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REGIONAL OFFICE
SINDH
REGIONAL OFFICE
KPK
REGIONAL OFFICE
BALOCHISTAN
Ground Floor
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The Mall, Peshawar.
Tel: (091) 9213046-47
Fax: (091) 286908
helpdesk-pew@smeda.org.pk
September 2013
Pre-feasibility Study
Gaming Zone
Table of Contents
1. Disclaimer ............................................................................................................................... 1
2. Purpose of the Document ........................................................................................................ 2
3. Introduction to SMEDA.......................................................................................................... 2
4. Introduction To Scheme .......................................................................................................... 2
5. Executive Summary ................................................................................................................ 3
6. Brief Description of Project & Product .................................................................................. 3
7. Critical Factors in Decision Making ....................................................................................... 3
8. Installed & Operational Capacities ......................................................................................... 4
9. Geographical Potential for Investment ................................................................................... 4
10.
Potential Target Markets & Cities ....................................................................................... 4
11.
Project Cost Summary ......................................................................................................... 4
11.1.
Project Economics ............................................................................................................ 4
11.2.
Project Financing.............................................................................................................. 5
11.3.
Project Cost ...................................................................................................................... 5
11.4.
Space Requirement ........................................................................................................... 6
11.5.
Machinery & Equipment Requirement ............................................................................ 6
11.6.
Office Equipment Requirement ....................................................................................... 7
11.7.
Furniture & Fixtures Requirement ................................................................................... 7
11.8.
Human Resource Requirement......................................................................................... 7
11.9.
Revenue Generation ......................................................................................................... 8
11.10. Other Costs ....................................................................................................................... 8
12.
Contacts Suppliers, Experts/Consultants, Dev Institutions............................................... 9
13.
Annexure ............................................................................................................................ 10
13.1.
Profit & Loss Statement ................................................................................................. 10
13.2.
Balance Sheet ................................................................................................................. 11
13.3.
Statement of Cash Flow ................................................................................................. 12
13.4.
Useful Project Management Tips ................................................................................... 13
13.5.
Useful Links ................................................................................................................... 14
14.
Key Assumptions ............................................................................................................... 16
ii
September 2013
Pre-feasibility Study
Gaming Zone
1. DISCLAIMER
This information memorandum is to introduce the subject matter and provide a general
idea and information on the said matter. Although, the material included in this
document is based on data/information gathered from various reliable sources;
however, it is based upon certain assumptions which may differ from case to case. The
information has been provided on as is where is basis without any warranties or
assertions as to the correctness or soundness thereof. Although, due care and diligence
has been taken to compile this document, the contained information may vary due to
any change in any of the concerned factors, and the actual results may differ
substantially from the presented information. SMEDA, its employees or agents do not
assume any liability for any financial or other loss resulting from this memorandum in
consequence of undertaking this activity. The contained information does not preclude
any further professional advice. The prospective user of this memorandum is
encouraged to carry out additional diligence and gather any information which is
necessary for making an informed decision, including taking professional advice from a
qualified consultant/technical expert before taking any decision to act upon the
information.
For more information on services offered by SMEDA, please contact our website:
www.smeda.org.pk
1
September 2013
Pre-feasibility Study
Gaming Zone
3. INTRODUCTION TO SMEDA
The Small and Medium Enterprises Development Authority (SMEDA) was established in
October 1998 with an objective to provide fresh impetus to the economy through
development of Small and Medium Enterprises (SMEs).
With a mission "to assist in employment generation and value addition to the national
income, through development of the SME sector, by helping increase the number, scale
and competitiveness of SMEs" , SMEDA has carried out sectoral research to identify
policy, access to finance, business development services, strategic initiatives and
institutional collaboration and networking initiatives.
Preparation and dissemination of prefeasibility studies in key areas of investment has
been a successful hallmark of SME facilitation by SMEDA.
