SMEDA Flower Shop

Pre-Feasibility Study
Flower Shop
Small and Medium Enterprise Development Authority

Government of Pakistan
www.smeda.org.pk
HEAD OFFICE REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE

SINDH NWFP BALOCHISTAN
43-T, Gulberg II, 5TH Floor, Bahria Ground Floor Bungalow No. 15-A
Lahore, 54660. Complex II, M.T. Khan Road, State Life Building Chaman Housing Scheme
Tel: (042) 111-111-456 Karachi. The Mall, Peshawar. Airport Road, Quetta.
Fax: (042) 5753545, Tel: (021) 111-111-456 Tel: (091) 9213046-47 Tel: (081) 831623, 831702
5753587 Fax: (021) 5610572 Fax: (091) 286908 Fax: (081) 831922
helpdesk@smeda.org.pk helpdesk-khi@smeda.org.pk helpdesk-pew@smeda.org.pk helpdesk-qta@smeda.org.pk
April 2007
Pre-Feasibility Study Flower Shop
DISCLAIMER
The purpose and scope of this information memorandum is to introduce the subject
matter and provide a general idea and information on the said area. All the material
included in this document is based on data/information gathered from various sources and
is based on certain assumptions. 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 does not assume any liability for any financial or other loss
resulting from this memorandum in consequence of undertaking this activity. Therefore,
the content of this memorandum should not be relied upon for making any decision,
investment or otherwise. The prospective user of this memorandum is encouraged to
carry out his/her own due diligence and gather any information he/she considers
necessary for making an informed decision.
The contents of the information memorandum do not bind SMEDA in any legal or other
form.
DOCUMENT CONTROL
Document No. PREF-28
Revision 2
Prepared by SMEDA-Punjab
Approved by GM Punjab
Issue Date October 5, 2001
Revision Date April, 2007
PREF-28/October 2001/1
1 INTRODUCTION TO SMEDA............................................................................................... 4
2 PURPOSE OF THE DOCUMENT.......................................................................................... 4
3 BRIEF INTRODUCTION ....................................................................................................... 4
3.1 General Brief ......................................................................................................................................... 5
3.2 Project Rationale .................................................................................................................................... 5
4 REGULATION ........................................................................................................................ 5
5 KEY SUCCESS FACTORS ..................................................................................................... 5
6 THREATS ................................................................................................................................ 6
7 PROCESS FLOW CHART ..................................................................................................... 6
8 VIABLE ECONOMIC SIZE ................................................................................................... 6
9 CURRENT INDUSTRY STRUCTURE .................................................................................. 7
10 SALES & MARKETING ISSUES ..................................................................................... 7
10.1 Tips for selling flowers......................................................................................................................... 9
11 LAND & BUILDING........................................................................................................ 10
11.1 Shop .................................................................................................................................................. 10
11.2 Land selection .................................................................................................................................... 10
12 FARM INPUTS ................................................................................................................ 11
12.1 Flower Plants & Bulbs....................................................................................................................... 11
12.2 Production Basics.............................................................................................................................. 14
12.3 Watering ........................................................................................................................................... 15
12.4 Labor ............................................................................................................................................... 16
12.5 Pesticide Sprays ................................................................................................................................ 17
12.6 Fertilizers .......................................................................................................................................... 17
12.7 Harvest and Post Harvest ................................................................................................................... 18
12.8 Building & Shed: .............................................................................................................................. 20
12.9 Farm Fixtures & Tools: ..................................................................................................................... 20
12.10 Packing Shed .................................................................................................................................. 20
12.11 Transportation ................................................................................................................................. 21
12.12 Electricity ....................................................................................................................................... 21
12.13 Foliage & Fastening Items ............................................................................................................... 22
12.13.1 Suzuki Van................................................................................................................................... 22
13 OUTPUT ........................................................................................................................... 22
14 PRICING AND RECORD KEEPING ............................................................................. 23
15 GENERAL FACTS & FIGURES .................................................................................... 23
16 FLOWERS PURCHASED FROM VENDORS ............................................................... 24
17 KEY ASSUMPTIONS ...................................................................................................... 28
PREF-28/April, 2007/Rev 2
1 INTRODUCTION TO SMEDA
The Small and Medium Enterprise Development Authority (SMEDA) was established with
the objective to provide fresh impetus to the economy through the launch of an aggressive
SME support program.
Since its inception in October 1998, SMEDA had adopted a sectoral SME development
approach. A few priority sectors were selected on the criterion of SME presence. In depth
research was conducted and comprehensive development plans were formulated after
identification of impediments and retardants. The all-encompassing sectoral development
strategy involved recommending changes in regulatory environment by taking into
consideration other important aspects including finance, marketing, technology and human
resource development.
SMEDA has so far successfully formulated strategies for sectors including fruits and
vegetables, marble and granite, gems and jewelry, marine fisheries, leather and footwear,
textiles, surgical instruments, transport and dairy. Whereas the task of SME development at a
broader scale still requires more coverage and enhanced reach in terms of SMEDA’s areas of
operation.
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 document also provides sectoral information, brief on
Government policies and international scenario, which have some bearing on the project
itself.
This particular pre-feasibility is regarding setting up a “Flower Shop”. In meeting the above
tasks we have obtained information from industry sources and officials of major flower
shop/farm owners in Pakistan.
This report is based on the information obtained from industry sources as well as from the
discussions with businessmen. For financial Model, since the forecasts/projections relate to
the future, actual results are likely to be different because events and circumstances
frequently do not occur as expected and the differences may be material.
Whilst due care and attention have been taken in performing the exercise, no liability can be
inferred for any inaccuracies or omissions reported from the results thereof. It is essential that
this report be read in its entirety with Financial Model in order to fully comprehend the
impact of key assumptions on the range of values determined.
3 BRIEF INTRODUCTION
Environmentally sound production techniques, increased farm diversification, and increased
farm income are basic parts of sustainable farming systems. Cut flower production and
marketing offers both small and large-scale growers a way to increase the level of
4
sustainability on their farms. The tremendous variety of plants that can be grown as cut
flowers allows growers to choose those which are well-adapted to the farm site and grown
without large offsite inputs. This variety also makes diversity in both production and
marketing possible. And the high value of cut flowers can increase farm income.
3.1 General Brief

Cut flower harvesting is gaining popularity in Pakistan. This sector is attracting not just men
but a lot of women into this business as well. Women are entering this field, thinking it is an
easy and part time business. But once they are engaged in this work, they realize that it is a
full time job.
Although a cut flower farm is a profitable and attractive venture, the grower is still not
rewarded properly in financial terms for his/her work. Either the middleman or the retailers
make the profit. Retailers enjoy the maximum margin.
This pre-feasibility is being prepared by SMEDA and is intended to provide general
information on the opportunity for an investor in the floricultural sector to establish a flower
shop backed by his own cut flowers farm. This would maximize the profits for the investor
and make the product value added when sold on the shop as flower basket, bouquet, and
bunch.
3.2 Project Rationale

Cut flower production has the potential to increase income for both small and large farms.
Cut flower business is a reasonably sound and paying business if conducted in a proper way
and on a proper scale. Demand for cut flowers is growing tremendously as more and more
people are becoming aware of the beauty of flowers as decorative items. Weddings, birthday
parties, seminars, and other such social gathering events are incomplete without floral
decorations.
A project that envisages one flower shop in Lahore backed with two farms, one in the
outskirts of Lahore and other in Haripur / Abbotabad, seems unreasonable as far as capital
investment is concerned, and unmanageable as far as geographic locations are concerned.
But when we check the concept on business level, not only the project becomes viable, but
also the financial returns make it highly attractive. Unfulfilled demand in posh localities of
the city, easy availability of shops, easy availability of leased land, year round demand and
high profit margins are some of the factors that convince an investor to come into this
business.
4 REGULATION
There is no government regulation, which affects this business.
5 KEY SUCCESS FACTORS

