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Pre-Feasibility Study

(Cut Flower Farm)

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 Complex, Egerton Road,
Lahore
Tel: (92 42) 111 111 456, Fax: (92 42) 36304926-7

helpdesk@smeda.org.pk
REGIONAL OFFICE
Punjab

REGIONAL OFFICE
Sindh

REGIONAL OFFICE
Khyber Pakhtunkhwa

REGIONAL OFFICE
Balochistan

3rd Floor, Building No. 3,


Aiwan-e-Iqbal Complex,
Egerton Road Lahore,
Tel: (042) 111-111-456
Fax: (042) 36304926-7
helpdesk.punjab@smeda.org.pk

5th Floor, Bahria


Complex II, M.T. Khan Road,
Karachi.
Tel: (021) 111-111-456
Fax: (021) 35610572
helpdesk-khi@smeda.org.pk

Ground Floor
State Life Building
The Mall, Peshawar.
Tel: (091) 111-111-456
Fax: (091) 5286908
helpdesk-pew@smeda.org.pk

Bungalow No. 15-A


Chaman Housing Scheme
Airport Road, Quetta.
Tel: (081) 2831623, 2831702
Fax: (081) 2831922
helpdesk-qta@smeda.org.pk

Note: All SMEDA Services / information related to PM's Youth Business Loan are Free of Cost
May, 2014

Pre-feasibility Study

Cut flower Farm Marigold (Rs.1.46 Million)

Table of Content
1

Disclaimer.........................................................................................................2

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

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

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

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

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

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

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

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

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


11 Process Flow:..................................................................................................6
12 Project Cost Summary ..................................................................................6
12.1
12.2
12.3
12.4
12.5
12.6
12.7
12.8
12.9
12.10

Project Economics ..................................................................................................... 7


Project Financing ....................................................................................................... 8
Project Cost ................................................................................................................ 8
Space Requirement ................................................................................................... 8
Machinery and Equipment ........................................................................................ 9
Furniture ...................................................................................................................... 9
Raw Material Requirement ....................................................................................... 9
Human Resource Requirement ............................................................................... 9
Revenue Generation ............................................................................................... 10
Other Costs ............................................................................................................... 10

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


14 Annexure ........................................................................................................11
14.1
14.2
14.3
14.4
14.5

Income Statement .................................................................................................... 11


Project Balance Sheet............................................................................................. 13
Cash Flow Statement .............................................................................................. 14
Useful Project Management Tips .......................................................................... 14
Useful Links .............................................................................................................. 14

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

Pre-feasibility Study

Cut Flower Farm - Marigold (Rs.1.46 Million)

1 DISCLAIMER
This information memorandum is to introduce the subject matter and provide a
general idea and information on the subject. Although, the material included in 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

SMEDA Services / Information related to PMs Youth Business Loan are FREE OF COST -

Pre-feasibility Study

Cut Flower Farm - Marigold (Rs.1.46 Million)

2 PURPOSE OF THE DOCUMENT


The objective of the pre-feasibility study is primarily to facilitate potential
entrepreneurs in project identification for investment. The project pre-feasibility may
form the basis of an important investment decision and in order to serve this
objective, the document / study covers various aspects of project concept
development, start-up, production, marketing, finance and business management.
The purpose of this document is to facilitate potential investors in Cut Flower Farm
by providing them with a general understanding of the business with the intention of
supporting potential investors in crucial investment decisions.
The pre-feasibility reports builds upon best practices developed by enterprises
through trial and error and industrial norms that provide practical guidance on
various aspects of starting and managing a successful business.
Apart from carefully studying the whole document one must consider critical 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 sectorial
research to identify policy, access to finance, business development services,
strategic initiatives and institutional collaboration and networking initiatives.
Preparation and dissemination of pre-feasibility studies in key areas of investment
has been a hallmark of SME facilitation by SMEDA.
Concurrent to the pre-feasibility studies, a broad spectrum of business development
services is also offered to the SMEs by SMEDA. These services include
identification of experts and consultants and delivery of need based capacity building
programs of different types in addition to business guidance through help desk
services.

