Salt Products PDF

Pre-Feasibility Study
Prime Ministers Small Business Loan

Scheme
(Salt Products Manufacturing Unit)
Small and Medium Enterprises Development Authority

Ministry of Industries & Production
Government of Pakistan
www.smeda.org.pk
HEAD OFFICE
4th Floor, Building No. 3, Aiwan e Iqbal, Egerton Road,
Lahore
Tel 92 42 111 111 456, Fax 92 42 36304926-7
helpdesk@smeda.org.pk
REGIONAL OFFICE
PUNJAB
REGIONAL OFFICE
SINDH
REGIONAL OFFICE
KPK
REGIONAL OFFICE
BALOCHISTAN
3rd Floor, Building No. 3,

Aiwan e Iqbal, Egerton Road
Lahore,
Tel: (042) 111-111-456
Fax: (042)6304926-7
helpdesk.punjab@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
September 2013
Salt Products Manufacturing Unit
Table of Contents
1. DISCLAIMER .......................................................................................................................................... 2
2. PURPOSE OF THE DOCUMENT ......................................................................................................... 3
3. INTRODUCTION TO SMEDA .............................................................................................................. 3
4. INTRODUCTION TO SCHEME ........................................................................................................... 4
5. EXECUTIVE SUMMARY ...................................................................................................................... 4
6. BRIEF DESCRIPTION OF PROJECT & PRODUCT ........................................................................ 5
7. CRITICAL FACTORS ............................................................................................................................ 5
8. INSTALLED & OPERATIONAL CAPACITIES ................................................................................. 6
9. GEOGRAPHICAL POTENTIAL FOR INVESTMENT ..................................................................... 6
10.
POTENTIAL TARGET MARKETS ............................................................................................... 6
11.
PROJECT COST SUMMARY ......................................................................................................... 6
11.1.
11.2.
11.3.
11.4.
11.5.
11.6.
11.7.
11.8.
11.9.
11.10.
12.
12.1.
12.2.
12.3.
PROJECT ECONOMICS ................................................................................................................... 6

PROJECT FINANCING .................................................................................................................... 7
PROJECT COST ............................................................................................................................. 7
SPACE REQUIREMENT .................................................................................................................. 8
MACHINERY AND EQUIPMENT...................................................................................................... 8
OFFICE EQUIPMENT...................................................................................................................... 9
RAW MATERIAL REQUIREMENTS ................................................................................................. 9
HUMAN RESOURCE REQUIREMENT .............................................................................................10
REVENUE GENERATION...............................................................................................................10
OTHER COSTS .............................................................................................................................10
ANNEXURE ..................................................................................................................................... 11
INCOME STATEMENT ...................................................................................................................11
STATEMENT OF CASH FLOW........................................................................................................12
BALANCE SHEET .........................................................................................................................13
13.
USEFUL PROJECT MANAGEMENT TIPS................................................................................ 14
14.
USEFUL LINKS............................................................................................................................... 15
15.
KEY ASSUMPTIONS ..................................................................................................................... 16
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
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, and production, marketing, finance and business
management.
The purpose of this document is to facilitate potential investors in Salt Products
Manufacturing Unit by providing them with a general understanding of the
business with the intention of supporting potential investors in crucial investment
decisions.
The need to come up with pre-feasibility reports for undocumented or minimally
documented sectors attains greater imminence as the research that precedes
such reports reveal certain thumb rules; best practices developed by existing
enterprises by trial and error, and certain industrial norms that become a guiding
source regarding various aspects of business set-up and its successful
management.
Apart from carefully studying the whole document one must consider critical
aspects provided later on, which form basis of any Investment Decision.
3. INTRODUCTION TO SMEDA
The Small and Medium Enterprises Development Authority (SMEDA) was
established in October 1998 with an objective to provide fresh impetus to the
economy through development of Small and Medium Enterprises (SMEs).
With a mission "to assist in employment generation and value addition to the
national income, through development of the SME sector, by helping increase
the number, scale and competitiveness of SMEs" , SMEDA has carried out
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.
3
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
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
This particular pre feasibility is regarding Salt Products Manufacturing Unit. The
salt products manufacturing project entails producing salt rock crystal products
ranging from lamps, tiles, candle stands, salt soups and various decorative
shapes/pieces. Salt products are known for their therapeutic/healing affects on
body and mind. There is an increasing trend and preference for organic quality
products for their natural curative properties. Salt products are equally sought for
decorative purposes due to their distinctive colors and composition. There is
growing demand of salt products in the Western countries due to its healing
properties for a number of ailments.
Pakistani salt products are well known all over the world for their distinctive
composition and craftsmanship. The country holds one of the largest reserves of
salt deposit in the world. Growing international demand for salt products,
availability of cheap and skilled labor coupled with abundant raw material offer
new startups a very promising opportunity to venture into salt products
manufacturing.
Salt Products manufacturing business venture entails a total investment of about
Rs. 1.55 million. This includes a capital investment of Rs.0.99 million and a sum
of Rs.0.55 million as initial working capital. The project is financed through 90%
debt and 10% equity. The Net Present Value (NPV) of the project is around Rs.
5.96 million with an Internal Rate of Return (IRR) of 64% and a payback period of
2.35 years. The project will generate employment opportunity for 11 persons
including owner manager.
Higher return on investment and a steady growth of business is closely
associated with the entrepreneur having some prior experience or education in
the related field of business. This pre feasibility encompasses essential
information regarding various aspects of starting a salt products manufacturing