The proposed project would have a number of competitive advantages:
1) Filling the demand gap for quality flower products
2) Supply of flowers
3) Own sale point
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4) More extensive product line which suits customer demand
6 THREATS
Flowers are perishable products with a limited life span. Even if they are treated with life
enhancing solution, their life is limited. If they are not sold in time they loose appeal and
have to be dumped, resulting in economic loss.
Another possible threat is the attack of certain diseases on the flower fields. Though
pesticides are sprayed regularly, yet there is always a chance of their attack. This could
cause considerable and/or detrimental damage.
A distant threat could be the lack of demand either due to excessive supply or change in
fashion. But this is too distant and remote to stop anyone from going for this project.
7 PROCESS FLOW CHART

Picking (Early Washing in Treatment with Drying with
morning) clean water life enhancing natural air
solution
Transportation via Packing in Visual

train /truck or van wooden and/or Inspection
cardboard boxes
Final sorting of flowers, removal Direct sales through shop,

of leaves and making of flower supply to party decorators &
baskets, bouquets & bunch sale in open market (mandi)
8 VIABLE ECONOMIC SIZE

A normal sized shop of 15’x20’ is required at a posh location in the city. To support this
shop, a 5.5-acre farm in Lahore (Mahmood Booti area) and a 4-acre farm in Haripur /
Abbotabad is required for constant supply of high quality Roses, Tube Rose, Statice and
Gladiola flowers throughout the year. The plantation of flowers in both the farms would be as
per the following table:
Table 1: Land size for each Flower Plant
Sr. No. Flower Name Lahore Farm Haripur / Abbotabad Farm
1 Roses 2 Acre 2 Acre
2 Glad 2 Acre 2 Acre
3 Tube Rose 1 Acre -
4 Statice 0.5 Acre -
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9 CURRENT INDUSTRY STRUCTURE

The standard of retail flower shops in Pakistan is not very good. This is an overall situation
in the country. There are very few proper florist shops in the country. Most of the shops can
only qualify as covered kiosks, where flowers are being sold in a very ordinary form. Though
these are retail outlets, they do not add much value to the product.
Most of these retail outlets exist in a group along some important shopping point or market.
This is so because these have been established by the order of local municipalities. They do
not have proper display facilities. As these are open shops therefore they have no air
conditioners to keep the temperature down so as to keep the flowers fresh. They do this by
keeping the flowers in water buckets and spraying them with water every few hours. This is
done to keep the flowers fresh, not realizing that this procedure reduces the life of flowers.
All such outlets have a very limited product line with not many variations. Simple bunch of
flowers is the major selling product. Very few and ordinary bouquets are also available.
Loose rose petals are another form of very popular selling items, to be sprinkled on wedding
invitees or for funeral bier.
Proper florist shops exist only in 5-star hotels. To a large extent, this is still the case. Only
one or two other shops exist outside a 5-star hotel in all major cities. Like in Lahore there are
only two or three proper florist shops, which exist outside a 5-star hotel shopping arcade.
The hotel shops are very expensive, though they have very good quality product. These
other shops are becoming more popular as they are less expensive compared to the shops in
5-star hotels and have almost similar quality and variety.
The reason being, city shops are becoming more popular is because they sell high quality
flowers and have diversified product line. These shops have qualified flower arrangement
experts to create quality flower based products.
10 SALES & MARKETING ISSUES

The city shop would serve as the center point of all marketing and sales activities. The whole
concept of this pre-feasibility study centers on the flower shop. All other requirements are
there to support it. There will be three segments of buyers from the shop:
a) Direct buyers of flower basket, bouquets, and bunch.
b) Direct event decoration orders.
c) Party decorators, event organizers, and offices.
At present, the roadside flower shops & open flower shops are the only source for purchasing
whatever kind of flowers one wants. There are two main reasons for the success of these
shops. First of all they are strategically located for easy access. Secondly, they are the only
known source for flower sales. People have to buy whatever they have to offer.
The second category of party decorators, event organizers, and offices also buy either from
these shops and/or different traders cum suppliers, who themselves buy directly from
‘mandi’. In either case the quality is low, there is no variety, and no surety of consistency of
supply.
Self owned flower farms would feed the proposed flower shop, the quality of flowers would
be excellent. The professional flower arrangement experts would handle the flowers properly
7
and create beautiful flower baskets, bouquets, and bunches. There would be a lot of variety
to choose from. The shop would be air-conditioned and therefore the flowers would be fresh
and healthy when the buyer would come to purchase. In this way the flower shop would
serve as an important sale point for individual customers.
Besides selling flowers directly from the retail outlet, the shop would also take orders for
party, offices, and wedding decorations. Marketing possibilities include wholesale markets,
restaurants, supermarkets, retail florists, special events such as weddings, and the Internet.
i. Whole sale Markets
Whole sale markets are considered by many to be entry-level markets, a place for new
growers to sharpen their skills and cultivate higher-level markets.
ii. Restaurants
Selling to restaurants requires flexibility and high-quality products. The time needed to make
deliveries may be considerable.
iii. Supermarkets
Grocery stores can handle large volumes, but it can be difficult to establish accounts.
iv. Retail Florists
In general, a florist will want flowers that are just beginning to open —unlike most whole
sale market customers, who prefer fully open blossoms. Most florists know exactly what they
want and may need a fairly large quantity of a certain flower.
Introduce with a bucket of free samples, a flyer that lists the flowers grown & sell at the
outlet, delivery schedule, payment terms, and business card. E-mail or fax a list of what is to
offer after harvesting, then call for orders.
Deliver on the same day and same time every week. Florists need to depend on you if they
have downsized standing orders from the wholesale markets so that they can buy from the
flower shop.
Use buckets with flower shop’s name/label on them so you can leave them to pick up the
following trip. Offer only the best. Consistency in quality, quantity, and variety is crucial.
v. Weddings
Wedding work can be profitable, but it is not for everyone who grows flowers. Besides
needing aesthetic talents, it takes a certain temperament to work cooperatively with brides,
grooms, and often their parents. It also takes a lot of time.
Most weddings involve a bridal bouquet, bridesmaid bouquets, altar arrangements and
reception hall arrangements. The price should reflect not only the cost of materials and labor
for the finished product but also the time spent in consultation. One needs to give his/her
client a price estimate well in advance of the wedding day.
vi. Internet
In the past decade, the Internet has become an important marketing tool. The Internet allows
growers to reach customers that they could not have reached in other ways without
considerable expense. More than 6 percent of all Internet transactions involve flower sales.
Building own Web site is a big step, but it may be an excellent way to increase the markets.
The shop, with its flower arrangement experts and own direct supply of high quality flowers
from the farm, would serve the high end of the market. One of the shops in Lahore is
currently doing this and is a very successful business.
Initial introduction and brand awareness campaign would have to be launched for the shop to
be a successful retail outlet at its beginning. Two steps would have to be taken for this. First
is to choose the right location and setup a proper shop with an appealing interior decoration.
The second step is to distribute one page pamphlet along with newspapers in the neighboring
localities. In the beginning, some discounts would have to be offered to build relations and
retain customers. For this purpose, 1% of total revenues would be used as promotion
expenses.
10.1 Tips for selling flowers

