Chapter # 01

Executive Summary

1.1. The Project back ground

Correct selection, design and construction of the packaging is just as important for loss-free transportation and

storage as are the requirements placed on the product itself. Savings are often made on packaging in order to reduce

total costs of concerned industry. Packaging industry in Bangladesh is comparatively a young industry by world

standard; however from the very modest beginning the packaging solutions has come edge and has really taken off

during last two decades! Now Corrugated Carton, Poly bag, Pet bottle, Glass bottle, Flexible packaging, PVC Oven

sacking etc. are manufactured locally. Raw materials, machineries with chemicals are being imported from abroad.

Quality of locally produced packaging materials is good on average with tremendous opportunities for investment as

there is a room for more than U$$4.00billion packaging and accessories market in our country it is rapidly growing

significantly. These could be classified in 03 standards varying from high standards to medium to average standard.

At the same time the country has few world class manufacturing factories which are producing standard packaging

solutions.

Packaging Industry is among the fastest growing industries in Bangladesh. A high degree of potential exists for

almost all user segments which are expanding appreciably-Processes foods, hard and soft drinks, fruit and marine

products, cosmetics and personal care, office stationary and accessories, fabrics and garments, white goods and other

durables, electrical appliances and equipments, entertainment and other electronics, shoes and leather ware, gems and

Jeweler’s, toys and sports goods, chemicals and fertilizers.

Due to lower manufacturing costs, Bangladesh is fast becoming a preferred hub for packaging production. The

Bangladesh packaging industry has made a mark with its exports that comprise flattened cans, printed sheets and

components, crown cork, lug caps, plastic film laminates, craft paper, paper board and packaging machinery, while

the imports include tinplate, coating and lining compounds and others. In Bangladesh, the fastest growing packaging

segments are laminates and flexible packaging, especially PET and woven sacks.

1.2. Project Justification and Objectives:

The ABC packaging, being one of the elevated technically advance automatic corrugated carton manufacturer in

Bangladesh, which would like to maintain a leading position by developing fully automatic board plants along with

the diversified advance equipment and accessories. Its aim to employ intelligence in developing packaging with a

solution based products and prompt services in reducing lead time, improving quality and providing overall value

saving for the end user for our carton boxes.

It’s main target to get nomination and approval for packaging solution from world class buyer like; H & M, Levi,

NIKE, GAP, IKEA, Wal*mart, ZARA, and many more which is already started. In recent years there has been a

substantial increased in the export of RMG, Pharmaceuticals, Ceramics Leather, Frozen Foods and horticultural,

floricultural products from the Bangladesh to the European markets, American and Scandinavian countries and

these sectors have provided much needed foreign exchange earnings. This growth is expected to continue within the

limits of freight capacity. Packaging materials namely corrugated cardboard boxes or cartons represent an important

cost item for these industries and all box requirements are currently produced in locally which is not substantial. It is

noted that, there is no significant capacity of automatic corrugated carton are produced locally.

A pre-feasibility study is undertaken to assess the market potential for setting up of an automated corrugated box

manufacturing facility. The proposal has been designed with state of the art automated foreign machineries &

equipments which will manufacture high corrugated carton in different shape and some categorical printing

materials for RMG”s requirements. It is strongly designed to get buyer nomination as to cope up with world class

factories. Support to other local industries, such as, Pharmaceuticals, Ceramics, Leather Goods, soap, confectionary

and poultry, in providing a locally available box and enabling import substitution or better preservation of their

products " Generation of employment, both directly and indirectly and support to rural development and the role of

women in the economy in enabling communal gardens to better preserve their products and hence access a better

market.

In view of the above benefits of the automatic corrugated packaging project would provide, the Promoter to look to

the National Board of Investment for supporting and providing a Development Certificate and investment incentives

in terms of tax allowances and duty waivers. The BOI has already expressed its interest in initial support for the

project.

Chapter # 02

History of the Packaging Materials

2.1. Global Packaging Manufacturing Industry

 Packaging technology has been undergoing rapid development over the past few decades, with consumers reliant

on packaging for food safety and transportability in particular. The explosion of supermarkets and convenience

foods would not have been possible without developments in packaging. Recent advances in environmentally

friendly packaging are helping packaging manufacturers meet demand for recyclable products as consumers seek

to reduce waste and limit the harmful impact of modern living on the environment. Sustainability is a major issue

for the packaging industry moving forward as companies reliant on the industry are obliged to comply with

changing government legislation encouraging recycling. Producing lightweight alternatives to traditional

packaging is also key as companies seek to cut transport cost.

The global packaging material and machinery industry generates $500 billion yearly, accounting for between 1%

and 2% of gross domestic product in industrialized nations, according to the World Packaging Organization. There

are 100,000 packaging manufacturing companies in operation, representing 5 million jobs.

2.2. Bangladesh Context:

Packaging industry in Bangladesh is comparatively a young industry by world standard; however from very

modest beginning the packaging solutions has come edge and has really taken off during last two decades. Now

Corrugated Carton, Poly bag, Pet bottle, Glass bottle, Flexible packaging, PVC Oven sacking etc. are

manufactured locally. However raw materials, machineries with chemicals are being imported from abroad.

Quality of locally produced packaging materials is good on average with tremendous opportunities for investment.

These could be classified in 03 standards varying from high standards to medium to average standard. At the same

time the country has few world class manufacturing factories which are producing standard packaging solutions.

2.3. Growing Trend of Packaging in Bangladesh:

Packaging Industry is among the rapidly growing industries in Bangladesh A high degree of potential exists for

almost all user segments which are expanding appreciably-Processes foods, hard and soft drinks, fruit and marine

products, cosmetics and personal care, office stationary and accessories, fabrics and garments, white goods and

other durables, electrical appliances and equipments, entertainment and other electronics, shoes and leather ware,

gems, toys and sports goods, chemicals and fertilizers.

Due to lower manufacturing costs, Bangladesh is fast becoming a preferred hub for packaging production. The

Bangladesh packaging industry has made a mark with its exports that comprise flattened cans, printed sheets and

components, crown cork, lug caps, plastic film laminates, craft paper, paper board and packaging machinery, while

the imports include tinplate, coating and lining compounds and others. In Bangladesh, the fastest growing

packaging segments are laminates and flexible packaging, especially PET and woven sacks.

