SUNDAY, NOVEMBER 04, 2012

A BRIEF FEASIBILITY REPORT

ABOUT OPENING BRANCH OFFICE IN ISLAMABAD

Submitted To:

Mr. Hamza Saeed Manager Genset Division Mr. WAQAR RANA

Prepared By:

Sales Coordinator

OUTLINE
INTRODUCTION PRODUCT /SERVICES INTENDED MARKET ENVIRONMENT COMPETITION BUSINESS MODEL FINANCIAL PROJECTIONS CAPITAL REQUIREMENT & STRATEGIES MARKETING AND SALES STRATEGIES RECOMMENDATION AND FINDINGS CONCLUSION

BASIC THEME

Basic theme of making this feasibility report is to target the domestic and commercial market of Islamabad and NWFP for service contract and sale of diesel generating sets by exploring our current client portfolio and new customers.

LEVEL OF EXPERTISE
Person who has decision-making power and should know how to handle various kinds of activities can easily open such kind of project. Capabilities required are: Educated. Personal Knowledge of power generating equipments and its alternative solutions. Motivated

Competition
Our main competitors are generator companies. Below is the list of the companies having head/branch offices in Islamabad and its vicinity;

Sr. No
1 2 3 4 5 8 9 1 2 3 4 5 6 7 10 11 12 13 14

Company Name
Allied Engineering & Services Ltd. Bahum Associates (Pvt.) Ltd Greaves (Pvt) Ltd Orient Energy Systems SM Jaffer & Co KASEL (PVT.) LTD Lloyd Machinery & Engineering Ali Business Machines (pvt) Ltd. Crescent-import (pvt) Ltd. (cil) Combined Engineering & Services Ensys (Private) Limited Electro Power Systems Friend Engineering Services KHAN ENGINEERS & GENERATOR SERVICES Nortech Engineering & Services Pana Communication Inc Power Ocean Power System & Services Proctor International (Pvt.) Ltd

Head Office/Branch Office

Branch Office Branch Office Branch Office Branch Office Branch Office Branch Office Branch Office Head Office Head Office Head Head Head Head Head Head Head Head Head Head Office Office Office Office Office Office Office Office Office Office

Note: Serial No 1-5 are the key players of market in diesel generating companies.

Business model
A)

Revenue generating model

It is the customers who are the main source for generating profits for a company when they choose our product or service over other competitor's. Our business model will be revenue generating only if we provide product or service better then the competitors and will be delivered in a reasonable time frame otherwise our competitor will render us obsolete. Knowing this following are the sources for generating revenue and maximizing profit of our company; Primary Service contract Generator Sale Secondary Rental Generators Line Conditioners (Telecom)

B)

Operation requirement
1. Physical premises

We will open our office in a rental house located near I-9 sector of Islamabad because it will render us the following benefits;

Low rent as compared to other areas of Islamabad Reduces the operational expenses Will serve as a multipurpose like temporary accommodation for our head office mangers and godown for generator repair items. 2. Management and personal requirement

At the start we will not hire any manager because initially all the operations will be monitored by the head office. However following personnel can be hired for initial setup in Islamabad; One Supervisor One Sales Executive One Technician Cum Driver

One Technician One Office Boy Cum Watchman

Hierarchy of the Islamabad office

HEAD OFFICE

Supervisor

Sales Executive

Technician Cum Driver

Technician

Boy Cum Watchman

BASES OF INVESTMENT APPRAISAL FINANCIAL ASPECT

The project for opening a branch in Islamabad is financially very profitable because there are three major reasons:

Ready-made portfolio of clients is available. Generating revenue from service contract and sale in Islamabad and NWFP. Will reduce the companys expenses for complaint handing in Islamabad and NWFP.

As Multiline has sold more than 33 generators to government, residential and commercial clients in Islamabad and cities in its surroundings, hence by keeping in view the above three main points we must not afraid in making investment in such a place where it reduces the risk factor even up to a minimum.