a. Have a good volume and plenty of color. It will attract people like a magnet.
b. Sell only quality flowers. (Post-harvest handling is critical.) People will come back if
the flowers sold to them have a long vase life.
c. Keep flower buckets wiped off (clean) and neat. Use white plastic buckets for regular
bouquets, and taller, thin plastic flower buckets for taller varieties and those with long stems.
d. Tell customers how to maintain their flowers. Tell them to change the water every day
or ever other day & give customers a card with a homemade alternative: To three cups of
water, add one tablespoon sugar, one teaspoon vinegar, and one crushed aspirin tablet.
People seem to like the idea.
e. Wrap bouquets or purchased flowers attractively. Use floral sleeves or use plastic
bags and customers don’t seem to mind.
f. Be creative with offerings. Have a variety of sizes of bouquets. ‘Build-your-own’
bouquets are popular at some markets. Have several buckets of individual flowers for
customers to choose from to make their own bouquets. Or offer bunches of one kind of
flower, such as Chrysanthemum or Gladiolus. It is found anything works, as long as it’s
colorful. Fall colors don’t do well in summer, and dull colors don’t do well, especially on
cloudy days.
g. Have a good awning to protect flowers from the harsh summer sun. Wilting flowers
won’t sell.
h. Check flower buckets often during the market to make sure flower stems are in the
water. It is noticed when people pick bouquets up to compare; they often don’t set them back
in the water. And they break some stems.
i. Have a few sunflowers that aren’t quite perfect? Give them away to kids. It’ll make
them happy, and moms will remember.
11 L A N D & B U I L D I N G
Following inputs are required related to land & building:
11.1 Shop
A 300 square feet shop is required for establishing a proper retail outlet in the posh & well
populated area in any of the big cities of Pakistan. Shop is to be obtained on rent. Rent
estimation for such a shop is Rs 30,000/month. Six months rent as advance and three months
rent as security would be required as well. Security is a one-time expenditure. Advance rent
would only be given at the beginning. After first six months, as the shop would be running
regularly, rent would be paid on monthly basis.
The shop would be partitioned into two parts. The front part would serve as the display area
and the back part of the shop behind the partition would serve as the area where flowers
would be received and sorted. After sorting, new flower baskets, bouquets, and bunches
would be made everyday and then displayed for sale. As products would be sold, new ones
would be made to fill the empty space on display.
The interior decoration of the shop would cost about Rs 300,000. This amount would be
spent to create an aesthetic look, to install an air conditioner, to set up the display area, to
create partition, to make shelves and install a wash basin behind partition, to buy tools, and to
make the cash counter. The area behind partition would be about 100 square foot.
11.2 Land selection

Most cut flowers prefer a location in full sun throughout the entire day. The field and soil
should be well drained. If at all possible, a location with well drained, sandy loam soil, high
in organic matter, and with a neutral pH is desirable. Soil preparation is the most important
job to do in the flower farm. All plants should be watered as soon after planting as possible.
Delaying the application of water to the newly planted crop may severely reduce overall
production.
Wind protection is highly desirable for all plants. Windbreaks serve to reduce water stress on
plants and help prevent stem breakage and floral damage. A source of irrigation water is
essential. If animal foraging is a problem, fencing may be required.
Land is required at two places. One farm is to be made near Lahore (Mahmood Booti / Burki
Area) and the other one in Haripur / Abbotabad. The basic advantage of having a farm at
Lahore is that the temperature/weather conditions are feasible and frost is relatively less as
compared to its other neighboring areas. The farm at Lahore would be supply source of
Gladiolus, Roses, Statice for the shop during winter season & Tube Rose during summer
season. This farm would be actively supplying these flowers from mid of March to
February. The other farm in Haripur / Abbotabad would also be used for supplying Glads &
Roses during summer months & it would be supplying flowers from April to November.
Besides the flower growing area, a little space would be required for post harvest treatment at
both of the farms. The farm near Lahore is bigger because it will supply flowers during the
peak demand season, the winter & the summer seasons.
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The land would be obtained on lease. In Mahmood Booti or its neighboring areas, lease rate
is Rs 15,000 per acre per year, whereas, in Haripur / Abbotabad it is around Rs 17,500 per
acre per year.
12 FARM INPUTS
12.1 Flower Plants & Bulbs
a. Preparing the Bed

Plants should be grown in beds raised 4–6 inches to maximize drainage. Poorly drained soil
should be corrected by placing drain lines 10–12 inches deep under the beds.
A well-drained soil environment is essential for maximum root development and reduces the
potential for root rot problems.
A worker can efficiently reach only 2 feet into a bed to make a proper cut and remove the
flower without damage to the crop. Bed length also is set to maximize the area in production
versus the area in aisles. The limiting factor to bed length is labor efficiency. The maximum
distance a worker should carry harvested flowers is about 50–60 feet. Planting beds should
be 100–120 feet long.
b. What To Grow: The Ideal Crop

An ideal cut flower crop, either fresh or dried, would have the following characteristics:
 Low cost of production—materials and labor
 High value and unlimited demand
 High production per square foot of bed space
 Extended production and marketing season
 Long productive life
 Post harvest vase life of at least 7 days
 Resistance to diseases and pests of all types
 Resistance to heat and drought stress
 Long stems (18 inches)
 Easy harvest and handling
 Aesthetically pleasing and/or fragrant flowers, foliage, or stems
No single species or variety of plant material will meet all of these criteria. They are
presented here to provide a means of evaluating the relative desirability of producing a crop
of a specific plant.
c. When to Plant
Planting dates depend on the target market and on plant classification—whether it is an
annual, biennial, or perennial. In general, the peak demand for the retail florist trade is from
fall through Mother’s Day. Plantation schedule for both farms is mentioned below:
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Table 2: Flowers planted at Lahore Farm1

Sr. Flower Name Planted In Flowers Blossom in
No
1 Roses (all species) 15 Jan - 15 Feb First Year, Jul - Feb then
every year continue from
Apr - Feb
2 Gladiolus
White Prosperity Sep - Jan (mid) After 110 Days
a (White Color)
Advance Red (Red Sep - Dec After 120 Days
b Color)
Perceilia, (Purple Aug - Feb 70 Days
c Color)
Rose Supreme (Pink Sep - Jan (mid) 90 Days
d Color)
3 Tube Rose (Single) 15 Apr - 1 May (all at After 60 Days (15 Jun -
once) Jan)
4 Statice Seeds planted in Sept Mar - Apr (mid)
Oct & Nov (plants
transplanted in the field)
Table 3: Flower planted at Haripur / Abbotabad Farm

Sr. Flower Name Planted In Flowers Blossom in
No
1 Roses (all species) Jan First Year, Jul - Nov/Dec
then every year continue
from Apr - Nov
2 Gladiolus
White Prosperity Feb – Apr After 110 Days
a (White Color)
Advance Red (Red Feb – Apr After 120 Days
b Color)
Perceilia, (Purple Feb – Apr 70 Days
c Color)
Rose Supreme (Pink Feb - Apr 90 Days
d Color)
1
Mr. Umar Farooq, flowers farmer in Pattoki. Cell #: 0333-4181-981
12
d. Plant Density
A closely spaced crop of annual flowers like Gladiolus & Statice will usually produce more
flowers over the growing season than a crop at wider spacing. In general, the closer the
spacing of annuals the more flowers produced. A 4- to 6-inch spacing within the row and 6–8
inches between rows is ideal for most annual flowers.
In general, perennials like Roses are planted at about 1-foot spacing, within and between
rows based on the growth habit of individual species and the growing conditions. It should be
noted that closer spacings produce more flowers per square foot of bed, but also reduce air
circulation within the bed. Poor air circulation could increase the likelihood of foliar
diseases.
An important point is that each species of roses has different life period & the average life of
a rose flower plant is 5 years. After 5 years all the plants would have to be replaced with
new ones. Following is the table showing the life period of different species of roses:
Table 4: Life period of different species of Roses2

