Proj Report 2

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Feasibility Report on ZeeQ Cables Pakistan

ZeeQ Cables Pakistan

Department of Commerce M.com Finance


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Dedication

We dedicate thisentire work to our belovedparents and teachers who co-operate with us at each andevery stage of life, and provide

us shades to protect us fromharmness of difficulties in lifeafter the Almighty Allah.



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Preface

The Important Pillar Of Commerce Education in

Bahawalnagar,the Department of Commerce has

always tried to make its students be familiar with

the different techniques in the field of Project

Appraisal so that they can understand & present

the concepts of Project Appraisal in the todays

world of progress & development.

The importance of principal work almost exists in

every professional field. Practical knowledge

makes man a technical person who enables to do

every work efficiently regarding his profession.

The very distributive feature of the degree of

Business Administration is that it stresses more

on the practical aspects of study especially the

4th semester. Our teachers have extremely

realized this importance & they use all the tacts

to expose us to the real field circumstances.



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Project Appraisal has become a common

phenomenon now-a-days. We have tried our

level best to fulfill the requirements of the topic.Every effort has been made to incorporate all the

available means of information to make this

assignment comprehensive and fruitful.



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ACKNOWLEDGEMENT

The Creator of this Universe, Almighty Allah, we

with the supreme preference pay thanks to him

for having being us in this universe as a human

and most importantly a Muslim.

We would like to pay our special regards and

thanks to Respected Mr. Muhammad Sajid

Amin who provides us guidance at each and

every step, in completion of this report.andthanks to all my group members who coordinate

to complete the project report.



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Our mission Statement



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TABLE OF CONTENTS

Serial # Topic Description Page #

1 Executive Summary 9


Our Mission is to makepeople aware of highquality cables, by providinguncompromising quality to

our consumers; we intendto make ZeeQ Cables the#1 Pakistani Cablemanufacturers on anational scale, and later onthe international platformas well.


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2 Introduction of Company 14

3 Market Analysis 21

4 Technical Analysis 26

5 Personnel Analysis 35

6 Financial Analysis 37

7 Assumption Underlying Statements 38

8 Estimated Income Statements 41

9 Estimated Balance Sheet 42

10 Estimated Cash Flows 43

11 Financial Ratios & Commentary 44

12

SWOT Analysis 45

13 Recommendations 46

14 Conclusions 47




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Executive Summary

Project appraisal on the Cable ManufacturingBefore going to brief details of the project appraisal it is hereby given some projected highlights of

the company in the form of Executive Summary.

NAME OF THE PROJECT ZeeQ Cables Pakistan



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NATURE OF INDUSTRY Cable Manufacturing

(A New Project)

CORPORATE STATUS Private Firm

LOCATION OF PROJECT IndustrialArea Multan Road

Bahawalpur Pakistan

A start of the business required some experienced techniques to prepare the initial

report, however with the help of our respected sir we, the student of M.com

finance have been able to utilize the knowledge acquired from our respected

teacher as well as from outside environment.

We have selected the business of Cable Manufacturing with the hope and

determination that it will grow over the years because it have lot of potential in thefuture market. This is also a challenging project and will be the test of our hidden

qualities.

ZeeQ CABLES is registered firm established with the objective of making a Power

Cables in Industrial Area, district Bahawalpur and also to meet the power cables

demand of the housing projectsand industrial units in the local area as well as in

the whole country with leading mission to export the products in foreign as well.

Electric cables play an important role in current lives of human beings, because a

lot of facilities used by humans are electrically equipped. When we comes topower cables, it really ease the living pattern of humans by transferring electricity

from one place to another.

We are going to produce three kinds of electric cables i.e. Single Core

(240mm2), Double Core (10mm2) and Three Core (50mm2). Growth of sale

is very important for our firm, we will be producing at 70% capacity in the

started production year followed by 80% and 90% in coming years

respectively of the total 100% production.

The production estimates by utilizing 100% capacity of the three power cables

is as under in the meters in following table;



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We will purchase imported plant machinery from local dealers, because in

Pakistan there are local dealers available who sell that imported plant to local

customers. Plant Machinery will reached at site at Oct 15, 2012. Our plant

machinery installed on 30 Nov 2012. It will start its commercial operation on

January 1st 2013.

Financial Highlights

Estimated cost of project (Rs in 000)

Fixed cost 151,044

Initial Working Capital 21,000


A 240mm2 Single

core

3060000 Meters

B 10mm2 Two core 1360000 Meters

C 50mm2 ThreeCore 1700000 Meters

2012 2013 2014

GrossMargin (%) 17.6% 17.6% 17.6%OperatingMargin (%) 5.4% 5.5% 5.5%Net Margin

(%) 2.0% 2.2% 2.3%CurrentRatio intimes 1.14 1.20 1.27

Equity Ratio 10.7% 16.2% 21.1%

Debt ServiceCoverageRatio 5.7 8.1 10.2


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Total Cost 353965.601

Means of Finance

There are two types of means of finance. One is from sponsors

contribution and other is taking debt from Bank. The ratio of debt and

equity is of 60:40.

