7/31/2019 Proj Report 2
1/51
7/31/2019 Proj Report 2
2/51
23
Feasibility Report on ZeeQ Cables Pakistan
ZeeQ Cables Pakistan
Department of Commerce M.com Finance
7/31/2019 Proj Report 2
3/51
23
Feasibility Report on ZeeQ Cables Pakistan
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.
Department of Commerce M.com Finance
7/31/2019 Proj Report 2
4/51
23
Feasibility Report on ZeeQ Cables Pakistan
Department of Commerce M.com Finance
7/31/2019 Proj Report 2
5/51
23
Feasibility Report on ZeeQ Cables Pakistan
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.
Department of Commerce M.com Finance
7/31/2019 Proj Report 2
6/51
23
Feasibility Report on ZeeQ Cables Pakistan
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.
Department of Commerce M.com Finance
7/31/2019 Proj Report 2
7/51
23
Feasibility Report on ZeeQ Cables Pakistan
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.
Department of Commerce M.com Finance
7/31/2019 Proj Report 2
8/51
23
Feasibility Report on ZeeQ Cables Pakistan
Our mission Statement
Department of Commerce M.com Finance
7/31/2019 Proj Report 2
9/51
23
Feasibility Report on ZeeQ Cables Pakistan
TABLE OF CONTENTS
Serial # Topic Description Page #
1 Executive Summary 9
Department of Commerce M.com Finance
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.
7/31/2019 Proj Report 2
10/51
23
Feasibility Report on ZeeQ Cables Pakistan
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
ZeeQ Cables Pakistan
Department of Commerce M.com Finance
7/31/2019 Proj Report 2
11/51
23
Feasibility Report on ZeeQ Cables Pakistan
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
Department of Commerce M.com Finance
7/31/2019 Proj Report 2
12/51
23
Feasibility Report on ZeeQ Cables Pakistan
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;
Department of Commerce M.com Finance
7/31/2019 Proj Report 2
13/51
23
Feasibility Report on ZeeQ Cables Pakistan
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
Department of Commerce M.com Finance
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
7/31/2019 Proj Report 2
14/51
23
Feasibility Report on ZeeQ Cables Pakistan
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
Department of Commerce M.com Finance
7/31/2019 Proj Report 2
15/51
23
Feasibility Report on ZeeQ Cables Pakistan
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.
Department of Commerce M.com Finance
Wire drawing
Stranding machine
Stranding machine
Extruder small
Extruder large
Testing machine small
Testing machine large
Laying machine
7/31/2019 Proj Report 2
16/51
23
Feasibility Report on ZeeQ Cables Pakistan
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.
Department of Commerce M.com Finance
ZeeQ Cables Pakistan
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
7/31/2019 Proj Report 2
17/51
23
Feasibility Report on ZeeQ Cables Pakistan
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
Department of Commerce M.com Finance
7/31/2019 Proj Report 2
18/51
23
Feasibility Report on ZeeQ Cables Pakistan
Two core Cable
Three core cable
Department of Commerce M.com Finance
7/31/2019 Proj Report 2
19/51
23
Feasibility Report on ZeeQ Cables Pakistan
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
Department of Commerce M.com Finance
7/31/2019 Proj Report 2
20/51
23
Feasibility Report on ZeeQ Cables Pakistan
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
Department of Commerce M.com Finance
7/31/2019 Proj Report 2
21/51
23
Feasibility Report on ZeeQ Cables Pakistan
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
Total Debt 212379.3604
E q u i t yPaid-up Capital
(Sponsors) 141586.2403 141586.2403
Department of Commerce M.com Finance
7/31/2019 Proj Report 2
22/51
23
Feasibility Report on ZeeQ Cables Pakistan
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
Department of Commerce M.com Finance
7/31/2019 Proj Report 2
23/51
23
Feasibility Report on ZeeQ Cables Pakistan
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.
Department of Commerce M.com Finance
7/31/2019 Proj Report 2
24/51
23
Feasibility Report on ZeeQ Cables Pakistan
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.
Department of Commerce M.com Finance
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
7/31/2019 Proj Report 2
25/51
23
Feasibility Report on ZeeQ Cables Pakistan
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
Department of Commerce M.com Finance
7/31/2019 Proj Report 2
26/51
23
Feasibility Report on ZeeQ Cables Pakistan
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
Department of Commerce M.com Finance
7/31/2019 Proj Report 2
27/51
23
Feasibility Report on ZeeQ Cables Pakistan
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 ?
