Pakistan Council of Scientific & Industrial Research

(PCSIR)
Ministry of Science & Technology
Govt. of Pakistan
HEAD OFFICE:
1,Constitution Avenue, Sector G-5/2
Islamabad
Tel.051-9225395-99, Fax.051-9225372, 9219266
E-mail: pcsirheadoffice@gmail.com, URL: www.pcsir@gov.pk

Pak Swiss Training Centre

Campus PCSIR Labs. Complex
Off University Road, Karachi-75280
Tel.021-3464163, Fax.021-34641962
E-mail: pstckarachi@gmail.com, URL: www.pstcpk.com

Note: All Services / information related to PM's Youth Business Loan are Free of Cost
April, 2014

DISCLAIMER
This information memorandum is to introduce the subject matter and provide a general I guideline
and information for a specific field. The material included in this document is based on data /
information obtained from various reliable sources; However it cannot be taken up as a complete
solution for setup of a production unit The conditions need to be given more may be custom suited to
a particular region and product of particular material. This report is put up without any warranties or
assertions as to the correctness or soundness thereof the degree of success and profitability may
vary for different products, regions change in tariff of power and cost of raw material and labor cost.
PSTC, the persons involved in the preparation of this document do not assume any liability for any
financial or other loss resulting during establishment or running the business/ project. memorandum
in consequence of undertaking this activity. The contained The user of this business feasibility report
should take additional precaution and Obtain detailed information. Services of a professional
qualified consultant / technical expert may obtained before implementation.

PURPOSE OF DOCUMENT
The objective of the pre-feasibility study is to facilitate entrepreneurs in project identification for
investment. The project pre-feasibility may form the basis of investment decision and in order to fulfill
this objective, the report covers various main factors of project has been discussed finance, start
up, basic requirements, development, production, marketing and business management.
The purpose of this document is to provide guide line for investors in Injection Molding of Plastic
Products and provide them understanding of the business in order to facilitate investors in
investment decisions.
INTRODUCTION TO PSTC

The establishment of Pak Swiss Precision Mechanics and Instrumentation Training Centre, now
recognized as a Centre of Excellence in Technical Education was to provide technical personnel
to cater the growing need for the emerging industrial sector in the Country. PSTC came into
existence in 1965 and started functioning with imparting training in the discipline of Precision
Mechanics and Instrumentation.
The three years Diploma Course of Associate Engineer in Precision Mechanics & Instrument
Technology, Four Years Specialized Diploma in Dies and Mould Technology and Three Years
Diploma in Process Control Technology are conducted with the Affiliation of Sindh Board of
Technical Education. In addition to these courses PSTC has also introduced B.Tech.
Programme in Mechanical Technology (affiliated with NED University of Engineering &
Technology). A Four Years DAE in Dies & Mould Technology (Evening Program) has also been
introduced. PSTC is also conducting evening short courses for in-service Engineers &
Technologists to upgrade their skills in the field of CNC Programming & Operation (CAD/CAM)
and Control Technology (PLC). About 300 in-service Engineers & Technologists are trained
every year.
Pak Swiss Training Centre has also been rendering technical services to industrial and scientific
organizations public and private sector, in the field of design & development, fabrication of tools,
moulds, gauges and plant spares. The dies and mould manufacturing sector is being supported
the most because PSTC is the only institution in Pakistan having the state of art training
facilities.
P.S.T.C Karachi

Page 2

The contribution of PSTC towards the development of industries and organization through
skilled manpower and design & development is always regarded by the industries and
organization of Pakistan time to time. They highly inspire and appreciate the training procedure
on state of art technology & machines during their visits to PSTC.
EXECUTIVE SUMMARY
The Injection Molding Plastic Products Manufacturing Unit may be established at a location where
basic infra structure is available electric power, water connection,transport facilities and other
necisities essential for the production are conveniently available. All industrial zones Karachi,
Hyderabad, Lasbela, Hubchowki, Lahore, Gujranwala, Multan, Rawalpindi, Quetta, Peshawar etc.
are suitable regions to setup the project. The proposed project is assumed to manufacture Plastic
Automobile Parts using Injection Moulding Process.
The injection molding setup would have an installed capacity to manufacture 3000 components per
shift per day up to 10 grams. 05 persons would be required to carry out the manufacturing and
managing operations.

Total cost estimates are Rs. 2.216 million with a fixed investment of Rs. 0.235 million and an initial
working capital requirement of Rs. 0.231 million.
Given the cost assumptions IRR and payback are 49% and 2.25 years respectively.