MEANS OF FINANCE In Rs("000")

D e b t

Habib Bank Ltd 212379.3604 212379.3604

Total Debt 212379.3604

E q u i t yPaid-up Capital

(Sponsors) 141586.2403 141586.2403

TOTAL EQUITY 141586.2403

DEBT : EQUITY RATIO 60 : 40

SPONSORS' STAKE 40.00%

Name of Financial InstitutionThe name of our lending instituition is Habib Bank Ltd which will provide us

the entire loan which we need for the completion of our project. The mark up rate

of the Bank is 18%.

Name of Sponsors

The sponsors of the project are professionally qualified and have valuable and

extensive experience of business management regarding.They have good trading

contacts and market reputations in the city.The project faces no problems in terms



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of marketing its products.The sponsors experience would assist the firm in its

smooth and profitable operation.

The sponsors are financially sound and capable to contribute their part of the

equity in the proposed scheme. The managing partner of the firm has vast

experience in the managing of this industrial organization

SR.NO. NAME STATUS

1. M.Mudassar Partner

2. Faisal Saood Partner

3. Hassan Iqbal Partner

The names of Machinery involved

Name of Civil Contractor

The name of civil contractor is Mr.Umar Draz.We will hire the services of this contractor forconstructing our building and will pay him fee for his services and construction work.

Name of Machinery Supplier

The name of the machinery supplier is Mr. Shams & Corp Lahore, who will provide us the

foreign machinery and all related import charges are being bear by the supplier.


Wire drawing

Stranding machine

Stranding machine

Extruder small

Extruder large

Testing machine small

Testing machine large

Laying machine


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Address:31 b Model Town N Block Lahore Pakistan

Implementation ScheduleThe project is expected to be implemented within 6 months from the date ofthe submission of the proposal to the bank. The details of the activities along

with time required are given as under:

Sponsors stake is 40% and IRR is 43% of the project with a pay back periodof 2 Years. Our feasibility shows us there is the great potential in this project,

we have a good profitability ratio with increasing trend , and we also have apay back period which is 2 years, its means we will recover our whole

investment after the 2 years, and after the recovery period the chances of

growth are very high.



IMPLEMENTATION SCHEDULES.NO. ACTIVITIES MONTH YEAR

1 Acquiring of Land & leveling Start 1st Jan 2012

Complete 30th Jan 2012

2 Engineering studies and designing

of

civil work

Start 2nd Feb 2012

Complete 10th Mar 2012

3 Order for local machinery 15th Sep 2012

4

Construction of building and civil

work Start 1st Apr 2012

Complete 30th Sep 2012

5 Arrival of local machinery at site 15th Oct 2012

6

Erection and installation of

machinery Start 20th Oct 2012

Complete 30th Nov 2012

7 Order for raw materials 20th Nov 2012

8 Trial run Start 10th Dec 2012

Complete 25th Dec 2012

9 Start of commercial production 1st Jan 2013


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We hope our commercial production will start in 1st January 2013,if all thework has been done according to our prepared schedule.

Introduction Of Company

The proposed company ZeeQ Cables Pakistan will do a private business.Initially there will be three sponsors of the company which are the partners of

the company also. The company will do a legal business with the complianceof corporate rules and regulations of Pakistan; profit earned by the company

will be distributed among the members of the company.

ZeeQ Cables Pakistan will produce three kinds of electric cables i.e. Single

Core (240mm2), Double Core (10mm2) and Three Core (50mm2).The companywill produce will be producing at 70% capacity in started production year

followed by 80% and 90% in coming years respectively of the total 100%

production.

Products of Company

Single Core Cable



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Two core Cable

Three core cable



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Over the last years the potential and scope of power cables has increased dueto new industrial structures, improvement in the technology and the

preferably the investment in the real state like in housing projects etc.

Power Cables Industry

There are almost 923 small and large scale production cables manufacturing

companies (Source from Pakistan Business Pages) are being working inPakistan, trying to fulfil the demand of local needs and exporting the products

to the foreign as well.

Newage Cables, Pakistan Cables are one of the largest cable manufactures inPakistan having their provincial contribution 79% and 85% respectively of the

whole cables manufacturers.To lead the industry like other top quality power cable producers, we are

determined to provide 99.9% pure copper cables and 100% conductivity of

the conductors to our customers to reduce the wastage of electricity.

Location of the Project

The project is proposed to be setup in Industrial Area, Multan Road

Bahawalpur Pakistan. The site enjoys the following advantages:

Easy availability of raw material and contact with suppliers

Availability of communication facilities like telephone, telex, etc

Access to main road, sources of power, water, fuel, etc.