4 INTRODUCTION TO SCHEME
Prime Ministers Youth Business Loan program, for young entrepreneurs, with an
allocated budget of Rs. 5.0 Billion for the year 2013-14, is designed to provide
subsidised financing at 8% mark-up per annum for one hundred thousand (100,000)

SMEDA Services / Information related to PMs Youth Business Loan are FREE OF COST -

Pre-feasibility Study

Cut Flower Farm - Marigold (Rs.1.46 Million)

beneficiaries, through designated financial institutions, initially through the National


Bank of Pakistan (NBP) and the First Women Bank Ltd. (FWBL).
Loans from Rs. 0.1 million to Rs. 2.0 million with tenure up to 8 years inclusive of 1
year grace period, and a debt: equity of 90: 10 will be disbursed to SME
beneficiaries across Pakistan, covering; Punjab, Sindh, Khyber Pakhtunkhwa,
Balochistan, Gilgit Baltistan, Azad Jammu & Kashmir and Federally Administered
Tribal Areas (FATA).

5 EXECUTIVE SUMMARY
Cut Flower Farm is proposed to be located at favorable flower growing areas in
Pakistan including Pattoki, Khanewal, Faisalabad, Dadu, Sukkur, Peshawar, Swat,
Quetta, Kalat, Ziarat, Pishin, Khanozai, Killa Saifullah etc.
The varieties included are Gladiolus, Mari Gold, Statice and Chrysanthemum.
Production Capacity of Gladiolus, Statice, Chrysanthemum and Marigold is 120,000
Kg, having first year production capacity of 48,000 Kg at initial utilization of 40% in
year -01.
Total Cost Estimate is Rs. 1.46 Million with fixed investment of Rs. 1.25 Million and
working capital of Rs. 0.21 Million.
Given the cost assumptions IRR and payback are 69% and 2.09 years, respectively.
The most critical considerations or factors for success of the project are:

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


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

Balochistans dry and cold climate offers better opportunities for growth of cut
flower. Quetta, Mastung, Kalat, Pishin, Killa Saifullah and Ziarat are some of the
areas recommended for starting such a farm in Balochistan.

6 BRIEF DESCRIPTION OF THE PROJECT


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

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


growing areas in Pakistan and particularly in Balochistan including District
Quetta, Kalat, Ziarat, Pishin / Khanozai, Killa Saifullah and any other temperate
area.

Product: The farm would produce cut flowers to fulfil the local demand of cut
flower varieties including Gladiolus, Mari Gold, Statice and Chrysanthemum.

SMEDA Services / Information related to PMs Youth Business Loan are FREE OF COST -

Pre-feasibility Study

Cut Flower Farm - Marigold (Rs.1.46 Million)

Target Market: The target market for the Cut Flower Farm is local. Major buyers
of cut flower are in larger cities such as Karachi, Peshawar, Lahore and
Islamabad and domestic market is Quetta, whereas, other potential areas of
Balochistan can also be targeted based upon demand.

Employment Generation: The proposed project will provide direct employment


to 06 people. Financial analysis shows the unit shall be profitable from the very
first year of operation.

7 CRITICAL FACTORS

Establishment of the farms in areas where basic infrastructure including water


and electricity are available.

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


requirements and pest management techniques.

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

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


and varieties.

Special attention towards healthy and certified seeds / bulbs, land


preparation, sowing pattern, water management, fertilizer application and
marketing is required.

8 INSTALLED AND OPERATIONAL CAPACITY


Total farm area is assumed to be Four (04) Acres. Cultivation of Gladiolus, Statice,
Chrysanthemum and Marigold will be distributed on the farm area respectively.

Table 1: Production at 40% Capacity


Production Capacity (Units)
Initial capacity utilization
Production per year
Production lost to Petals
Production quantity sold (Flowers)
Production quantity sold (Petals)

120,000
40%
48,000
9,600
38,400
24

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


Marigold varieties and will generate revenues from sale of these varieties. Additional
revenues will be generated from the sale of Gladiolus Corms which will start from the
third year.

SMEDA Services / Information related to PMs Youth Business Loan are FREE OF COST -

Pre-feasibility Study

Cut Flower Farm - Marigold (Rs.1.46 Million)

Product
Gladiolus, Statice,
Chrysanthemum and Mari
Gold

Table 2: Product Mix


Production Capacity Per
Year @ 100 %
120,000 kg

Sales Price (Rs.)


