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For detail information please refer to attached financial statements at the end of the report
Pre-Feasibility Study Cut Flowers Farm - Roses
PREF-27/October 2001/1
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1) Low cost of labor
2) Lower rent rate of available land
3) Growing local market
4) Country profile suites this project.
13. Threats
Flowers are perishable products with a limited life span. Without any life enhancing
treatment, its shelf life is three days to four days maximum. Therefore, flowers should be
transported from the field as soon as possible in order to take advantage of its short life.
There are certain diseases that can effect flowers detrimentally, but timely pesticide sprays
act as a defense against such threats.
Note:
The proposed project is based on following assumptions:
1) Only rose flowers would be grown
2) Approximately 11,000 plants are planted per acre
3) Farm is based in Pattoki area
4) Already grafted plants would be bought from a nursery
5) Canal & Pump water would be used for irrigation
Pre-Feasibility Study Cut Flowers Farm - Roses
PREF-27/October 2001/1
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Financial Evaluation of Cut Flowers SMEDA
Key Variables
Total Investment in Project 1,268,038
Debt 50% 634,019
Equity 50% 634,019
Interest Rate 16%
Debt Tenure 3
Debt Payments per year 1
Rs. in actuals
Total Cash Flow Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Net Cash Flow to Project (after tax) (216,246) 633,977 598,565 600,746 (94,194) 701,976 725,172 748,679 772,360 1,464,822
Interest Costs 118,271 89,334 38,938 - 60,240 60,240 43,056 23,123 - -
Principal Repayment (84,517) 475,172 243,364 - (376,503) 107,400 124,585 144,518 - -
Total Debt Servicing 33,754 564,506 282,302 - (316,263) 167,641 167,641 167,641 - -
Net Cash Flow to Investors (250,000) 69,471 316,263 600,746 222,069 534,335 557,531 581,038 772,360 1,464,822
Equity Project
IRR 32% 27%
Payback Period (yrs) 3.83 3.59
Statement Summaries SMEDA
Initial Investment
Capital Investment Rs. in actuals
Building/Infrastructure 102,000
Land tillage and saplings 590,000
Machinary & Equipment 50,000
Pre-operating costs 21,040
Total Capital Costs 763,040
Working Capital Rs. in actuals
Raw material inventory 219,725
Upfront land lease rental 35,273
Cash 250,000
Total Working Capital 504,998
Total Investment 1,268,038
Initial Financing Rs. in actuals
Debt 634,019
Equity 634,019
Pre-Feasibility Study Cut Flowers Farm - Roses
PREF-27/October 2001/1
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Statement Summaries SMEDA
Income Statement
Rs. in actuals
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Revenue 340,314 1,214,920 1,500,784 1,575,823 1,654,614 1,737,345 1,824,212 1,915,423 2,011,194 2,111,754
Cost of goods sold 484,779 502,868 521,763 541,505 562,136 583,702 606,250 629,833 654,502 680,316
Gross Profit (144,465) 712,052 979,020 1,034,318 1,092,478 1,153,643 1,217,962 1,285,590 1,356,692 1,431,438
General administration & selling expenses
Rental expense 35,273 35,273 35,273 35,273 35,273 35,273 35,273 35,273 35,273 35,273
Depreciation expense 128,100 128,100 128,100 128,100 128,100 160,701 160,701 160,701 160,701 160,701
Amortization expense 2,104 2,104 2,104 2,104 2,104 2,104 2,104 2,104 2,104 2,104
Subtotal 165,477 165,477 165,477 165,477 165,477 198,078 198,078 198,078 198,078 198,078
Operating Income (309,942) 546,575 813,543 868,841 927,001 955,565 1,019,884 1,087,512 1,158,613 1,233,359
Earnings BeforeInterest & Taxes (309,942) 546,575 813,543 868,841 927,001 955,565 1,019,884 1,087,512 1,158,613 1,233,359
Interest expense 118,271 89,334 38,938 - 60,240 60,240 43,056 23,123 - -
Earnings BeforeTax (428,213) 457,241 774,605 868,841 866,761 895,325 976,827 1,064,389 1,158,613 1,233,359
Tax - 12,482 333,080 373,602 372,707 384,990 420,036 457,687 498,204 530,345
NET PROFIT/(LOSS) AFTER TAX (428,213) 444,759 441,525 495,239 494,054 510,335 556,792 606,702 660,410 703,015
Balancebrought forward (428,213) 16,546 458,071 953,310 1,447,364 1,957,699 2,514,490 3,121,192 3,781,602
Total profit availablefor appropriation (428,213) 16,546 458,071 953,310 1,447,364 1,957,699 2,514,490 3,121,192 3,781,602 4,484,617
Balancecarried forward (428,213) 16,546 458,071 953,310 1,447,364 1,957,699 2,514,490 3,121,192 3,781,602 4,484,617
Pre-Feasibility Study Cut Flowers Farm - Roses
PREF-27/October 2001/1