Availability of skilled and unskilled manpower.

Free from other environmental hazards like water-logging, floods

salinity, etc.

Power Cables and Company Strategy

Power Cables have copper strands inside them through which the electricity

flows. If the conductivity of the copper is not 100%, the flow faces resistancecausing wastage of electricity. THIS WASTAGE GETS BILLED! The structure of

our cables allows electricity to flow smoothly through the wires without any



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resistance. Some cable companies in Pakistan offer cheap cables that aremade with low grade material. The result is low conductivity and high

resistance causing current leakages, increased power bills and risk of damageto health and property. ZeeQ Cables will alleviate all these problems and will

offers VALUE RETURN to its customers in short and long term.

The Management Beliefs

LeadershipWe value leaders of high integrity, energy and enthusiasm who have the necessarymanagerial, professional and people skills to inspire a group or an organization to set

high goals and achieve them willingly. We believe that leadership skills need to bestrengthened at all levels within our organization and that managerial and professionalcompetence is a necessary foundation.

Teamwork and PartnershipWe believe that high performing teams containing appropriate diversity can achievewhat individuals alone cannot. Consciously using the diversity of style, approach and

skills afforded by teams is strength we must continue building into our organization.

Quality and Continuous ImprovementsWe believe that quality and strong commitment to continuous improvements areessential to our ongoing success. To this end, we define quality as understanding thecustomers expectations, agreeing on performance and value, and providing productsand services that meet expectations 100 percent of the time. Our motto is, Quality in allwe do.

Ethics and IntegrityWe do care how results are achieved and will demonstrate honest and ethical behavior

in all our activities. Choosing the course of highest integrity is our intent and we willestablish and maintain the highest professional and personal standards. A well-foundedreputation for scrupulous dealing is itself a priceless asset.

Open CommunicationWe value communications that are courteous and open and that enables each of us todo our jobs more effectively by providing information that contributes to the quality of



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our judgment and decision making. Effective communication should provide the meansfor gaining understanding of the companys overall objectives and plans and of thethinking behind them.

InnovationSuccess requires us to continually strive to produce break through ideas that result inimproved solutions and services to customers. We encourage challenges to the statusquo and seek organizational environment s in which ideas are generated, nurtured anddeveloped.

Individual Growth and DevelopmentWe strongly believe in the dignity and value of people. We must consistently treat eachother with respect and strive to create an organizational environment in whichindividuals are encouraged and empowered to contribute, grow and develop them and

help to develop each other.

Enjoyment and FunWe believe that excitement, satisfaction and recognition are essential elements of ahealthy, creative and high performing work environment. Having fun in our work shouldbe a normal experience for everyone

Financial Plan

The critical energy crisis in the country is going to be worse and worse,recently our visit to National Bank operational manager, he stated to us that

the State Bank of Pakistan announced a policy not to issue the project loans incurrent situation, because it will have a downside effect on the existing

industries of the company.

However in order to complete our assignment we came to know the terms andconditions of the project financing from Habib Bank and decided to take loan

from this bank according to agreed terms and conditions.

MEANS OF FINANCE In Rs("000")D e b t

Habib Bank Ltd 212379.3604 212379.3604



(Sponsors) 141586.2403 141586.2403



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TOTAL EQUITY 141586.2403

DEBT : EQUITY RATIO 60 : 40SPONSORS' STAKE 40.00%

LandThe proposed land required is in the Industrial area of Bahawalpur Multan

Road which is heart of the different industries sector in this area having G.Troad side advantages.

Our total area of the land is 110 marlas having 29920 Sqr feets with 130 feetwidth (front) and 230 feet length.

Sr.No. Description

Area in

Unit Cost

Rs ("000")

Marlas

Ratepercentagesof cost ofland Total Cost

1 Land 110 100,000 11,000

2 Registration 110 1% 1,000 110

3 Stamp Duty 110 2% 2,000 220

4District Councilcorporation Fee 110 1% 1,000 110

5Development andleveling Charges 110 5% 5,000 550

6 TMO Fee 110 2% 2,000 220



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Total Cost of Land 111,000 12,210

BuildingThe contractor of our building and civil work Mr.Umar Draz describe us there

will be a boundary wall of having 8 height one side struck pointing and fromother side pluster.It has 2 feet high iron angles on top of walls with barbered

wire.Administration block will be constructed on the basis of modern combined hallhaving separated offices with glasses wall. In other areas there is

manufacturing section combined with interlink gates following by stores andopen uncovered area.



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The manufacturing Section will be constructed with the point kept in mind that

there is vibration create during running of the machinery so the wall will have18 inches width to protect the building from this effect.