20 35/kg

9 GEOGRAPHIC POTENTIAL FOR INVESTMENT


Pakistan is a country conducive to small scale farming where floriculture provides an
opportunity for enhancing income from available land resources.
Floriculture is an upcoming opportunity in the country since it requires less water and
provides more per acre income than traditional crops. It can play a major role in the
economy. It can become an important sector such as Horticulture, Livestock &
Fisheries.
Favorable growing areas particularly including Pattoki, Khaniwal, Faisalabad, Dadu,
Sukkur, Peshawar, Swat, Quetta, Kalat, Ziarat, Pishin, Khanozai, Killa Saifullah etc.
One of the major competitive advantages of Balochistan is the tenure of production.
In Balochistan, flower plants can be in produced for 8 months while in other
provinces of Pakistan, such period is for 4 months only.

10 POTENTIAL TARGET MARKETS / CITIES


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

11 PROCESS FLOW:
The Flower process will be as under:

Land
Leveling

Sowing

Watering

Early Stage
Plants

Visual
Inspection

Plucking

Packing &
Distribution

12 PROJECT COST SUMMARY


A detailed financial model has been developed to analyze the commercial viability of
Cut Flower Farm - Gladiolus, Mari Gold, Statice and Chrysanthemum under the

SMEDA Services / Information related to PMs Youth Business Loan are FREE OF COST -

Pre-feasibility Study

Cut Flower Farm - Marigold (Rs.1.46 Million)

Prime Ministers Youth Business Loan. Various cost and revenue related
assumptions along with results of the analysis are outlined in this section.
The projected Income Statement, Cash Flow Statement and Balance Sheet are
attached as appendix.
12.1

Project Economics

The total project investment is Rs. 1.46 Million which includes Capital Cost of Rs.
1.25 Million and Working Capital of Rs. 0.21 Million.
All the figures in this financial model have been calculated for a total farm area
assumed to be Four (04) Acres. Cultivation of the cut flowers is expected to yield
120,000 Gladiolus, Statice, Chrysanthemum and Marigold over a distributed area of
04 Acres, respectively.
Yield covered by Cut Flower Farm of Gladiolus, Statice, Chrysanthemum and
Marigold in year one will be 48,000 at initial capacity of 40%.
The following table shows internal rates of return and payback period.
Table 3 - Project Economics

Description

Details

Internal Rate of Return (IRR)

69%

Payback Period (Yrs)

2.09

Net Present Value NPV (Rs.)

3,202,684

Since floriculture sector in Pakistan is not highly developed there are great variations
in the production and consumption cycle of cut flowers. The production cycle is
especially dependent upon the natural environment and weather. Similarly, the
consumption cycle is influenced by marriages, religious (URS) and political
occasions. Due to these reasons it is difficult to forecast the actual requirement for
cut flowers. Similarly, due to the perishable nature of the product, appropriate
infrastructure and transportation also plays an important role in marketing and
profitability of cut flowers.
Focus on healthy and certified seeds/ bulbs, land preparation, sowing pattern, water
management, fertilizer application, hiring of skilled personal, pest management,
ever-changing fashion in terms of flower color and varieties, along with marketing is
required to avoid project losses.

SMEDA Services / Information related to PMs Youth Business Loan are FREE OF COST -

Pre-feasibility Study

12.2

Cut Flower Farm - Marigold (Rs.1.46 Million)

Project Financing

Following table provides details of the equity required and variables related to bank
loan:
Table 4: Project Financing

Description
Total Equity (10%)
Bank Loan (90%)

Details
Rs.146,766
Rs.1,320,898

Annual Markup to the Borrower

12.3

8%

Tenure of the Loan (Years)

Grace Period (Years)

Project Cost

Following requirements have been identified for operations of the proposed


business.
Table 5: Capital Investment for the Project

12.4

Capital Investment
Land
Machinery & equipment
Land tillage and saplings
Furniture & fixtures
Pre-operating costs
Total Capital Costs

Rs.
On lease
16,000
850,400
20,000
364,791
1,251,191

Working Capital
Raw material inventory
Upfront land lease rent
Cash
Total Working Capital
Total Investment

Rs.
16,473
100,000
100,000
216,473
1,467,664

Space Requirement

Total required land for this project is Four (04) acres, most of which will be used for
farming. Land would be leased for the project, however, investors with own land can
generate more income from the project.