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Statement Summaries SMEDA
Balance Sheet
Rs. in actuals
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Assets
Current assets
Cash & Bank 250,000 - 69,471 385,734 986,480 1,585,052 2,119,387 2,676,918 3,257,956 4,030,317 5,456,171
Accounts receivable - 13,985 31,957 55,802 63,218 66,379 69,698 73,183 76,842 80,684 84,718
Raw material inventory 219,725 242,247 267,077 294,453 324,634 357,909 394,595 435,041 479,632 528,795 -
Pre-paid annual land lease 35,273 35,273 35,273 35,273 35,273 35,273 35,273 35,273 35,273 35,273 -
Total Current Assets 504,998 291,506 403,779 771,262 1,409,605 2,044,613 2,618,953 3,220,415 3,849,704 4,675,069 5,540,889
Fixed assets
Building/Infrastructure 102,000 96,900 91,800 86,700 81,600 76,500 71,400 66,300 61,200 56,100 51,000
Saplings & Land Tillage 590,000 472,000 354,000 236,000 118,000 753,006 602,405 451,804 301,202 150,601 -
Machinary & Equipment 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 -
Total Fixed Assets 742,000 613,900 485,800 357,700 229,600 854,506 693,805 533,104 372,402 211,701 51,000
Intangible assets
Pre-operation costs 21,040 18,936 16,832 14,728 12,624 10,520 8,416 6,312 4,208 2,104 -
Total Intangible Assets 21,040 18,936 16,832 14,728 12,624 10,520 8,416 6,312 4,208 2,104 -
TOTAL ASSETS 1,268,038 924,341 906,410 1,143,690 1,651,829 2,909,639 3,321,173 3,759,830 4,226,314 4,888,874 5,591,889
Liabilities & Shareholders' Equity
Current liabilities
Short termdebt - 265,376 - - - - - - - - -
Total Current Liabilities - 265,376 - - - - - - - - -
Other liabilities
Deferred tax - - 12,482 51,600 64,500 75,250 83,850 90,300 94,600 96,750 96,750
Long termdebt 634,019 453,160 243,364 - - 376,503 269,103 144,518 - - -
Total Long TermLiabilities 634,019 453,160 255,846 51,600 64,500 451,753 352,953 234,818 94,600 96,750 96,750
Shareholders' equity
Paid-up capital 634,019 634,019 634,019 634,019 634,019 1,010,522 1,010,522 1,010,522 1,010,522 1,010,522 1,010,522
Retained earnings - (428,213) 16,546 458,071 953,310 1,447,364 1,957,699 2,514,490 3,121,192 3,781,602 4,484,617
Total Equity 634,019 205,806 650,565 1,092,090 1,587,329 2,457,886 2,968,221 3,525,012 4,131,714 4,792,124 5,495,139
TOTAL CAPITAL AND LIABILITIE 1,268,038 924,341 906,410 1,143,690 1,651,829 2,909,639 3,321,173 3,759,830 4,226,314 4,888,874 5,591,889
Pre-Feasibility Study Cut Flowers Farm - Roses
PREF-27/October 2001/1
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Statement Summaries SMEDA
Cash Flow Statement
Rs. in actuals
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Operating activities
Net profit - (428,213) 444,759 441,525 495,239 494,054 510,335 556,792 606,702 660,410 703,015
Add: depreciation expense - 128,100 128,100 128,100 128,100 128,100 160,701 160,701 160,701 160,701 160,701
amortization expense - 2,104 2,104 2,104 2,104 2,104 2,104 2,104 2,104 2,104 2,104
Deferred income tax - - 12,482 39,118 12,900 10,750 8,600 6,450 4,300 2,150 -
Accounts receivable - (13,985) (17,971) (23,845) (7,416) (3,161) (3,319) (3,485) (3,659) (3,842) (4,034)
Raw material inventory (219,725) (22,522) (24,830) (27,375) (30,181) (33,275) (36,686) (40,446) (44,592) (49,162) 528,795
Cash provided by operations (219,725) (334,517) 544,643 559,626 600,746 598,572 641,736 682,116 725,556 772,360 1,390,581
Financing activities
Change in long termdebt 634,019 (180,859) (209,796) (243,364) - 376,503 (107,400) (124,585) (144,518) - -
Change in short termdebt - 265,376 (265,376) - - - - - - - -
Add: land lease expense - 35,273 35,273 35,273 35,273 35,273 35,273 35,273 35,273 35,273 35,273
Land lease payment (35,273) (35,273) (35,273) (35,273) (35,273) (35,273) (35,273) (35,273) (35,273) (35,273) -
Issuance of shares 634,019 - - - - 376,503 - - - - -
Cash provided by / (used for) financing a 1,232,765 84,517 (475,172) (243,364) - 753,006 (107,400) (124,585) (144,518) - 35,273
Investing activities
Capital expenditure (763,040) - - - - (753,006) - - - - -
Cash (used for) / provided by investing a (763,040) - - - - (753,006) - - - - -
NET CASH 250,000 (250,000) 69,471 316,263 600,746 598,572 534,335 557,531 581,038 772,360 1,425,854
Cash balance brought forward 250,000 - 69,471 385,734 986,480 1,585,052 2,119,387 2,676,918 3,257,956 4,030,317
Cash available for appropriation 250,000 - 69,471 385,734 986,480 1,585,052 2,119,387 2,676,918 3,257,956 4,030,317 5,456,171
Cash carried forward 250,000 - 69,471 385,734 986,480 1,585,052 2,119,387 2,676,918 3,257,956 4,030,317 5,456,171