Sr. Roses Name Life Life period of Flowers / Plant / Year
No period of Flowers
Plants
1 Kardinal Rose 5 years
2 Christian Dior Rose 7 years
3 Gold Medal Rose 5 years 35-40 Flowers 1st year
4 Angelique Rose 6 years then 50-60 flowers next
5 Roses Check 8 years
6 Yorkshire Bank Rose 4 years year & this will go up to
4 to 5 Days in
7 Pink Perfume Rose 8 years
4 years and on the 5th
8 Margaret Theatre Rose 7 years Summer & 10
9 Mashal Milan Rose 6 years year 40-50 flower, 6th
to 15 days in
10 Perfect Moment Rose 4 years
year 35-40 flower & on
11 Mashish Gonigone 6 years Winter Season
Rose
the 7th and 8th year 25-
12 Mccartney Rose 8 years
13 Peter Fanket Flood 5 years 35 flowers per plant.
Rose
14 Mikado Rose 8 years
15 Maalia Rose 5 years
Approximately 14,000 plants would be planted in each acre for roses (Internationally this
figure has gone up to 22,000 plants per acre, but in Pakistan 14,000 is considered to be the
manageable number). Plants are available from local nurseries. They are transferred to the
2
13
farm when plants are an year old. At the farm in Lahore, plants would be transferred to the
field around 15th January. After that, they would be looked after for next six months just as if
they are being used for commercial production. Commercial production would start in July
and will go up to February in the first year then every year will continue from April to
February. In Haripur / Abbotabad farm the plants would be transferred to the field in January
and then they would be used for commercial production in July to November then every year
will continue from April to November. In all, about 56,026 rose plants would be required.
Each rose plant costs about Rs 10, when bought from the nursery at twelve months of age.
Each rose plant would give about 50 flowers per plant. Out of these 50, 80% would be
available for commercial sale.
As far as gladiola is concerned, its bulb is imported from Holland. But it is also available
locally through different companies. 55,000 bulbs are planted on one acre of land
(International standards go up 110,000 bulbs per acre, but in Pakistan 55,000 bulbs is the
maximum at present). In Lahore the sowing of bulbs would start in September. Not all are
placed at once. Certain number is sowed in the beginning and then different batches are
sowed after 1 - 2 weeks. This is done to obtain flowers over a longer period of time from the
land. Gladiola is harvested after 70 - 120 days. In Haripur / Abbotabad sowing would start in
February and will go up to April on the same pattern. Each bulb of high quality gladiola
flower costs about Rs 4. Yield of gladiola flower based on imported bulb is about 90%.
Another important fact about Gladiola is that its species like white prosperity, rose supreme,
advance red & yellow glad multiply their varieties.
12.2 Production Basics

a. Plan for Season-Spanning Blooms
Differences in location and climate, market, and personal choices will result in different
schedules. Gladioli are ready to cut about 70 - 120 days from planting. First planting starts in
September, and sequential plantings at intervals of a week or a month, ending at least 90 days
before April for the farm based at Lahore & from February to April for the farm at Haripur /
Abbotabad.
b. Plant Establishment
Some flowers in some geographic areas can be easily started by direct seeding. Others are
more safely started in flats to be transplanted later. Like Gladioli & Tube Rose are started
with bulbs & Statice with seeds.
Start with good seed/bulb. If you save seed/bulb from year to year, do small germination tests
several weeks before you plan to plant. Then you’ll have time to order new seed if you need
it.
c. Weed Management
Weeds compete with flowers for nutrients, water, and light, and can harbor insect pests. A
heavy stand of weeds in planting can severely reduce cut flower quality and also increases
the time required to harvest, raising labor costs. Weeding can be one of the most time
consuming operations, especially if you choose not to use chemical herbicides.
14
d. Insect Pests and Disease Management

The best way to prevent insect and disease problems is to select plants that grow well, like
Roses, Glad, Tube Rose & Statice. A healthy, actively growing plant is more resilient to
insect attack. The ideal approach is a preventative program. Control insects early, when they
are first detected. Do not wait until a serious infestation occurs.
Next step is to recognize problems caused by insects and diseases. Some can be tolerated;
others will destroy the value of flowers. The more you know about their life cycles, the more
likely you will be able to manage them effectively with non-toxic methods.
e. Disease Control
Foliar fungus diseases are the most serious disease problem on cut flowers. If mildew or
other foliar diseases are a recurring problem, it might be wise to increase the spacing between
plants slightly to improve air circulation around the foliage. Powdery mildew and black leaf
spot are two of the most common foliar diseases. Botrytis attacks flowers during cool damp
weather. Improper watering or frequent rains may cause some root rot problems. These can
be minimized by planting on raised beds.
The best approach to disease control is a preventative program. Manage the crop. Don’t
neglect it. Practice good sanitation; keep the field free of weeds and plant debris. Adjust
planting density for each species to allow sufficient air circulation within the bed.
Table 5: Disease & its symptoms found on Gladiolus3

Host Disease Symptoms
Gladiolus Fusarium crown (corm) During the growing season, leaves on affected
rot (Fusarium plants turn yellow prematurely. During storage,
oxysporum f. gladioli) corms develop a dry rot. Diseased corms produce
spindly, weak plants the
following year.
f. Cultural control. Examples include crop rotation, plant spacing, and adjusting the timing
of planting or harvest.
12.3 Watering
To maintain floral quality and peak production, the plants must be watered frequently,
sometimes daily with some soil types.
Natural rainfall is not sufficient nor reliable. Without supplemental watering, production may
not be economically realistic. For both the farms watering would be done with the help of
tube well (diesel) as for most of the areas canal irrigation is not sufficient. Each floral crop
needs year round water supply on a specific timing.
Overhead watering is not recommended. It may physically damage the flowers, cause
spotting on the petals, splash soil onto the foliage, and promote the spread of disease. The
3
The Association of Specialty Cut Flower Growers (www.ascfg.org)
15
basic principle in designing an irrigation system for cut flowers is to place the water
uniformly around each plant. Spacing of irrigation lines depends on soil type and structure.
Irrigation should be scheduled based on the soil moisture status in the root zone. Proper
irrigation management provides sufficient but not excessive water to the crop. Water stress
will reduce production and quality of a crop. A consistently saturated soil will reduce growth
and promote the development of root rot. The amount and frequency of water required will
vary with the weather and stage of maturity of the crop.
Water is an important requirement to have a good yield of fresh and healthy flowers. Besides
requirement of water for growing plants, it has another important role in the post harvest
treatment as well. This role centers on post harvest washing and life enhancement solution
treatment. Clean and fresh water is required for both these activities.
For both Lahore & Haripur / Abbotabad, a tube well would have to be installed to meet the
water requirements of the farm. It would cost Rs 100,000 to install a new tube well and set
up the water distribution system. Rose flower plants require water every 20-25 days except
for April, May, and June. During these three months fields are watered every week.
For gladiola flower water requirement is every 15 days till harvesting. Tube Rose compared
to other crops required more water, since it is harvested in the peak summer season. It would
be requiring water each week and will continue for a period of 30 weeks & for Statice water
requirement would be after every 15 days from transplanting till harvesting.
Table 6: Watering cost from Tube Well4

Sr. No. Flower Name Per Acre Watering Cost from Tube Well
(Annually)
1 Roses Rs. 15,000
2 Gladiolus Rs . 2,500
3 Tube Rose Rs. 12,000
4 Statice Rs. 5,000
In Haripur / Abbotabad, same watering cost would be incurred.

The requirement of water is quite regular at both the farms. It is mostly according to the
requirement. The requirement increases if rainfall is low.
12.4 Labor
Labor efficiency is a critical factor in choosing a site. Flower production requires intensive
management. The site should have ready access for production equipment and removal and
handling of the harvested product. The idea is to maximize efficiency of the labor required
for all production and marketing functions.
4
16
General formula is 2 person per acre excluding foreman cum accountant. The laborer would
cost Rs 4,500/month/acre. The labor requirement for the farms is mentioned in the table
below:
Table 7: Labor requirement for the Farms5

Sr. No. Flower Name Total Land Labor at Lahore Labor at Haripur /
Farm Abbotabad Farm
1 Roses 4 Acres 4 4
2 Gladiolus 4 Acres 3 3
3 Tube Rose 1 Acre 1 (for both Tube -
4 Statice 0.5 Acre Rose & Statice) -
For Lahore farm total 8 laborers would be required. The laborers would also act as pickers,
cleaners, sorters, packers, etc. There would be 1 foreman cum accountant to keep the work
moving and to manage it. During peak season, temporary pickers can be hired on daily
wages. But that cost is negligible. Foreman could be hired for Rs 7,000/ month.
For the farm at Haripur / Abbotabad the setup would be the same with the only difference
that 7 laborers would be required. Salary structure would almost be the same as well.
For the flower shop, manpower requirements are different. At least 6 persons are required to
run this kind of a shop; 2 salesman, 2 workers (flower arrangement experts), and 2 cleaner.
Salary for the salesman would be around 6,000 Rs/month. For each worker, it would be
around 4,500 Rs/month, and the cleaner would cost around 4,000 Rs/month.
12.5 Pesticide Sprays

For rose farm 2 sprays per month would be required at planting and when the plant starts
producing flowers 4 sprays per month would be required. Total cost of sprays per acre per
year is Rs 9,000. For gladiola one spray is required every fortnight starting from September.
It costs Rs. 2,000 per acre for pesticide spray on gladiola. For tube rose & statice no spray
would be required.
For Haripur / Abbotabad farm the spraying would remain the same.
12.6 Fertilizers
Before initiating any fertilizer program, always test the soil for nutrient content. The
increased water requirement of cut flowers creates an increased requirement for fertilization.
The application of fertilizer should coincide with crop needs. Nitrogen deficiency is the most
common nutrient problem.
5
17
 For Roses annual total expenditure on fertilizers per acre is Rs 134,000.