SMEDA Services / Information related to PMs Youth Business Loan are FREE OF COST -

Pre-feasibility Study

12.5

Cut Flower Farm - Marigold (Rs.1.46 Million)

Machinery and Equipment

Following table provides a list of equipment required for planting, managing and
harvesting the farm.
Table 7: List of Machinery & Equipment

Items
Shovels, pickaxes, Cutters , Cart
& Misc tools etc
Total
12.6

Total Cost Rs
16,000
16,000

Furniture

Since this is a field oriented project, therefore, no office equipment will be required.
However, there is a provision for purchase of rudimentary furniture.
Table 8: Furniture Cost

Description

Total Cost
(Rs.)
20,000
20,000

Furniture
Total
12.7

Raw Material Requirement

Cost is determined for different cut flower varieties by adding their seed / bulb cost
with labour, pesticides, fertilizer etc.
Table 9: Cost of Material

Material

Cost (Rs.)

Pesticide Sprays
Fertilizers
Water
Weeding
Total
12.8

Unit
20,000
25,000
25,000
25,000

4
4
4
4

Total
Annual
Cost (Rs.)
80,000
100,000
100,000
100,000
380,000

Human Resource Requirement


Table 10: Human Resource Requirement

Description

Supervisor / Marketing
Officer
Farm Worker (Mali) Full
Time

No. of Employees
1

Salary/month

50,000

20,000

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Pre-feasibility Study

Cut Flower Farm - Marigold (Rs.1.46 Million)

Total Staff

70,000

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


and marketing / sales of the cut flower.
Semi-skilled workers are required to look after the plants, watering, fertilizer
application, de-weeding, insecticide use, planting and harvesting at the farm.
12.9

Revenue Generation

Table 11: Revenue Assumptions

Product
Gladiolus, Statice,
Chrysanthemum and
Marigold
Petals (Kg.)
Total Sales Revenue

Unit

Sales Price

38,400

(Rs./Unit)
35

24

20

First Year Sales


Revenue (Rs)
1,334,000

480
1,334,480

Price range for cut flower is Rs. 20 35 per kg. Sales growth rate is assumed to
increase at 10% per annum. Increase in cost of goods sold is assumed to be 12%,
as it is anticipated that some of the bulbs will be available for re-use within two
years. Initial capacity of project is assumed at 40% of total available capacity and
growth in capacity utilization is projected at 25% per annum.

12.10

Other Costs
Table 12: Misc Expenses

Operating Expense / annum


Administration Expense / annum
Land lease/rental expense / annum
Travelling expense
Communication expense
Depreciation expense
Amortization expense
Subtotal

(Rs.)
240,000
100,000
40,344
24,000
88,640
36,479
529,463

SMEDA Services / Information related to PMs Youth Business Loan are FREE OF COST -

10

Pre-feasibility Study

Cut Flower Farm - Marigold (Rs.1.46 Million)

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


Mr. Fahim Ahmed Malghani
Horticulturist/Cold Chain Specialist
Vegetable Botanist Agriculture Research Institute
Agriculture & Cooperatives Department, Government of Balochistan
Quetta
Cell: 0334 4058071

SMEDA Services / Information related to PMs Youth Business Loan are FREE OF COST -

11

Pre-feasibility Study

Cut Flower Farm - Marigold (Rs.1.46 Million)

14 ANNEXURE
14.1

Income Statement

Statement Summaries

SMEDA

Income Statement
Rs. in actuals
Year 10

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9

1,344,480
617,680
726,800

2,403,258
874,352
1,528,906

3,050,289
942,325
2,107,964

3,355,318
1,014,581
2,340,737

3,690,850
1,094,622
2,596,227

4,059,935
1,183,357
2,876,577

4,465,928
1,281,804
3,184,124

4,912,521
1,391,100
3,521,421

5,403,773
1,512,520
3,891,253

5,944,150
1,647,487
4,296,663

General administration & selling expenses


Administration expense
Rental expense
Utilities expense
Travelling & Comm. expense (phone, fax, etc.)
Office vehicles running expense
Office expenses (stationary, etc.)
Promotional expense
Insurance expense
Professional fees (legal, audit, etc.)
Depreciation expense
Amortization expense
Property tax expense
Miscellaneous expense
Subtotal
Operating Income