Department of Commerce M.com Finance
7/31/2019 Proj Report 2
28/51
23
Feasibility Report on ZeeQ Cables Pakistan
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
Department of Commerce M.com Finance
7/31/2019 Proj Report 2
29/51
23
Feasibility Report on ZeeQ Cables Pakistan
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
Department of Commerce M.com Finance
7/31/2019 Proj Report 2
30/51
23
Distributor
Feasibility Report on ZeeQ Cables Pakistan
Distribution Channel
Department of Commerce M.com Finance
Direct to business
Factory
7/31/2019 Proj Report 2
31/51
23
Feasibility Report on ZeeQ Cables Pakistan
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.
Department of Commerce M.com Finance
Export Dealers
Retailer
7/31/2019 Proj Report 2
32/51
23
Feasibility Report on ZeeQ Cables Pakistan
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.
Department of Commerce M.com Finance
7/31/2019 Proj Report 2
33/51
23
Feasibility Report on ZeeQ Cables Pakistan
.
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.
Department of Commerce M.com Finance
7/31/2019 Proj Report 2
34/51
23
Feasibility Report on ZeeQ Cables Pakistan
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.
Department of Commerce M.com Finance
7/31/2019 Proj Report 2
35/51
23
Feasibility Report on ZeeQ Cables Pakistan
Laying machine
This machine is used for the laying of manufactured cables in roles of required
sizes.
Department of Commerce M.com Finance
7/31/2019 Proj Report 2
36/51
23
Feasibility Report on ZeeQ Cables Pakistan
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.
Department of Commerce M.com Finance
7/31/2019 Proj Report 2
37/51
23
Feasibility Report on ZeeQ Cables Pakistan
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
Department of Commerce M.com Finance
7/31/2019 Proj Report 2
38/51
23
Feasibility Report on ZeeQ Cables Pakistan
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:
Department of Commerce M.com Finance
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/Ductile7/31/2019 Proj Report 2
39/51
23
Feasibility Report on ZeeQ Cables Pakistan
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
Department of Commerce M.com Finance
7/31/2019 Proj Report 2
40/51
23
Feasibility Report on ZeeQ Cables Pakistan
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;
Department of Commerce M.com Finance
7/31/2019 Proj Report 2
41/51
23
Feasibility Report on ZeeQ Cables Pakistan
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
Department of Commerce M.com Finance
7/31/2019 Proj Report 2
42/51
23
Feasibility Report on ZeeQ Cables Pakistan
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
Total Debt 212379.3604
E q u i t yPaid-up Capital
(Sponsors) 141586.2403 141586.2403TOTAL EQUITY 141586.2403
DEBT : EQUITY RATIO 60 : 40
Department of Commerce M.com Finance
7/31/2019 Proj Report 2
43/51
23
Feasibility Report on ZeeQ Cables Pakistan
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
Department of Commerce M.com Finance
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
7/31/2019 Proj Report 2
44/51
23
Feasibility Report on ZeeQ Cables Pakistan
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
Department of Commerce M.com Finance
7/31/2019 Proj Report 2
45/51
23
Feasibility Report on ZeeQ Cables Pakistan
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
Department of Commerce M.com Finance
7/31/2019 Proj Report 2
46/51
23
Feasibility Report on ZeeQ Cables Pakistan
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
Department of Commerce M.com Finance
7/31/2019 Proj Report 2
47/51
23
Feasibility Report on ZeeQ Cables Pakistan
Financial Ratios
Department of Commerce M.com Finance
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
7/31/2019 Proj Report 2
48/51
23
Feasibility Report on ZeeQ Cables Pakistan
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
Department of Commerce M.com Finance
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
7/31/2019 Proj Report 2
49/51
23
Feasibility Report on ZeeQ Cables Pakistan
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
Department of Commerce M.com Finance
http://www.businessballs.com/alberthumphreytam.htmhttp://www.businessballs.com/alberthumphreytam.htm7/31/2019 Proj Report 2
50/51
23
Feasibility Report on ZeeQ Cables Pakistan
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.
Department of Commerce M.com Finance
http://www.blurtit.com/q8438133.htmlhttp://www.blurtit.com/q8438133.html7/31/2019 Proj Report 2
51/51
Feasibility Report on ZeeQ Cables Pakistan
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.