2.4. Contribution of Packaging Industry in Bangladesh:

There are about 1300 no’s of packaging industry in Bangladesh out of which 40 % are in standard form. Total

packaging and printing sector is one of the largest employers in Bangladesh like the RMG sector where 03 million

people are employed and 80% are women. Packaging sector plays an important role for the development of

industry as well as export and local consumptions. During eighties only few packaging industry were set to meet

packaging requirement of pharmaceuticals industries. But early eighties when export oriented RMG started their

export it demand increased tremendously. To keep pace of the RMG sectors and others export oriented sectors is

going up by leaps and bounds to cater needs of the demand. Now all export oriented sectors like RMG, Frozen

foods, Handicrafts, pharmaceuticals, Ceramics, flowers are meeting up by the local packaging industries.

Apart from the export oriented sectors there are few hundreds of packaging industry to meet up the local industries

demand like foods and beverages, cosmetic and others consumer’s goods. Because of tremendous demands of

consumers needs, demands for foil, flexible packaging, and poly has also increased. In recent times demand for

pharmaceuticals packaging increased their products.

2.5. Industry Composition in Global Context

The packaging industry is composed of two major components, namely, the supply side or providers of

packaging products and the demand side or end users. Each component’s category is characterized by varying

investment status and potentials, contingent upon growth stimuli in each sector. Government has given the priority

for agro products such as fruits, vegetables etc. we produces these items abundantly. But due to poor packaging we

are to loose our foreign exchange although there is good scope for development of packaging materials of this

sector by introducing standard end eco-friendly devices. The printing sectors have also been developed. Now there

is great scope for development of this sector by using modern technology.

Chapter #03

Project Highlights

3.1. Name and Location of the Project: ABC company Limited

Factory Address:

Corporate Office:

Legal Status of the Company: Private Limited Company, incorporated under the Registrar of Joint Stocks Companies and Firms, Dhaka, Bangladesh

Main Sponsor of the project: Mr. XYZ………………..

3.2. The Project:

ABC LIMITED, a private limited company is formed by some proven entrepreneurs who have long success

record in the business domain. The project is located at .......................on a 25 bigha plot. It will use modern

automatic and high end technical system, supported by a mechanized well processing unit for elegant carton box.

The project has designed combined by a highly efficient engineering machineries & equipments to get a unique way

of forming fine corrugated box, in which this approach results in lower energy usage, high quality carton production

and dramatically reduced hassle of producing traditional corrugated carton industry.

The project will be equipped with a balanced and complete range of machineries. Main machinery will be imported

from Taiwan, China. Erection and installation of machinery will be completed by the Engineers and technicians

under the guidance of Chinese Engineers and local experts. The project will go into trial production at the end of

2014. It will be one of the largest carton manufacturing projects of the country with an annual production capacity

of 225.00 million pieces of corrugated carton box. The project will create job opportunities for about 190 people.

Total Cost of the project is estimated to be BDT 752.94 million–out of which BDT 400.54 million will be

arranged through a Term Loan (including Working Capital facility of BDT 200.00 million) and BDT

352.40million will be contributed by the sponsors with Debt-Equity Ratio of 54:46. Term loan tenure is 06

years with grace period of 01 year. Repayment will be made on quarterly basis. The Project Economic Life

has been estimated to 10 (ten) years. The Debt–Service Coverage Ratio of the project works out to 3.59, 2.21,

2.52, 2.70 and 2.87 times during the first five years of projected operation of the project. The project is

expected to break-Even at 32% of the rated capacity and 37% of the capacity utilization with sales volume of

BDT 5994.00million. Net Present Value (NPV) of the project, @12% discount with an impressive Internal Rate of

Return (IRR) of 28.29%. Payback period is estimated to be 3 years.

3.3. Product Mix and Production Capacity:

The establishment of this automatic packaging industry is to get a versatile packaging products and corrugated carton

box facilities that would provide the extensive benefits to the Bangladesh economy. Support to the substantially

growing RMG, textile, Pharmaceuticals, Leather, Ceramics, horticultural, floricultural and fisheries export industries

it would be capable of producing the following product mix:

Folding cartons with bottom and top flaps (partially abutting)

Folding cartons with bottom and top flaps (completely abutting)

Folding cartons with bottom flaps and tuck-in top

Folding cartons with tuck-in bottom and tuck-in top

Pull-through cartons , Tube and slide cartons, Hinged top cartons with tuck-in top

Hinged top cartons with overlapping top , Telescope cartons

Double cover cartons , Folder cartons, one-piece

The annual production capacity of the project will be met by 2 shifts of 8 hours per day, for 300 working days in a

year. The standard size and capacity is given below:

Item and Size Rate Rated Production Capacity Annual

Unit Daily

Single-wall corrugated (3Ply/5Ply)

Double-wall and triple-wall

Triple-wall and triple-wall corrugated

Piece 100,000/per day 300.00 million

3.4. Land of the Project:

The project will be located at…………..on a plot of measuring 25 bighas. The land is about

…………………..kilometer from ……………….town and it is attached 120 ft by main road Dhaka- Aricha. The

cost of the land is BDT 200.50 million. Infrastructure facilities such as Gas, water, road and electricity will be

available at the project site.

3.5. Building/Floor Space of the Factory/Civil Work:

Various sheds are required to make for the proposed automatic corrugated carton project. Machine room, Printing

room, raw materials sheds, finished products shed, pump house, Boiler machine room, labor shed, toilets, security

guard room etc have been proposed to be made. The cost of the civil construction to be made has been estimated

Floor area is @70,000 SFT with steel structure and others required Brick Building materials

3.6. Machinery Requirement of the Project:

Particulars/Items Source UnitBoard Plant China/Taiwan 01Die Cutting machine China 02Printing Machine(2 colour) China 01Printing Machine (1 colour) China 01Stapling Machine China 01Strapping Machines Taiwan 03Rotory/Slotter China 01Rotory/Slitter China 01Slotting Machine China 01Platen Punching China 02Boiler (16 bar/4MT) USA/India/China/Taiwan/Malaysia 01Generator (300 KVA) Caterpillar(USA) 01Plate Making Machine Taiwan 01Fork Lift (TCM) Japan 01Additional Machine Wooden/Plastic Pallets China 03Pallet Trucks China 05Loading Pallet trucks China 03In house Laboratory Test equipments 01 sets

Most of the machinery will be imported from Taiwan and China at an estimated cost of BDT 166.33 million. In

addition to the imported machinery, the project will require some local machinery and equipment. The cost of local

machinery has been estimated at BDT 20.00 million.