The most critical considerations or factors for success of the project are
1. Selection of appropriate plant and equipment / molds
2. Relevant Management Experience
3. Power / Energy Mix
4. Marketing Efficiency

BRIEF DESCRIPTION OF PROJECT AND PRODUCT

COMPOSITION

Most plastics contain organic polymers. The vast majority of these polymers are based
on chains of carbon atoms alone or with oxygen, sulfur, or nitrogen as well. The
backbone is that part of the chain on the main "path" linking a large number of repeat
units together. To customize the properties of a plastic, different molecular groups
"hang" from the backbone (usually they are "hung" as part of the monomers before the
monomers are linked together to form the polymer chain). The structure of these "side
chains" influence the properties of the polymer. This fine tuning of the properties of the
polymer by repeating unit's molecular structure has allowed plastics to become an
indispensable part of the twenty-first century world.

P.S.T.C Karachi

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ADDITIVES
Most plastics contain other organic or inorganic compounds blended in. The amount of
additives ranges from zero percentage for polymers used to wrap foods to more than
50% for certain electronic applications. The average content of additives is 20% by
weight of the polymer. Fillers improve performance and/or reduce production costs.
Stabilizing additives include fire retardants to lower the flammability of the material.
Many plastics contain fillers, relatively inert and inexpensive materials that make the
product cheaper by weight. Typically fillers are mineral in origin, e.g., chalk. Some fillers
are more chemically active and are called reinforcing agents. Since many organic
polymers are too rigid for particular applications, they are blended with plasticizers (the
largest group of additives), oily compounds that confer improved rheology. Colorants
are common additives, although their weight contribution is small. Many of the
controversies associated with plastics are associated with the additives.[ Organotin
compounds are particularly toxic.
CLASSIFICATION
Plastics are usually classified by their chemical structure of the polymer's backbone
and side chains. Some important groups in these classifications are
the acrylics, polyesters, silicones, polyurethanes, and halogenated plastics. Plastics can
also be classified by the chemical process used in their synthesis, such
as condensation, polyaddition, and cross-linking.

THERMOPLASTICS AND THERMOSETTING POLYMERS

There are two types of plastics: thermoplastics and thermosetting polymers.
Thermoplastics are the plastics that do not undergo chemical change in their
composition when heated and can be molded again and again. Examples
include polyethylene, polypropylene, polystyrene and polyvinylchloride. Common
thermoplastics range from 20,000 to 500,000amu, while thermosets are assumed to
have infinite molecular weight. These chains are made up of many repeating molecular
units, known as repeat units, derived from monomers; each polymer chain will have
several thousand repeating units.
Thermosets can melt and take shape once; after they have solidified, they stay solid. In
the thermosetting process, a chemical reaction occurs that is irreversible. The
vulcanization of rubber is a thermosetting process. Before heating with sulfur, the
polyisoprene is a tacky, slightly runny material, but after vulcanization the product is
rigid and non-tacky.

Process : The proposed facility is to be setup with used plastic injection molding
machine including molds for production of 25 grams plastic components automobile
parts.
P.S.T.C Karachi

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Location: The unit is proposed to be established as a manufacturing facility at a location

where utilities, infrastructure and other provisions necessary for the production process
are conveniently available such as industrial zones in Karachi, Hub, Hyderabad, Lahore,
Gujranwala, Multan, Rawalpindi and Peshawar etc.

The per capita consumption of plastic in Pakistan is 3.1 kg, while it is 3.3 kg in India and
7 kg in China. The highest per capita consumption of plastic is in United States and
Germany, where per capita consumption is 120 kg per annum. Globally, the per capita
plastic consumption works out to be around 24 kg per annum. There are around 6,000
plastic manufacturers in the Pakistan and 600,000 people are directly or indirectly
engaged in this business.

Product: The project is assumed to manufacture plastic automobile components using

injection grade PP PE employing plastic injection moulding machine operating 12 hours
a day, The production units should have an installed capacity to manufacture 1600
components of 10 grams plastic automobile use per day.
Target Market: Karachi, Hub, Hyderabad, Lahore, Gujranwala, Multan, Sialkot,
Faisalabad, Gujrat, Rawalpindi, Quetta and Peshawar etc. are good markets for the
product under consideration.
Employment Generation:

The project will provide direct employment to 05 people. In future it may be extended to
staff of 12 in period of 03 years.
IMPORTANT FACTORS
The factors that are related to the decision to invest in the proposed project are:
Selection of appropriate plant and equipment / moulds
Relevant Experienced Management and Trained and Experienced Technical
Staff
Available uninterruptable of Electrical power ( alternate source of power in case
of load shedding )
Marketing Efficiency
Linkages
OPERATIONAL CAPACITIES
The proposed injection molding plastic products setup is may be established as a
manufacturing facility. The setup would have an capacity to manufacture 1600
components of 10 grams per day 424000 per annum. However the plant is estimated to
manufacture components operating at an 85% capacity. Sales are expected to increase
at a rate of 15% annually with the same installed capacity.
P.S.T.C Karachi

