Prime Minister's Youth Business Loan

Pre-Feasibility Study
(Injection Molding Plastic Products)

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 Complex, Egerton Road,
Lahore
Tel: (92 42) 111 111 456, Fax: (92 42) 36304926-7
[email protected]
REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE
Punjab Sindh Khyber Pakhtunkhwa Balochistan
3rd Floor, Building No. 3, 5th Floor, Bahria Ground Floor Bungalow No. 15-A
Aiwan-e-Iqbal Complex, Complex II, M.T. Khan Road, State Life Building Chaman Housing Scheme
Egerton Road Lahore, Karachi. The Mall, Peshawar. Airport Road, Quetta.
Tel: (042) 111-111-456 Tel: (021) 111-111-456 Tel: (091) 111-111-456 Tel: (081) 2831623, 2831702
Fax: (042) 36304926-7 Fax: (021) 35610572 Fax: (091) 5286908 Fax: (081) 2831922
[email protected] [email protected] [email protected] [email protected]

Note: All SMEDA Services / information related to PM's Youth Business Loan are Free of Cost
December, 2013
Pre-Feasibility Study Injection Molding Plastic Products

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 AND PRODUCT ............................................................. 5
7. CRITICAL FACTORS .................................................................................................................. 6
8. INSTALLED AND OPERATIONAL CAPACITIES ...................................................................... 6
9. GEOGRAPHICAL POTENTIAL FOR INVESTMENT.................................................................. 6
10. POTENTIAL TARGET MARKETS / CITIES .......................................................................... 6
11. PRODUCTION PROCESS FLOW ......................................................................................... 7
12. PROJECT COST SUMMARY ................................................................................................ 7
12.1 PROJECT ECONOMICS ...................................................................................................... 7
12.2 PROJECT FINANCING ........................................................................................................ 8
12.3 PROJECT COST ................................................................................................................ 8
12.4 SPACE REQUIREMENT ...................................................................................................... 8
12.5 MACHINERY AND EQUIPMENT ............................................................................................ 9
12.6 FURNITURE AND FIXTURES .............................................................................................. 10
12.7 RAW MATERIAL REQUIREMENTS...................................................................................... 10
12.8 HUMAN RESOURCE REQUIREMENT .................................................................................. 11
12.9 REVENUE GENERATION .................................................................................................. 11
12.10 OTHER COSTS ............................................................................................................... 12
13. CONTACTS - SUPPLIERS, EXPERTS/CONSULTANTS ................................................... 14
14. ANNEXURE.......................................................................................................................... 15
14.1 ANNEXURE 1 - INCOME STATEMENT................................................................................. 15
14.2 ANNEXURE 2 – STATEMENT OF CASH FLOW ..................................................................... 16
14.3 ANNEXURE 3 – BALANCE SHEET...................................................................................... 17
14.4 USEFUL PROJECT MANAGEMENT TIPS ............................................................................. 18
14.5 USEFUL LINKS ................................................................................................................ 19
15. KEY ASSUMPTIONS ........................................................................................................... 20
1. DISCLAIMER
This information memorandum is to introduce the subject matter and provide a
general idea and information on the subject. 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 exercised 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

SMEDA Services / Information related to PM’s Youth Business Loan are FREE OF COST - 2
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, production, marketing, finance and business management.
The purpose of this document is to facilitate potential investors in Injection
Molding Plastic Products business 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 it’s successful management.
Apart from carefully studying the whole document one must consider critical
aspects provided later on, which form the 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, institutional collaboration and networking initiatives.
Preparation and dissemination of prefeasibility studies in key areas of investment
has been a 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.

SMEDA Services / Information related to PM’s Youth Business Loan are FREE OF COST - 3
4. INTRODUCTION TO SCHEME
‘Prime Minister’s Youth Business Loan’ 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).
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 Pakistan, covering; Punjab, Sindh, Khyber Pakhtunkhwah,
Balochistan, Gilgit Baltistan, Azad Jammu & Kashmir and Federally Administered
Tribal Areas (FATA).

