Professional Documents
Culture Documents
REGIONAL OFFICE
SINDH
REGIONAL OFFICE
KPK
REGIONAL OFFICE
BALOCHISTAN
Ground Floor
State Life Building
The Mall, Peshawar.
Tel: (091) 9213046-47
Fax: (091) 286908
helpdesk-pew@smeda.org.pk
September 2013
Pre-Feasibility Study
Table of Contents
1 DISCLAIMER .......................................................................................................................................... 2
2 PURPOSE OF THE DOCUMENT ......................................................................................................... 3
3 INTRODUCTION TO SMEDA .............................................................................................................. 3
4 INTRODUCTION TO SCHEME ........................................................................................................... 4
5 EXECUTIVE SUMMARY ...................................................................................................................... 4
6 BRIEF DESCRIPTION OF THE PROJECT ........................................................................................ 5
7 CRITICAL FACTORS ............................................................................................................................ 5
8 INSTALLED & OPERATIONAL CAPACITIES ................................................................................. 5
9 POTENTIAL TARGET MARKET / CITIES ....................................................................................... 5
10 PROJECT COST SUMMARY ............................................................................................................... 6
10.1
10.2
10.3
10.4
10.5
10.6
10.7
11 ANNEXURE ............................................................................................................................................. 9
11.1
11.2
11.3
Pre-Feasibility Study
1 DISCLAIMER
This information memorandum is to introduce the subject matter and provide a
general idea and information on the said matter. 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.
For more information on services offered by SMEDA, please contact our website:
www.smeda.org.pk
Pre-Feasibility Study
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 prefeasibility studies in key areas of investment
has been a successful hallmark of SME facilitation by SMEDA.
Concurrent to the prefeasibility 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
4 INTRODUCTION TO SCHEME
Prime Ministers Small Business Loans Scheme, 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) beneficiaries, through designated financial institutions, initially through
National Bank of Pakistan (NBP) and First Women Bank Ltd. (FWBL).
Small business loans with tenure upto 7 years, and a debt : equity of 90 : 10 will
be disbursed to SME beneficiaries across Pakistan, covering; Punjab, Sindh,
Khyber Pakhtunkhwah, Balochistan, Gilgit Baltistan, Azad Jammu & Kashmir and
Federally Administered Tribal Areas (FATA).
5 EXECUTIVE SUMMARY
This particular Pre-feasibility is for provision of LTV driver training services.
Driving is a skillful task that needs proper training and knowledge of Traffic laws
and regulations. There is a tremendous increase in the number of vehicles
particularly in urbanized cities of Pakistan. Moreover, the government has been
taking steps towards effective implementation of traffic regulations. This has
created a demand for formalized drivers training and road safety information
thereby creating an opportunity for establishing a Drivers Training Service for a
prospective entrepreneur.
The total cost for setting up requisite training facility is Rs. 1.80 million out of
which Rs. 1.60 million is the capital cost and Rs. 0.20 million is working capital
requirement. The debt and equity ratio is 90% and 10%. The project NPV is
around Rs. 4.14 million with an IRR of 57%, and payback period of 2.35 years.
The project is proposed to be set up in suitable locality of any of the urban
centers of Pakistan like Lahore, Karachi, Sukkur, Hyderabad, Faisalabad,
Sargodha, Multan, Quetta and DI Khan, Nowshera and Peshawar. Keeping in
view the nature of services, there is minimal requirement of establishing a formal
office. The facility will comprise of 3 vehicles and employ 4 individuals including
the owner manager. The total capacity of training service will be to train 720
drivers annually. During the sessions, trainees shall be familiarized with the
basics of driving functions including traffic signal system, awareness about traffic
rules and dealing with emergencies and accidents.
Pre-Feasibility Study
7 CRITICAL FACTORS
The following significant factors may be taken into account while making
investment decision:
Efficient utilization of idle capacity by offering Pick & Drop facilities to office
executives on need basis as an additional business opportunity.
Pre-Feasibility Study
Description
Details
Internal Rate of Return (IRR)
57%
Payback Period (yrs)
2.35
Net Present Value (NPV)
Rs. 4,148,210
Returns on the investment and its profitability are highly dependent on trained
staff, marketing, and competitive fee structure. In case the Driving Training
service is not managed efficiently, it will not be able to cover the potential market
and recover payments; hence cost of operating the business will increase.
Pre-Feasibility Study
Details
Rs.180,000
Rs.1,620,000
8%
7
Amount (Rs.)
Vehicles
1,600,000
1,600,000
Amount (Rs.)
