Pre-Feasibility Study Housing Construction Company: Small and Medium Enterprise Development Authority

Pre-Feasibility Study
Housing Construction Company

Small and Medium Enterprise Development Authority
Government of Pakistan
www.smeda.org.pk
HEAD OFFICE
6th Floor LDA Plaza Egerton Road, Lahore
Tel 111 111 456, Fax: 6304926-7 Website www.smeda.org.pk
Helpdesk@smeda.org.pk
REGIONAL OFFICE
PUNJAB
REGIONAL OFFICE
SINDH
REGIONAL OFFICE
NWFP
REGIONAL OFFICE
BALOCHISTAN
8th Floor LDA Plaza Egerton
Road, Lahore
Tel 111 111 456, Fax:
6304926-7 Website
www.smeda.org.pk
helpdesk@smeda.org.pk
5TH Floor, Bahria
Complex II, M.T. Khan Road,
Karachi.
Tel: (021) 111-111-456
Fax: (021) 5610572
Helpdesk-khi@smeda.org.pk
Ground Floor
State Life Building
The Mall, Peshawar.
Tel: (091) 9213046-47
Fax: (091) 286908
helpdesk-pew@smeda.org.pk
Bungalow No. 15-A
Chaman Housing Scheme
Airport Road, Quetta.
Tel: (081) 831623, 831702
Fax: (081) 831922
helpdesk-qta@smeda.org.pk
December, 2006
Pre Feasibility Study Housing Construction Company
PREF-80/December, 2006/Rev2
1 INTRODUCTION TO SMEDA ____________________________________________________ 2
2 PURPOSE OF THE DOCUMENT _________________________________________________ 2
3 CRUCIAL FACTORS & STEPS IN DECISION MAKING FOR INVESTMENT __________ 3
4 PROJECT PROFILE ____________________________________________________________ 3
4.1 OPPORTUNITY RATIONALE _____________________________________________________ 3
4.2 PROJECT BRIEF ______________________________________________________________ 4
4.3 MARKET ENTRY TIMING _______________________________________________________ 4
4.4 PROPOSED BUSINESS LEGAL STATUS _____________________________________________ 4
4.5 PROJECT CAPACITY AND RATIONALE _____________________________________________ 4
4.6 PROJECT INVESTMENT_________________________________________________________ 4
4.7 PROPOSED LOCATION _________________________________________________________ 5
4.8 KEY SUCCESS FACTORS/PRACTICAL TIPS FOR SUCCESS _______________________________ 5
4.9 STRATEGIC RECOMMENDATIONS ________________________________________________ 5
5 SECTOR & INDUSTRY ANALYSIS _______________________________________________ 5
5.1 SECTOR CHARACTERISTICS_____________________________________________________ 5
5.2 SUB SECTOR INFORMATION_____________________________________________________ 5
5.2.1 Government Policy Direction ________________________________________________ 6
5.3 LEGAL ISSUES REGARDING HOUSING INDUSTRY ____________________________________ 7
6 MARKET INFORMATION_______________________________________________________ 7
6.1 MARKET POTENTIAL __________________________________________________________ 7
6.2 TARGET CUSTOMERS _________________________________________________________ 8
6.3 TRADE STATISTICS ___________________________________________________________ 8
7 PRODUCTION PROCESS________________________________________________________ 8
7.1 PRODUCTION PROCESS FLOW ___________________________________________________ 9
7.2 RAW MATERIAL REQUIREMENT _________________________________________________ 9
7.3 MACHINERY REQUIREMENT ____________________________________________________ 9
7.4 PRODUCT/PROJECT STANDARDS AND COMPLIANCE ISSUES ____________________________ 9
7.5 RECOMMENDED HOUSE LAYOUT _______________________________________________ 10
8 LAND & BUILDING REQUIREMENT____________________________________________ 12
8.1 COVERED AREA REQUIREMENT ________________________________________________ 12
8.2 RENT COST ________________________________________________________________ 12
8.3 RECOMMENDED MODE _______________________________________________________ 12
8.4 UTILITIES REQUIREMENT _____________________________________________________ 12
8.5 SUITABLE LOCATION_________________________________________________________ 12
9 HUMAN RESOURCE REQUIREMENT ___________________________________________ 12
10 FINANCIAL ANALYSIS ________________________________________________________ 13
10.1 PROJECT COSTS_____________________________________________________________ 13
10.2 PROJECTED INCOME STATEMENT _______________________________________________ 14
10.3 PROJECTED BALANCE SHEET __________________________________________________ 15
10.4 PROJECTED CASH FLOW STATEMENT ____________________________________________ 16
10.5 COST OF SALES _____________________________________________________________ 17
11 KEY ASSUMPTIONS___________________________________________________________ 18
1
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. The
prospective user of this memorandum is encouraged to carry out additional diligence and
gather any information he/she feels necessary for making an informed decision.