Concurrent to the prefeasibility studies, a broad spectrum of business development
services is also offered to the SMEs by SMEDA. These services include identification of
experts and consultants and delivery of need based capacity building programs of
different types in addition to business guidance through help desk services.
4. INTRODUCTION TO SCHEME
Prime Ministers Small Business Loans Scheme, for young entrepreneurs, with an
allocated budget of Rs. 5.0 Billion for the year 2013-14, is designed to provide
2
September 2013
Pre-feasibility Study
Gaming Zone
subsidised financing at 8% mark-up per annum for one hundred thousand (100,000)
beneficiaries, through designated financial institutions, initially through National Bank of
Pakistan (NBP) and First Women Bank Ltd. (FWBL).
Small business loans with tenure upto 7 years, and a debt : equity of 90 : 10 will be
disbursed to SME beneficiaries across Pakistan, covering; Punjab, Sindh, Khyber
Pakhtunkhwah, Balochistan, Gilgit Baltistan, Azad Jammu & Kashmir and Federally
Administered Tribal Areas (FATA).
5. EXECUTIVE SUMMARY
Gaming Zone is proposed to comprise of 20 gaming stations and will operate for a
period of 10 to 12 hours on daily basis. Proposed locations are Lahore, Islamabad,
Karachi, Peshawar, Quetta & other cities with easy internet access.
Total cost estimate of the project is Rs. 2.16 Million with a fixed investment of Rs. 1.94
Million and a working capital of Rs. 0.22 Million.
Given the cost assumptions IRR and payback are 58% and 2.96 years, respectively.
The most critical considerations or factors for success of the project are location,
environment, up-to-date games, technology and marketing.
Location: Lahore, Islamabad, Karachi, Peshawar, Quetta & other cities with
easy internet access.
Target Market: Initially, the project proposes to draw in local youngsters, later
LAN gaming tournaments at national level can be launched.
September 2013
Pre-feasibility Study
Gaming Zone
10.
11.
A detailed financial model has been developed to analyze the commercial viability of
Gaming Zone under the Prime Ministers Small Business Loan Scheme. Various cost
and revenue related assumptions along with results of the analysis are outlined in this
section.
The projected Income Statement, Cash Flow Statement and Balance Sheet are
attached as appendix.
11.1.
PROJECT ECONOMICS
The project proposes twenty (20) computer stations/game stations. After projects
maturity and especially during the tournaments, the gaming zone could entertain a
wider base as required. The following table shows internal rates of return and payback
period.
Table 1: Project Economics
Description
Details
58%
2.96
9,792,673
Returns on the scheme and its profitability are highly dependent on the environment in
order to provide a p leasing experience to customers for latest and on demand LAN
gaming, internet, refreshment services, etc.
4
September 2013
Pre-feasibility Study
11.2.
Gaming Zone
PROJECT FINANCING
Following table provides details of the equity required and variables related to bank
loan:
Table 2: Project Financing
Description
Total Equity (10%)
Bank Loan (90%)
Markup to the Borrower
Tenure of the Loan (Years)
11.3.
Details
Rs. 216,042
Rs.1,944,379
8%
7
PROJECT COST
Amount (Rs.)
178,750
984,000
420,750
218,000
89,865
1,891,365
269,056
2,160,421
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September 2013
Pre-feasibility Study
11.4.
Gaming Zone
SPACE REQUIREMENT
11.5.
Rs/Sqft
Sqft
150
150
100
150
50
1,000
100
75
1,225
Amount
(Rs.)
7,500
150,000
10,000
11,250
178,750
Details of machinery & equipment required for the project are given below, it is to be
noted that life of the equipment is proposed to be 3 years, after which the equipment is
to be replaced:
Table 5.1: Machinery & Equipment Detail
Description
Quantity
Computer Server (Complete set)
1
Personal Computers
20
UPS
21
Total
Cost (Rs./unit)
100,000
40,000
4,000
Total Rs.