Implementation Schedule

Theacquiring and leveling of land will be as according to schedule is on 1st

ofJan 2012 and all related work complete on the 30th of Jan 2012.

Engineering studies and designing of civil work started from 1st Feb 2012 and

be in finished situation at 10th of March 2012.The order for required machinery for proper working of plant made at 15 Sep

2012 and the MAchinary arrived at 15 Oct 2012.The errection and installationcomplete on 20 Oct 2012.Construction of building and civil works completed

at 1st April 2012.


Description

Unit of CoveredRatePer Rs ("000")

Building Construction Marla Area Unit Total Cost

Wire Drawing

Section RCC Square feet 5 1,360 2100 2856StrandingSection RCC Square feet 9 2,448 2100 5140.8ExtrusionSection RCC Square feet 10 2,720 2100 5712Raw MaterialStore RCC Square feet 15 4,080 2100 8568Finish GoodsStore RCC Square feet 15 4,080 2100 8568

Work shop RCC Square feet 5 1,360 900 1224

Labortary RCC Square feet 3 816 1100 897.6AdministrationBlock RCC Square feet 6 1,632 1800 2937.6

Open AreaOpenarea Square feet 22 5,984 400 2393.6

Parking Area RCC Square feet 20 5,440 1,800 9792BoundaryWalls RCC

Squarefeet(720) 720 2100 1512

Total Cost ofBuilding andCivil Works 110 30640 49,602


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The order of raw material made at 20Nov 2012 and after its proper storageand control the trial run durated from 10th to 25th of Dec 2012,finally the

commercial production will start from the right beginning of the year 2013 i.e.1st Jan.

Market AnalysisThe demand of power cables is not altered by the direct effect of the economic

condition of country and is relatively consistent over the years due to theestablishment and repair work of the industries and construction of the new

residential projects irrespective of the fact that the economic condition of the

country is not good for the last 5 years or so.There are thousands of productsin the cable industry, our specifications consist of three products and demand

for these products is very complicated to measure.However the industry trend about these products is very positive and

according to Fast Cables and Newage Cables Lahore the demand of these

products is very high.

Future Potential

The current electricity crisis have brought down the domestic demand ofpower cables, however according to the future trends as the electricity

shortfall is promised to be balanced the demand of power cables will increase

to some high extent.

Growing Demand

Supply and Demand of Electricity in Pakistan

Supply and Demand Position: 2008-2015 (MW)

2008 2009 2010 2011 2012 2013 2014 2015

Existing Generation 15,903 15,903 15,903 15,903 15,903 15,903 15,903 15,903



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Proposal / CommittedGeneration

530 4,235 7,226 10,115 10,556 13,307 13,520 14,607

Total

Existing/Committed

Generation

16,484 20,138 23,129 26,018 26,459 29,210 29,423 30,510

Expected Available

Generation 13,146 16,110 18,503 20,814 21,167 23,368 23,538 24,408

Demand (Summer

Peak)16,484 17,868 19,352 20,874 22,460 24,126 25,919 28,029

Surplus/Deficit

Generation-3,338 -1,758 -849 -60 -1,293 -758 -2,381 -3,621

Source: Private Power and Infrastructure Board - Govt. of Pakistan.

This statistical report about energy crises in Pakistan tell us that the

generation of the electricity is lower as compare to the consumption, so due to

this our sale of the cables will effect, and if we go toward the world market ,that tell us about growing demand of the electricity cables ,there are some

statistical figure about the world demand of cables and its consumption



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We analyze that there is the % changes of production in the world market,now we see the consumption pattern in the cables , after it we will go to the

decision whether we should go toward world market or not ?



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There is the demand of cables in the world market, and we hope so we will

enter in the world market as a reliable and quality manufacturer



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Target Market

Our consumers cannot be specified as we will serve everyone who uses

electricity. However, our customers will mainly contractors, architects,consultants, and general people who are constructing their own houses/offices

as well.

Our customers will also include large factories that will purchase our productfor the effective and efficient running of their machinery. Sugar, Textile,

Cement, Oil, Aviation, and Telecommunication industries are only a few of themany that will choose our products due to our superior quality and

affordability.

Price of Products

Products 240mm2 10mm2 50mm2

Sale Price 3,050 400 1,940

Cost Price 1,623 368 1,256

Profit 1,427 32 682



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Distributor


Distribution Channel


Direct to business

Factory


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Technical Analysis

The emergence of new technology is always being welcomed with both handsin every sector of the industry, as far as the cable manufacturing machinery is

concerned the latest machines are being developed in different countries like

china, India, Italy etc for the purpose of reducing the per unit cost and toimprove the efficiency of manufacturing process.

Machines Involved

Wire Drawing:

The basic purpose of this machine is to reduce the size of large copper rods in

order to meet the requirement of required copper rod sizes for the manufacturing of

cable conductors.


