugest blunder of this government; it is the cause of the energy crises in Pakistan. To overcome this problem government has to take a keen look on this problem and have to solve it by conversation and taking some strong and possible steps. Pakistan is rich in hydro resources of energy. According to an estimate the country has enough resources to generate approximately 40000 mw of hydro-electricity. However, presently it only generates 8000 mw of electricity against an installed capacity of 11327 mw. In addition the country can generate electricity with the help of wind and solar energy which has not yet been exploited to meet the energy deficit. Nuclear energy is yet another source of energy and at present PAEC produces 472 mw. It is far less than what PAEC should have been producing to meet the energy deficit.

Power cables demand improvement

The demand of the power cables is directly related to the electricity availability, so a immense presence of electricity in Pakistan can give more life to cable manufacturers, which will have direct effect on the quality of life of the living people of Pakistan. The demand of domestic cables can be meet properly woth more efficiency and the exports can be increased as well.

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Conclusion
The power cables manufacturing business can contribute in the economy of the country to much extent in the form of employment, availability of power cables locally and can become a leading manufacturer in the global line as well by producing high quality cables to the worldwide customers. Currently we are just focusing on the three types of the power cables, and the feasibility report show us there is the increasing trend in the ratios, and each year we are distributing the 50% our income to the sponsors. Currently the demand of the power cables in the Pakistan is low because the construction of the building and the industry in the Pakistan is going to slump, and we also conclude that the demand of the power cables in the worldwide is very high, and we also saw the production and the consumption of the cables in the worldwide, we hope so in the future we will enter in the world market. In short there are the market potential exists in the world market.

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