5. EXECUTIVE SUMMARY
The Injection Molding Plastic Products Unit is proposed to be established as a
contract manufacturing facility at a location where utilities especially electricity,
infrastructure and other provisions essential for the production process are
conveniently available. All industrial zones in cities like Karachi, Lasbela,
Hyderabad, Lahore, Gujranwala, Multan, Rawalpindi, Quetta, Peshawar etc. are
suitable locations to setup the project. The proposed project is assumed to
manufacture plastic containers using injection grade HDPE / Co - PP plastic in a
contract manufacturing mode.
The injection molding setup would have an installed capacity to manufacture
187,200 units of 500 grams plastic containers. However, the plant is estimated to
manufacture 149,760 containers operating at 80% capacity. 12 personnel would be
required to manage the operations of the plastic injection molding setup.
Total cost estimates are Rs. 2.18 million with a fixed investment of Rs. 1.84
million and an initial working capital requirement of Rs. 0.34 million.
Given the cost assumptions IRR and payback are 49% and 2.25 years
respectively.
The most critical considerations or factors for success of the project are
1. Selection of appropriate plant and equipment / molds
2. Relevant Management Experience
3. Power / Energy Mix
4. Marketing Efficiency

SMEDA Services / Information related to PM’s Youth Business Loan are FREE OF COST - 4
6. BRIEF DESCRIPTION OF PROJECT AND PRODUCT
Plastic is a common name for polymers that are materials made of long strings of
carbon and other elements. There are many different types of plastic, depending
on the starting monomer selected, the length of polymer chains, and the type of
modifying compounds added. The varied use of plastic in our everyday life has
made it an integral component in almost everything. Plastic is used in everyday
items like ballpoint pen, buckets, containers, glasses, water pipes, plastic bags to
items of engineering excellence like cars and airplanes. The per capita
consumption of plastic in Pakistan is 3.1 kg, while it is 3.3 kg in India and 7 kg in
China. The highest per capita consumption of plastic is in United States and
Germany, where per capita consumption is 120 kg per annum. Globally, the per
capita plastic consumption works out to be around 24 kg per annum. There are
around 6,000 plastic manufacturers in the Pakistan and 600,000 people are
directly or indirectly engaged in this business.
The injection molding business is assumed to operate as a sole proprietorship,
however, partnership opportunities may be explored if further investment is
required.
• Technology: The proposed facility is to be setup with used plastic injection
molding machine including molds for production of 500 grams plastic
containers.
• Location: The unit is proposed to be established as a manufacturing facility at
a location where utilities, infrastructure and other provisions essential for the
production process are conveniently available such as industrial zones in
Karachi, Hub, Hyderabad, Lahore, Gujranwala, Multan, Rawalpindi and
Peshawar etc.
• Product: The project is assumed to manufacture food grade and other plastic
containers using injection grade HDPE / Co - PP plastic in a contract
manufacturing mode operating 20 hours a day, 312 days a year. The setup
would have an installed capacity to manufacture 187,200 units of 500 grams
plastic containers per annum.
• Target Market: Karachi, Hub, Hyderabad, Lahore, Gujranwala, Multan,
Sialkot, Faisalabad, Gujrat, Rawalpindi, Quetta and Peshawar etc. are good
markets for the product under consideration.
• Employment Generation: The proposed project will provide direct
employment to 12 people.

SMEDA Services / Information related to PM’s Youth Business Loan are FREE OF COST - 5
7. CRITICAL FACTORS
The main critical success factors that affect the decision to invest in the proposed
business setup are:
• Selection of appropriate plant and equipment / molds
• Relevant Management Experience
• Power / Energy Mix
• Marketing Efficiency
• Linkages

8. INSTALLED AND OPERATIONAL CAPACITIES

The proposed injection molding plastic products setup is envisaged to be
established as a manufacturing facility. The setup would have an installed capacity
to manufacture 187,200 units of 500 grams plastic containers per annum. However
the plant is estimated to manufacture 149,760 containers operating at an 80%
capacity. Sales are expected to increase at a rate of 10% annually with the same
installed capacity.