 For Gladiolus annual total expenditure on fertilizers per acre is Rs 44,400.
 For Tube Rose annual total expenditure on fertilizers per acre is Rs 13,900.
 For Statice annual total expenditure on fertilizers per acre is Rs 2,050.
The fertilizer requirement for each flower is mentioned in the table below:
Table 8: Fertilizer requirement for each Flower6

Sr. No Fertilizer’s Names Cost/ Bag Bags/Acre Total Amount
1.0 ROSE
1.1 SSP7 320 60 76,800
1.2 Potash 1,000 6 24,000
1.3 Nitrogen 550 10 22,000
1.4 CAN 350 8 11,200
2.0 GLADIOLUS
2.1 Nitrophos 700 13 36,400
2.2 Potash 1,000 2 8,000
3.0 TUBE ROSE
3.1 Nitrophos 700 17 11,900
3.2 Potash 1,000 2 2,000
4.0 STATICE
4.1 Nitrophos 700 3 1,050
4.2 Potash 1,000 2 1,000
For all flowers annual total expenditure 194,350
12.7 Harvest and Post Harvest

Post harvest success begins with providing the best growing conditions possible and
harvesting at optimum harvest stage. The following practices hold true for most cut flowers:
 Use sharp and clean cutting tools. Disinfect cutting tools at least twice per day.
 Remove excess foliage: foliage exposed to the air increases water loss; submerged foliage
increases microbial growth and clogged stems.
 Cut into clean buckets that have been washed inside—and out if they will be stacked-with
detergent and two to four tablespoons of household bleach per gallon of water.
 Place stems in water as you cut to reduce the amount of air that gets into the stems. Recut
stems underwater, removing about one inch, to remove air bubbles and bacteria.
 Harvest during the coolest part of the day, early morning or late evening, and keep
buckets of flowers out of the sun.
6
7
SSP - Single Super Phosphate
18
 Use warm, 100 to 110°F water in the buckets. It is taken up more quickly than cool
water.
 Let flowers stand at room temperature in a hydrating solution for one to two hours.
 Store in a cooler. Low temperatures prolong quality and vase life. The best temperature
for keeping most cut flowers is 32 to 38°F with 80 to 90 percent humidity.
The longest vase life for some flowers will be achieved if they are cut with color but not yet
open. Others are best when cut fully open. Following is the table showing the perfect harvest
time of Roses, Tube Rose & Gladioli.
Table 9: Optimal Development Stage of Cut Flowers for Direct Sale8

Common name Species Stage of development
Glads Gladiolus cultivars 1–5 buds showing color
Tuberose Polianthes tuberose Majority of florets open
Roses Rosa hybrids
Red and pink cultivars First 2 petals beginning to unfold, Calyx
reflexed below a horizontal position.
Yellow cultivars Slightly earlier than red and pink
White cultivars Slightly later than red and pink
After flowers are cut, quality cannot be improved, but take steps to maintain quality and
extend the vase life by providing food, water, and cool temperatures.
a. Water Flow in Stems
Without water, flowers wilt. When stems are cut, two things happen to restrict water flow:
 Air gets into the stems and blocks the uptake of water.
 Bacteria begin to grow in the vase water and clog the stems.
To reduce the amount of air that gets into the stems, flower stems should be placed in water
as you cut them. Later, recut the stems underwater, removing about one inch, to remove air
bubbles and bacteria. When cuts are made underwater, a film of water prevents air from
entering the stems in the short time it takes to move them to post harvest solutions.
Bacteria, yeasts, and other microbes are present everywhere: in the soil, on plants, and other
organic matter. Bacteria grow quickly in any liquid containing sugars and other organic
matter. When stems are cut, they release sugars, amino acids, proteins, and other materials
that are perfect food for bacteria. They start to grow at the base of cut stems as soon as
flowers are put into water.
To prevent the growth of bacteria, commercial preservatives contain anti-microbial
compounds, or biocides. But a simple biocide can be made by adding 1 teaspoon of
household bleach (5 percent hypochlorite) to 8 gallons of water. This is very effective, but
must be replaced every two or three days.
8
The Association of Specialty Cut Flower Growers (www.ascfg.org)
19
b. Vase Life of Flowers

For the longest vase life, flowers should be harvested in the morning before the heat of the
day. The flowers are cooler and have more water in them. A number of products have been
developed to help prolong vase life. All contain antimicrobials to suppress bacterial growth.
Hydration products make it easier for water to move up the stems. The solution should have
a pH of 3.0 to 3.5, as this improves the flow. Hydration usually is best if sugar is not in the
hydrating solution.
Holding solutions have sugar to feed the flowers. Sugar provides the energy needed by some
flowers to continue opening.
Pulsing is a chemical treatment of flowers to prolong the vase life. The treatment is not
continuous and typically lasts for 2–12 hours. Silver Thio Sulfate (STS), and 5–10 percent
sucrose solutions are chemicals often pulsed into flowers.
12.8 Building & Shed:

This project does not require any major building structure. Only a small room for storage
purpose is required at the farm. A maximum of 12’x12’ room is enough. Besides storage
room, one proper shed is required. This is an important requirement. The shed should be
20’x15’ covered area with open sides for air passage. This area is to be used for washing,
sorting, packing, and other post harvest activities. The construction rate is Rs. 400 per square
feet. This construction rate is based on the fact that the room and the shed would be made up
of semi-baked bricks using local masonry skills. The idea is to cut initial capital investment.
One room and one shed each would be constructed in Lahore and Haripur / Abbotabad.
12.9 Farm Fixtures & Tools:

Basic farm tools and fixture would include tools for pruning the plants, picking the flowers,
and removing leaves, etc. Besides these tools, other fixtures are required including pesticide
spray machine, clean water hand pump, tables, plastic tubs, wooden crates and fans. Total
capital requirement for all these items is Rs 8,000 per acre for both the farms. All items
would be Pakistan made and are easily available.
12.10 Packing Shed