3.7. Erection and Installation:

Erection and installation of machinery will be completed by the local technicians under the guidance of Chinese &

Taiwanese Engineers and local experts. Total cost for erection and installation of machinery is estimated to be BDT

9.00 million.

3.8. Technical Services and Quality Control:

The technology involved in manufacturing of corrugated croton and printing products are well known to the high

skilled technical persons, who are available in this country. Moreover, the machine supplier will provide the back

bone technical support at the time of erection and installation of the project, so no critical problem is anticipated and

maintenance of the machinery. Besides; we do recruit high qualified engineering team to get un-interrupted

production support. A few problems that may arise from time to time would be sorted out by these resident

technicians and experts, thus ensuring smooth operation and good, consistent quality.

3.9 Job Creation:

The project will create is about 190 job opportunities.

4.1 Cost of the Project:

The total Cost of the project has been estimated at Tk752.94mln which is shown below:

Items Bank Investment Sponsor’s Investment Total% Amount % Amount %

Land & land Development:Requirement of Land Area (Rate of the land & Land Development, 25 bighas @80lac taka

0.00 0.00 100.00 200.00 200.00

Building & Others Civil works:(Built up Area, Construction Schedule, Plant Layout),72,000sft, BDT1300/p/Sft

40.00 37.44 60.00 56.16 93.60

Cost Capital Machinery (imported):(C & F Value of the machinery)

90.00 149.70 10.00 16.63 166.33

Other Cost for Imported machinery (16%): Pre Shipment inspection (1% of C & F) Marine Insurance Cost (1% of C & F) Clearing Forwarding Charges (1% of C & F) L/C commission (1% of C & F) Import Duty (6% C & F ) Import License fee (2.5% of C & F ) Inland Freight (1% CFR)

Local Transport & other cost

0.00 0.00 100.00 26.61 26.61

Local machinery & Equipments:(Miscellaneous Items and Accessories, Instruments, Laboratory Equipment's and Accessories

90.00 18.00 10.00 2.00 20.00

0.00Security Deposit:For Utility, Electrification, Electric Load and Water, Environment, Maintenance etc

0.00 100.00 5.00 5.00

Erection & Installation cost: Civil, Mechanical & Electrical Expenses for Foreign Erectors and consultancy

( Fooding, Lodging, Transport & supervision) Expenses for Local Erectors, Connection for power

0.00 0.00 100.00 9.00 9.00

Office Decoration & Transport:Office Furniture & Fixture, office decoration, Heavy vehicles, Car/ transport etc

0.00

0.00 100.00 15.00 15.00

Preliminary and pre operating Cost: Company Formation, Registration, Legal expenses,

Documentation, Drawing, designing, Layout Plan, Consultant fees

Mortgage, Mutation Fees, and documentation fee, Trail Production

0.00 100.00 2.00 2.00

Interest during construction period (IDCP)On BDT @15% per annum for a period of 6 months

100.00 15.40 0.00 0.00 15.40

Total Fixed Cost 220.54 332.40 552.94

Working Capital (03 months) 90.00 180.00 10.00 20.00 200.00

Total Cost of the Project Including Capital 400.54 352.40 752.94

4.2 Means of Finance:

(Million BDT)

Particulars Total

Sponsors 352.40 Equity

Bank’s Loan 400.54 Debt

Total Initial Capital Investment of the Project 752.94

4.3 Debt–Equity Ratio:

The Debt– Equity Ratio on completion of the project works out at 54:46

4.4 Debt – Service Coverage Ratio:

The debt – service coverage ratio of the project works out to 3.59, 2.21, 2.52, 2.70 and 2.87 times

during the first five years of projected operation of the project

4.5 Earnings Forecast & Profitability:

Forecast of Earnings

Particulars Taka in BDTCapacity Utilization 75% 80% 85% 90%

1st Year 2nd Year 3rd Year 4th Year Per Day Per monthUnit

Price Production/da

y Pric in U$$

Sales Revenue 1,599,750,000 1,679,737,500 1,763,724,375 1,851,910,594 5,332,500 133,312,500 71

Cost of Goods Sold 1,119,825,000 1,175,816,250 1,234,607,063 1,296,337,416 3,732,750 93,318,750 50

Gross profit 479,925,000 503,921,250 529,117,313 555,573,178 1,599,750 39,993,750 75,000

Administrative & Marketing exp. 143,977,500 134,379,000 123,460,706 111,114,636 479,925 11,998,125 6 300

Operating profit 335,947,500 369,542,250 405,656,606 444,458,543 22,500,000 Yearly

Financial Expenses 63,990,000 50,392,125 44,093,109 37,038,212 213,300 6,399,000 3

Net Operating Profit 271,957,500 319,150,125 361,563,497 407,420,331 1,599,750,000

Income Tax (40%) 108,783,000 127,660,050 144,625,399 162,968,132 4,351,320 5

Net Profit after tax 163,174,500 191,490,075 216,938,098 244,452,198 543,915 135,978,750

Dividend @ 20% 24,476,175 28,723,511 32,540,715 36,667,830 979,047 1

Retained Earnings 138,698,325 162,766,564 184,397,383 207,784,369 462,328 11,558,194 65

Cumulative Retained Earnings

Ratios : Gross Profit to Sales 30 30 30 30Net Profit to Sales 10 11 12 13

9 10 10 11Return on Equity calculation : Net Profit 163,174,500 191,490,075 216,938,098 244,452,198Shareholders' equity 300,000,000 438,698,325 601,464,889 785,862,272Return on Equity 54 44 36 31

4.6 Break-Even Analysis:

The project is expected to break-Even at 32% of the rated capacity and 37% of the capacity utilization with

sales volume of BDT 5994.00million. Net Present Value (NPV) of the project, @12% discount with an

impressive Internal Rate of Return (IRR) of 28.29%. Payback period is estimated to be 3 years.

4.7 Sensitivity Analysis:

Necessary sensitivity analysis has been performed and the project shows debt service coverage ratio

position at 10% increase in production cost and 10% decrease in sales volume.