9. GEOGRAPHICAL POTENTIAL FOR INVESTMENT

For the success of the project, it is important to find a location preferably in an
industrial clusters where utilities especially electricity and other infrastructure are
conveniently available. All industrial clusters in Karachi, Hub / Lasbela, Hyderabad,
Lahore, Gujranwala, Multan, Rawalpindi, Quetta and Peshawar etc. are suitable to
house the project. Establishing the unit in large cities would have an advantage of
being close to large buyers, which may lead to consistent orders and referrals.

10. POTENTIAL TARGET MARKETS / CITIES

The plastic and packaging sectors are growing industrial segments in Pakistan
relying heavily on the changing lifestyle patterns and population growth in the
country. Major target market includes food processing and marketing companies,
chemical, lubricant and pharmaceutical sector stakeholders based in Karachi and
Lahore. However, there is also a growing demand for the product in, Hyderabad,
Sukkur, Shikarpur, Gujranwala, Multan, Rawalpindi, Quetta and Peshawar etc.

SMEDA Services / Information related to PM’s Youth Business Loan are FREE OF COST - 6
11. PRODUCTION PROCESS FLOW
The production process diagram of the proposed injection molding plastic products
setup is as follows.

Injection Molding Process Flow

Trial Run
Yes
preparation Yes
Commence
 Molds Satisfactory Production Order count
Prototype Run completed
Contract  Resin, Delivery
Material
Supplier Pigment
 Machine
setup

No No

Rework

12. PROJECT COST SUMMARY

A detailed financial model has been developed to analyze the commercial viability
of this project under the ‘Prime Minister’s Youth Business Loan’ Scheme. Various
costs 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 appendices.

12.1 Project Economics

The following table shows internal rate of return, payback period and NPV for
injection molding plastic products project operating at 80% of capacity in its first
year of operations.
Table 1 - Project Economics

Description Details
Internal Rate of Return (IRR) 49%
Payback Period (yrs) 2 .25
Net Present Value (NPV) Rs 4,683,191

SMEDA Services / Information related to PM’s Youth Business Loan are FREE OF COST - 7
Returns on the project and its profitability are highly dependent on the power mix,
relevant management experience, marketing efficiency and quality of molds.

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. 217,760
Bank Loan (90 %.) Rs.1,959,840
Markup to the Borrower (%age/annum) 8%
Tenure of the Loan (Years) 8
Grace Period (Years) 1

12.3 Project Cost

Following requirements have been identified for operations of the proposed

business.
Table 3: Capital Investment for the Project

Capital Investment Amount (Rs.)

Renovation Cost 205,000
Furniture &Fixtures 189,000
Machinery & Equipment 1,200,000
Advance Rent and Security Deposit 196,800
Preliminary Expenses 50,000
Total Capital Cost 1,840,800
Initial Working Capital 336,800
Total Project Cost 2,177,600

12.4 Space Requirement

The land requirement is around 2,050 sq feet in an industrial area where all utilities
and facilities are properly available. The plot will easily allow the accommodation of
the recommended machines. The recommended space is proposed to be totally

SMEDA Services / Information related to PM’s Youth Business Loan are FREE OF COST - 8
covered with 30% space for warehouse, around 12% for office and tool shop and
rest 58% to be utilized for production.