240,000
100,000
64,334
88,640
36,479
529,454
197,346

244,800
110,000
96,578
88,640
36,479
576,497
952,409

249,696
121,000
116,478
88,640
36,479
612,293
1,495,671

254,690
133,100
126,129
88,640
36,479
639,038
1,701,699

259,784
146,410
136,704
88,640
36,479
668,017
1,928,211

264,979
161,051
148,296
88,640
36,479
699,445
2,177,132

270,279
177,156
161,006
88,640
36,479
733,560
2,450,564

275,685
194,872
174,944
88,640
36,479
770,619
2,750,801

281,198
214,359
190,233
88,640
36,479
810,909
3,080,344

286,822
235,795
207,007
88,640
36,479
854,743
3,441,921

Other income
Gain / (loss) on sale of assets
Earnings Before Interest & Taxes

197,346

952,409

1,495,671

1,701,699

1,928,211

2,177,132

2,450,564

2,750,801

3,080,344

3,441,921

Interest expense
Earnings Before Tax

109,634
87,713

100,371
852,038

88,196
1,407,475

75,011
1,626,688

60,732
1,867,479

45,267
2,131,865

28,519
2,422,045

10,381
2,740,420

3,080,344

3,441,921

Tax
NET PROFIT/(LOSS) AFTER TAX

4,386
83,327

105,305
746,733

188,621
1,218,854

221,503
1,405,185

257,622
1,609,857

297,279
1,834,585

340,806
2,081,239

388,563
2,351,858

439,551
2,640,793

493,788
2,948,133

Balance brought forward


Total profit available for appropriation
Dividend
Balance carried forward

83,327
83,327

83,327
830,060
830,060

830,060
2,048,913
2,048,913

2,048,913
3,454,098
3,454,098

3,454,098
5,063,956
5,063,956

5,063,956
6,898,541
6,898,541

6,898,541
8,979,780
8,979,780

8,979,780
11,331,637
11,331,637

11,331,637
13,972,430
13,972,430

13,972,430
16,920,563
16,920,563

Revenue
Cost of goods sold
Gross Profit

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11

Pre-feasibility Study

Cut Flower Farm - Marigold (Rs.1.46 Million)

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Pre-feasibility Study

14.2

Cut Flower Farm - Marigold (Rs.1.46 Million)

Project Balance Sheet

Statement Summaries

SMEDA

Balance Sheet
Year 0

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Rs. in actuals
Year 10

Year 9

Assets
Current assets
Cash & Bank
Accounts receivable
Finished goods inventory
Equipment spare part inventory
Raw material inventory
Pre-paid annual land lease
Pre-paid building rent
Pre-paid lease interest
Pre-paid insurance
Total Current Assets

100,000
16,473
100,000
216,473

268,599
18,418
40,615
110,000
437,632

1,064,795
25,669
50,341
121,000
1,261,806

2,377,932
37,353
62,020
133,100
2,610,406

3,894,189
43,874
76,409
146,410
4,160,882

5,630,006
48,261
94,136
161,051
5,933,454

7,603,909
53,088
115,975
177,156
7,950,128

9,838,828
58,396
142,882
194,872
10,234,978

12,359,711
64,236
176,030
214,359
12,814,337

15,440,919
70,660
216,869
235,795
15,964,242

Fixed assets
Land
Building/Infrastructure
Saplings & Land Tillage
Machinary & Equipment
Furniture & fixtures
Office vehicles
Office equipment
Total Fixed Assets

850,400
16,000
20,000
886,400

765,360
14,400
18,000
797,760

680,320
12,800
16,000
709,120

595,280
11,200
14,000
620,480

510,240
9,600
12,000
531,840

425,200
8,000
10,000
443,200

340,160
6,400
8,000
354,560

255,120
4,800
6,000
265,920

170,080
3,200
4,000
177,280

85,040
1,600
2,000
88,640

364,791
364,791
1,467,664

328,312
328,312
1,563,704

291,833
291,833
2,262,759

255,354
255,354
3,486,239

218,875
218,875
4,911,596

182,396
182,396
6,559,050

145,916
145,916
8,450,605

109,437
109,437
10,610,335

72,958
72,958
13,064,575

36,479
36,479
16,089,361

0
19,458,391

9,793
9,793

20,277
20,277

23,066
23,066

26,119
26,119

29,605
29,605

33,591
33,591

38,156
38,156

43,392
43,392

49,410
49,410

45,357
45,357

Intangible assets
Pre-operation costs
Legal, licensing, & training costs
Total Intangible Assets
TOTAL ASSETS
Liabilities & Shareholders' Equity
Current liabilities
Accounts payable
Export re-finance facility
Short term debt
Other liabilities
Total Current Liabilities