unit business in Pakistan.
6. BRIEF DESCRIPTION OF PROJECT & PRODUCT

The proposed project provides information on salt product manufacturing in
Pakistan. As defined in the executive summary, there are a number of factors for
which salt products are sought worldwide however, therapeutic and decorative
are two distinct reasons salt products are bought all over the world
The proposed project provides information on key aspects of starting salt product
manufacturing.
This prefeasibility details information about investment opportunities in the area
of salt products i.e. salt lamps, candle stand and salt soap. The unit is also
capable of manufacturing other salt products like salt spa products, salt inhalers,
salt bricks, tiles and blocks etc. Salt product manufacturing unit will primarily
focus on indirect export (middleman / traders).
Salt product manufacturing unit requires an investment estimated at Rs.1.55
million. This pre-feasibility is based on a unit with 2 lathe machines (5ft capacity),
1 cutter (24 length), grinder, drill and blowers with a capacity of manufacturing
400 salt products per 8 hours shift. Total employment required for this unit would
be 11 persons including owner manager. Total area required for salt products
manufacturing would be approximately 1.5 kanals that would be acquired on rent.
Estimated rent for such an area is Rs. 30,000/- per month.
7. CRITICAL FACTORS
Awareness/knowledge of international markets and their demand trends

for salt products.
High return on investment and a steady growth of business is closely
associated with continuous training and capacity building of the
entrepreneur. Prior experience/education in the related field of business
can be a big advantage.
Strict management/supervision controls to minimize wastage.
Ensuring availability of skilled labor and quality raw material.
Ventilation and adequate safety measures are to be ensured during the
production process. Workers must be provided with safety masks to
protect them from salt dust. Salt raw material and products should be
protected from water.
8. INSTALLED & OPERATIONAL CAPACITIES

This pre-feasibility is based on 2 lathe and 1 cutting machines with a capacity of
manufacturing 400 salt products per 8 hours shift. The total employment required
for this unit would be 11 persons. Total number of salt products produced in year
1 would be 60,000 reaching 50% of the total installed capacity, while maximum
capacity (95%) will be achieved with production reaching at 114,000 pieces in
year 10 of the project.
9. GEOGRAPHICAL POTENTIAL FOR INVESTMENT