The allocation of space would be as follows:

Table 4: Space Requirement

Space Requirement (in ft.) Area Cost of

(Sqft.) Renovation
Amount (Rs.)
Production Hall 1,200 120,000
Office and tool shop 250 25,000
Warehouse 600 60,000
Total Area 2,050 205,000

The proposed premises would be acquired on a rental basis with 3 months deposit
and 3 months advance rent after which rent will be payable on monthly basis. The
monthly rent is estimated at approximately Rs. 16/ Sq. feet amounting to Rs.
32,800 per month for the proposed injection molding setup (2,050 Sq Ft.)
The premises renovation and customization costs of Rs. 205,000/- would be
depreciated at the rate of 10% per annum using diminishing balance method.

12.5 Machinery and Equipment

The typical injection molding plastic products setup would require the following
machinery and molds for its operations:
Table 5: List of Machinery and Equipment

Cost Total
Description Quantity
Rs/unit Rs.
Used Injection
Molding Machine 1 900,000 900,000
(Year 1990-1996)
Used Molds (plastic
300,000
container 500gms)
Total Cost of Machinery 1,200,000

The injection molding machine is available in Pakistan with local suppliers dealing
in used / refurbished machinery. However, since the life of this machinery is very
long (15 to 20 years) many people prefer using used machinery which requires a

SMEDA Services / Information related to PM’s Youth Business Loan are FREE OF COST - 9
regular maintenance but the capital investment is significantly lower than new
machines. These machines usually come in two technological formats

1) Computerized
2) Analog

The most common brands for injection molding machinery are Jet Master, Super
Jet, Mitsubishi, BM Biraghi, Engel, Horizon, Sintesi etc. A used analog injection
molding machine of Triad origin is proposed for this setup. Chinese machines are
also available but Japanese, European or American machinery is preferred by
manufacturers and buyers. The molds are very costly and need to be carefully
picked. Some molds are locally made but people generally prefer Chinese molds
that are usually robust and refined. Used molds to manufacture 500 grams plastic
bucket are proposed for this setup. Used molds are relatively cheap and able to
deliver the desired quality for local buyers.

12.6 Furniture and Fixtures

A total of Rs 189,000 is required for purchase of office furniture, fixture and related
equipment. The following table gives an estimated breakup:
Table 6: Furniture and Fixtures Costs

Description Quantity Cost/Unit (Rs.) Amount (Rs.)

Table & Chair Set (Owner) 1 17,000 17,000
Table & Chair Set (Customer 1 14,000 14,000
Service)
Table & Chair Set (Office Staff) 2 14,000 28,000
Air Conditioner (Split Unit) 1 60,000 60,000
Waiting Chairs 10 2,500 25,000
Sofa Set for Customers 1 20,000 20,000
Curtains / Interior Décor 25,000 25,000
Total 189,000

The Office Furniture & Equipment costs are estimated to depreciate at the rate of
10% per annum using diminishing balance method for the projected period.

12.7 Raw Material Requirements

Considering the price competition, decreasing margins at retail level, prevailing

credit in the market (2-3 months) and limited investment, toll manufacturing or
contract manufacturing mode is proposed for the injection molding project. The
margins tend to be above average, if the manufacturer is in possession of a rare or

SMEDA Services / Information related to PM’s Youth Business Loan are FREE OF COST - 10
quality mold. A strong referral base, however, is required for toll manufacturing
contracts. Raw material inventories in such a mode of manufacturing are not
necessary.

12.8 Human Resource Requirement

The human resource requirement for the general and management staff are as
follows:

Table 7: Human Resource Requirement

Description No. of Salary per Total monthly

Employees month (Rs.) salary (Rs.)
Owner 01 28,000 28,000
Accountant 01 15,000 15,000
Purchaser 01 10,000 10,000
Store keeper 01 10,000 10,000
Production Manager 01 25,000 25,000
Electrician 01 15,000 15,000
Hydraulics Technician 01 15,000 15,000
Machine Operators 03 12,000 36,000
Helpers 02 10,000 20,000
Total Staff 12 174,000

It is assumed that the owner would be managing the overall affairs of the plastic
molding setup. An accountant is required to process bills, invoices, receivables and
also maintain accounts etc. The purchaser would be primarily responsible for
making daily procurements; raw material and other purchases as and when
required. The Production Manager should have considerable knowledge about
polymer technology and its properties; preferably having a diploma in plastic
technology with 5 to 7 years experience. The machine operators should also have
relevant experience of handling and operating injection molding machines and
plastic processing.
The proposed project would need a total of 12 persons to handle the plastic
injection molding operations. Salaries of all employees are estimated to increase at
the rate of 10% annually.