For more information on services offered by SMEDA, please contact our website:
www.smeda.org.pk
DOCUMENT CONTROL
Document No. PREF-80
Revision 2
Prepared by SMEDA-Punjab
Issue Date February 2005
Revision Date December , 2006
Issued by Library Officer
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 the 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.
Along with the sectoral focus a broad spectrum of business development services is also
offered to the SMEs by SMEDA. These services include identification of viable business
opportunities for potential SME investors. In order to facilitate these investors, SMEDA
provides business guidance through its help desk services as well as development of
project specific documents. These documents consist of information required to make
well-researched investment decisions. Pre-feasibility studies and business plan
development are some of the services provided to enhance the capacity of individual
SMEs to exploit viable business opportunities in a better way.
This document is in the continuation of this effort to enable potential investors to make
well-informed investment decisions.
2 PURPOSE OF THE DOCUMENT
The objective of the pre-feasibility study is primarily to facilitate potential entrepreneurs
to facilitate investment and provide an overview about housing construction business.
The project pre-feasibility may form the basis of an important investment decision and in
order to serve this objective, the document covers various aspects of housing construction
business 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 “Housing construction Company” which
comes under “Construction and Real Estate” sector.
3
3 CRUCIAL FACTORS & STEPS IN DECISIONMAKING FOR INVESTMENT
Housing can play a significant role in the economic growth of our country, as a source of
jobs and capital investment, as a secure vehicle for individual and family savings, and as
an essential contributor to personal happiness. So before making any investment decision,
it is advisable to evaluate the associated risk factors by taking into consideration certain
key elements. These may include availability of resources, academic knowledge, and
specific managerial and technical skill set.
The development of a vibrant housing industry is based on an ample supply of affordable
land, with easy access to transportation and efficient distribution of necessities such as
energy and water.
On the other hand a demand driver may be the desire of many families to modernize,
enlarge or otherwise renovate their homes. This has been an important part of the housing
culture for many decades.
Financial institutions are an important partner in the housing sector. To broaden the
consumer base for home ownership, especially among lower income families, the
financial sector is greatly assisted by banks and financial institutions.
For the housing industry, a well trained work force is essential. An added advantage for
Pakistani housing industry is that skilled labour is available at fairly cheap rate.
4 PROJECT PROFILE
4.1 Opportunity Rationale
1Housing is one of the basic human requirements, as every family needs a roof. Providing
shelter to every family has become a major issue as a result of rapid urbanization and
higher population growth. On the other hand, the provision of house has not kept pace
with the above phenomenon and resulted in the deterioration of living condition,
increased health hazarded and rapid growth of slums and squatter settlements (Katchi
Abadies). The improvement of slums and katchi abadies and provision of affordable
housing to shelterless population will not only help alleviate the urban and rural poverty
but also increase the productivity of the low income population through improved public
health. The present Government is committed to give priority to housing sector and has
demonstrated its commitment by allocating significant resources for its accelerated
development, which would contribute to the economy in the form of additional
employment and support 30 – 40 allied industries. The multiple effects of the housing
and construction sector have the potential to create maximum employment opportunities
besides generating industrial, commerce and trade activities.
1 Economic survey of Pakistan 2005-06
4
4.2 Project Brief
The project under consideration will be for construction of residential houses of 5 Marla
(1,125 sq. ft.), 7 Marla (1,575 sq. ft.) and 10 Marla (2,250 sq. ft.) within the proposed
locations. The proposed sites for the construction are JOHAR TOWN, WAPDA TOWN
and VALENCIA HOUSING SOCEITY.
4.3 Market Entry Timing
Though the construction work is not dependent on the time but, as per industry norm, the
ideal timing for housing construction is from May to Jun and then from September to
November. The reason is rainy season during July and August which causes delays in
construction process. During December to February the labour is mostly migrated to rural
areas for crop harvest. During harvest season labour is paid more in rural areas this
causes shortage of labour and consequently rise in daily wages.