4.8 Internal Rate of Return (IRR): 28.29% Payback period is estimated to be 3 years 02 months.

4.9 Mode of Repayment: Capitalized loan will be repaid in 20 quarterly installments 1st installment will fail due on 9th months after the project goes into operation

4.10 Economic Life: The economic life of the project has been estimated to be 10 years without any major replacement

Chapter # 04

Management Aspect

5.1 Company Formation:

ABC Limited is a private limited company incorporated on the 10th day of January 2014, with the Registrar of Joint

Stock Companies (RJSC) and Firms under the Companies Act of 1994. The authorized capital of the company is BDT

100 million. The company will initially manufacture standard automatic corrugated carton to meet the demand of the

export oriented RMG and domestic different market. The registered office of the company is located

at ............................................................Dhanmondi R/A, Road No. 8/A, Dhaka-1209

5.2 Board of Director & Their Background:

Name of the Directors with Parents/Husband Name

Address Status Percentage of Share

01. Mr. ABC…….

Back Ground of Board of Directors of the Company:

The Board of Directors consist of 2 (two) directors. Directors are qualified, resourceful and experienced in the

field of business. A brief portrayal of the Directors is furnished below:

5.1 Background of the Directors:

5.2.2 Mr. Director:

.................................................

5.3 Management:

The overall all management of the company will be confronted by its Board of Directors. The Board will formulate

policies and provides necessary guidelines for smooth operation of the company. The Managing Director will be the

Chief Executive Officer of the company. Others member of the Board will assist him for running the company sharply

from time to time. Qualified and experienced, technical, administrative, Marketing and accounting professional will be

required to assist key officials & management.

Chapter # 05Technical Aspects

6.1 Corrugated Packaging Industry

Outline of Manufacturing Process and Materials Utilized

The manufacture of corrugated packaging can be roughly classified into two processes: the container board combining process, which glues one or more sheets of fluted corrugating medium to one or more flat facings of linerboard; and the box manufacturing process, which is used to assemble the corrugated sheets into boxes.

Figure 1 depicts the typical manufacturing process flow and the auxiliary facilities that are used at a corrugated packaging plant. Figure 1 Overview of Manufacturing Process Flow for Corrugated Packaging

A complete spate sheet is prepared for Production of the project including diagram

6.3 Utilities:

6.3.1 Power: The project requires a connected load of 300 KVA.

6.3.2 Water: Water will be taken from a deep tube well at the project site

6.3.3 Fuel and Lubricant:

6.4 Repair and Maintenance:

The annual requirement of repair and maintenance for the machinery has been estimated @ 5%, 5%, 5%, 5% and 5%

of the initial cost of machinery, for the first five years of operation. The repair and maintenance cost of the building,

throughout the life of the project, has been estimated at 5% of the initial cost of the building.

6.5 Health and Safety:

There will be regular visits from a doctor to look after the health of the workers. The factory will have a designated

clinic. Fire fighting equipment and first aid boxes will be strategically placed around the factory, as per the fire and

safety regulations. All the staff and workers of the factory will be regularly trained to maintain safety standards in the

workplace. They will also be provided with safety gear and adequate training to deal with hazards and emergencies.

6.6 Technical, Administrative Personnel and Labour:

6.6 Technical:

Name of the Post Quantity

General Manager 01Factory Manager 01Engineer Electrical/Mechanical 01Production Supervisor 07Shift Manager 02Machine Operator all machine 35Machine Helper 80Maintenance Staff (Mechanical) 04Electrician 02Assistant Electrician 01Fork Lift Operator 03Vehicle Helper 08Vehicle Loading Helper 08Driver 04

Total 157

6.6 Administrative:

Sl. No. Name of the Post Quantity1 Manager -Administration 012 Manager -Marketing 022 Sales Executive/Officer 053 Store Manager/Commercial Manger 024 Admin Officer, Computer operator 035 Assistant Account cum Cashier 016 Peon 027 Security Guard, Sweeper cum Mali 05

Total 21

6.3 Total (Technical + Administrative) 178

6.7 Technical Consultant:

"Nestor Consulting Limited" is a professional consulting firm that helps its clients by delivering flexible solutions

using experienced professionals minds. A group of professional who delivers innovative solutions that fully meet

clients' business, technology and budgetary needs. Nestor brings together from a wide range of industrial and

business models for better and faster results with more personal care for the corporate growth. Then design and build

enterprises that enable communication and knowledge‐sharing in new, more effective ways. It engages clients as

partners and is a true business partner to the clients from planning to implementation to support.

6.7.1 Services:

6.7.1.1 Manufacturing Plant Consultancy

6.7.1.2 Scope of services:

A. Design and supervision:

Nestor will complete site specific lay outs for the project;

Develop the overall plant designs and select appropriate machineries for the proposed project;

Supervise the construction of civil works of main plant which includes kiln, dryer, machine

foundation and other related facilities / infrastructures by providing required engineers and designers

team to supervise design level construction.

B. Machinery Supply:

Nestor will select and finalize the appropriate machinery for the plant;

Imported portion of machinery will be supplied by the authorized supplier of Nestor after opening of

L/C by the client in due time as agreed with Nestor, preferably, within 7 days of commissioning of

construction work. It will need at least 3.5 months for the machinery to come to the project site after

opening L/C;

Regarding local machinery, Nestor will provide the required specification while the client will source

and procure these by themselves.

C. Trial Production:

Upon completion of construction, installation of plant and machinery, Nestor will Design suitable

program / schedule for plant start up and trial run in consultation with the client.

Nestor will provide the list and amount of materials and workers / operators required for trial

production and the client will accordingly arrange everything necessary to start up the trial

production.

D. Training of Manpower:

Nestor will arrange for the training of key personnel for plant operation during trial run. The training includes the

following persons:

Operators (List will be provided)

Dry Brick set up (1 supervisor along with 5 workers)

Technicians for small maintenance

Workers group to be engaged in Green brick set up on the trolley (1 supervisor along with 5

workers)

Workers group to be engaged in finished brick stacking (1 supervisor along with 5 workers)

E. Duration of Service: Normally 6 to 8 months (Construction and trial production period) after opening L/C.

F. After sales service:

Nestor shall provide feedback and trouble –shooting services but not for more than 6 (six) months after

commissioning. However, after six months, a separate service agreement may be concluded between Nestor and the

client, if the client has the intention to do so.

Apart from those companies mentioned above there is several numbers of projects waiting in the pipeline.

6.7 Human Resources:

Nestor has the best professionals and experts to design, supervise, install and commissioning of an efficient HHK plant.

Its consulting team is skilled in supervision and directing the internal company support work to ensure that budget and

schedule constraints are met. Nestor has more than 300 (Three hundred) of expert Mason for the construction work

including 50 (fifty) mason who are specialized in Kiln construction work.

6.7 Technical Collaboration:

Nestor is in the process of arranging technical collaboration with Chinese, Indian and European Brick manufacturing

companies, experts and research institutes and organizations with a vision to become the Brick Technology Pioneer in

Bangladesh.