200,000
200,000
1,800,000
Total
Working Capital
Cash in hand
Total
Total Project Cost
10.4 Machinery Requirement
Description
Quantity
Cost
Rs/unit
2 500,000
1 600,000
3
Total
Rs.
1,000,000
600,000
1600,000
Main equipment for driving training service is vehicle for providing practical
training to the drivers. Keeping in view the project investment size, used vehicles
are proposed, therefore, due attention and care is to be exercised while
procuring these vehicles.
Pre-Feasibility Study
Sr.
No
1
2
Unit
Suzuki Mehran Car (800 cc)
Suzuki Cultus Car (1000 cc)
Fuel
Petrol
Consumption
Rate / ltr
Km/ltr
17
Rs. 109
14
Rs. 109
Total Km /
day /
vehicle
90
90
Description
No. of
Employees
Salary per
month
Annual Salary
Owner
20,000
240,000
Driving Instructors
15,000
540,000
Total Salaries
780,000
The table above provides details of human resource required to run this project.
Salaries of all employees are estimated to increase at 10% annually.
10.7 Revenue Generation
Table 7: Revenue Details
Product
Unit
Rs.
No.
Rs.
Fee (Rs./Student)
Expected no. of Students First Year
Revenue 1st Year (Rs.)
6,000
360
2,160,000
Pre-Feasibility Study
11 ANNEXURE
11.1 Income Statement
Income Statement
Year 1
2,160,000
Year 2
2,613,600
Year 3
3,136,320
Year 4
3,737,448
Year 5
4,427,438
Year 6
5,218,052
Year 7
6,122,515
Year 8
6,734,766
Year 9
7,408,243
Year 10
8,149,067
21%
25%
8%
54%
459,998
540,000
162,000
1,161,998
998,002
556,598
592,575
196,020
1,345,193
1,268,407
667,918
650,269
235,224
1,553,411
1,582,909
795,935
713,580
280,309
1,789,824
1,947,624
942,877
783,055
332,058
2,057,990
2,369,448
1,111,248
859,295
391,354
2,361,897
2,856,156
1,303,864
942,957
459,189
2,706,010
3,416,505
1,434,251
1,034,765
505,107
2,974,123
3,760,644
1,577,676
1,135,511
555,618
3,268,805
4,139,438
1,735,443
1,246,066
611,180
3,592,689
4,556,378
11%
2%
5%
7%
240,000
43,200
108,000
160,000
263,367
52,272
130,680
160,000
289,008
62,726
156,816
160,000
317,147
74,749
186,872
160,000
348,025
88,549
221,372
160,000
381,909
104,361
260,903
160,000
419,092
122,450
306,126
160,000
459,895
134,695
336,738
160,000
504,671
148,165
370,412
160,000
553,807
162,981
407,453
160,000
551,200
446,802
606,319
662,088
668,551
914,358
738,768
1,208,856
817,945
1,551,503
907,172
1,948,983
1,007,668
2,408,837
1,091,329
2,669,315
1,183,248
2,956,190
1,284,242
3,272,137
446,802
123,099
123,099
323,703
662,088
108,167
108,167
553,921
914,358
91,997
91,997
822,362
1,208,856
74,484
74,484
1,134,372
1,551,503
55,517
55,517
1,495,985
1,948,983
34,977
34,977
1,914,007
2,408,837
12,731
12,731
2,396,106
2,669,315
2,669,315
2,956,190
2,956,190
3,272,137
3,272,137
Tax
NET PROFIT/(LOSS) AFTER TAX
323,703
15,392
538,529
45,854
776,508
92,656
1,041,716
146,898
1,349,088
230,301
1,683,705
326,721
2,069,385
389,828
2,279,486
461,547
2,494,643
540,534
2,731,603
323,703
323,703
323,703
862,232
862,232
862,232
1,638,739
1,638,739
1,638,739
2,680,456
2,680,456
2,680,456
4,029,544
4,029,544
4,029,544
5,713,249
5,713,249
5,713,249
7,782,634
7,782,634
7,782,634
10,062,120
10,062,120
10,062,120
12,556,763
12,556,763
12,556,763
15,288,366
15,288,366
Revenue
Cost of sales
Cost of goods sold (Fuel Cost)
Operation costs 1 (direct labor)
Operating costs 2 (machinery maintenance)
Total cost of sales
Gross Profit
General administration & selling expenses
Administration expense
Communications expense (phone, fax, mail, internet, etc
Promotional expense
Depreciation expense
Miscellaneous expense 1
Subtotal
Operating Income
Pre-Feasibility Study
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 10
323,703
160,000
483,703
538,529
160,000
15,392
713,921
776,508
160,000
45,854
982,362
1,041,716
160,000
92,656