4.4 Proposed Business Legal Status
The proposed legal structure of the business entity is either sole proprietorship or
partnership. Although selection totally depends upon the choice of the entrepreneur but
this financial feasibility is based on a Sole Proprietorship.
4.5 Project Capacity and Rationale
The proposed project size is simultaneous construction of two houses at nearby locations.
This will provide the minimum feasible size for the project and minimum capital outlay
for project initiation.
4.6 Project Investment
The total cost of the project is Rs.6.903million.
Table 4-1 Project Costs
Capital Investment 303,400
Working Capital Requirement 6,600,000
Total Investment 6,903,400
The proposed pre-feasibility is based on the assumption of 50% debt and 50% equity.
However this composition of debt and equity can be changed as per the requirement of
the investor.
Table 4-2 Project Financing
Debt 50% 3,451,700
Equity 50% 3,451,700
Total project Investment 6,903,400
5
Table 4-3 Viability
IRR 116.94%
NPV @25% 250,954
Pay Back Period (year) 1.81
4.7 Proposed Location
The proposed locations for the construction of houses are as follows
Johar Town
WAPDA Town
Valencia Town
4.8 Key Success Factors/Practical Tips for Success
The key success factors for housing Construction Company are careful selection of
construction site and a good architecture. The investment in good construction material
and efficient use of labour are also very crucial. In short quality pays in the long run.
4.9 Strategic Recommendations
 The construction industry is only profitable if the projects are completed in time.
 Quality of materials used ensures quality of houses built. Superior quality is the best
competitive advantage these days.
 Careful selection of residential area counts towards selling price and timely sales
 The investment in good architectural design is worth it. A good look is the first thing
buyers would be looking for at the first place.
5 SECTOR & INDUSTRYANALYSIS
5.1 Sector Characteristics
The construction sector in Pakistan today is still at low ebb. This can be judged from the
fact that per capita consumption of cement in Pakistan is one of the lowest among the
developing countries i.e. 70 kgs. With public spending on the decline and most projects
being funded under loans from international agencies, the fate of construction sector
seems to be hanging in balance. This sector has a big vacuum in the market and a lot has
to be done yet.
5.2 Sub sector Information
According to the latest available census of 1998, the total number of housing units,
throughout the country, was 19.3 million, 67.7 per cent housing was in rural areas and
32.3 per cent in urban areas. The overall housing stock comprised 39 per cent kucha
houses, 40 per cent semi-pukka houses and 21 per cent pukka houses. The housing
6
backlog, as estimated according to the 1998 census, was 4.3 million units. The annual
additional requirement is estimated around 500,000 housing units whereas the annual
production is estimated around 300,000 housing units resulting in a recurring backlog of
270,000 housing units annually. The household size is 6.6 persons and the occupancy per
room is 3.3 persons. It is estimated that to make up the backlog and to meet the shortfall
in the next 20 years, the overall housing production has to be raised to 500,000 housing
units annually. The usual privileges, concessions, exemptions and remissions have
become applicable to this industry in accordance with the Board of Investment policy.
(Pakistan & Gulf Economist).
The construction sector registered a growth rate of 7.9 percent against a target of 5.4
percent and last year's growth of 3.1 percent. Housing and construction has been
identified as one of the major drivers of growth and the government has taken various
budgetary and non-budgetary measures to boost this sector which has responded
positively despite higher input prices.
5.2.1 Government Policy Direction
Construction industry alone provides impetus to over 42 other industries. As the
Government of Pakistan aims at alleviating poverty and improving revenue collection, a
focused attention to this industry can help in achieving both the objectives. On the one
hand it has the potential to offer new job opportunities and, on the other hand, enhance
revenue collection from other industries. Realizing this fact the Government of Pakistan
has took a number of measures for reviving the housing and construction sector, which
has been declared a priority industry.
 The government has announced various incentives in the National Housing Policy
for providing affordable housing for the poor. A rapid growth in housing finance
will significantly contribute to the economy in the form of additional employment
and support a variety of allied industries.
 These measures include; the improvement in the availability of housing finance
by encouraging commercial banks to extend housing loans, the reduction in
interest rates from 17-18% to 7.5 to 8.5%, streamlining of the legal frame work
for loan recovery of financial institutions, and the enhancement of bank exposure
to housing finance from 5% to 10% of net advances.