100,000
800,000
84,000
984,000
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September 2013
Pre-feasibility Study
11.6.
Gaming Zone
Details of the office equipment required for the project are given below:
Table 6: Office Equipment Detail
Description
Quantity
Telephone
Networking
Lighting (tube lights)
Total
11.7.
1
1
21
Cost
Rs/unit
5,000
150,000
3,000
Total
Rs.
5,000
150,000
63,000
218,000
11.8.
Cost
78,750
105,000
42,000
30,000
165,000
420,750
No. of
Employees
1
2
1
1
5
Salary/Month
50,000
15,000
10,000
10,000
85,000
Staff salaries are estimated as per market trends, however, they may be set on different
pay scales. Salaries of all employees are estimated to increase at 10% annually.
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September 2013
Pre-feasibility Study
11.9.
Gaming Zone
REVENUE GENERATION
The gaming zone is to carry 20 gaming stations; it is assumed that one game including
lag time is to last for 3 hours thereby allowing 4 people to play per day on one gaming
station. However, the project is to begin its operations with 60% capacity utilization
building up over a period of ten years to 100% utilization. Revenue details for Year 1 are
as follows:
Table 9: Revenue Detail
Capacity
Year 1
15,360
11.10.
Production
Capacity
25,600
Revenue /
Game (Rs.)
200
First Year
Revenue (Rs)
3,072,000
OTHER COSTS
The primary overhead cost of the project would be utilities such as building rent,
electricity, gas, water and fuel costs, keeping in mind the expenses for generator.
8
September 2013
Pre-feasibility Study
12.
Gaming Zone
Sponsored Tournaments:
http://teletimesinternational.com/asia/10117/ptcl%E2%80%99s-onlinegamers%E2%80%99-league-tournament-receives-massive-response?lang=bn
9
September 2013
Pre-feasibility Study
13.
Gaming Zone
ANNEXURE
13.1.
Statement Summaries
SMEDA
Income Statement
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Rs. in actuals
Year 10
Revenue
Cost of goods sold
Gross Profit
3,072,000
300,000
2,772,000
3,942,400
330,000
3,612,400
4,956,160
363,000
4,593,160
6,133,248
399,300
5,733,948
7,496,192
439,230
7,056,962
8,245,811
483,153
7,762,658
9,070,392
531,468
8,538,924
9,977,432
584,615
9,392,816
10,975,175
643,077
10,332,098
12,072,692
707,384
11,365,308
1,200,000
228,667
720,000
153,600
171,213
17,973
60,000
2,551,452
220,548
1,320,000
251,533
792,000
197,120
171,213
17,973
66,000
2,815,839
796,561
1,452,000
276,687
871,200
247,808
171,213
17,973
72,600
3,109,480
1,483,680
1,597,200
304,355
958,320
306,662
302,183
17,973
79,860
3,566,554
2,167,394
1,756,920
334,791
1,054,152
374,810
302,183
17,973
87,846
3,928,674
3,128,288
1,932,612
368,270
1,159,567
412,291
302,183
96,631
4,271,553
3,491,105
2,125,873
405,097
1,275,524
453,520
476,505
106,294
4,842,812
3,696,112
2,338,461
445,607
1,403,076
498,872
476,505
116,923
5,279,443
4,113,374
2,572,307
490,167
1,543,384
548,759
476,505
128,615
5,759,736
4,572,362
2,829,537
539,184
1,697,722
603,635
708,527
141,477
6,520,082
4,845,226
Other income
Gain / (loss) on sale of assets
Earnings Before Interest & Taxes
220,548
796,561
590,400
2,074,080
2,167,394
3,128,288
1,081,022
4,572,127
3,696,112
4,113,374
1,586,441
6,158,803
4,845,226
Interest expense
Earnings Before Tax
149,169
71,379
131,339
665,222
112,040
1,962,040
138,107
2,029,287
109,882
3,018,405
79,331
4,492,797
46,261
3,649,852
21,575
4,091,799
13,870
6,144,932
5,530
4,839,696
Tax
NET PROFIT/(LOSS) AFTER TAX
71,379
665,222
1,962,040
2,029,287
123,128
2,895,277
233,288
4,259,509
261,235
3,388,617
291,612
3,800,187
324,542
5,820,390
360,762
4,478,935
71,379
71,379
71,379
736,601
736,601
736,601
2,698,642
2,698,642
2,698,642
4,727,928
4,727,928
4,727,928
7,623,206
7,623,206
7,623,206
11,882,715
11,882,715
11,882,715
15,271,331
15,271,331
15,271,331
19,071,518
19,071,518
19,071,518
24,891,908
24,891,908
24,891,908
29,370,843
29,370,843
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September, 2013
Pre-feasibility Study
13.2.