Chapter # 06Marketing Aspects

01. Introduction:

Packaging industry in Bangladesh is comparatively a young industry by world standard; however from very

modest beginning the packaging solutions has come edge and has really taken off during last two decades. Now

Corrugated Carton, Poly bag, Pet bottle, Glass bottle, Flexible packaging, PVC Oven sacking etc. are

manufactured locally. However raw materials, machineries with chemicals are being imported from abroad.

Quality of locally produced packaging materials is good on average with tremendous opportunities for

investment. These could be classified in 03 standards varying from high standards to medium to average

standard. At the same time the country has few world class manufacturing factories which are producing

standard packaging solutions.

The products of the proposed projects will be automatic corrugated carton box produced from.............

Automatic carton have comparative advantage in respects of unit price, size/specification. Automatic carton box

have also standard in size smoothness in surface bright in excellent glitters, hardness in strength as compared to

traditional carton box. Furthermore this type project can supply huge volume of corrugated carton to it

significantly growing RMG sector and others diversified packaging product market. It can cater the large

volume of carton at a time when various sectors place order.

02. Growing Trend of Packaging:

Users of the Corrugated Box

Packaging Industry is among the rapidly growing industries in Bangladesh. A high degree of potential exists for

almost all user segments which are expanding appreciably-Processes foods, hard and soft drinks, fruit and

marine products, cosmetics and personal care, office stationary and accessories, fabrics and garments, white

goods and other durables, electrical appliances and equipments, entertainment and other electronics, shoes and

leather ware, gems and toys and sports goods, chemicals and fertilizers.

Due to lower manufacturing costs, Bangladesh is fast becoming a preferred hub for packaging production. The

Bangladesh packaging industry has made a mark with its exports that comprise flattened cans, printed sheets

and components, crown cork, lug caps, plastic film laminates, craft paper, paper board and packaging

machinery, while the imports include tinplate, coating and lining compounds and others.

03. Market Size of Packaging materials:

Industry Composition in Global Context:

The packaging industry is composed of two major components, namely, the supply side or providers of

packaging products and the demand side or end users. Each component’s category is characterized by

varying investment status and potentials, contingent upon growth stimuli in each sector.

Supply side - by nature of end product

As for the type of end product, packaging manufacturing has globally the greatest share of the total industry

(81%), followed by the packaging service (14%) then by packaging machinery (5%). Packaging machinery is

equipment for uses such as canning; container cleaning, filling, and forming; bagging, packing, unpacking,

bottling, sealing and placing of lid; inspection and check weighing; wrapping, shrink film and heat sealing; case

forming, labeling and encoding; palletizing and related uses.

Packaging machinery sub-sector is highly globalized, with European countries and the USA dominating the top

ten lists of major country producers and exporters. The world production of packaging machinery reached € 22

billion in 2007 (Packaging Gateway, 2010). Packaging refers to the technology and material for enclosing or

protecting products for distribution, storage, sale, and use (Soroka, 2002).

Supply side - by form and type of packaging material

As for form, packaging can either be flexible or rigid with the former fast replacing the more traditional rigid

form, owing to cost and flexibility advantage. Flexible packaging includes materials such as film, foil or paper

sheeting. Rigid packaging includes glass, rigid metal, and wood. As to the share of the total packaging market,

paper (34%) tops the list, followed by rigid plastic (27%), metal (15%), glass (11%), flexible packaging (10%),

and others (3%). The flexible packaging market is expected to grow by around 3.2% annually over the next five

years with food accounting for 75-80% of the demand. To retain its current share of the market, rigid packaging

has to address the cost advantage of its flexible counterpart, while affording flexibility and variety of uses.

Demand side - by end user product or industry

On the demand side, the packaging industry may be classified in relation to the type of end user, namely:

individual consumers, institutional and industrial users with the latter further sub categorized by industry type,

namely, food, beverage and petrochemicals. Food accounts for 50% of the global consumer packaging industry

valued at US$ 380 billion as of 2009. If the beverage sector is to be added, that will even increase to 69%

(Figure 2). That the food and beverage market account for more than half of the packaging market are

worldwide phenomena. In developing countries the growing demand from the food and beverage market has

been instrumental in stimulating the overall growth in the packaging industry (Global Industry Analysts, 2010).

The global consumer packaging industry, by end use, 2012

1. Cosmetics (5%)

2. Healthcare (6%)

3. Beverages (19%)

4. Food (50%)

5. Others (20%)

Demand Analysis at Micro & Macro level in Bangladesh:

Packaging solutions in Bangladesh is a thriving sector industry with more than 04 million people dependent on

it for their livelihood. Total corrugated carton production in Bangladesh is estimated at 1.00 billion cartons

annually. There are over all 12,000 packaging industries in Bangladesh and most (60%) of them are using

“traditional system. Traditional technologies for manufacturing are …………………………………….

The market size for packaging materials for food, pharmaceuticals, cosmetics, toiletries, Ind. products, textiles,

handicrafts, etc. accounts for  4%, while rigid & semi-rigid  plastic containers is about 9%.The metal and tin

containers accounts for 10%, glass containers 10% , Corrugated Board & boxes is about 23%, paper & paper

board 36% and other ancillary materials  like tapes straps, labels, adhesives, etc. - 8%. Up gradation, both of

functionality and aesthetics, characterizes the recent trends in the industry. Elaborate and more expensive

packaging is penetrating deeper into marketing of industrial products and even agro-based products, like food

and personal care products, drugs and pharmaceuticals, consumer durables and electronic products, especially

entertainment products.

Apart from the export oriented sectors there are few hundreds of packaging industry to meet up the local

industries demand like foods and beverages, cosmetic and others consumer’s goods. Because of tremendous

demands of consumers needs, demands for foil, flexible packaging, and poly has also increased. In recent

times demand for pharmaceuticals packaging increased their products. Government has given the priority for

agro products such as fruits, vegetables etc. we produces these items abundantly. But due to poor packaging

we are to loose our foreign exchange although there is good scope for development of packaging materials of

this sector by introducing standard end eco-friendly devices. The printing sectors have also been developed.

Now there is great scope for development of this sector by using modern technology

Existing Demand:

Packaging market size in Bangladesh is about BDT25,000 corer is growing at the rate of 10 per cent per annum.