 The maximum housing loans per party limit has been increased from Rs.5 million
to Rs.10.0 million and the maximum debt-equity increased from 70:30 to 85:15.
The maximum loan tenure for housing finance has been increased from 15 to 20
years and the maximum limit of lending for HBFC has been increased from Rs.20
million to Rs.50 million.
 In the fiscal area, the measures taken include the enhancement of Tax credits on
borrowing under housing loans from financial institutions from Rs.100,000/- or
25% of the income of the mortgager, to Rs.500,000/- or 40% of the income of the
mortgager, whichever is less. The limit of property income for withholding tax
has been raised from Rs.100,000/- to Rs.200,000/-. The rate of withholding tax on
property income has been reduced from 7.5% to 5%. CED on wires and cables
7
has been withdrawn and excise duty on cement has been reduced by 25% to
lessen the cost of construction2.
5.3 Legal Issues Regarding Housing Industry
Following government departments are involved in the Housing Industry.
 Lahore Development Authority (For more info please visit http://www.lda.gop.pk ).
 WAPDA Town housing Society
6 MARKET INFORMATION
6.1 Market Potential
Construction industry in Pakistan has been in the developing stage. In fact two decades
ago, the construction companies were better organized and played significant role in the
country's development and progress. However during the last twenty years there has been
considerable decline in the growth, ability and efficiency of the construction companies.
Large and established companies have been replaced with small and medium size
companies lacking in management, financial viability and necessary experience to takeup
sizable prestigious projects of national importance whereas in the period of seventies,
Pakistani companies executed large projects in Middle East and Gulf after obtaining these
projects in International competition. The new housing policy (2001) by current
government has proved to be a catalyst for sustainable growth in construction industry in
recent years.
Table 6-1 Housing Units by Tenure (In million)3
Census 1998
Tenure All Areas Rural Urban
All Types 19.3 13.1 6.2
(100) (100) (100)
Owned 15.6 11.4 4.2
(80.8) (87.1) (67.6)
Rented 1.7 0.3 1.4
(9.0) (2.3) (23.2)
Rent Free 2.0 1.4 0.6
(10.2) (10.6) (9.2)
Note: The figures in parenthesis are percent shares
2 Economic Survey of Pakistan 2004
3 Source:Population and Housing Census 1998
8
6.2 Target Customers
The target customers are the general public of upper-middle income group.
6.3 Trade Statistics
A brief overview of major industry segments is as below.
Table 6-2 Total Number of Construction Companies4
Category C-1 242 Numbers
Project Cost Limit No limit
Project Limit Cost Upto Rs 100 million
Project Cost Limit Upto Rs 50 million
Project Cost Limit Upto Rs 20 million
Share in GDP (%age):
Construction 3.5
Housing 6.0
GDP/GNP Real Growth Rates ( %age):
Construction 6.24
Housing 5.28
Gross Fixed Capital Formation:
Construction Rs 13,532 million
Housing Rs 56,093 million
Contribution to Employment:
Total Employed Labor Force 37.03 million
Construction Sector Share 2.50 million
Foreign Direct Investment (Jul-2003.) US$ 21.1 million
Import of Construction Machinery US$ 67.9 million
Average turn over per year Rs 250 billion
7 PRODUCTION PROCESS
This section will include the production details of the project, which includes the raw
material required, product mix, production capacity, production proportion of each
product etc.
3Source:: Pakiisttan Board off IInvesttmentt
9
7.1 Production Process Flow
The production process includes the following steps.
 Procurement of Land
 Architecture Design
 Materials Procurement
 Erection of Foundations
 Construction of Structure
 Installation of Electrical Wire Pipes
 Construction of roof.
 Plaster of cement
 Sewerage and water pipe installation
 Construction of floors and bathrooms
 Paints and electrification
7.2 Raw Material Requirement
Following raw materials will be used:
Bricks Steel Doors and Grills
Sand Wood
Crush Win board
Steel Chipboard
Mud Glass
Cement Varnish
Floor Tiles Paints
Bath Room Fittings Hardware
Cupboards Wires
Lighting accessories Misc. electrification equipment
Sewerage and Water Supply Pipes PVC Pipes
Dadex Pipe
7.3 Machinery Requirement
All the required machinery like Mixer, Lifts etc are available widely on rental basis.