19,380,665
77,726
19,458,391

0
-

Other liabilities
Lease payable
Deferred tax
Long term debt
Total Long Term Liabilities

1,320,898
1,320,898

2,919
1,320,898
1,323,817

91,440
1,174,215
1,265,655

252,135
1,015,358
1,267,493

441,297
843,316
1,284,612

661,729
656,994
1,318,722

916,499
455,207
1,371,706

1,208,960
236,673
1,445,633

1,542,779
1,542,779

1,920,755
1,920,755

2,345,704
2,345,704

Shareholders' equity
Paid-up capital
Retained earnings
Total Equity
TOTAL CAPITAL AND LIABILITIE

146,766
146,766
1,467,664

146,766
83,327
230,093
1,563,704

146,766
830,060
976,826
2,262,759

146,766
2,048,913
2,195,680
3,486,239

146,766
3,454,098
3,600,865
4,911,596

146,766
5,063,956
5,210,722
6,559,050

146,766
6,898,541
7,045,308
8,450,605

146,766
8,979,780
9,126,546
10,610,335

146,766
11,331,637
11,478,404
13,064,575

146,766
13,972,430
14,119,197
16,089,361

146,766
16,920,563
17,067,329
19,458,391

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13

Pre-feasibility Study

14.3

Cut Flower Farm - Marigold (Rs.1.46 Million)

Cash Flow Statement


-

Statement Summaries

SMEDA

Cash Flow Statement


Year 0
Operating activities
Net profit
Add: depreciation expense
amortization expense
Deferred income tax
Accounts receivable
Finished good inventory
Equipment inventory
Raw material inventory
Pre-paid building rent
Pre-paid lease interest
Advance insurance premium
Accounts payable
Other liabilities
Cash provided by operations

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9

Rs. in actuals
Year 10

(16,473)
(16,473)

83,327
88,640
36,479
2,919
(18,418)
(24,142)
9,793
178,599

746,733
88,640
36,479
88,521
(7,252)
(9,726)
10,484
953,879

1,218,854
88,640
36,479
160,695
(11,684)
(11,679)
2,789
1,484,094

1,405,185
88,640
36,479
189,161
(6,521)
(14,389)
3,053
1,701,609

1,609,857
88,640
36,479
220,432
(4,387)
(17,727)
3,486
1,936,780

1,834,585
88,640
36,479
254,770
(4,826)
(21,840)
3,986
2,191,795

2,081,239
88,640
36,479
292,462
(5,309)
(26,906)
4,565
2,471,169

2,351,858
88,640
36,479
333,818
(5,840)
(33,149)
5,236
2,777,043

2,640,793
88,640
36,479
377,976
(6,424)
(40,839)
6,017
3,102,643

2,948,133
88,640
36,479
424,949
(7,066)
216,869
(4,053)
3,703,952

Financing activities
Change in long term debt
Change in short term debt
Change in export re-finance facility
Add: land lease expense
Land lease payment
Lease principal repayment
Issuance of shares
Purchase of (treasury) shares
Cash provided by / (used for) financing a

1,320,898
(100,000)
146,766
1,367,664

100,000
(110,000)
(10,000)

(146,683)
110,000
(121,000)
(157,683)

(158,857)
121,000
(133,100)
(170,957)

(172,042)
133,100
(146,410)
(185,352)

(186,322)
146,410
(161,051)
(200,963)

(201,786)
161,051
(177,156)
(217,892)

(218,535)
177,156
(194,872)
(236,250)

(236,673)
194,872
(214,359)
(256,160)

214,359
(235,795)
(21,436)

235,795
235,795

Investing activities
Capital expenditure
Acquisitions
Cash (used for) / provided by investing a

(1,251,191)
(1,251,191)