12.9 Revenue Generation

The Sales are expected to increase by 10% every year. The 10% annual increase
in revenue is expected to result from increase in product price. The prices are
exclusive of the General Sales Tax.

SMEDA Services / Information related to PM’s Youth Business Loan are FREE OF COST - 11
The item-wise estimated revenue from injection molding plastic products is as
follows
Table 08: Revenue

First Year
First Year
Sales Price Sales
Particulars Unit Sales
(Rs./Unit) Revenue
(kg.)
(Rs)
Plastic containers (contract Kg 72 74,880 5,391,360
manufacturing)
Total 5,391,360

12.10 Other Costs

• Machinery Maintenance: The Injection Molding Machine and molds have a

long life, however, the maintenance cost of the machines are usually high,
since they need to be oiled and cleaned regularly specially before installing a
new mold or starting a fresh production process. The yearly maintenance cost
has been taken to be 5% of the written down value of the machine. It is
anticipated that the machinery would require an overhaul after every five
years. It is, therefore, assumed that machinery overhauling expenditures
would be incurred at 10% of the price of the Machinery in Year-5 & Year- 10.
• Rent and deposits: The proposed premises will be acquired on a rental basis
with 3 months deposit and 3 months advance rent after which rent will be
payable on monthly basis. The monthly rent is estimated to be Rs. 16/ Sqft.
amounting to Rs. 32,800 per month for the proposed injection molding plastic
products unit (2,050 Sq Ft.). The rent is estimated to increase at the rate of
10% per annum for the projected period.
• Utilities Requirements: The following table presents the assumed breakup of
utilities on a monthly basis:
Table 09: Utilities
Description Monthly
Charges (Rs.)
Electricity 120,000
Water 4,000
Telephone 6,000
Total 130,000
The utilities expense is estimated to increase at the rate of 10% per annum for
the projected period.

SMEDA Services / Information related to PM’s Youth Business Loan are FREE OF COST - 12
• Working Capital Requirements: It is estimated that an additional amount of
Rs. 336,800 will be required as cash in hand to meet the initial working capital
requirements during operations. The requirement is based on the rent, utilities
and salaries expenses for at least one month. The following table gives the
break up.
Table 10: Working Capital
Description Month Monthly
Charges (Rs.)
Utilities 01 130,000
Salaries 01 174,000
Rent 01 32,800
Total 336,800

• Preliminary Expenses: The provision for preliminary expenses is assumed to

be Rs. 50,000 and will be amortized equally over a 5 year period.
• Office &Miscellaneous Expenses: A monthly expense of Rs. 45,000 (1,500
per day) is assumed to be incurred for traveling, office purchases &
miscellaneous expenses, which are expected to increase at the rate of 10%
per annum for the projected period.
• Financial Charges: It is assumed that long-term financing for 8 years will be
obtained in order to finance the injection molding setup, including premises
renovation, procurement of machinery & equipment and furniture &fixtures etc.
This facility is estimated to be acquired at a rate of 08% per annum with 84
monthly installments over a period of seven years after a one year grace
period. The installments are assumed to be paid at the end of every month.
• Taxation: The business is assumed to run as a sole proprietorship; therefore,
tax rates applicable on the income of a non salaried individual taxpayer are
used for income tax calculation of the business.
• Cost of Capital: The cost of capital is explained in the following table:
Table 11: Cost of Capital
Particulars Rate
Required return on equity 20 %
Cost of finance 8%
Weighted average cost of capital 9.2 %

The weighted average cost of capital is based on the debt / equity ratio of
90:10.