Gaming Zone
BALANCE SHEET
Statement Summaries
SMEDA
Balance Sheet
Year 0
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Rs. in actuals
Year 10
40,389
228,667
269,056
61,793
251,533
313,326
629,607
276,687
906,293
1,818,876
304,355
2,123,232
3,714,777
334,791
4,049,568
6,537,397
368,270
6,905,667
8,998,835
405,097
9,403,931
12,452,074
445,607
12,897,681
16,696,650
490,167
17,186,817
20,680,856
539,184
21,220,040
26,514,343
26,514,343
Fixed assets
Building/Infrastructure
Machinery & equipment
Furniture & fixtures
OEducational Tools
Total Fixed Assets
178,750
984,000
420,750
218,000
1,801,500
169,813
885,600
378,675
196,200
1,630,288
160,875
787,200
336,600
174,400
1,459,075
151,938
1,998,504
294,525
152,600
2,597,567
143,000
1,769,134
252,450
130,800
2,295,384
134,063
1,539,763
210,375
109,000
1,993,201
125,125
3,053,609
168,300
87,200
3,434,234
116,188
2,649,917
126,225
65,400
2,957,729
107,250
2,246,225
84,150
43,600
2,481,225
98,313
4,162,753
42,075
21,800
4,324,941
89,375
3,527,039
3,616,414
Intangible assets
Pre-operation costs
Legal, licensing, & training costs
Total Intangible Assets
TOTAL ASSETS
89,865
89,865
2,160,421
71,892
71,892
2,015,506
53,919
53,919
2,419,288
35,946
35,946
4,756,744
17,973
17,973
6,362,925
8,898,867
12,838,165
15,855,410
19,668,042
25,544,981
30,130,757
Assets
Current assets
Cash & Bank
Pre-paid annual land lease
Total Current Assets
Other liabilities
Long term debt
Total Long Term Liabilities
1,944,379
1,944,379
1,728,085
1,728,085
1,493,961
1,493,961
1,852,625
1,852,625
1,510,222
1,510,222
1,139,595
1,139,595
738,415
738,415
304,166
304,166
210,694
210,694
109,517
109,517
Shareholders' equity
Paid-up capital
Retained earnings
Total Equity
TOTAL CAPITAL AND LIABILITI
216,042
216,042
2,160,421
216,042
71,379
287,421
2,015,506
216,042
709,285
925,327
2,419,288
284,052
2,620,068
2,904,119
4,756,744
284,052
4,568,651
4,852,703
6,362,925
284,052
7,475,221
7,759,273
8,898,867
284,052
11,815,698
12,099,750
12,838,165
284,052
15,267,193
15,551,245
15,855,410
284,052
19,173,296
19,457,348
19,668,042
284,052
25,151,412
25,435,463
25,544,981
11
September, 2013
284,052
29,846,705
30,130,757
30,130,757
Pre-feasibility Study
13.3.