Export Dealers

Retailer


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Stranding machine:

This machine is used to twist and combine wires of coppers of different sizes for

removing the effect of electric flux created during the pass of electricity in the

cables.



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.

Extruder

This machine is used for the covering or insulation of cooper conductor in the

presence of PVC (poly vinyl chloride, a material used to protect the copper

conductor) for protecting copper conductor which transfer electricity by external

environment.



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Testing machineThis machine is used to test the samples of manufactured power cables for their

proper conductivity requirement. The capacity or the load a cable can carry is

tested at this stage.



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Laying machine

This machine is used for the laying of manufactured cables in roles of required

sizes.



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Manufacturing ProcessThe large size copper rods are bring in initial stage to the wire drawing sectionfor the purpose of reducing their sizes to manufacture the conductors of

different required sizes.These copper wires of reduced sizes are then comes to stranding section for

the purpose of twisting the the copper wires in order to minimize or cancel theeffect of electric magnetic flux that produced during the transfer of electricity.

There is a process after twisting involved is testing the conductivity or

capacity of cables with the testing machines installed in the quality section orlab.

The twisted copper wires are then comes to extruder of relevant size ofcopper bobbins to insulate or cover these wires with PVC (Poly Vinyl Chloride)

in a particularly two type of insulation i.e simple insulation of different cores of

cables and sheathing or bedding.The insulated cables then pulled by a large force machine which is called

laying machine for transfer of finished cables.



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Process Flow Diagram

Copper Rods in Different Size

Wire Drawing Section

Required Sizes of Conductor Copper Wires

Raw Stranding SectionMaterial (Copper Rods

& PVC)

Twisted Conductor Copper Wires

Extrusion Section (Insulation)

PVC Insulated cable Conductors

Laying Section

Finished Rolls of Cables



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Raw Material RequiredThe raw material required for the manufacturing of power cables is copper

for conductor and PVC (Poly Vinyl Chloride) for external insulation andsheathing of power cables.

Copper

It is a ductilemetal, with very high thermal and electrical conductivity. Pure

copper is rather soft and malleable, and a freshly exposed surface has areddish-orange color. It is used as a thermal conductor, an electrical

conductor.

PVC

Polyvinyl chloride is the third most widely produced plastic, after polyethylene

and polypropylene.[2] PVC is widely used in construction because it is cheap,durable, and easy to assemble. PVC production is expected to exceed 40

million tons by 2016.

PVC is commonly used as the insulation on electric wires; the plastic used forthis purpose needs to be plasticized.

Direct Labour

The labour requirement for the project is as follow:


No. of

Employees

Salary Total Salary

Machine

Operator

8 18,000 144,000

MachineWorker

20 10,000 200,000

Packaging

Worker

5 7,000 35,000

Total Direct

Labour

33 35,000 379,000
http://en.wikipedia.org/wiki/Ductilehttp://en.wikipedia.org/wiki/Metalhttp://en.wikipedia.org/wiki/Thermal_conductorhttp://en.wikipedia.org/wiki/Electrical_conductorhttp://en.wikipedia.org/wiki/Electrical_conductorhttp://en.wikipedia.org/wiki/Plastichttp://en.wikipedia.org/wiki/Polyethylenehttp://en.wikipedia.org/wiki/Polypropylenehttp://en.wikipedia.org/wiki/Polyvinyl_chloride#cite_note-1%23cite_note-1http://en.wikipedia.org/wiki/Constructionhttp://en.wikipedia.org/wiki/Electric_insulationhttp://en.wikipedia.org/wiki/Electric_wirehttp://en.wikipedia.org/wiki/Metalhttp://en.wikipedia.org/wiki/Thermal_conductorhttp://en.wikipedia.org/wiki/Electrical_conductorhttp://en.wikipedia.org/wiki/Electrical_conductorhttp://en.wikipedia.org/wiki/Plastichttp://en.wikipedia.org/wiki/Polyethylenehttp://en.wikipedia.org/wiki/Polypropylenehttp://en.wikipedia.org/wiki/Polyvinyl_chloride#cite_note-1%23cite_note-1http://en.wikipedia.org/wiki/Constructionhttp://en.wikipedia.org/wiki/Electric_insulationhttp://en.wikipedia.org/wiki/Electric_wirehttp://en.wikipedia.org/wiki/Ductile


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Factory OverheadThe project consist of heavy machinery which requires large capacity of

electric connection,so in order to meet the requirement in the absence ofelectricity there is also a Caterpillar 400 KV generator.