The said project can be started in any adjoining industrial areas of Khewra,
district Jhelum, Warcha, District Mianwali, Kalabagh, District Mianwali. These
areas are preferred because of their proximity to raw material and availability of
skilled labor.
10.
POTENTIAL TARGET MARKETS
Salt products manufactured in this unit will be primarily exported to European

countries such as UK, Germany, France, Italy, Spain. In addition to these
countries, Korea, Japan and Australia are also potential markets of salt products.
11.
PROJECT COST SUMMARY
A detailed financial model has been developed to analyze the commercial

viability of Salt Products Manufacturing Unit 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 installed production capacity of the project is 120,000 salt products per year.
However during the first year of operations it will operate at 50% of the installed
capacity producing 60,000 salt products.
The following table shows internal rate of return, payback period and net present
value;
Table 1: Project Economics
Description
Details
Internal Rate of Return (IRR)
64%
Payback Period (yrs)
2.35
Net Present Value (NPV)
5,958,870
6
Returns on the project and its profitability are highly dependent on acquiring and
maintaining regular orders, procurement of salt and timely deliveries. Skilled
labor constitutes an important part of the whole operations.
11.2.
Project Financing
Following table provides details of the equity required and variables related to
bank loan;
Table 2: Project Financing
Description
Details
Total Equity (10%)
Rs.155,290
Bank Loan (90%)
Rs.1,397,610
Markup to the Borrower (%age/annum)
8%
Tenure of the Loan (Years)

11.3.
Project Cost
Following requirements have been identified for operations of the proposed

business. Rented premises for the unit has been recommended.
Table 3: Capital Investment for the Project
Capital Investment
Amount (Rs.)
Machinery
849,000
Furniture & Office equipment
117,000
Pre operational expenses
32,000
Total Capital Costs
998,000
Initial Working Capital
554,900
Total Project Cost
1,552,900
11.4.
Space Requirement
The area has been calculated on the basis of space requirement for production,
management and storage. However, the units operating in the industry do not
follow any set pattern. Following table shows calculations for project space
requirement.
Table 4: Space Requirement
Space Requirement
Sqft
Management building
150
Production area
1,200
Store
4,500
Open area
900
Total Area
6,750
Premises will be obtained on rent @ Rs 30,000 per month.

11.5.
Machinery and Equipment
Following table provides list of machinery and equipment required for an average
salt product manufacturing unit.
Table 5: Machinery & Equipment
Description
Quantity
Cost
Rs/unit
Total
Rs.
Cutter 24
60,000
60,000
Lathe machine 5
300,000
600,000
Grinder
10,000
40,000
Drill machine 5 with special bit
20,000
20,000
Hand drill
3,000
3,000
Blower
8,500
8,500
Electrification, installation, tools, etc
100,000
100,000
Total
15
849,000
Following is a brief description of the process flow; blocks of salt are cut into
small pieces by cutters. Lathe machines are used to shape and size salt pieces
into lamps and candle stands etc. Finishing operations are carried out on a
grinder and drill machine. Natural profile products (natural shape) are made on
grinders and hand drills.
11.6.
Office Equipment
Following are details of necessary office equipment.

Table 6: Office Equipment Details
Quantity
Cost
Amount
Computer desktop (used)
20,000
20,000
UPS
7,500
7,500
Computer printer
10,000
10,000
Telephone set
1,000
1,000
Total
11.7.
38,500
Raw Material Requirements
Salt mined from Khewra, Kalabagh and Warcha mines will be primarily used.
Raw materials requirements have been calculated on the basis of 4 product
categories which the unit will be producing.
Table 7: Cost of Materials
Unit
Rate
(Rs)
Quantity
(Kg)
Cost
Rs./Unit
Salt lamp (24 kg)

Salt
Kg
3.90
19.50
Kg
1.95
9.75
Kg
0.65
3.25
Kg
4.55
22.75
Candle stand (12 kg)

Salt
Salt soap (0.40.6 kg)
Salt
Natural profile (34 kg)
Salt
11.8.
Human Resource Requirement
Following table provides details of human resource required for this project:
Table 8: Human Resource Requirement
Description
No. of
Employees
Salary per
month
Owner Manager
20,000
Accountant
12,000
Machinist
12,000
Helper
10,000
Total Staff
11
The owner will focus on acquiring orders, purchase of salt and overall
management of the unit. The unit is capable of producing approximately 400
products in a 8 hour shift. Salaries of all employees are estimated to increase at
10% annually.
11.9.
Revenue Generation
Following table provides details of the revenue generated by the project in the
first year;
Product
Unit
Sales
Price
(Rs./Unit)
First Year
Production
First Year
Sales
Revenue
(Rs)
Salt lamp (24 kg)
No.
78.00
12,000
936,000
Candle stand (12 kg)
No.
39.00
12,000
468,000
Salt Soap (0.40.6 kg)
No
13.00
12,000
156,000
Natural Profile (34 kg)
No
91.00
24,000
2,184,000
Total Sales Revenue

