Pre-Feasibility Study

(Commercialization of Arsenic Field Water Testing Kit)

PAKISTAN COUNCIL OF RESEARCH IN WATER RESOURCES

MINISTRY OF SCIENCE AND TECHNOLOGY

HEAD OFFICE
Khayaban-e-Johar, H-8/1, Islamabad; Ph: +92-51-9101285

Commercialization and Innovation Cell (CIC)

Tel.# 051-9101282-83-85 Fax # 051-9128010

Note: All Services / information related to PM's Youth Business Loan are Free of Cost
April , 2014

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1. DISCLAIMER

In this document, we provide the information regarding the subject matter. The material of whole
the document is based upon the data and information collected from various reliable sources
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.
Commercialization and Innovation Cell, PCRWR, its employees 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.

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 Water and Waste water
business by providing them 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 PCRWR

The Pakistan Council of Research in Water Resources (PCRWR) was established in 1964 through
a resolution and named as Irrigation, Drainage and Flood Control Research Council (IDFCRC)
within the Ministry of Natural Resources. It was brought under the administrative control of
Ministry of Science & Technology in 1970. The Council was renamed as Pakistan Council of
Research in Water Resources (PCRWR) by means of Resolution in 1985. Now, PCRWR is a
corporate body established by Act No.1 of 2007. Since its inception, PCRWR has played its role
as a national research organization, by undertaking and promoting applied as well as basic
research in various disciplines of water sector, more specifically, irrigation, drainage, surface and
groundwater management, groundwater recharge, watershed management, desertification control,
rainwater harvesting, water quality assessment and management. With its Head Office in

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 Islamabad, the Council undertakes R&D activities in all the provinces through 6 Regional
Offices/ Research Centers located at Tandojam, Quetta, Bahawalpur, Lahore, Peshawar and
Gilgit. These Centers are equipped with state of the art water testing laboratories, lysimeter
stations, experimental farms, groundwater investigation cells, mechanized tile drainage laying
facilities, and documentation and information cell.

4. EXECUTIVE SUMMARY

Safe drinking water is one of the basic human needs for good health. The use of poor quality
water may lead to bad impacts on the health and environment. About 200,000 child deaths occur
each year in Pakistan due to water-borne diseases. A survey carried out by Pakistan Council of
Research in Water Resources (PCRWR) has revealed that the access to safe drinking water in
urban areas is only 23% and in rural areas is 14% (based on the assessment survey of 10,000
water supply schemes). Major contaminants are Bacteriological contamination, Arsenic, Nitrate
and Fluoride. Such contaminants have adverse effects on the quality of life due to possible
outbreaks of water related diseases like cholera, diarrhea, typhoid, hepatitis A & E, cancer,
skeletal and crippling fluorosis. Without adequate water testing/ facilities, people may
unknowingly drink contaminated water containing hazardous contaminants linked to potentially
fatal diseases. The major hurdle in water testing is unavailability of adequate water testing
laboratories. The present situation demands the cost effective and user friendly water testing and
treatment technologies to save the public health
Pakistan Council of Research in Water Resources has developed an innovative water testing
methods in the form of low cost water testing kit for determination of arsenic contamination.
After identification of arsenic contamination, the rectification will also be required by the
consumers, for which, PCRWR has already made breakthrough by the development and
promotion of Arsenic Kit. In order to promote this product to meet the market demand and to
ensure the bulk availability, PCRWR has also established Commercialization and Innovation Cell
(CIC) for manufacturing and commercialization of Arsenic Field Water Testing Kit.
Manufacturing and commercialization of this product at mass scale under the controlled
production environment within the country is the present goal to assist government and non-
government organizations, general communities and industries.

The proposed R&D product involves a total investment of about Rs.0.881 approx. million. The
project will generate direct employment opportunity for 4 persons. Higher return on investment
and a steady growth of business is expected with the industrialist having some prior experience or
education in the related field of business. This pre-feasibility encompasses essential information
regarding various aspects of starting a Water Sector business in Pakistan.