Description In Rs. ("000")

Fixed Cost:

Power: @ 353/240/KW/Month 1,016.64

Insurance: @ 5% of machinery 2,580

indirect labor cost 3,240

Maintenance and Depreciation:

Machinery depreciation 5,160

factory building depreciation 2,480.08Maintenance of Building @ 5% of Costof Building 2,480Maintenance of Machinery 5% of the

cost 2,580Total Fixed Cost 1,9536.8

Variable Manufacturing Expenses:

Fuel Chargers 45 liter/hr 4hours daily 4,896

Power:@ 18/ 115200units/Month 19,35,360

Total Variable Cost 19,40,256



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Personnel Analysis

Management is the process of coordinating and overseeing the workactivities of others so that organizational goals are accomplished efficiently

and effectively with and through others people.So to coordinate and evaluate the each department there is need to assign

jobs individually, following is the Admn and other Staff for the Project.

Designation

No. of

Employees

Monthly

Salary

TotalMonthly

Salary

Annual Salary

Rs. ("000")

Chairman 1 100,000 100,000 1,200PersonalSecretary 1 40,000 40,000 480AdminManager 1 80,000 80,000 960ProductionManager 1 25,000 25,000 300Selling &MarketingManager 1 40,000 40,000 480Accounts &

FinanceManager 1 40,000 40,000 480

Assistants 4 18,000 72,000 864

Office Boy 2 7,000 14,000 168

Cook 1 8,000 8,000 96PhoneOperator 1 7,000 7,000 84

Total 10 365000 426000 5112

The indirect staff of the plant and their salary is as

under;



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Status Total Salary Grand TotalIndirect Labor

Work shop Incharge 2 20,000 40,000

Technician 2 25,000 50,000Work shop Helper 2 10,000 20,000

Laboratary Incharge 1 30,000 30,000Laboratary InchargeAssistant 1 20,000 20,000Inventory Controller (RawMaterial) 1 20,000 20,000Inventory Controller(F.Goods) 1 20,000 20,000

Store Keeper 2 8,000 16,000

Receptionist 1 12,000 12,000Office Boy 2 7,000 14,000

Gate Keeper 4 7,000 28,000

Total indirect Labour 19 179,000 270,000

Management Commitment

Top management demonstrates its commitment to the development andimplementation of the quality management system and continually improving

its effectiveness by:

Communicating the importance of meeting customer requirements as

well as statutory and regulatory requirements. Establishing the qualitypolicy.

Review and approve quality objectives.

Conducting management reviews.

Customer FocusTop management, through its internal systems, ensures that customer

requirements and needs are determined and are met with the aim ofenhancing customer satisfaction.

Financial Analysis



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The Financial Structure of the project appraisal consisting of the equityprovided by the sponsors and the debt provided by the National Bank .

Cost of the Project ("000")Sr.No. Description LC FC Total cost

1 Land 12,210 12,210

2 Building 49,602 49,602

3 Machinery 51,600 51,600

4Installation & Erection 12% ofMachinery 6,192 6,192

5 Insurance 5% of Cost of Machinery 2,580 2,580

6 Intrest during Construction 30,878

7 Vahicles 13,571 13,5718 Furniture and Fixture 953 953

9 Office Equipment 100 100

10 Pre-operating expenses14236.4004 14,236

Total Estimated Fixed Cost 151,044 151,044

Add: Net Initial Net Working Capital 21000 21,000

Total Estimated Cost of Project

Means of Finance

MEANS OF FINANCE In Rs("000")D e b tHabib Bank Ltd 212379.3604 212379.3604



(Sponsors) 141586.2403 141586.2403TOTAL EQUITY 141586.2403

DEBT : EQUITY RATIO 60 : 40



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The amount of debt is provided by Habib Bank limited at the mark up rate of 18% andthe remaining portion of the total cost of the project is acquired by Equity participation ofthe sponsors in which the stake of sponsors is 40%.

Initial Net Working Capital requirement

Initial Net Working Capital

in Rs,

("000")

Current Assets

Cash 6,000Account Recevable 10% of theSale 9000

Raw Material 60000

Total Current Assest 21000

Less : Current Liabilities 0

0

Net Initial working Capital 21000

Important AssumptionsSome of the important assumption regarding the production, cash flow, expenses,depreciation and financing assumption are listed in the following tables.

Production Assumptions

Cash Flow Assumptions


Maximum Attainable Capacity In Percentage 100%

Capacity Utilization (1st Year) In Percentage 70%

Production Capacity In Units (70% in first year) 4284 KM of 3 products

Production Capacity Utilization Growth Rate 10% per year


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Accounts Receivables 10% of sales

Accounts Payable 30% of Raw Material

Expense Assumptions

Machine Maintenance 5% of the cost

Pre-Operational Expense Rs. 14236.40037

Wages Growth Rate 5%

Deprecation Expense Assumptions

Plant & Machinery Depreciation Rate 10%

Furniture & Fixtures Depreciation Rate 10%

Vehicle Depreciation Rate 15%Building 5%

Financing Assumptions

Debt 60%

Equity 40%

Tax Rate 35%

IRR

39%

Payback period

The initial investment will be recovered in the 2 years time period.