SMEDA Services / Information related to PM’s Youth Business Loan are FREE OF COST - 13
13. CONTACTS - SUPPLIERS, EXPERTS/CONSULTANTS
There are many local suppliers of plastic processing machinery working in Karachi
and other cities that may be contacted for quotes or procurement.
Machinery Supplier / Consultant Contact
• Plastipack Machines Pvt. Limited
G-2, State Life Building No. 03
Dr. Ziauddin Ahmed Road, Karachi
Phone: 021-3568449
Fax: 021-35682150

• M/s Orient Plastcare Pakistan

Plot # 126, 127, Sector # 23 Korangi Industrial Area, Karachi
Tel # 021-35115541-35115542 cell # 0333-2133983

• Pakistan Industrial Technical Assistance Center (PITAC)

234- Ferozpur Road near Metro Canal Station, Lahore
Phone: 042-99230699, 042-99230575, 042-99230702

• Plastics Technology Centre

St -2/1, Sector – 30, Korangi Industrial Area,
Karachi 74900
Phone: 021 – 35066955, 35063589
Fax: 021 – 35060373

SMEDA Services / Information related to PM’s Youth Business Loan are FREE OF COST - 14
Pre-Feasibility Study Injection Molding Plastic Products

14. ANNEXURE

14.1 Annexure 1 - Income Statement

INJECTION MOLDING PLASTIC PRODUCTS

Projected Income Statement (Rs.) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Revenue 5,391,360 5,930,496 6,523,546 7,175,900 7,893,490 8,682,839 9,551,123 10,506,235 11,556,859 12,712,545
Production Labor 1,332,000 1,465,200 1,611,720 1,772,892 1,950,181 2,145,199 2,359,719 2,595,691 2,855,260 3,140,786
Utilities 1,560,000 1,716,000 1,887,600 2,076,360 2,283,996 2,512,396 2,763,635 3,039,999 3,343,999 3,678,398
Cost of Sales 2,892,000 3,181,200 3,499,320 3,849,252 4,234,177 4,657,595 5,123,354 5,635,690 6,199,259 6,819,185
Gross Profit 2,499,360 2,749,296 3,024,226 3,326,648 3,659,313 4,025,244 4,427,769 4,870,546 5,357,600 5,893,360

General Administrative & Selling Expenses

Salaries 756,000 831,600 914,760 1,006,236 1,106,860 1,217,546 1,339,300 1,473,230 1,620,553 1,782,608
Rent Expense 393,600 432,960 476,256 523,882 576,270 633,897 697,286 767,015 843,717 928,088
Office & Miscellaneous Expenses 540,000 594,000 653,400 718,740 790,614 869,675 956,643 1,052,307 1,157,538 1,273,292
Amortization Expenses 10,000 10,000 10,000 10,000 10,000 - - - - -
Depreciation Expense 159,400 143,460 129,114 116,203 104,582 106,124 95,512 85,961 77,364 69,628
Maintenance Expense 54,000 48,600 43,740 39,366 41,429 37,286 33,558 30,202 27,182 30,464
Subtotal 1,913,000 2,060,620 2,227,270 2,414,426 2,629,755 2,864,528 3,122,299 3,408,715 3,726,354 4,084,080
Operating Income 586,360 688,676 796,956 912,222 1,029,558 1,160,716 1,305,470 1,461,831 1,631,246 1,809,280

Financial Charges (08% Per Annum) 156,787 148,922 130,858 111,296 90,109 67,164 42,314 15,402 - -

Earnings Before Taxes 429,573 539,754 666,097 800,926 939,449 1,093,552 1,263,156 1,446,429 1,631,246 1,809,280
Tax 2,957 13,975 26,610 42,639 63,417 86,533 111,973 139,464 173,749 209,356
Net Profit 426,616 525,779 639,487 758,287 876,032 1,007,019 1,151,182 1,306,964 1,457,497 1,599,924