MEANS OF FUNDING
We have two means of funding. Our personal equity is 70 % and bank loan is 30 % of the total Project cost that is explained as under: Personal Equity up to 0.74767M (747,670) Bank Loan up to 0.3243M (320,430)

COST OF PROJECT
We have a 2250 Sq.ft (10 Marla-Dimension 30 front 75 depth) rental house in vicinity of Islamabad with a temporary accommodation as well. SETUP COST

Multiline Engineering Co Islamabad Branch

DESCRIPTION 1) Documentation Of Rental Agreement DETAILS (Security 2 months- Rs 50,000 + Advance Rent 3 months-Rs 25,000 per month) Suzuki TOTAL PRICE (Rs)

2) Service Van (Lease) 3) Store Items for Genset 4) Tool Box for Generator Repairing 5) Furniture and Fixtures

Two Tool Boxes-Rs 12,000 each Panasonic Fax- Rs 12,000 Samsung Printer/Scanner/CopierRs 27,000 7 Chairs Rs 2,000 Per Chair Table Rs 12,000 Refrigerator- Rs 15000 1 Computer System-14000 One Split A.C s of 1.5 ton-Rs 28000 per A .C

125,0 00 630,0 00 50,000 24,000

6) Miscellaneous Expenses TOTAL Contingencies @ 10%

---------

122000 20,000 971000 97,100 1,068,100

Total Project Cost

Thus the total final cost of the project is Rs 1,068,100/-.

FIXED MONTHLY EXPENSES

This monthly expenses is given as under as it will definitely incur if no single customer will come.

ITEMS Salary of Sales Executive Salary of Supervisor Salary of Technician Cum Driver Salary of Technician Salary of Office Boy cum watchman Utility Bills Rent Total

MONTHLY (Rs) 15,000 25,000 16,000 12,000 10,000 25000 25000 128,000

Quarterly Expenses (Rs) 45,000 75,000 48,000 36,000 30,000 75000 75000 384,000

INSTALLMENT PLAN
We have taken a loan amounting of Rs 3,00,000/- from the Bank Of Punjab Blue Area Branch, Islamabad against a plot worth Rs 500000/- on an agreed monthly rate of interest 14 %. Total repayment period is 3 years including 1 year as grace period. Following is the interest for the first year in which the installment is not paid to the bank and afterward there is a monthly installment plan for 2 years. Interest For The Grace Year Interest = Prt = (3,00,000)(0.14)(1) = Rs 42,000

Present Value = 3,00,000 + 42,000 = Rs 3,42,000 Monthly Installment (R) Value (Two Years) P 3,42,000 3,42,000 3,42,000 3,42,000 3,42,000 R R = = = = = = = = R [{(1+ i)n 1)}] / [ i(1 + i)n] R [(1 + 0.14/12) 24 1)] / [(0.14/12)(1 + 0.14/12) 24] R [(1.0117) 24 1] / [(0.0117) (1.0117) 24] R [1.3220 1 ] / [ (0.0117) (1.3220)] R [0.3220] / [0.0155] R [(20.7742) 3,42,000 20.7742 Rs 16,366/-

AMORTIZATION SCHEDULE
MONTHLY 0 1 2 3 4 5 6 7 8 9 10 11 12 INSTALLMENT 13,358 13,358 13,358 13,358 13,358 13,358 13,358 13,358 13,358 13,358 13,358 13,358 INTEREST 6,698 6,620 6,542 19,860 6,462 6,382 6,300 19,144 6,218 6,134 6,050 18,403 5,965 5,879 5,791 17,635 PRINCIPAL PAYMENT 6,660 6,738 6,817 20,215 6,896 6,977 7,058 20,931 7,141 7,224 7,308 21,672 7,393 7,480 7,567 22,440 BALANCE 574,101 567,441 560,702 553,886 546,989 540,012 532,954 525,814 518,590 511,282 503,888 496,409 488,842

NOTE: We have taken the loan amounting to Rs 3,00,000 on an agreed ratio of 70:30 against a property worth Rs 5,00,000 with 14% interest (Monthly) for 3 years including one grace year from Bank of Punjab Main Market, Islamabad.

Recommendation and findings

Conclusion