11.10.
3,744,000
Other Costs
Other essential costs to be borne by the company are electricity and

communication expenses.
10
12.
ANNEXURE
12.1.
Income Statement
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
3,744,000
2,419,361
1,324,639
4,530,240
2,789,697
1,740,543
5,436,288
3,212,016
2,224,272
6,478,243
3,693,370
2,784,873
7,674,227
4,241,761
3,432,465
9,044,624
4,866,275
4,178,350
10,612,359
5,577,221
5,035,138
12,403,195
6,386,309
6,016,885
14,446,074
7,306,837
7,139,237
16,773,497
8,353,908
8,419,589
General administration & selling expenses

Administration expense
Rental expense
Utilities expense
Travelling & Comm. expense (phone, fax, etc.)
Office expenses (stationary, etc.)
Promotional expense
Depreciation expense
Amortization expense
Subtotal
Operating Income
240,000
360,000
22,882
93,600
2,400
37,440
100,450
3,200
859,972
464,667
263,367
396,000
25,170
91,922
2,634
45,302
100,450
3,200
928,045
812,498
289,008
435,600
27,687
110,171
2,890
54,363
100,450
3,200
1,023,370
1,200,902
317,147
479,160
30,456
131,151
3,171
64,782
100,450
3,200
1,129,517
1,655,356
348,025
527,076
33,502
155,225
3,480
76,742
100,450
3,200
1,247,700
2,184,765
381,909
579,784
36,852
182,802
3,819
90,446
102,577
3,200
1,381,389
2,796,960
419,092
637,762
40,537
214,343
4,191
106,124
102,577
3,200
1,527,826
3,507,312
459,895
701,538
44,591
250,363
4,599
124,032
102,577
3,200
1,690,796
4,326,089
504,671
771,692
49,050
291,445
5,047
144,461
102,577
3,200
1,872,143
5,267,094
553,807
848,861
53,955
338,239
5,538
167,735
102,577
3,200
2,073,913
6,345,676
Earnings Before Interest & Taxes
464,667
812,498
1,200,902
1,655,356
2,200,165
2,796,960
3,507,312
4,326,089
5,267,094
6,345,676
Interest expense
Earnings Before Tax
106,200
358,467
93,318
719,179
79,368
1,121,535
64,259
1,591,097
47,896
2,152,269
30,175
2,766,785
10,984
3,496,329
4,326,089
5,267,094
6,345,676
Tax
NET PROFIT/(LOSS) AFTER TAX
358,467
31,918
687,262
90,730
1,030,805
165,719
1,425,378
277,954
1,874,316
414,196
2,352,589
596,582
2,899,747
820,326
3,505,763
1,102,628
4,164,466
1,443,486
4,902,190
Balance brought forward