Monthly Profit After Tax 35,551 43,815 53,291 63,191 73,003 83,918 95,932 108,914 121,458 133,327

SMEDA Services / Information related to PM’s Youth Business Loan are FREE OF COST - 15
Pre-Feasibility Study Injection Molding Plastic Products

14.2 Annexure 2 – Statement of Cash Flow

INJECTION MOLDING PLASTIC PRODUCTS

Projected Statement of Cash Flows (Rs.) Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Cash Flow From Operating Activities

Net Profit - 426,616 525,779 639,487 758,287 876,032 1,007,019 1,151,182 1,306,964 1,457,497 1,599,924
Add: Depreciation Expense - 159,400 143,460 129,114 116,203 104,582 106,124 95,512 85,961 77,364 69,628
Amortization Expense - 10,000 10,000 10,000 10,000 10,000 - - - - -

Net Cash Flow From Operations - 596,016 679,239 778,601 884,490 990,614 1,113,144 1,246,694 1,392,925 1,534,861 1,669,552

Cash Flow From Financing Activities

Receipt of Long Term Debt 1,959,840

Repayment of Long Term Debt - (217,636) (235,699) (255,262) (276,449) (299,394) (324,244) (351,156) - -
Owner's Equity 217,760

Net Cash Flow From Financing Activities 2,177,600 - (217,636) (235,699) (255,262) (276,449) (299,394) (324,244) (351,156) - -

Cash Flow From Investing Activities

Construction Cost (205,000)

Machinery & Mold (1,200,000) (120,000) (120,000)
Office Furniture (189,000)
Advance Rent (196,800)
Preliminary Expenses (50,000)

Net Cash Flow From Investing Activities (1,840,800) - - - - (120,000) - - - - (120,000)

NET CASH FLOW 336,800 596,016 461,603 542,902 629,228 594,165 813,749 922,450 1,041,769 1,534,861 1,549,552

Cash at the Beginning of the Period - 336,800 932,816 1,394,418 1,937,320 2,566,548 3,160,713 3,974,463 4,896,913 5,938,682 7,473,543
Cash at the End of the Period 336,800 932,816 1,394,418 1,937,320 2,566,548 3,160,713 3,974,463 4,896,913 5,938,682 7,473,543 9,023,095

SMEDA Services / Information related to PM’s Youth Business Loan are FREE OF COST - 16
Pre-Feasibility Study Injection Molding Plastic Products

14.3 Annexure 3 – Balance Sheet

INJECTION MOLDING PLASTIC PRODUCTS

Projected Balance Sheet (Rs.) Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Assets
Current Assets
Cash & Bank Balance 336,800 932,816 1,394,418 1,937,320 2,566,548 3,160,713 3,974,463 4,896,913 5,938,682 7,473,543 9,023,095
Prepaid Rent 196,800 196,800 196,800 196,800 196,800 196,800 196,800 196,800 196,800 196,800 196,800
Total Current Assets 533,600 1,129,616 1,591,218 2,134,120 2,763,348 3,357,513 4,171,263 5,093,713 6,135,482 7,670,343 9,219,895

Fixed Assets
Machinery & Molds 1,200,000 1,080,000 972,000 874,800 787,320 828,588 745,729 671,156 604,041 543,637 609,273
Building Premises Renovation 205,000 184,500 166,050 149,445 134,501 121,050 108,945 98,051 88,246 79,421 71,479
Office Furniture and Fixtures 189,000 170,100 153,090 137,781 124,003 111,603 100,442 90,398 81,358 73,222 65,900
Total Fixed Assets 1,594,000 1,434,600 1,291,140 1,162,026 1,045,823 1,061,241 955,117 859,605 773,645 696,280 746,652