7.4 Product/Project Standards And Compliance Issues
Please check with the relevant authorities (Like LDA for Johar Town and WAPDA
Cooperative Housing Society for WAPDA Town) for more specific details about the
10
Construction and Compliance issues. These Compliance Issues vary widely by location
and by size of plot. Detailed requirements can be obtained from concerned authority upon
request.
7.5 Recommended House Layout
For a 5 Marla house following layout is recommended, (front 25 feet X length 45 feet )
Ground Floor
 2 bedrooms (13X12 ft) + attached bathrooms (5X5 ft)
 1 kitchen (6X8 ft)
 A car porch (15X10 ft)
 1 TV Lounge (13X10 + 2X8 ft)
 1 Drawing Room (11X13 ft)
 Vacant Space (5 ft on front and 5 ft at back)
1st Floor
 1 store (6X8 ft)
 A stair room (10X10 ft)
 1 TV Lounge (13X10 + 2X8 ft)
 1 Living Room (7X13 ft)
 Tarries (5 Feet)
Doors and Windows
 Windows 7 (4.5X4.5)
 Windows 4 (2X2)
 Front Door 1 (7X4)
 Room Doors 13 (7X3)
 Bathroom Doors 4 (7X2.25)
For a 7 Marla house following layout is recommended, (front 28 feet X length 50 feet)
Ground Floor
 2 bedrooms (11X12.5 ft) + attached bathrooms (7X7 ft)
 1 Store (10X7)
 1 TV Lounge (17X10)
11
 Vacant Space (7 ft on front and 7 ft at back)
1st Floor
 2 bedrooms (11X12.5 ft) + attached bathrooms (7X7 ft)
 1 TV Lounge (17X10)
Doors and Windows
 Windows 7 (4.5X4.5)
 Windows 4 (2X2)
For a 10 Marla house following layout is recommended, (front 35 feet X length 65 feet)
Ground Floor
 1 TV Lounge (14X20 ft)
 Vacant Space (10 ft on front and 7 ft at back 5 ft Galley)
1st Floor
 1 TV Lounge (14X20 ft)
Doors and Windows
12
 Windows 13 (4.5X4.5)
 Windows 4 (2X2)
8 LAND & BUILDING REQUIREMENT
8.1 Covered Area Requirement
The required space for office is 400 Sq. Feet office
8.2 Rent Cost
The Rent Cost for office will be Rs. 12,000 per month.
8.3 Recommended Mode
It is recommended to rent an office on the preferred.
8.4 Utilities Requirement
Electricity and two phone lines will be required in office.
8.5 Suitable Location
The office should be located near the construction sites for administrative purpose. The
suitable location can be Faisal Town, Johar Town and Garden Town.
9 HUMAN RESOURCE REQUIREMENT
Designation Number Salaries / Month
Manager 1 55,000
Accounts Officer 1 18,000
Diploma Engineer 1 22,000
Drafts man 1 15,000
Office Boy 2 4,500
Security Guards 1 5,000
Pre Feasibility Study Housing Construction
Company
PREF-80/Feb, 2005/Rev1
13
10 FINANCIALANALYSIS
10.1 Project Costs
Office Equipment Cost
Furniture & Fixture 61,400
Air Conditioner 25,000
Computers 50,000
Printer 25,000
Sub Total 161,400
Preliminary Expenses 70,000
Preoperational Expenses 72,000
Total 303,400
Working Capital Required 6,600,000
Total Project Cost 6,903,400
Company
14
10.2 Projected Income Statement
PKR
(ooo)
Year - I Year - II Year - III Year - IV Year - V Year - VI Year - VII Year - VIII Year - IX Year
-X
Sales/Revenue 17,000 28,600 56,108 88,759 126,811 210,152 351,392 456,809 792,890 1,030,757
Cost of Sales:
Add opening stock - - - - - - - - - -
Operating expenses 10,900 16,612 29,334 42,284 55,423 84,840 131,380 158,703 257,624 313,250
Less closing stock
10,900 16,612 29,334 42,284 55,423 84,840 131,380 158,703 257,624 313,250