A packing shed is an essential part of any flower farm. A well-designed packing shed will
save time and help to maintain high quality. Depending on the size of the farm, it may be as
rudimentary as a laundry tub or table under a canopy.
a. Location. The packing shed should be close to the fields so that harvested produce can be
moved quickly to the post harvest area. It should also be accessible by whatever vehicle is
going to transport the produce off the farm.
b. Space. At a minimum, sinks for washing buckets and vases, tables for sorting and
arranging, and a cooler is required. A place to store buckets, vases, and other supplies will
also be required. Work stations should be close enough that steps aren’t wasted going back
and forth, but they should allow plenty of room for two or more people to work together.
20
c. Light. Good lighting is important because it allows the workers to spot defects in the
flowers. From a mental health perspective, try to get as much daylight as possible into the
packing shed.
d. Surfaces. The best flooring is concrete because it allows the workers to use wheeled carts
or hand trucks to move boxes or buckets. Concrete should be poured so that it slopes toward
a 6-inch drain for easy washing of the floor.
e. Cleanliness. Sanitation is especially important in flower packing sheds, to prevent food-
borne illness. In flower packing sheds, packaging can be protected from mice and other pests
by keeping supplies in sealed storage containers.
f. Water. Plan for drainage that will handle a large amount of water. Consider running it off
to a garden area where it can be used to water plants.
g. Ergonomics. Workstation heights should suit the workers. The most efficient work table
height is halfway between the wrist and the elbow, measured when the arm is held down at
the worker’s side. For heavier items, it is slightly lower. A loading dock that matches the
height of the pickup/truck will minimize back strain when loading.
i. Work flow. The most efficient layout avoids extra steps and crossed paths. It also moves
flowers in the direction of the worker’s leading hand (left to right for right-handed people).
Flowers from the farm in Lahore would not need any packing. They would just be put in
plastic buckets filled with water and then transported through Suzuki Van to the shop.
The flowers from Haripur / Abbotabad farm would need to be transported in wooden crates
to Lahore. About 700 wooden crates for Roses & 468 cartons for Gladiolus would be
required & their freight & cost would be charged from the customer. Each wooden crate
would cost Rs 100 & cartons would cost Rs. 35.
12.11 Transportation
Transportation of flowers from Lahore farm to the shop would be carried out by a Suzuki
van. The distance between the farm and the shop should not be more than 45 minutes drive.
The transportation of flowers from Haripur / Abbotabad farm to the shop would require some
planning. The wooden crates would have to be transported to Haripur / Abbotabad city, from
where buses take cargo directly to Lahore. The best option of transportation between the
farm and Haripur / Abbotabad City would be the local public transportation. The
transportation cost of each crate / carton from Haripur / Abbotabad would be Rs. 110.
12.12 Electricity
The major consumption of electricity would be at the shop where light and air conditioner
would run constantly for at least 8 hours a day. Average electricity bill of the shop would be
around 10,000 rupees/month.
The consumption of electricity at the farm in Lahore & Haripur / Abbotabad would be
nominal. We can assess the electricity charges at the Lahore farms at around Rs 1500/month.
21
12.13 Foliage & Fastening Items

Availability of foliage is not a big problem. Many private gardeners supply good quality
foliage at very low rates. On average it costs Rs 150/day to buy foliage to be used as part of
decorative flower arrangements at the shop. Other than that the fastening items like the
flower basket, salaphene role, tape role, flower oasis & flower ribbon would cost an average
Rs. 100/day.
12.13.1 Suzuki Van

A suzuki van can be hired on daily basis or on monthly basis for transportation of flowers
from the farm at Lahore to the shop. It would cost around Rs 12,000/month to rent a van. It
is advisable to use rented van as it saves you from the hassle of maintenance of the vehicle
and the driver.
13 OUTPUT
Production of rose flowers has different seasonal variations. In Lahore, during November
and December, production is on the higher side. January and February are slow growth
period because of winter frost. March and early half of April are the maximum yield season.
After 20th April till early June there is no yield due to hot blowing winds. From July till
September, rose is available but the quality is low. Quality starts to improve from October.
In Haripur / Abbotabad farm, the reverse is true for roses. High yield months are during
summer season. Other factors remain the same most of the time.
On an average, one plant of rose flower has an average yield of 50 flowers per year. Out of
these 50, about 10 flowers are rendered useless for commercial usage, either by man handling
or by some disease. Therefore, only 40 flowers per plant per year are available for
commercial sales. Therefore, about 1.1 million rose flowers would be available for
commercial sales from the two farms round the year.
As far as the gladiola flower is concerned, in Lahore region it is sowed in September.
Harvesting is after 70-120 days based on various species of glads. Therefore, the flower is
available for commercial sale during the first week of December. At the time of sowing, a
gap of about 15 days is given. Therefore, the sowing continues till February so that flower is
available till March and at times till April.
In Haripur / Abbotabad, it is sowed in early February so that yield is available from May till
September or even October. Average yield of gladiola flower planted from imported bulb is
90%. Based on these statistics, about 99,000 gladiola flower stems would be available for
commercial sale from the two farms.
Tube rose planted in Lahore region will be sowed from 15th April till 1st May. Harvesting is
after 60 days. Therefore, the flower is available for commercial sale during the last week of
June. At the time of sowing, all the bulbs are sowed at once. About 62,000 of both tube rose
& statice flower stems would be available for commercial sale.
Statice seeds will be planted in Lahore region in September and in October/November they
will be transplanted in the field. Flowers blossom between March and April
22
First of all, the available flowers would be used for creating beautiful flower baskets,
bouquets, and bunches and then selling them from the shop. Besides selling about 25 such
arrangements a day from the shop for three hundred & sixty days a year, 30% of the
remaining flowers would be used for direct event decoration. Remaining 70% of the total
production would be sold directly in ‘mandi’. During summer months, the sale is usually
slow, whereas, during winter months, the high season, the sale is at peak on all accounts,
including event decoration.
14 PRICING AND RECORD KEEPING

There are a couple of ways to approach setting the prices. The first is based on the cost of
production, and the profit margin you need to make over that, and the second is based on the
price the market will bear or what the established selling price of an item is. In reality, what
is end up with is a combination of the two. Regardless of the market price, the cost of
production must be known.
Set a sale price that covers the cost of production and marketing and provides a profit. Price
the flowers fairly in regard to what other producers are charging. Don’t under-price the
competition. The only way to know the cost of production, including labor, is to keep
records.
15 GENERAL FACTS & FIGURES

Table 10: Salable flowers per year (when farm is operating at 60% capacity)
Sr. Flower Name Total Area in No. of Salable Flowers / Total Salable
No Acres Plants plant or Yield flowers per year
1 Roses 4 56,026 40 1,120,519
2 Gladiolus 4 220,000 90% 99,000
3 Tube Rose 1 125,173 100% 62,586
4 Statice 0.5 12,517 100% 62,586
Table 11: Shop (330 days a year)

Average no. of arrangements sold/day 14
Average total arrangements sold/year 4,620
Average number of flowers/arrangement 24
Average expected price per arrangement Rs 300
Table 12: Wholesale and Party Decorations

(30% of remaining production)
Average no. of flower stems available for 371,000
Party Decoration
Average selling price (Roses, Gladiola, Rs. 3.86
Tube Rose & Statice)
23
Table 13: Open Market (Mandi) Sale

Average no. of individual stems available 1,344,692
for sale
Average price per rose Rs. 0.65
Average price per gladiola stem Rs 9.00
Average price per tube rose stem Rs 1.50
Average price per statice stem Rs 0.50
Table 14: Financial Analysis

Total Investment 4,672,241
Total Capital Investment 3,760,974
Total Working Capital 911,267
Project IRR 44%
Payback Period 2.57 yrs
16 FLOWERS PURCHASED FROM VENDORS

There are numerous variety of flowers normally sold at the flower shops, but Roses, Glads,
Tube Rose are sold comparatively more that others. However, to retain the clientele one must
have other varieties related to exoitic & speciality cut flowers.
The list of other local and imported flowes to be pruchased from the vendors are:
Table 15: List of flowers to be purchased from Vendors
Sr. No. Flower Name Quantity Sold
Annually
1 Iris 8,640
2 Lillium 4,320
4 Imported Chrysanthemum 4,320
5 Imported Lilly Oriental 2,160
6 Imported Gerbera 2,160
7 Imported Carnations 4,320
8 Imported Orchid 2,160
9 Imported Jypsophelia 2,160
10 Imported Bird of Paradise 1,080
24
Statement Summaries SMEDA

Income Statement
Rs. in actuals
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Revenue 5,264,879 6,703,176 7,286,446 7,923,929 8,620,866 9,383,012 10,216,696 11,128,869 12,127,173 13,220,006
Cost of goods sold 3,303,176 3,632,099 4,064,283 4,565,758 5,097,455 5,713,506 6,506,059 7,190,250 8,073,105 9,096,885
Gross Profit 1,961,704 3,071,077 3,222,163 3,358,171 3,523,410 3,669,506 3,710,636 3,938,620 4,054,068 4,123,121
General administration & selling expenses