Preliminary Expenses 50,000 40,000 30,000 20,000 10,000 - - - - - -

Total Assets 2,177,600 2,604,216 2,912,358 3,316,146 3,819,171 4,418,754 5,126,380 5,953,318 6,909,127 8,366,623 9,966,548

Owner's Equity 217,760 644,376 1,170,154 1,809,641 2,567,929 3,443,961 4,450,980 5,602,162 6,909,127 8,366,623 9,966,548

Long Term Liability 1,959,840 1,959,840 1,742,204 1,506,505 1,251,243 974,794 675,399 351,156 (0) - -

Total Equity & Liabilities 2,177,600 2,604,216 2,912,358 3,316,146 3,819,171 4,418,754 5,126,380 5,953,318 6,909,127 8,366,623 9,966,548

SMEDA Services / Information related to PM’s Youth Business Loan are FREE OF COST - 17
Pre-Feasibility Study Injection Molding Plastic Products

14.4 Useful Project Management Tips

Technology
• Required spare parts & consumables: Suppliers credit agreements and
availability as per schedule of maintenance be ensured before start of
operations.
• Energy Requirement: The energy requirements should be properly assessed
and alternate source of energy for critical operations must be arranged in
advance.
• Machinery Suppliers: Suppliers should be asked for training and after sales
services through a proper contract.
• Quality Assurance Equipment & Standards: Products’ quality standards
must be defined and a system to check them instituted; this improves
credibility.
Marketing
• Product Development & Packaging: Experts’ help may be sought for
product / service and packaging design & development
• Ads & P.O.S. Promotion: Business promotion and dissemination through
banners and launch events is recommended. Product brochures should be
developed from quality service providers.
• Sales & Distribution Network: Expert's advice and distribution
agreements are required.
• Price - Bulk Discounts, Cost plus Introductory Discounts: Price should
never be allowed to compromise quality. Price during introductory phase may
be lower and used as a promotional tool. Product cost estimates should be
carefully documented before price setting.

Human Resources
• Adequacy & Competencies: Skilled and experienced staff should be hired for
greater productivity and efficiency
• Performance Based Remuneration: Attempt to manage human resource cost
should be focused through performance measurement and performance based
compensation.
• Training & Skill Development: Encouraging training and skill of self &
employees through experts and exposure of best practices is route to success.

SMEDA Services / Information related to PM’s Youth Business Loan are FREE OF COST - 18
Pre-Feasibility Study Injection Molding Plastic Products

Least cost options for Training and Skill Development (T&SD) may be linked
with compensation benefits and awards.

14.5 Useful Links

• Prime Minister’s Office

www.pmo.gov.pk
• Small & Medium Enterprises Development Authority (SMEDA)
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 Jammu 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

SMEDA Services / Information related to PM’s Youth Business Loan are FREE OF COST - 19
Pre-Feasibility Study Injection Molding Plastic Products

15. KEY ASSUMPTIONS

Particulars Assumption
Sales Increase 10 % per year
Increase in Cost of Raw Materials 10 % per year
Increase in Staff Salaries 10 % per year
Increase in Utilities (Electricity / Water / Gas) 10 % per year
Increase in Rent 10 % per year
Increase in Office Expenses 10 % per year
Debt / Equity Ratio 90 : 10
Depreciation
o Plant Building 10 % per annum (Diminishing Balance)
o Machinery & Molds 10 % per annum (Diminishing Balance)
o Office Furniture & Equipment 10 % per annum (Diminishing Balance)
Machine Overhauling Cost 10 % of Cost Price (Year 5 & Year 10)
Machine Annual Maintenance Cost 5% of Written Down Value
Loan Period 8 Years
Loan Grace Period 1 Year
Loan Installments Monthly
Financial Charges (Loan Rate) 08 % per annum
Tax Rate Tax rates for non-salaried individuals

SMEDA Services / Information related to PM’s Youth Business Loan are FREE OF COST - 20