Currently rigid packaging enjoys more than 65% market share but the traditional rigid packaging users are

migrating to flexible packaging in a big way. Market size of PET/BOPP and other flexible film-based

manufacturing segment is estimated at around BDT 5billion. The cost impact of PET film and BOPP film on

the overall packaging cost ranges from 35-85% depending on the product to be packaged. 

The overall growth rate of the industry has tapered off to around 9%. The flexible packaging industry is

expected to grow at about 10-15% per annum in the coming years.

Taka in million U$$Year Total Export Earnings RMG Export

EarningsCorrugated Carton Box & Printing materials

% and growth rate of RMG, Packaging & Accessories

2005.06 1052.16 7900.80 790.08 75.062006-07 12177.86 9211.23 921.23 75.642007-08 14110.80 10699.80 1069.98 75.832008-09 15565.19 12347.77 1243.70 79.332009-10 16204.65 12796.72 1279.72 77.122010-11 200628.73 18340.89 1834.89 78.102011-12 23704.19 20360.05 2036.05 78.802012-13 27018.26 21515.73 2151.73 79.63

Supply Gap & Projected Market:

Supply gap has been worked out by deducting the supply from estimated demand for corrugated cartons and

market share has been worked out considering supply gap and production capacity of the proposed project

which is shown below in table.

Taka in million U$$Year Projected RMG Export

EarningsCorrugated Carton Box & Printing materials

% and growth rate of RMG, Packaging & Accessories

2014 24097.61 2409.70 10.102015 27230.30 2723.00 10.122016 30770.24 3077.10 10.352017 34770.38 3477.20 10.452018 39290.52 3929.12 10.66

Existing Automatic Supplier:

There are about 1000 no’s of RMG oriented packaging industry in Bangladesh out of which 40 % are in

standard form. Total packaging and printing sector is one of the largest employers in Bangladesh like the RMG

sector where 4 million people are employed and 80% are women.

Table List:

Marketing Strategy:

Lower Price:

Due to lower manufacturing costs, Bangladesh is fast becoming a preferred hub for packaging production. The

Bangladesh packaging industry has made a mark with its exports that comprise flattened cans, printed sheets and

components, crown cork, lug caps, plastic film laminates, craft paper, paper board and packaging machinery, while the

imports include tinplate, coating and lining compounds and others. In Bangladesh, the fastest growing packaging

segments are laminates and flexible packaging, especially PET and woven sacks. This growth is expected to continue

within the limits of freight capacity. Packaging materials namely corrugated cardboard boxes or cartons represent an

important cost item for these industries and all box requirements are currently produced in locally which is not

substantial. It is noted that, there is no significant capacity of automatic corrugated carton are produced locally.

Product Features and Quality:

Type of Packaging I

I. Paper Packaging:

The use of paper and paperboards for food packaging dates back to the 17th century with accelerated usage in

the later part of the 19th century (Kirwan 2003). Paper and paperboard are sheet materials made from an

interlaced network of cellulose fibers derived from wood by using sulfate and sulfite. The fibers are then pulped

and/or bleached and treated with chemicals such as slimicides and strengthening agents to produce the paper

product. FDA regulates the additives used in paper and paperboard food packaging (21 CFR Part 176).

Paper and paperboards are commonly used in corrugated boxes, milk cartons, folding cartons, bags and sacks,

and wrapping paper. Tissue paper, paper plates, and cups are other examples of paper and paperboard products.

About thousand and 400 are in standard form they produce, corrugated carton, back board, neck, hang tag, size

tag, price tag, bar code, photo inlay, size sticker, carton sticker, 80% machineries and raw materials are imported

Paper:

Plain paper is not used to protect foods for long periods of time because it has poor barrier properties and is not

heat sealable. When used as primary packaging (that is, in contact with food), paper is almost always treated,

coated, laminated, or impregnated with materials such as waxes, resins, or lacquers to improve functional and

protective properties. The many different types of paper used in food packaging are as follows:

Paper laminates.

Paper laminates are coated or uncoated papers based on Kraft and sulfite pulp. They can be laminated with

plastic or aluminum to improve various properties. For example, paper can be laminated with polyethylene to

make it heat sealable and to improve gas and moisture barrier properties. However, lamination substantially

increases the cost of paper. Laminated paper is used to package dried products such as soups, herbs, and spices

Metal

Metal is the most versatile of all packaging forms. It offers a combination of excellent physical protection and

barrier properties, formability and decorative potential, recyclability, and consumer acceptance. The 2 metals

most predominantly used in packaging are aluminum and steel.

Aluminum:

Commonly used to make cans, foil, and laminated paper or plastic packaging, aluminum is a lightweight,

silvery white metal derived from bauxite ore, where it exists in combination with oxygen as alumina.

Magnesium and manganese are often added to aluminum to improve its strength properties (Page and others

2003). Unlike many metals, aluminum is highly resistant to most forms of corrosion; its natural coating of

aluminum oxide provides a highly effective barrier to the effects of air, temperature, moisture, and chemical

attack.

Aluminum Foil:

Aluminum foil is made by rolling pure aluminum metal into very thin sheets, followed by annealing to achieve

dead-folding properties (a crease or fold made in the film will stay in place), which allows it to be folded

tightly. Moreover, aluminum foil is available in a wide range of thicknesses, with thinner foils used to wrap

food and thicker foils used for trays.

Bellows are the packaging materials in our country:

Bottles, Blister Packs, Glass packaging,

PP Oven sacks, (about 50 industries in Bangladesh)

Plastic Bottles, Skin Pack, Tin Can, Boxes, Shrink Wrap

Barrel, Tetra aluminum Foil, Crate, Aseptic, Container, Active, Beverage Can

Flexible, Rigid Plastic, Metal, Flexible, Glass, Paper Board, Food, Beverage etc.

The ABC packaging, being one of the high technologically advance corrugated carton manufacturer in

Bangladesh which would like to maintain a leading position by developing fully automatic board plants along with

the diversified advance machinery. Its aim to employ intelligence in developing packaging with a solution based

products and prompt services in reducing lead time, improving quality and providing overall value saving for the

end user for our boxes. These sorts of corrugated packaging material will be producing ABC Company

Limited.

What is corrugated fiberboard?

Corrugated fiberboard or cardboard (as it’s sometimes referred) is a paper-based material that consists of a fluted

corrugated sheet and one or two flat linerboards. The smooth, flat paper that sandwiches the interior fluting is the

linerboard. The fluted paper (or medium as it is sometimes referred) is joined to the flat linerboard with an

adhesive to form the corrugated fiberboard. Two design factors impact the weight, strength, qualities and

characteristics of corrugated fiberboard: fluting and wall construction. Wall construction is the most

straightforward design factor. Corrugated cardboard walls are manufactured in single, double, and even triple-wall

thicknesses. The more layers in the cardboard wall, the greater the strength.