Total profit available for appropriation
Balance carried forward
358,467
358,467
358,467
1,045,728
1,045,728
1,045,728
2,076,533
2,076,533
2,076,533
3,501,911
3,501,911
3,501,911
5,376,226
5,376,226
5,376,226
7,728,815
7,728,815
7,728,815
10,628,562
10,628,562
10,628,562
14,134,325
14,134,325
14,134,325
18,298,791
18,298,791
18,298,791
23,200,981
23,200,981
Revenue
Cost of goods sold
Gross Profit
11
12.2.
Statement of Cash Flow
Cash Flow Statement
Operating activities
Net profit
Add: depreciation expense
amortization expense
Deferred income tax
Accounts receivable
Equipment inventory
Raw material inventory
Pre-paid building rent
Accounts payable
Cash provided by operations
Financing activities
Change in long term debt
Issuance of shares
Cash provided by / (used for) financing a
Investing activities
Capital expenditure
Cash (used for) / provided by investing a
Year 4
Year 3
Year 5
Year 6
Year 7
Year 0
Year 1
Year 2
(12,500)
(62,400)
(180,000)
(254,900)
358,467
100,450
3,200
(307,726)
(4,103)
(24,430)
(18,000)
82,375
190,233
687,262
100,450
3,200
31,918
(32,311)
(5,268)
(32,995)
(19,800)
19,337
751,792
1,030,805
100,450
3,200
90,730
(69,546)
(6,739)
(44,385)
(21,780)
23,066
1,105,800
1,425,378
100,450
3,200
165,719
(80,055)
(8,594)
(59,495)
(23,958)
27,534
1,550,180
1,874,316
100,450
3,200
277,954
(91,970)
(10,929)
(79,495)
(26,354)
32,905
2,080,077
2,352,589
102,577
3,200
414,196
(105,468)
(13,862)
(105,918)
(28,989)
39,380
2,657,706
2,899,747
102,577
3,200
596,582
(120,745)
(17,542)
(140,762)
(31,888)
47,213
3,338,382
(155,201)
(155,201)
(168,083)
(168,083)
(182,034)
(182,034)
(197,143)
(197,143)
(213,505)
49,137
(164,368)
(231,226)
(231,226)
(250,418)
(250,418)
1,397,610
155,290
1,552,900
(49,137)
(49,137)
Year 8
3,505,763
102,577
3,200
820,326
(138,023)
(22,153)
(186,635)
(35,077)
56,723
4,106,700
Year 9
4,164,466
102,577
3,200
1,102,628
(157,550)
(27,922)
(246,937)
(38,585)
68,307
4,970,184
Rs. in actuals
Year 10
4,902,190
102,577
3,200
1,443,486
(179,601)
129,613
983,451
424,431
(38,706)
7,770,641
(998,000)
(998,000)
NET CASH
300,000
35,032
583,709
923,766
1,353,037
1,866,571
2,426,480
3,087,964
4,106,700
4,970,184
7,770,641
Cash balance brought forward

Cash available for appropriation
Cash carried forward
300,000
300,000
300,000
335,032
335,032
335,032
918,741
918,741
918,741
1,842,507
1,842,507
1,842,507
3,195,544
3,195,544
3,195,544
5,062,116
5,062,116
5,062,116
7,488,595
7,488,595
7,488,595
10,576,560
10,576,560
10,576,560
14,683,260
14,683,260
14,683,260
19,653,444
19,653,444
19,653,444
27,424,085
27,424,085
12
12.3.
Balance Sheet
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
Assets
Current assets
Cash & Bank
Accounts receivable
Equipment spare part inventory
Raw material inventory
Pre-paid building rent
Total Current Assets
300,000
12,500
62,400
180,000
554,900
335,032
307,726
16,603
86,830
198,000
944,191
918,741
340,037
21,871
119,825
217,800
1,618,274
1,842,507
409,583
28,610
164,210
239,580
2,684,490
3,195,544
489,638
37,204
223,705
263,538
4,209,629
5,062,116
581,608
48,132
303,199
289,892
6,284,948
7,488,595
687,076
61,994
409,117
318,881
8,965,664
10,576,560
807,821
79,537
549,879
350,769
12,364,566
14,683,260
945,845
101,690
736,514
385,846
16,853,155
19,653,444
1,103,395
129,613
983,451
424,431
22,294,333
27,424,085
1,282,996
28,707,081
Fixed assets
Machinery & equipment
Furniture & fixtures
Office equipment
Total Fixed Assets
849,000
78,500
38,500
966,000
764,100
70,650
30,800
865,550
679,200
62,800
23,100
765,100
594,300
54,950
15,400
664,650
509,400
47,100
7,700
564,200
424,500
39,250
49,137
512,887
339,600
31,400
39,309
410,309
254,700
23,550
29,482
307,732
169,800
15,700
19,655
205,155
84,900
7,850
9,827
102,577
32,000
32,000
1,552,900
28,800
28,800
1,838,541
25,600
25,600
2,408,974
22,400
22,400
3,371,540
19,200
19,200
4,793,029
16,000
16,000
6,813,834
12,800
12,800
9,388,773
9,600
9,600
12,681,898
6,400
6,400
17,064,710
3,200
3,200
22,400,111
28,707,081
82,375
82,375
101,712
101,712
124,778
124,778
152,312
152,312
185,217
185,217
224,597
224,597
271,810
271,810
328,533
328,533
396,840
396,840
358,134
358,134
Intangible assets
Pre-operation costs
Total Intangible Assets
TOTAL ASSETS
Liabilities & Shareholders' Equity
Current liabilities
Accounts payable
Total Current Liabilities
Other liabilities
Deferred tax
Long term debt
Total Long Term Liabilities
1,397,610
1,397,610
1,242,409
1,242,409
31,918
1,074,326
1,106,244
122,648
892,292
1,014,940
288,367
695,149
983,516
566,321
481,644
1,047,965
980,517
250,418
1,230,935
1,577,099
1,577,099
2,397,425
2,397,425
3,500,053
3,500,053
4,943,539
4,943,539
Shareholders' equity
Paid-up capital
Retained earnings
Total Equity
TOTAL CAPITAL AND LIABILITIE
155,290
155,290
1,552,900
155,290
358,467
513,757
1,838,541
155,290
1,045,728
1,201,018
2,408,974
155,290
2,076,533
2,231,823
3,371,540
155,290
3,501,911
3,657,201
4,793,029
204,427
5,376,226
5,580,653
6,813,834
204,427
7,728,815
7,933,242
9,388,773
204,427
10,628,562
10,832,989
12,681,898
204,427
14,134,325
14,338,752
17,064,710
204,427
18,298,791
18,503,218
22,400,111
204,427
23,200,981
23,405,408
28,707,081
13
September 2013
13.
USEFUL PROJECT MANAGEMENT TIPS
Technology
Required spare parts & consumables: The preventive maintenance of