ESTIMATED INCOME STATEMENTS



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For the year ending Dec 31, 2012 2013 2014

Efficiency Assumed : 70% 80% 90%

SALES 8115800 10381900 11699400

COST OF GOODS SOLD :

- Raw Materials 6205780.26 7092320.297 7978860.335

Direct Labour 4548 4775.4 5014.17

Factory overhead 1391391.76 1587371.04 1783350.32

Total Manufacturing cost 7601720.02 8684466.737 9767224.825

Add: Opening inventory 0 912206.4024 1042136.008Less: Ending inventory 912206.4024 1042136.008 1172066.979

Cost of Goods Sold 6689513.6 8554537.13 9637294

G R O S S P R O F I T 1,426,286 1,827,363 2,062,106

OPERATING EXPENSES

Depriciation on Equipment & Furniture 197 197 197

Depriciation on Vahicles 2,036 4,071 6,107

Admin & General Expenses 8590 9878.5 11360.275

Selling Expenses 10% of the sale 811580 1038190 1169940

Total Operating Expenses 984,718 1,259,975 1,421,592

OPERATING PROFIT 441568.0321 567388.3686 640514.221

NON OPERATING EXPENSES79,38

7 71,52963,77

8Financial Expenses 2847.280074 2847.280074 2847.280074

Amortzn. of Prelim. Exp 8831.360643 11347.76737 12810.28442

Workers Welfare Fund 2%102,25

9 130,812 147,412

Interest on Borrwings193,32

5 216,536 226,848

Sub-Total 248242.9065 350852.0125 413666.694

P R E - T A X P R O F I T 248242.9065 350852.0125 413666.694

Income Tax 0.35 86885.01727 122798.2044 144783.343

N E T P R O F I T 161,357.89 228053.8082 268883.351

ESTIMATED BALANCE SHEET



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As on Dec, 31 Constructn. 2013 2014 2015

ASSETS

Cash 187,922 (305,663) (179,121) 4,289

Accounts Receivables(10% ofsale) 9,000 811,580 1,038,190 1,169,940

Inventory

Raw Material 6,000 1,551,445 1,773,080 1,994,715

Finished Goods - 912,206 1,042,136 1,172,067

Total Current Assets 202,922 2,969,569 3,674,285 4,341,011

Plant & Machinery 51,600 51,600 51,600

Vahicles 13,571 13,571 13,571

Building 49,602 49,602 49,602

Furniture & Fixture 953 953 953

Office Equipment 507 507 507

Less: Acc, Depriciation 9,872 19,745 29,617

Net Fixed Assets 136,807 106,360 96,488 86,615

Land 12,210 12,210 12,210

Total Fixed Assets: 136,807 118,570 108,698 98,825

Preliminary Expenses: 14,236 11,389 8,542 5,695

Total Assets: 353,966 3,099,528 3,791,525 4,445,531

LIABILITIES & EQUITY

Current Liabilities

Account Payable 1,861,734 2,127,696 2,393,658

Current borrowings against A/R 568,106 726,733 818,958

Interest charges 79,387 71,529 63,778

Workers Welfare Fund 8,831 11,348 12,810

Dividends Payable 80,679 114,027 134,442

Total Current Liabilities: 2,598,738 3,051,333 3,423,646

Long-term Liabilities

HABIB BAMK LIMITED 212,379 169,903 127,428 84,952

Total Long-term Liabilities 212,379 169,903 127,428 84,952

EQUITY

provision for bed debts 2% 162,316 183,079.80

Paid up Capital 141,586 141,586 141,586

Add: Retained earnings26,985 288,098 588,869

Total Equity: 141,586 330,887 612,764

Total Liabilities & Equity: 353,966 3,099,528 3,791,525 4,445,531

ESTIMATED CASH FLOWS



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Financial Ratios


For the year ending Dec 31 Const. Yr. 2013 2014 2015

SOURCES

Operating Profit - 441,568 567,388 640,514

Add Back: Depreciation - 9,872 9,872 9,872

Amortization - 2,847 2,847 2,847

Funds from Operations - 454,288 580,108 653,234

Other Income

HABIB BANK LTD. 212,379

Increase in Current Liabilities 2,598,738 452,595 372,312

Paid up Capital 141,586

TOTAL SOURCES 353965.601 3053025.53 1,032,703 1025546.384

APPLICATION OF FUNDS

Investment in Fixed Assets: 136,807

-Preliminary Exp 14,236 2,847 2,847 2,847

Repayment of : -

Mark up on debt - 79,387 71,529 63,778

Interest charges 102,259 130,812 147,412

Taxes 86,885 122,798 144,783

Increase in current Assets: 15,000 3,275,231 578,175 483,316

TOTAL 166,044 3,546,610 906,161 842,137

cash surpuls (deficit) 187,922 (493,585) 126,542 183,410

Add: Ending Balance 187,922 (305,663) (179,121)