5. INTRODUCTION TO SCHEME

Prime Ministers Youth Business Loan, for young entrepreneurs, with an allocated budget of
Rs. 5.0 Billion for the year 2013-14, is designed to provide subsidized financing at 8% mark-up
per annum for one hundred thousand (100,000) beneficiaries, through designated financial
institutions, initially by the National Bank of Pakistan (NBP) and the First Women Bank Ltd.
(FWBL).Loans from Rs. 0.1 million to Rs. 2.0 million with tenure up to 8 years inclusive of 1
year grace period, and a debt: equity of 90: 10 will be disbursed to SME beneficiaries across

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 Pakistan, covering; Punjab, Sindh, Khyber Pakhtunkhwa, Balochistan, Gilgit Baltistan, Azad
Jammu & Kashmir and Federally Administered Tribal Areas (FATA).

6. BRIEF DESCRIPTION OF PROJECT & PRODUCT

The market demand is comparatively higher than the manufacturing potential of the
Commercialization and Innovation Cell (CIC) and thus the Cell has certain limitations to meet the
market demand through the availability of arsenic field water testing Kit technologies through
mass scale production. The %age earned profit on pilot scale manufacturing will increase to a
higher extent with mass scale production. An enumeration of water quality products, market
demands and manufacturing capacity is given below:

Sr. No. Water Quality Market demand Manufactured

Product/Technology (2010-2013) in 2010-13
(No.)
1. Arsenic Field Testing Kit 500 70

This market potential is assessed from the prevailing water quality issues in the country as well as
from the demands received from national and international organizations working in the water
sector. Considering financial limitations, as well as lack of marketing professionals, an expanded
marketing campaign could not be launched with pilot scale manufacturing within PCRWR
Commercialization and Innovation Cell (CIC), however; there is a great market potential for these
cost effective Arsenic Testing Kit Technology depicted below:

Arsenic Testing Kit

Preliminary Requirements and Feasibility Analysis

The preliminary investment required for the establishment of an entrepreneurship for

manufacturing and marketing of this water quality testing kit is as follows:

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Sr. Production Production Actual Cost Approx.Net
No. Product Patent per unit
No. Rate Requirements Quantity/ Price
Name
(by IPO) (Units/day) year (No.) (PKR) (PKR)

1. Arsenic 141362 40 kits /day Raw material, 12000 3000-4000 6000/-

Field chemicals and
Testing reagents,
Kit scientific
equipment for
weighing,
grinding,
trimming and
cutting and
printing material.

Considering the concept of water quality problem identification and providing the rectification
measures as per demand of the customers at household and community level, the mass scale
manufacturing of cost effective product will reduce the manufacturing and marketing cost
simultaneously and will increase the profit returns accordingly. Thus, PCRWR intends to invite
the business proposals from private firms/registered proprietors interested to establish
entrepreneurship for the above listed product of PCRWR.

7. CRITICAL FACTORS

Energy electricity factors.

Lack of marketing and advertising of the products in public sector.
Higher return on investment and a steady growth of business is closely associated with regular
training and capacity building of the entrepreneur and employees.
Higher prices make the quality products less reachable as compare to cheap and low grade
products.
Prior experience and related /education in the related field of business.
Strict compliance regarding local and international environmental regulations and compliance
requirements.
8. INSTALLED & OPERATIONAL CAPACITIES
See the number 12 (PROJECT COST SUMMARY)
9. GEOGRAPHICAL POTENTIAL FOR INVESTMENT

South Punjab, Central Punjab and Sindh in general and some areas of Balochistan and KPK in
particular are the key clusters for marketing of arsenic field water testing kit. Production unit can
be established in the suburbs / periphery areas of these cities.

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10. POTENTIAL TARGET MARKETS

Market analysis has revealed the requirements of Arsenic Kit for arsenic removal by the various
stakeholders of water sector such as; Government departments working in water supply and water
quality management, international organizations and Non-Government organizations involved in
water quality surveillance activities like UNICEF, WHO, UNDP, JICA, Islamic Relief, Action
Aid etc., private sector stakeholders involved in water and waste water business and general
public/households, who use this PCRWR water quality product for their water quality monitoring
and emergency relief programmes. For instance, 2010 floods in Pakistan escalated the demand of
such testing and curative products which was proved to be an uncontrolled market-capture
phenomena for such a public sector organization with meager financial resources.