Gross Profit 6,100 11,988 26,774 46,475 71,388 125,312 220,012 298,106 535,266 717,507
Operating Expenses:
Administrative Expenses 1,765 1,933 2,120 2,327 3,257 3,564 3,918 4,308 4,737 5,209
Marketing Expenses 170 286 561 888 1,268 2,102 3,514 4,568 7,929 10,308
Operating Profit 4,166 9,769 24,092 43,261 66,863 119,646 212,580 289,230 522,600 701,990
Financial Charges 459 362 266 169 72 - - - - -
Profit before Taxation 3,707 9,406 23,827 43,092 66,790 119,646 212,580 289,230 522,600 701,990
Taxation 1,172 3,167 8,214 14,957 23,252 41,751 74,278 101,105 182,785 245,571
Profit after Taxation 2,534 6,239 15,612 28,135 43,539 77,895 138,302 188,124 339,815 456,418
Acc. Profit b/f - 2,534 8,773 24,386 52,520 96,059 173,953 312,255 500,380 840,195
Un-appropriated Profit c/f 2,534 8,773 24,386 52,520 96,059 173,953 312,255 500,380 840,195
1,296,613
Company
15
10.3 Projected Balance Sheet
PKR
(ooo)
Year - 0 Year - I Year - II Year - III Year - IV Year - V Year - VI Year - VII Year - VIII Year - IX
Year - X
Tangible Fixed Assets 161 138 118 101 87 76 66 57 50 44 38
Preliminary Expenses 70 56 42 28 14 - - - - - -
Current Assets:
Cash in Hand / Bank 6,600 9,726 17,303 37,303 71,518 122,686 219,091 389,928 604,887 1,026,388
1,545,598
6,672 9,726 17,303 37,303 71,518 122,686 219,091 389,928 604,887 1,026,388 1,545,598
6,903 9,920 17,463 37,432 71,619 122,762 219,156 389,985 604,937 1,026,431 1,545,636
Owners Equity:
Capital 3,452 3,452 3,452 3,452 3,452 3,452 3,452 3,452 3,452 3,452 3,452
Accumulated Profit - 2,534 8,773 24,386 52,520 96,059 173,953 312,255 500,380 840,195 1,296,613
Long Term Loan 3,452 2071 1381 690 - - - - - - -
Current Liabilities:
Current Portion
of Long Term Loan - 690 690 690 690 - - - - - -
Tax provision - 1,172 3,167 8,214 14,957 23,252 41,751 74,278 101,105 182,785 245,571
Accounts Payable - - - - - - - - - - -
- 1,863 3,858 8,905 15,647 23,252 41,751 74,278 101,105 182,785 245,571
6,903 9,920 17,463 37,432 71,619 122,762 219,156 389,985 604,937 1,026,431 1,545,636
Company
16
10.4 Projected Cash Flow Statement
PKR
(ooo)
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Profit before Financial
Charges & Taxation - 4,166 9,769 24,092 43,261 66,863 119,646 212,580 289,230 522,600 701,990
Amortization - 14 14 14 14 14 - - - - -
Depreciation - 24 20 17 14 12 10 9 7 6 5
- 4,203 9,803 24,123 43,289 66,888 119,656 212,588 289,237 522,606 701,995
Working Capital Change - 72 0 0 0 0 0 0 0 0 0
Cash form other Sources
Owners 3,452 - - - - - - - - - -
Bank Finance 3,452 - - - - - - - - - -
6,903 - - - - - - - - - -
Total Sources 6903 4275 9803 24123 43289 66888 119656 212588 289237 522606 701995
Fixed Assets 161 - - - - - - - - - -
Preliminary Expenses 70 -
Preoperational Expenses 72 -
Working Capital 6,600 -
Re -Payment of Loan - 1,149 1,053 956 859 763 - - - - -
Tax - - 1,172 3,167 8,214 14,957 23,252 41,751 74,278 101,105 182,785
6,903 1,149 2,225 4,123 9,074 15,720 23,252 41,751 74,278 101,105 182,785
Cash Increase/(Decrease) - 3,126 7,578 20,000 34,215 51,168 96,404 170,837 214,959 421,501 519,210
Opening Balance 6,600 6,600 9,726 17,303 37,303 71,518 122,686 219,091 389,928 604,887 1,026,388
Closing Balance 6,600 9,726 17,303 37,303 71,518 122,686 219,091 389,928 604,887 1,026,388 1,545,598