Net Cash Inflow/(Out Flow)187,922

(305,663) (179,121) 4,289


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2012 2013 2014

Gross Margin

(%) 17.6% 17.6% 17.6%

OperatingMargin (%) 5.4% 5.5% 5.5%Net Margin(%) 2.0% 2.2% 2.3%

Our Gross Margin ratio will increase for the upcoming years as we will be producing larger

capacity as compare to the production years which will have a direct effect on the operating margin

of the company. The operating margin will also increase by efficient production

The current ratio will be stable during the years as the current assets will be utilized efficiently, a

slight decrease is due to the increase in the current liabilities was relatively greater than the currentassets, as the profit will increase the equity will also increase to some proportion.

In corporate finance, it is the amount of cash flow from operations available to meet annual interest

and principal payments on debt. Our ratio is increasing means our operation funds are increasingand are more enough to pay the markup debt.

SWOT ANALYSIS


2012 2013 2014

CurrentRatio intimes 1.14 1.20 1.27

Equity Ratio 10.7% 16.2% 21.1%

2012 2013 2014

Debt ServiceCoverageRatio 5.7 8.1 10.2


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The origins of the SWOT analysis model

This remarkable piece of history as to the origins of SWOT analysis was provided by

Albert S Humphrey, one of the founding fathers of what we know today as SWOTanalysis. I am indebted to him for sharing this fascinating contribution. Albert Humphreydied on 31 October 2005.

Strength

Right products, quality and reliability

Superior product performance vs competitors

Better product life and durability

Spare manufacturing capacity

Product innovations ongoing

Weaknesses

Customer lists not tested

No direct marketing experience

We would be a small player

Opportunities

Market developments

Technology development and innovation

Local competitors have poor products

Could extend to overseas

Can surprise competitors

Threats Political effects

Environmental effects

Market demand

Recommendations

http://www.businessballs.com/alberthumphreytam.htmhttp://www.businessballs.com/alberthumphreytam.htm


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The 99.9% pure copper cables are preferred in the in usage to eliminate the wastage ofelectricity. This requires the raw material to be pure especially the copper and thecompany should capture its market share by having good quality of its cables, providingits customers the confidence that usage will reduce their element of risk in the wastage

of electricity and its reliability can make them comfortable while deciding to purchasefrom the ZeeQ Cables Pakistan.

Energy Crisis and Suggestions

Pakistan is in the grip of a serious energy crisis that is affecting all sectors of theeconomy and the various segments of the society. As the situation stands to-day, thereare hardly any immediate solutions to resolve the issue. A change of attitude and achange of life style is needed at the national level which should be triggered by theruling elite and followed by all segments of the society that have access to electricity. Atbest there could be some short and long-term solutions to the crisis but they needimmediate planning and execution with an enormous investment.

However, government is taking some steps for this energy crisis, but I think there onestep that was the privatization of K.S.E was the hugest blunder of this government; it isthe cause of the energy crises in Pakistan. To overcome this problem government hasto take a keen look on this problem and have to solve it by conversation and takingsome strong and possible steps.Pakistan is rich in hydro resources of energy. According to an estimate the country hasenough resources to generate approximately 40000 mw of hydro-electricity. However,presently it only generates 8000 mw of electricity against an installed capacity of 11327mw. In addition the country can generate electricity with the help of wind and solarenergy which has not yet been exploited to meet the energy deficit. Nuclear energy isyet another source of energy and at present PAEC produces 472 mw. It is far less thanwhat PAEC should have been producing to meet the energy deficit.

Power cables demand improvement

The demand of the power cables is directly related to the electricity availability, so aimmense presence of electricity in Pakistan can give more life to cable manufacturers,

which will have direct effect on the quality of life of the living people of Pakistan. Thedemand of domestic cables can be meet properly woth more efficiency and the exportscan be increased as well.

http://www.blurtit.com/q8438133.htmlhttp://www.blurtit.com/q8438133.html


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Conclusion

The power cables manufacturing business can contribute in the economy ofthe country to much extent in the form of employment, availability of power

cables locally and can become a leading manufacturer in the global line as wellby producing high quality cables to the worldwide customers. Currently we arejust focusing on the three types of the power cables, and the feasibility report

show us there is the increasing trend in the ratios, and each year we aredistributing the 50% our income to the sponsors.

Currently the demand of the power cables in the Pakistan is low because theconstruction of the building and the industry in the Pakistan is going to slump,

and we also conclude that the demand of the power cables in the worldwide isvery high, and we also saw the production and the consumption of the cables

in the worldwide, we hope so in the future we will enter in the world market.

In short there are the market potential exists in the world market.

Documents

Proj Report 2