Corrugated flutes

The inventors of corrugated board applied similar science to paper as ancient architects did to buildings. When

trying to uphold heavy loads, strength is unsurpassed when using an arch. Generally the larger flute profiles give

greater vertical strength and cushioning. The smaller flutes help enhance graphic capabilities while providing

greater structural integrity. By experimenting with flute profiles, designers can vary compression strength,

cushioning strength and thickness.

Corrugated comes in different wall construction

• Single-wall corrugated sheet

Single-wall corrugated boxes have a wide range of material strength, which is measured in terms of the Edge

Crush Test (ECT). The ECT test identifies the strength of the corrugated cardboard per square inch when crushed.

The ability of the assembled box to withstand weight before bursting is measured with the Mullen Bursting Test.

Single-wall corrugated boxes start at 23 ECT and range up to 55 ECT. Most single-wall corrugated boxes come in

200# to 275# bursting test strength. Very lightweight single-wall boxes will have a maximum box weight of 20

lbs., a bursting test weight of 125 lbs., and an ECT of 23 lbs. per square inch.

• Double-wall and triple-wall corrugated packaging

Double-wall cardboard is automatically stronger and more resistant to crushing than single-wall cardboard.

Heavier and less flexible than single-wall corrugated material, double-wall corrugated cardboard is designed to

accommodate heavier contents for shipping and storage. Double-wall corrugated cardboard strengths range

from 42 ECT to 82 ECT. Double-wall corrugated boxes have minimum bursting test weights starting at 200 lbs.

and going up to 600 lbs.

• Triple-wall and triple-wall corrugated packaging

Triple-wall corrugated boxes contain three corrugated mediums and four linerboard facings. This 7-ply

construction is used where large container sizes are involved, such as pallet packs. Triple-wall corrugated boxes

can hold significantly more weight, ranging from 240 to 300 lbs., with 67 to 112 ECT. Triple-wall corrugated

boxes are the heaviest type, and can hold significantly more weight, ranging from 240 to 300 lbs., with 67 to

112 ECT.

Standard US Corrugated Flutes

The project will also produce high quality below automatic corrugated carton of various design and

sizes:

Brown Kraft Carton T-Shirt Package Box Top Quality Corrugated Carton

Corrugated Shipping Box

Double Wall Brown Corrugated High Grade C/Box Printed Corrugated Box

Folding Box Corrugated Carton Box Corrugated Carton Box in different Shape

Types of Corrugated Board

Corrugated board consists of one or two outer plies, the flutes and, in multi-ply types of corrugated board,

of one or more intermediate plies. Corrugated board is classified as follows according to the number

of outer/intermediate plies and flutes:

Figure 1: Single face corrugated board consists of one ply of fluted paper, onto which paper or cardboard is glued.

Figure 2: Single wall (double face) corrugated board consists of one ply of fluted paper which is glued between two plies of paper or cardboard.

Figure 3: Double wall corrugated board consists of two plies of fluted paper which are glued together by one ply of un fluted paper or cardboard and the exposed outer surfaces of which are each covered with one ply of paper or cardboard.

Figure 4: Tri-wall corrugated board consists of three plies of fluted paper which are glued together by two plies

of paper or cardboard and the outer surfaces of which are likewise each covered with one ply of paper or

cardboard.

Cartons are usually made from double wall and single wall corrugated board. Cartons made from

high strength corrugated board, generally tri-wall (or ultra-heavy) corrugated board, are used for

transport operations involving severe climatic conditions and mechanical stresses and for those

involving heavier cargoes. (see Figure 6).

Figure 6: When arranged in this way, the flutes would collapse when exposed to pressure from above. Carton strength is then compromised and entire stacks may collapse

Automatic Corrugated Box as per Buyer Nomination:

It’s main target to get nomination and approval for packaging solution from world class buyer like; H & M,

Levi, NIKE, GAP, IKEA, Wal*mart, ZARA, and many more which is already started. In recent years there has

been a substantial increased in the export of RMG, Pharmaceuticals, Ceramics Leather, Frozen Foods and

horticultural, floricultural products from the Bangladesh to the European markets, American and Scandinavian

countries and these sectors have provided much needed foreign exchange earnings.

Importance of the packaging industry sector:

1. As packaging technology development is one of the keys to food loss reduction, and as addressing

food loss is relevant to both the poor smallholder food producer and the poor food insecure consumer,

the issue of food losses and the development of packaging solutions to address them are major global

concerns.

2. The packaging industry is the world’s third largest industry sector, next only to food and

petrochemical industries. It is also among the top five industries in almost all countries, with its annual

growth rate of 3-5%, which is a range even higher than the GDP’s growth rate in almost all countries.

3. Present day innovations and responses to changing consumer preferences and demands have extended

functions of packaging from mere protection to include promotion, information, convenience,

initiation and handling.

4. Packaging becomes an added P to the 4 Ps of marketing (product, price, place, promotion),

particularly in terms of facilitating branding, product differentiation and identity which is best

communicated at the point of purchase

On packaging and food loss in the value chains

5. Packaging spans the entire value chain and is a shared responsibility for all trading partners. Losses are

highest at pre- and post harvest stages in developing countries underscoring the need to focus on

packaging solutions and concomitant farm to market support infrastructures required at these stages of

the value chain. This is in great contrast to the industrialized countries where losses are at their peak at

the retail and consumption stages.

6. Products generally represent greater resources and have a much higher inherent value than the

packaging used to protect them. Thus, product losses due to underperforming packaging could cause

greater adverse effects on the environment than the gains made through packaging reduction.

7. Knowing what the losses are as well as when, where and how they occur can help pinpoint solutions,

packaging included to minimize them. In the same manner, knowing which packaging solutions are

available, currently and in the future, is a crucial first step in addressing food loss.

On packaging trends and potentials for development

8. A lot of changes are occurring in the global food system from the way the foods are produced,

distributed, stored, processed and retailed. This increasing dynamism in the food system, on the one

hand is placing a lot of challenges on the packaging industries, but on the other hand is opening up

opportunities and potentials for the packaging industry to develop and appropriately respond to.