NET CASH

100,000

168,599

796,196

1,313,137

1,516,257

1,735,817

1,973,903

2,234,919

2,520,883

3,081,207

3,939,747

Cash balance brought forward


Cash available for appropriation
Dividend
Cash carried forward

100,000
100,000

100,000
268,599
268,599

268,599
1,064,795
1,064,795

1,064,795
2,377,932
2,377,932

2,377,932
3,894,189
3,894,189

3,894,189
5,630,006
5,630,006

5,630,006
7,603,909
7,603,909

7,603,909
9,838,828
9,838,828

9,838,828
12,359,711
12,359,711

12,359,711
15,440,919
15,440,919

15,440,919
19,380,665
19,380,665

SMEDA Services / Information related to PMs Youth Business Loan are FREE OF COST -

14

Pre-feasibility Study

14.4

Cut Flower Farm - Marigold (Rs.1.46 Million)

Useful Project Management Tips

Technology

Quality Assurance Equipment & Standards: Products quality standards/check


need to be defined.

Marketing

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


service and packaging design & development.

Ads & Point of Sale Promotion: Business promotion and dissemination through
banners and launch events is highly recommended. Product brochures from
good quality service providers can be developed.

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

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


introductory phase price may be lower and used as a promotional tool. Product
cost estimates should be carefully documented before price setting. Government
controlled prices shall be displayed, where applicable.

Human Resources

List of Human Resource

Adequacy & Competencies: Recruitment of skilled and experienced staff


should be considered an investment.

Performance Based Remuneration: Performance based remuneration should


be offered to incentivize workers.

Training & Skill Development: Training and skill development of employees


and exposure to best practices should be undertaken. Least cost options for
Training and Skill Development (T&D) may be linked with compensation benefits
and awards.
14.5

(As per Section 12.8)

Useful Links
Prime Ministers Office
www.pmo.gov.pk

Small & Medium Enterprises Development Authority (SMEDA)


www.smeda.org.pk

National Bank of Pakistan (NBP)

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14

Pre-feasibility Study

Cut Flower Farm - Marigold (Rs.1.46 Million)

www.nbp.com.pk

First Women Bank Limited (FWBL)


www.fwbl.com.pk

Government of Pakistan
www.pakistan.gov.pk

Ministry of Industries & Production


www.moip.gov.pk

Government of Punjab
www.punjab.gov.pk

Government of Sindh
www.sindh.gov.pk

Government of Khyber Pakhtunkhwa


www.khyberpakhtunkhwa.gov.pk

Government of Balochistan
www.balochistan.gov.pk

Government of Gilgit Baltistan


www.gilgitbaltistan.gov.pk

Government of Azad Jammu & Kashmir


www.ajk.gov.pk

Trade Development Authority of Pakistan (TDAP)


www.tdap.gov.pk

Securities & Exchange Commission of Pakistan (SECP)


www.secp.gov.pk

Federation of Pakistan Chambers of Commerce and Industry (FPCCI)


www.fpcci.com.pk

State Bank of Pakistan (SBP)


www.sbp.org.pk

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15

Pre-feasibility Study

Cut Flower Farm - Marigold (Rs.1.46 Million)

15 KEY ASSUMPTIONS
Production Related Assumptions
Production Capacity (Units)
Initial capacity utilization
Production per year
Production lost to Patel (@ 20%)
Production quantity sold (Flowers)
Production quantity sold (Flowers in kgs. for petals)

120,000
40%
48,000
9,600
38,400
24

Revenue Assumption
Production Capacity
Sale price per Flower in year 1
Sale price per Kg. petals
Sale price growth rate
Production capacity utilization - Year 1
Production capacity utilization growth rate
Maximum capacity utilization

40,000

120,000
Rs. 35
Rs. 20

10%
40%
25%
75%

Financial Assumptions
Description
Equity
Debt
Debt Tenure (Years)
Interest Rate / annum
Grace Period (Years)

90 %
10 %
90%
8
8%
1

Depreciation Rates
Furniture
Machinery and Equipment

10 %
10 %

Cash Flow Assumptions


Accounts Receivables Cycle (days)
Accounts Payable Cycle (days)
Cash in Hand Rs.

5
15
100,000

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16

Pre-feasibility Study

Cut Flower Farm - Marigold (Rs.1.46 Million)

Economy Related assumptions


Inflation rate
Electricity growth rate
Water price growth rate
Wage growth rate

10 %
10 %
2%
2%

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17