1,294,372
1,349,088
160,000
146,898
1,655,985
1,683,705
160,000
230,301
2,074,007
2,069,385
160,000
326,721
2,556,106
2,279,486
160,000
389,828
2,829,315
2,494,643
160,000
461,547
3,116,190
2,731,603
160,000
540,534
3,432,137
1,620,000
180,000
(179,897)
-
(194,829)
-
(210,999)
-
(228,512)
-
(247,479)
-
(268,019)
-
(290,265)
-
1,800,000
(179,897)
(194,829)
(210,999)
(228,512)
(247,479)
(268,019)
(290,265)
Year 0
Operating activities
Net profit
Add: depreciation expense
Deferred income tax
Cash provided by operations
Financing activities
Project Loan - principal repayment
Additions to Project Loan
Issuance of shares
Purchase of (treasury) shares
Cash provided by / (used for) financing activities
Investing activities
Capital expenditure
Acquisitions
Cash (used for) / provided by investing activities
(1,600,000)
(1,600,000)
NET CASH
200,000
303,806
519,092
771,362
1,065,860
1,408,507
1,805,987
2,265,841
2,829,315
3,116,190
3,432,137
200,000
200,000
200,000
200,000
503,806
503,806
503,806
503,806
1,022,898
1,022,898
1,022,898
1,022,898
1,794,260
1,794,260
1,794,260
1,794,260
2,860,120
2,860,120
2,860,120
2,860,120
4,268,627
4,268,627
4,268,627
4,268,627
6,074,614
6,074,614
6,074,614
6,074,614
8,340,455
8,340,455
8,340,455
8,340,455
11,169,770
11,169,770
11,169,770
11,169,770
14,285,960
14,285,960
14,285,960
14,285,960
17,718,097
17,718,097
17,718,097
10
Pre-Feasibility Study
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 10
200,000
200,000
503,806
503,806
1,022,898
1,022,898
1,794,260
1,794,260
2,860,120
2,860,120
4,268,627
4,268,627
6,074,614
6,074,614
8,340,455
8,340,455
11,169,770
11,169,770
14,285,960
14,285,960
17,718,097
17,718,097
Fixed assets
Machinery & equipment
Total Fixed Assets
1,600,000
1,600,000
1,440,000
1,440,000
1,280,000
1,280,000
1,120,000
1,120,000
960,000
960,000
800,000
800,000
640,000
640,000
480,000
480,000
320,000
320,000
160,000
160,000
Intangible assets
Total Intangible Assets
TOTAL ASSETS
1,800,000
1,943,806
2,302,898
2,914,260
3,820,120
5,068,627
6,714,614
8,820,455
11,489,770
14,445,960
Assets
Current assets
Cash & Bank
Total Current Assets
1,620,000
1,620,000
180,000
180,000
1,800,000
17,718,097
1,440,103
1,440,103
15,392
1,245,274
1,260,666
61,246
1,034,275
1,095,521
153,902
805,762
959,664
300,800
558,284
859,083
531,101
290,265
821,365
857,822
857,822
1,247,650
1,247,650
1,709,197
1,709,197
2,249,731
2,249,731
180,000
323,703
503,703
1,943,806
180,000
862,232
1,042,232
2,302,898
180,000
1,638,739
1,818,739
2,914,260
180,000
2,680,456
2,860,456
3,820,120
180,000
4,029,544
4,209,544
5,068,627
180,000
5,713,249
5,893,249
6,714,614
180,000
7,782,634
7,962,634
8,820,455
180,000
10,062,120
10,242,120
11,489,770
180,000
12,556,763
12,736,763
14,445,960
180,000
15,288,366
15,468,366
17,718,097
11
September 2013
Pre-Feasibility Study
12 USEFUL LINKS
Prime Ministers Office, www.pmo.gov.pk
Small and Medium Enterprise Development Authority, www.smeda.org.pk
National Bank of Pakistan (NBP), 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
Ministry of Education, Training & Standards in Higher Education,
http://moptt.gov.pk
Government of Punjab, www.punjab.gov.pk
Government of Sindh, www.sindh.gov.pk
Government of Khyber Pakhtoonkhwa, 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
Trade Development Authority of Pakistan (TDAP), www.tdap.gov.pk
Security 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
12
September 2013
Pre-Feasibility Study
13 KEY ASSUMPTIONS
Table 8: Project Assumptions
10
10%
90%
8%
7
5%
365
12
300
Rs 6,000
10 days
360
5%
Vehicles
10%
Table 12: Expenditure Assumptions
Communication expense
Promotional Expense
13
September 2013
Rs. Per
K.m
Of Sales
Of revenue