6,600 9,726 17,303 37,303 71,518 122,686 219,091 389,928 604,887 1,026,388 1,545,598
Company
17
10.5 Cost of Sales
Rupees
Year - I Year - II Year - III Year - IV Year - V Year - VI Year - VII Year - VIII Year - IX Year
-X
Operation - - - - - - - - - -
Land cost 5,600,000 9,218,750 17,460,938 26,757,813 36,560,059 58,822,632 94,795,227 118,494,034
199,377,537 249,221,921
Material cost 3,570,799 5,023,335 8,154,354 10,718,931 13,047,476 18,072,544 25,492,698 28,041,968
40,749,656 44,824,622
Labour cost 1,484,000 2,085,875 3,371,242 4,417,323 5,382,105 7,442,086 10,493,133 11,542,446 16,747,645
18,422,410
Rent of mixer - - - - - - - - - -
Utilities connection 95,200 119,000 166,600 190,400 214,200 261,800 333,200 333,200 428,400 428,400
Electricity Chg. 149,760 164,736 181,210 199,331 219,264 241,190 265,309 291,840 321,024 353,126
10,899,759 16,611,696 29,334,342 42,283,797 55,423,103 84,840,252 131,379,567 158,703,488 257,624,262
313,250,479
18
11 KEYASSUMPTIONS
Table 11-1 Operating Assumptions
1st Year construction (No. of houses) 4
5 Marla 3
7 Marla 1
10 Marla 0
Table 11-2 Revenue Assumptions
Sales prices Rs.
5 Marla 4000000
7 Marla 5000000
10 Marla 7200000
Sales price growth rate 30%
Table 11-3 Financial Assumptions
Project life (Years) 10
Debt 50%
Equity 50%
Interest rate on long term debt 14%
Debt tenure (Years) 5
No. of installments in a year 2
Amortization (years) 5
Table 11-4 Material Requirement Assumptions
Materials Estimated Requirement
Bricks 20 / sq ft
Sand 1 Truck/ 167 Sq. ft
Crush 0.6 Cubic feet / sq ft
Steel 1.35 kg / sq ft
Cement 1 Bag / 3.07 sq ft
Mud 1 Trolley / 87 sq ft
Tiles on roof 2500 for 5 Marla; 3000 for 7 Marla and 5000 for 10 Marla
House
Tiles (for front) 52.02 Sq m for 5 Marla; 59.83 Sq m for 7 Marla; & 65.03
Sq m for 10 Marla
Grills 160 sq ft for 5 Marla; 160 Sq ft for 7 Marla and 280 sq ft
for 10 Marla
Glass 140 sq ft for 5 Marla; 140 sq ft for 7 Marla and 250 sq ft
for 10 Marla House
Lamination 12 sheets for 5 Marla House; 16 Sheets for 7 Marla and 18
19
sheets for 10 Marla House
Chip Board 66 sheets for 5 Marla House; 74 Sheets for 7 Marla and 74
Ply 12 sheets for 5 Marla House; 17 Sheets for 7 Marla and 19
Wood 242 Sq ft for 5 Marla; 296 Sq ft for 7 Marla and 296 Sq ft
for 10 Marla House
Table 11-5 Material cost Assumptions5
Material Rs Price Unit
Bricks 2400 Thousand
Sand 1600 Truck (350 cub ft)
Crush 20 Cubic ft
Steel 30 Kg
Cement 230 Bag
Mud 500 Trolley
Tiles 1800 Thousand
Grills including labour 150 Sq ft
Gate including labour 150 Sq ft
Glass 30 Sq ft
Tiles for Front 425 Sq m
Flooring :
Covered area 35 Sq ft
Bath rooms 450 Sq m
Others (Front, Back & Galli) 50 Sq ft
Door 80 Sq ft
Wood 15 Sq Ft
Lamination 1025 Sheet
Chipboard 700 Sheet
Ply 210 Sheet
5 Prices provided by: Khokar & Sons, Main Walton Road, Lahore. 0300-8866904
20
Table 11-6 Labour cost Assumptions
Category Rate Basis of Pricing
Civil work 125 Sq ft
Electrification 9 Sq ft
Sanitation 9 Sq ft
Paint 17 Sq ft
Carpenter 35000 5 Marla house
Guard 4500 Month
Glass Work 3 Sq ft
Table 11-7 Expense Assumptions
Land Price per Marla Rs. 250,000
Land Price growth rate 25%
Fees for land Rs. 25,000
Material, Labour growth rate 10%

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