11. PRODUCTION PROCESS FLOW

Chemical Manufacturing

Striping

Product

Packaging

Supply to the Market

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12. PROJECT COST SUMMARY

A detailed financial model has been developed to analyze the commercial viability of PCRWR
R&D product (Arsenic Field Water Testing Kit) under the Prime Ministers Youth Business
Loan scheme. Various cost and revenue related assumptions along with results of the analysis
are outlined in this section.

Name of product/ Activity: Arsenic Field Water Testing Kit

Capacity: 33 kits/ Day
Packing Size 10 X 6.5 Box, 100 Tests/Kit

12.1 Project Economics

Production capacity: 12,000 kits per year.
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) 71%
Payback Period (yrs) 1 Year
Net Present Value (NPV) As per demand

12.2 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. 88,200
Bank Loan (90%) Rs. 793800.00
Markup to the Borrower 8%
(%age/annum)
Tenure of the Loan (Years)
Grace Period (Year)

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 12.3 Project Cost
Following requirements have been identified for the operation of the proposed business. A rental
premise has been recommended for this project.
Table: 3 Project Cost
Capital Investment Amount (Rs.)
Machinery 29,000.00
Furniture and Fixture 138500.0
Office Equipment 134500.0
Technology Charged TBIC 400000
Preoperational expenses 150,000
Total Capital Cost 852,000.00

Initial Working Capital 30,000.00

Total Project Cost 882000.00

12.4. 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 Yards

Management building 40
Processing area 60
Open area 20
Total Area 120 yards

Premises will be obtained on rent @ Rs. 20,000-30,000 per month.

12.5 Machinery and Equipment

Following table provides list of machinery and equipment required for an average Arsenic Kit
Manufacturing unit raw to finish.
Table 5: Machinery & Equipments

Equipment Description Quantity Cost Total

Rs/unit Rs.
Physical Balance 1 25000 25000.00
Paper Trimer 1 2500 2500.00
Die for groove cutting 1 1500 1500.00
Total 29000.00
Note: The cost may vary at the time of purchase

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12.6 Furniture & Fixture
Following furniture and fixture will be required for the unit:

Table 6: Furniture & Fixture

Details Quantity Quantity Cost Amount (Rs.)

Office / Visitor Chairs 6 6,000 36000.00
Office Tables 2 10,000 20000.00
Fans (Pedestal and Ceiling) 5 3,500 17,500.00
Air Conditioner (1.5 ton 1 65,000 65,000.00
Split) for office
Total Rs. 138500.00

12.7 Office Equipment

Office equipment comprises of necessary IT equipment items.

Table 7: Office Equipment
Details Quantity Cost Amount
Computer laptop 1 65,000 65,000.00
Computer desktop (used) 1 35,000 35,000.00
Computer printer 2 18,000 18,000.00
Flat bed scanner 1 10,000 10,000.00
Networking 1 5000.0 5000.00
Telephone 3 1,500 1,500.00
Total 9 Rs. 134500.0

12.8 Raw Material Requirements

The raw materials are easily available in local market.

Table 8: Cost of Materials

Equipment Description Quantity Cost Total

Rs/unit Rs.
Packing box 12000 350 4200000.00
Printing & Packing 12000 60 720000.00
Flask10 ml 12000 100 1200000.00
Plastic 24000 240000.00 523200.00
Strip Bottle 12000 10 120,000.00
Lids 12000 25 300,000.00
Chemical cost 12000 1100 13200000.00
Sub total 19980000.005
Miscellaneous Cost @5% 999000.00
Grand Total 20979000.00
Cost Rs.1750/

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12.9 Human Resource Requirement
Following table provides details of human resource required for this venture:
Table 9: Human Resource Requirement

Description No. of Employees Salary per employee per

month (Rs.)
Scientists/ Technologist 1 50,000
Un-skilled persons 2 20,000
Marketing Person 1 20,000
Total Staff 4 90,000

Salaries of all employees are estimated to increase at 10% annually.

12.10 Revenue Generation

Table 10: Revenue Generation

Product Sales Price First Year First Year Sales

(Rs./Unit) Quantity Revenue(Rs)
production
Arsenic Kit Rs. 6000/kit 12,000* Approx 72
Million*

13. CONTACT DETAILS

The Deputy Director

Commercialization & Innovation Cell (CIC),
PCRWR, Islamabad.
Tel# 051-9101282-83-85

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