Administration expense - - - - - - - - - -
Rental expense 512,831 548,831 588,431 631,991 679,907 732,615 790,593 854,369 924,523 1,001,692
Utilities expense - - - - - - - - - -
Travelling & Comm. expense (phone, fax, etc.) - - - - - - - - - -
Packing cost of Roses & Glads 86,395 95,034 104,538 114,992 126,491 139,140 153,054 168,359 185,195 203,715
Office vehicles expense 144,000 158,400 174,240 191,664 210,830 231,913 255,105 280,615 308,677 339,544
Transportation expense from Haripur to Lahore 128,461 141,307 155,438 170,981 188,080 206,888 227,576 250,334 275,367 302,904
Office expenses (stationary, etc.) - - - - - - - - - -
Promotional expense 52,649 67,032 72,864 79,239 86,209 93,830 102,167 111,289 121,272 132,200
Insurance expense 4,000 3,600 3,200 2,800 2,400 2,000 1,600 1,200 800 400
Professional fees (legal, audit, etc.) - - - - - - - - - -
Depreciation expense 269,735 269,785 269,837 269,892 269,950 142,759 313,353 313,420 313,491 313,565
Amortization expense 141,130 141,130 141,130 141,130 141,130 141,130 141,130 141,130 141,130 141,130
Property tax expense - - - - - - - - - -
Miscellaneous expense - - - - - - - - - -
Subtotal 1,339,201 1,425,119 1,509,679 1,602,690 1,704,997 1,690,275 1,984,578 2,120,717 2,270,455 2,435,150
Operating Income 622,503 1,645,958 1,712,484 1,755,481 1,818,413 1,979,231 1,726,058 1,817,903 1,783,613 1,687,971
Other income 82,788 183,401 340,146 508,076 688,134 867,694 1,114,819 1,447,370 1,798,472 2,199,718
Gain / (loss) on sale of assets 448,208 392,182 336,156 280,130 224,104 168,078 740,706 637,613 534,520 -
Earnings Before Interest & Taxes 1,153,499 2,221,540 2,388,786 2,543,687 2,730,651 3,015,002 3,581,582 3,902,886 4,116,605 3,887,689
Interest expense 309,301 257,935 198,992 131,354 53,737 - - - - -

Earnings Before Tax 844,198 1,963,605 2,189,794 2,412,334 2,676,914 3,015,002 3,581,582 3,902,886 4,116,605 3,887,689
Tax 168,840 392,721 437,959 482,467 535,383 603,000 716,316 780,577 823,321 777,538
NET PROFIT/(LOSS) AFTER TAX 675,358 1,570,884 1,751,835 1,929,867 2,141,531 2,412,002 2,865,266 3,122,308 3,293,284 3,110,151
Balance brought forward 675,358 2,246,242 3,998,077 5,927,944 8,069,475 10,481,477 13,346,742 16,469,051 19,762,335
Total profit available for appropriation 675,358 2,246,242 3,998,077 5,927,944 8,069,475 10,481,477 13,346,742 16,469,051 19,762,335 22,872,486
Dividend - - - - - - - - - -
Balance carried forward 675,358 2,246,242 3,998,077 5,927,944 8,069,475 10,481,477 13,346,742 16,469,051 19,762,335 22,872,486
* Promotional Expense and Insurance Expense are for the shop alone.
* Other Income is the interest earned on cash in bank.
* Tax is applied at the rate of 41% approximately.
25
PREF-28/APRIL 2007/2

Balance Sheet
Rs. in actuals
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Assets
Current assets
Cash & Bank 580,000 1,075,754 2,592,266 4,210,649 5,950,876 7,811,796 9,542,074 12,754,296 16,193,105 19,776,342 24,218,014
Accounts receivable - 216,365 245,919 287,458 312,542 339,962 369,943 402,734 438,607 477,864 520,832
Finished goods inventory - - - - - - - - - - -
Equipment spare part inventory 125 138 152 168 185 204 224 247 273 301 -
Raw material inventory 144,311 166,564 198,725 238,705 283,322 338,553 415,742 484,132 579,356 697,155 -
Pre-paid annual land lease 152,831 152,831 152,831 152,831 152,831 152,831 152,831 152,831 152,831 152,831 -
Pre-paid building rent 30,000 33,000 36,300 39,930 43,923 48,315 53,147 58,462 64,308 70,738 -
Pre-paid lease interest - - - - - - - - - - -
Pre-paid insurance 4,000 3,600 3,200 2,800 2,400 2,000 1,600 1,200 800 400 -
Total Current Assets 911,267 1,648,251 3,229,394 4,932,541 6,746,079 8,693,661 10,535,561 13,853,901 17,429,280 21,175,632 24,738,846
Fixed assets
Land - - - - - - - - - - -
Building/Infrastructure 595,200 565,440 535,680 505,920 476,160 446,400 416,640 386,880 357,120 327,360 297,600
Machinery & equipment 200,000 180,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 -
Furniture & fixtures 30,000 27,000 24,000 21,000 18,000 15,000 12,000 9,000 6,000 3,000 -
Packing and Covering Sheet for Haripur Farm - - - - - - - - - - -
Office vehicles - - - - - - - - - - -
Office
Saplings
equipment
of Roses, Glads, Tube Roses, Statices & Farm Tools 1,524,474 1,308,551 1,092,630 876,712 660,797 444,885 1,208,876 949,692 690,511 431,334 172,161
Total Fixed Assets 2,349,674 2,080,991 1,812,310 1,543,632 1,274,957 1,006,285 1,717,516 1,405,572 1,093,631 781,694 469,761
Intangible assets
Pre-operation costs 1,411,300 1,270,170 1,129,040 987,910 846,780 705,650 564,520 423,390 282,260 141,130 -
Legal, licensing, & training costs - - - - - - - - - - -
Total Intangible Assets 1,411,300 1,270,170 1,129,040 987,910 846,780 705,650 564,520 423,390 282,260 141,130 -
TOTAL ASSETS 4,672,241 4,999,413 6,170,744 7,464,083 8,867,816 10,405,596 12,817,597 15,682,863 18,805,172 22,098,456 25,208,607
Liabilities & Shareholders' Equity

Current liabilities
Accounts payable - - - - - - - - - - -
Export re-finance facility - - - - - - - - - - -
Short term debt - - - - - - - - - - -
Other liabilities - - - - - - - - - - -
Total Current Liabilities - - - - - - - - - - -
Other liabilities
Lease payable - - - - - - - - - - -
Deferred tax - - 0 0 0 0 0 0 (0) (0) 0
Long term debt 2,336,121 1,987,934 1,588,381 1,129,886 603,751 - - - - - -
Total Long Term Liabilities 2,336,121 1,987,934 1,588,381 1,129,886 603,751 0 0 0 (0) (0) 0
Shareholders' equity
Paid-up capital 2,336,121 2,336,121 2,336,121 2,336,121 2,336,121 2,336,121 2,336,121 2,336,121 2,336,121 2,336,121 2,336,121
Retained earnings - 675,358 2,246,242 3,998,077 5,927,944 8,069,475 10,481,477 13,346,742 16,469,051 19,762,335 22,872,486
Total Equity 2,336,121 3,011,479 4,582,363 6,334,198 8,264,064 10,405,596 12,817,597 15,682,863 18,805,172 22,098,456 25,208,607
TOTAL CAPITAL AND LIABILITIES 4,672,241 4,999,413 6,170,744 7,464,083 8,867,816 10,405,596 12,817,597 15,682,863 18,805,172 22,098,456 25,208,607
26