machines should be carried out. Availability of the machinery spare parts and
consumables must be ensured.
Energy Requirement: The generator has not been recommended for the
project as it will increase the cost of production.
Machinery Suppliers: Multiple machinery suppliers should be contacted and

purchase should be made after thorough inspection. The availability of spare
parts should also be considered. Such machinery is easily available in local
markets of Lahore, Gurjanwala, Faisalabad & Peshawar.
Quality Assurance Equipment & Standards: The finished products should

be according to the design specifications of buyers. Compliance should be
ensured for dimensions, weight and especially for the electrical fitting fixtures
as the buyers install accessories before exporting the products.
Marketing
Sales & Distribution Network: The owner should establish long term contacts
with the buyers to ensure continuous flow of orders. Moreover he should have
links with the suppliers of salt from major salt mines of the country.
Human Resources
Adequacy & Competencies: Skilled and experienced staff is necessary for

the unit. Staff having requisite shop floor experience should be preferred.
14
September 2013
14.
USEFUL LINKS
Prime Ministers Office, www.pmo.gov.pk

Small and Medium Enterprise Development Authority, www.smeda.org.pk
National Bank of Pakistan (NBP), www.nbp.com.pk
First Women Bank Limited (FWBL), www.fwbl.com.pk
Government of Pakistan, www.pakistan.gov.pk
Ministry of Industries & Production, www.moip.gov.pk
Ministry of Education, Training & Standards in Higher Education,
http://moptt.gov.pk
Government of Punjab, www.punjab.gov.pk
Government of Sindh, www.sindh.gov.pk
Government of Khyber Pakhtunkhwa, www.khyberpakhtunkhwa.gov.pk
Government of Balochistan, www.balochistan.gov.pk
Government of Gilgit Baltistan, www.gilgitbaltistan.gov.pk
Government of Azad Jamu Kashmir, www.ajk.gov.pk
Trade Development Authority of Pakistan (TDAP), www.tdap.gov.pk
Security Commission of Pakistan (SECP), www.secp.gov.pk
Federation of Pakistan Chambers of Commerce and Industry (FPCCI)
www.fpcci.com.pk
State Bank of Pakistan (SBP), www.sbp.org.pk
Punjab Mineral Development Corporation (PMDC) www.punjmin.com
15
September 2013
15.
KEY ASSUMPTIONS
Table 14-1 Machinery Assumptions
Number of Machines Installed
Capacity Utilization (Year 1)
50%
Maximum capacity utilization
95%
Total Production of the unit per 8 hour shift
300
Table 14-2 Operating Assumptions
Annual Production capacity
120,000
Hours operational per day
Days operational per month
25
No. of Shifts
Days operational per year
300
Table 14-3 Economy-Related Assumptions
Electricity & Fuel growth rate
10%
Wage growth rate
10%
Table 14-4 Cash Flow Assumptions
Accounts Receivable cycle (in days)
30
Accounts payable cycle (in days)
30
Raw material inventory (in day)
30
Equipment and spare part inventory (in