9. The trend towards processing traditional export commodities at the country source and the introduction

of new consumer-packed products from developing countries to the world market will necessitate a

thorough understanding of customer requirements in industrialized countries on the part of developing

country exporters. This brings with it accompanying challenges in terms of marketing directly to

consumers in target markets, using their own brand names, and maintaining competitive packaging

designs and of high quality levels, challenges that likewise spill-over to the packaging industry in

developing countries, as well as their exporters

.7.12 Selling Arrangement:

At present the existing corrugated market sector in the area sell their products directly from the plant

side. As per buyer requirements through Back to Back L/C, all the products will be delivered to the

respective buyer.

Chapter # 07Economic Aspects

6.1. Employment Opportunity:

The projects will require a total number of about 190 persons of various categories. Cost per employment after

to be generated works out to BDT......

8.0 Contribution to GDP:

Chapter # 08Financial Aspects

10.1 Cost of the Project:

The total Cost of the project has been estimated at Tk752.94mln which is shown below:

Items Bank Investment Sponsor’s Investment Total% Amount % Amount %

Land & land Development:Requirement of Land Area (Rate of the land & Land Development, 25 bighas @80lac taka

0.00 0.00 100.00 200.00 200.00

Building & Others Civil works:(Built up Area, Construction Schedule, Plant Layout),72,000sft, BDT1300/p/Sft

40.00 37.44 60.00 56.16 93.60

Cost Capital Machinery (imported):(C & F Value of the machinery)

90.00 149.70 10.00 16.63 166.33

Other Cost for Imported machinery (16%): Pre Shipment inspection (1% of C & F) Marine Insurance Cost (1% of C & F) Clearing Forwarding Charges (1% of C & F) L/C commission (1% of C & F) Import Duty (6% C & F ) Import License fee (2.5% of C & F ) Inland Freight (1% CFR)

Local Transport & other cost

0.00 0.00 100.00 26.61 26.61

Local machinery & Equipments:(Miscellaneous Items and Accessories, Instruments, Laboratory Equipment's and Accessories

90.00 18.00 10.00 2.00 20.00

0.00Security Deposit:For Utility, Electrification, Electric Load and Water, Environment, Maintenance etc

0.00 100.00 5.00 5.00

Erection & Installation cost: Civil, Mechanical & Electrical Expenses for Foreign Erectors and consultancy

( Fooding, Lodging, Transport & supervision) Expenses for Local Erectors, Connection for power

0.00 0.00 100.00 9.00 9.00

Office Decoration & Transport:Office Furniture & Fixture, office decoration, Heavy vehicles, Car/ transport etc

0.00

0.00 100.00 15.00 15.00

Preliminary and pre operating Cost: Company Formation, Registration, Legal expenses,

Documentation, Drawing, designing, Layout Plan, Consultant fees

Mortgage, Mutation Fees, and documentation fee, Trail Production

0.00 100.00 2.00 2.00

Interest during construction period (IDCP)On BDT @15% per annum for a period of 6 months

100.00 15.40 0.00 0.00 15.40

Total Fixed Cost 220.54 332.40 552.94

Working Capital (03 months) 90.00 180.00 10.00 20.00 200.00

Total Cost of the Project Including Capital 400.54 352.40 752.94

10.2. Means of Finance

(Million BDT)Particulars Total

Sponsors 352.40 Equity

Bank’s Loan 400.54 Debt

Total Initial Capital Investment of the Project 752.94

10.3 Debt – Equity Ratio:

The debt – equity ratio on completion of the project works out at 54.46

0.4 Financial Evaluation:

To assess the financial viability of the project, profitability potential of the project has been estimated for five

years of operation.

The assumptions underlying the earning forecast are as follows:

a) The project will operate three shift 8 hours per day for 300 days a year.

b) The running capacity has been assumed to be70%, 75%, 80%, 85%, 90% during first five

years of operation.

c) Raw material price and sales price are expected to remain relatively constant. Any

increase in raw material price will be followed by the increase in sales price.

d) Annual increment of 5% has been considered for wages, salaries and bonuses.

e) As per Government policy, income tax will be deduced at the rate of 40% of net

operating profit.

f) Depreciation has been charged on straight line method at the following rates:

g) Economic life of the project has been assumed to be 10(ten) years without any major

replacement.

Based on the above assumptions, the profitability forecast reveals that the project is financially viable.

10.6 Profitability Status:

Particulars RateBuilding 5%Machinery 10%

Both the Gross Profit margin and Operating profit margin of ABC Limited (B2L) appear to be satisfactory and

maintain average of 48.41% and 25.04% respectively during the first five years. Return on Asset (ROA) is

expected on an average at 17.22%.

A Discounted Cash Flow Profile of the B2L has been prepared with assumed ten years life of the project

showing the Net Present Value (NPV) as positive and the value of NPV. The Internal Rate of Return (IRR) of

the said project is 28.29% and Payback period of 3 years Profitability Index is more than 1.

10.7 Project Liquidity Position:

Project’s liquidity status is very important consideration. If the project can’t properly evaluate its liquidity

status and its working capital requirement, the project may fall into troubles. As per the projection made, cash

flow generated from the project can easily meet the projects working capital requirement.

10.8 Project Solvency Status:

Times Interest Earned Ratio (TIER) represents the number of times earnings cover the interest expenses. It

presents the margin of safety in making fixed payment. So, a high ratio is desired by both management and

lender. TIER of B2L indicates that the project would be comfortably meeting its fixed obligation on time from

its operating margin.

B2L’s Debt Service Coverage Ratios (DSCR) also reflects repayment ability of the Company. The debt –

service coverage ratio of the project works out to 3.59, 2.21, 2.52, 2.70 and 2.87 times during the first five

years of projected operation of the project. (Details enclosed in annexure)

10.9 Break – Even Point:

The project is expected to break-Even at 32% of the rated capacity and 37% of the capacity utilization with sales

volume of BDT 5994.00million. Net Present Value (NPV) of the project, @12% discount with an impressive

Internal Rate of Return (IRR) of 28.29%. Payback period is estimated to be 3 years.

10.10 Fund Flow Statement:

The fund flow statement based on the profitability estimate is shown in the Annexure. The projection indicates

that adequate cash will be generated to meet all the operational expenses, debt repayment and dividend. The

projection indicates that the company’s net profit will increase with time.

10.11 Projected Income Statement:

This statement gives us an accurate picture about a company’s net income position during the different years of

operation. This projection is shown in the Annexure.

10.12 Projected Balance Sheet:

The projected balance sheet of the company is in the Annexure. The concern is expected to maintain a healthy

financial position during the operational life.