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 - 675,358 1,570,884 1,751,835 1,929,867 2,141,531 2,412,002 2,865,266 3,122,308 3,293,284 3,110,151
Add: depreciation expense - 269,735 269,785 269,837 269,892 269,950 142,759 313,353 313,420 313,491 313,565
amortization expense - 141,130 141,130 141,130 141,130 141,130 141,130 141,130 141,130 141,130 141,130
Deferred income tax - - 0 - - - - - (0) - 0
Accounts receivable - (216,365) (29,554) (41,539) (25,084) (27,420) (29,981) (32,791) (35,874) (39,256) (42,969)
Finished good inventory - - - - - - - - - - -
Equipment inventory (125) (13) (14) (16) (17) (19) (21) (23) (25) (28) 301
Raw material inventory (144,311) (22,253) (32,162) (39,979) (44,617) (55,231) (77,189) (68,390) (95,224) (117,799) 697,155
Pre-paid building rent (30,000) (3,000) (3,300) (3,630) (3,993) (4,392) (4,832) (5,315) (5,846) (6,431) 70,738
Pre-paid lease interest - - - - - - - - - - -
Advance insurance premium (4,000) 400 400 400 400 400 400 400 400 400 400
Accounts payable - - - - - - - - - - -
Other liabilities - - - - - - - - - - -
Cash provided by operations (178,436) 844,992 1,917,169 2,078,038 2,267,578 2,465,950 2,584,268 3,213,630 3,440,289 3,584,791 4,290,471
Financing activities
Change in long term debt 2,336,121 (348,187) (399,552) (458,496) (526,134) (603,751) - - - - -
Change in short term debt - - - - - - - - - - -
Change in export re-finance facility - - - - - - - - - - -
Add: land lease expense - 152,831 152,831 152,831 152,831 152,831 152,831 152,831 152,831 152,831 152,831
Land lease payment (152,831) (152,831) (152,831) (152,831) (152,831) (152,831) (152,831) (152,831) (152,831) (152,831) -
Lease principal repayment - - - - - - - - - - -
Issuance of shares 2,336,121 - - - - - - - - - -
Purchase of (treasury) shares - - - - - - - - - - -
Cash provided by / (used for) financing activities 4,519,410 (348,187) (399,552) (458,496) (526,134) (603,751) - - - - 152,831
Investing activities
Capital expenditure (3,760,974) (1,051) (1,104) (1,159) (1,217) (1,278) (853,990) (1,409) (1,479) (1,553) (1,631)
Acquisitions - - - - - - - - - - -
Cash (used for) / provided by investing activities (3,760,974) (1,051) (1,104) (1,159) (1,217) (1,278) (853,990) (1,409) (1,479) (1,553) (1,631)
NET CASH 580,000 495,754 1,516,512 1,618,383 1,740,226 1,860,921 1,730,278 3,212,221 3,438,809 3,583,237 4,441,671
Cash balance brought forward 580,000 1,075,754 2,592,266 4,210,649 5,950,876 7,811,796 9,542,074 12,754,296 16,193,105 19,776,342
Cash available for appropriation 580,000 1,075,754 2,592,266 4,210,649 5,950,876 7,811,796 9,542,074 12,754,296 16,193,105 19,776,342 24,218,014
Dividend - - - - - - - - - - -
Cash carried forward 580,000 1,075,754 2,592,266 4,210,649 5,950,876 7,811,796 9,542,074 12,754,296 16,193,105 19,776,342 24,218,014
27
17 KEY ASSUMPTIONS
The proposed project is based on following assumptions:
1. Only rose, gladiola, tube rose & statice flowers would be grown.
2. For the Flower Shop a complete variety of local and imported flowers (other than
flowers grown at the farm house) will be maintained. So that the customer gets a
complete range of flowers at one shop.
3. Farms are based in Lahore and Haripur / Abbotabad.
4. Clean water would be used for irrigation.
5. The shop would operate around 300 days an year and would be fed by its own farms.
6. 40% production capacity would be achieved during the first year, about 10% next
year, and it will remain at 50% throughout the other years. Since during the month of
Ramazan, Moharram and Summer seasons flowers demand is low, that’s why it is
assumed that the farm selling capacity would be 50%.
7. Growth rate is assumed at 10% after second year.
Other assumptions are mentioned in the table below:

Table 12: Operating Assumptions
Flower Shop
Hours Operational per day 12
Days operational per month 30
Days operational per year 360
Table 13: Economy Related Assumptions

Inflation rate 10%
Electricity growth rate 10%
Water price growth rate 10%
Gas price growth rate 10%
Wage growth rate 10%
Saplings of Roses 5%
Office equipment price growth rate 5%
Transportation expense growth rate 10%
Table 14: Expense Assumptions

Communication Expense 1% of Administrative Costs
Transportation Expense 8% of Cost of Goods Sold
Promotional Expense 1% of Revenues
PREF-28/APRIL 2007/2 28
Table 15: Cash flow Assumptions

Initial Cash in Bank Rs. 250,000
Accounts Receivable Cycle in (Days) 15
Raw Material (Fertilizers & Pesticides) 30
Inventory in (Days)
Table 16: Rent Assumptions

Refundable Rent Security of Flower Shop 3
(months)
Pre-paid Rent in (months) 6
Table 17: Depreciation Expense

Depreciation Method Straight Line Method
Depreciation Rate of Machinery & Furniture 10%
(Annual)
Depreciation Rate of Farm Tools & Fixtures 20%
(Annual)
Depreciation Rate of Roses (Annual) 20%
Depreciation Rate of Gladiolus (Annual) 10%
Depreciation Rate of Tube Rose (Annual) 10%
Depreciation Rate of Statice (Annual) 100%
Table 18: Financial Assumptions

Project Life (Years) 10
Debt Equity Ratio 50:50
Return on Equity 25%
Interest Rate on Long Term Debt 14%
Long Term Debt Tenure (Years) 5
Number of Payment/Year 4
Income Tax Rates Sole Proprietorship Tax Slabs
PREF-28/APRIL 2007/2 29

SMEDA Flower Shop

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Pre-Feasibility Study

Small and Medium Enterprise Development Authority

HEAD OFFICE REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE

2 PURPOSE OF THE DOCUMENT

3.1 General Brief

3.2 Project Rationale

5 KEY SUCCESS FACTORS

4) More extensive product line which suits customer demand

7 PROCESS FLOW CHART

Transportation via Packing in Visual

Final sorting of flowers, removal Direct sales through shop,

8 VIABLE ECONOMIC SIZE

9 CURRENT INDUSTRY STRUCTURE

10 SALES & MARKETING ISSUES

10.1 Tips for selling flowers

11.2 Land selection

12.1 Flower Plants & Bulbs

a. Preparing the Bed

b. What To Grow: The Ideal Crop

Table 2: Flowers planted at Lahore Farm1

Table 3: Flower planted at Haripur / Abbotabad Farm

Table 4: Life period of different species of Roses2

12.2 Production Basics

d. Insect Pests and Disease Management

Table 5: Disease & its symptoms found on Gladiolus3

Table 6: Watering cost from Tube Well4

In Haripur / Abbotabad, same watering cost would be incurred.

Table 7: Labor requirement for the Farms5

12.5 Pesticide Sprays

 For Roses annual total expenditure on fertilizers per acre is Rs 134,000.

Table 8: Fertilizer requirement for each Flower6

12.7 Harvest and Post Harvest

Table 9: Optimal Development Stage of Cut Flowers for Direct Sale8

b. Vase Life of Flowers

12.8 Building & Shed:

12.9 Farm Fixtures & Tools:

12.10 Packing Shed

12.13 Foliage & Fastening Items

12.13.1 Suzuki Van

14 PRICING AND RECORD KEEPING

15 GENERAL FACTS & FIGURES

Table 11: Shop (330 days a year)

Table 12: Wholesale and Party Decorations

Table 13: Open Market (Mandi) Sale

Table 14: Financial Analysis

16 FLOWERS PURCHASED FROM VENDORS

Statement Summaries SMEDA

General administration & selling expenses

Interest expense 309,301 257,935 198,992 131,354 53,737 - - - - -

Statement Summaries SMEDA

Liabilities & Shareholders' Equity

Statement Summaries SMEDA

Other assumptions are mentioned in the table below:

Table 13: Economy Related Assumptions

Table 14: Expense Assumptions

Table 15: Cash flow Assumptions

Table 16: Rent Assumptions

Table 17: Depreciation Expense

Table 18: Financial Assumptions

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