days)
30
Table 14-5 Revenue Assumptions
Production capacity of the unit
120,000
Sale price growth rate
15%
Local sales
100%
Table 14-6 Expense Assumptions
Factory & Administrative overhead (% of

Sales)
6%
Machine maintenance (% of Sales)
4%
Machine maintenance growth rate
5%
Pre-paid building Rent (months)
Rent growth rate
10%
Raw material price growth rate
10%
Communication Expense (% of Sales)

16
September 2013
0.50%
Promotional Expense (% of Sales)
1.00%
Table 14-7 Financial Assumptions
Project life
10
Debt
90%
Equity
10%
Interest rate on long-term debt
8%
Debt tenure
Debt payments per year
12
17
September 2013

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Pre-Feasibility Study

Prime Ministers Small Business Loan

Small and Medium Enterprises Development Authority

3rd Floor, Building No. 3,

5TH Floor, Bahria

Bungalow No. 15-A

Salt Products Manufacturing Unit

POTENTIAL TARGET MARKETS ............................................................................................... 6

PROJECT COST SUMMARY ......................................................................................................... 6

PROJECT ECONOMICS ................................................................................................................... 6

USEFUL PROJECT MANAGEMENT TIPS................................................................................ 14

KEY ASSUMPTIONS ..................................................................................................................... 16

Salt Products Manufacturing Unit

Salt Products Manufacturing Unit

2. PURPOSE OF THE DOCUMENT

Salt Products Manufacturing Unit

Salt Products Manufacturing Unit

information regarding various aspects of starting a salt products manufacturing

6. BRIEF DESCRIPTION OF PROJECT & PRODUCT

Awareness/knowledge of international markets and their demand trends

Salt Products Manufacturing Unit

8. INSTALLED & OPERATIONAL CAPACITIES

9. GEOGRAPHICAL POTENTIAL FOR INVESTMENT

POTENTIAL TARGET MARKETS

Salt products manufactured in this unit will be primarily exported to European

PROJECT COST SUMMARY

A detailed financial model has been developed to analyze the commercial

Internal Rate of Return (IRR)

Payback Period (yrs)

Net Present Value (NPV)

Salt Products Manufacturing Unit

Total Equity (10%)

Bank Loan (90%)

Markup to the Borrower (%age/annum)

Tenure of the Loan (Years)

Following requirements have been identified for operations of the proposed

Furniture & Office equipment

Pre operational expenses

Total Capital Costs

Initial Working Capital

Total Project Cost

Salt Products Manufacturing Unit

Premises will be obtained on rent @ Rs 30,000 per month.

Machinery and Equipment

Drill machine 5 with special bit

Electrification, installation, tools, etc

Salt Products Manufacturing Unit

Following are details of necessary office equipment.

Computer desktop (used)

Salt lamp (24 kg)

Candle stand (12 kg)

Salt Products Manufacturing Unit

Human Resource Requirement

Salt lamp (24 kg)

Candle stand (12 kg)

Salt Soap (0.40.6 kg)

Natural Profile (34 kg)

Total Sales Revenue

Other essential costs to be borne by the company are electricity and

Salt Products Manufacturing Unit

General administration & selling expenses

Earnings Before Interest & Taxes

Balance brought forward