Gaming Zone
Statement Summaries
SMEDA
Financing activities
Change in long term debt
Change in short term debt
Change in export re-finance facility
Add: land lease expense
Land lease payment
Change in lease financing
Issuance of shares
Purchase of (treasury) shares
Cash provided by / (used for) financ
1,944,379
(228,667)
216,042
1,931,754
Investing activities
Capital expenditure
Acquisitions
Cash (used for) / provided by invest
(1,891,365)
(1,891,365)
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Rs. in actuals
Year 10
71,379
171,213
17,973
260,565
637,906
171,213
17,973
827,091
1,910,783
171,213
17,973
2,099,968
1,948,583
302,183
17,973
2,268,739
2,906,570
302,183
17,973
3,226,726
4,340,477
302,183
4,642,660
3,451,494
476,505
3,927,999
3,906,103
476,505
4,382,608
5,978,116
476,505
6,454,620
4,695,294
708,527
5,403,820
(216,294)
228,667
(251,533)
(239,161)
(234,124)
251,533
(276,687)
(259,277)
358,664
276,687
(304,355)
68,010
399,005
(342,403)
304,355
(334,791)
(372,838)
(1,309,704)
(1,309,704)
(370,628)
334,791
(368,270)
(404,107)
(401,179)
368,270
(405,097)
(438,006)
(1,743,216)
(1,743,216)
(434,249)
405,097
(445,607)
(474,759)
(93,472)
445,607
(490,167)
(138,032)
(101,177)
490,167
(539,184)
(150,194)
(2,320,221)
(2,320,221)
(109,517)
539,184
429,667
NET CASH
40,389
21,404
567,814
1,189,270
1,895,901
2,822,619
2,461,438
3,453,240
4,244,575
3,984,206
5,833,487
40,389
40,389
40,389
61,793
61,793
61,793
629,607
629,607
629,607
1,818,876
1,818,876
1,818,876
3,714,777
3,714,777
3,714,777
6,537,397
6,537,397
6,537,397
8,998,835
8,998,835
8,998,835
12,452,074
12,452,074
12,452,074
16,696,650
16,696,650
16,696,650
20,680,856
20,680,856
20,680,856
26,514,343
26,514,343
12
September, 2013
Pre-feasibility Study
13.4.
Gaming Zone
Technology
Machinery Suppliers: Training and after sales services under the contract with the
machinery suppliers.
Marketing
Product Development & Packaging: Experts may be engaged for product/service and
packaging design & development.
Ads & P.O.S. Promotion: Business promotion and dissemination through banners and
launch events is highly recommended. Product brochures from good quality service
providers.
Sales & Distribution Network: Expert advice and distribution agreements are required.
Price - Bulk Discounts, Cost plus Introductory Discounts: During the introductory
phase price may be lower and used as a promotional tool. Product cost estimates should
be carefully documented before price setting. Government controlled prices shall be
displayed.
Human Resources
Training & Skill Development: Training and skill development of employees and
exposure of best practices. Least cost options for Training and Skill Development
(T&SD) may be linked with compensation benefits and awards.
13
September, 2013
Pre-feasibility Study
13.5.
Gaming Zone
USEFUL LINKS
Government of Pakistan
www.pakistan.gov.pk
Government of Punjab
www.punjab.gov.pk
Government of Sindh
www.sindh.gov.pk
Government of Balochistan
www.balochistan.gov.pk
September, 2013
Pre-feasibility Study
Gaming Zone
15
September, 2013
Pre-feasibility Study
14.
Gaming Zone
KEY ASSUMPTIONS
Details
20
320
12
60%
10%
100%
Revenue Assumptions
Description
Charge/ game station
Details
Rs. 200
10%
Rs. 20,000
Rs. 5,000
Economic Assumptions
Description
Details
Electricity
Gas
Water
Salary
10%
10%
10%
10%
Expense Assumptions
Description
Details
Electricity
Water
Gas
Promotional expense
Machinery & equipment insurance rate
Depreciation method
50,000
3,000
7,000
5%
5%
Straight line
16
September, 2013