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IMPORTANCE OF GEOGRAPHICAL LOCATION

For the success of the project, it is important to find a location preferably in an industrial
ZONES where utilities especially electricity and other infrastructure and raw material are
conveniently available. All industrial zones in Karachi, Hub , Lasbela, Hyderabad,
Lahore, Gujranwala, Multan, Rawalpindi, Quetta and Peshawar etc. are suitable for
establishment of the project. Establishing the unit in large cities would have an
advantage of being close to potential buyers and easy transportation, which may
facilitate continuous orders and wide spread referrals.

POTENTIAL TARGET MARKETS / CITIES

Plastic, print and packaging industries are among the leading sectors in the economy of
Pakistan, possessing a high growth potential. The government should promote these
sectors as they can generate jobs and business opportunities. These views were
expressed by participants of the seventh international plastic, printing and packaging
industry exhibition held at the Expo Centre. The three day Exhibition, which started on
March 12 and concluded on Monday, brought over 200 businessmen from different
sectors under one roof.

It was an international conference, attended by participants from China, India, Belgium,

Denmark, Germany, Iran, Japan, Malaysia, Netherlands, Oman, Saudi Arabia,
Singapore, Switzerland, Taiwan, Turkey, UAE, UK and USA. CEMS Pakistan arranged
the event in Lahore for the first time in order to encourage plastic and packaging
industry in the north zone of country.
Growth of plastic, packaging and printing industry was stagnant in the 1980s and 1990s.
However, an increase in usage of plastic products at homes and corporate level has
driven robust growth in the industry. Participants stated that plastic is the basic material
for products ranging from lunch boxes to dinning plates. They added that the exhibition
provided an opportunity to display their products, as no such event has been organised
in the past.
Said that similar events should be held frequently, as they allow the government to
generate revenue. Plaspack Managing Director Suhail Akbar said that he had received
an astounding response from the exhibition. Around 200 visitors came to my stall for
inquiries, he said, adding that the response gave an edge to his business. We
developed a lot of international contacts through the event, he added.
Saleem Akhter of Comutype Media, who had come from India to participate in the
event, said he was amazed to see the mega event. He maintained that such events
provide an opportunity for business expansion and help in bringing people together. He
appreciated the efforts of organizers, saying that he liked his stay in Pakistan.
Raja Imran, another participant of the exhibition, said that his business lacked mass
scale contacts.
P.S.T.C Karachi

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I have met a number of international participants and they were keen in dealing with my
company. I have booked almost a dozen orders in the last three days, he said. He
added that plastic industry in Pakistan has a huge potential as it can generate
significant amounts of revenue. He urged the government to address issues of the
plastic, print and packaging industries. The plastic industry, over the last decade, has
seen tremendous growth, as dependency on plastic has increased. Promoting the
industry is, therefore, need of the hour, he added.
PROJECT COST SUMMARY
A brief financial model has been developed to analyze the commercial viability of this
project. main costs and revenue related figures (estimated) along with results of the
analysis are tabulated as below.
The projected Income Statement, Cash Flow Statement and Balance Sheet are
attached as appendices.

Project Economics
The following table shows internal rate of return, payback period and NPV for injection
molding plastic products project operating at 80% of capacity in its first year of
operations.
Returns on the project and its profitability are highly dependent on the availability of
uninterruptable electrical power, Condition of machine, availability of raw material,
Description
Details
Internal Rate of Return
49%
Pay back period (years)
2.25
Net present Value
Rs 2.726 million
stability of raw material cost, relevant management and technical experience,
marketing efficiency and quality of moulds.

PROJECT FINANCING
Following table provides details of the equity required and variables related to bank
loan.

Table Project Financing

Description
Total Equity (10 %)
Bank Loan (90%)
Markup to the Borrower (%age/annum)
Tenure of the Loan (years)
Grace period
P.S.T.C Karachi

Details
Rs. 235800/=
Rs. 21222200/=
Rs. 8%
8
1 year
Page 7

Project Cost
Following requirements have been estimated for the operations of the Project

Table Capital Investment for the Project

Capital Investment
Furniture and Fixture & Office support Equipment
Machinery & Equipment
Security Deposit
Miscelleanous Expenses
Total Capital Cost
Initial working Capital
Total Project Cost

Amount
Rs. 50,000/=
Rs. 17,00,000/=
Rs. 1,80,000/=
Rs. 50,000/=
Rs. 19,80,000/=
Rs.2,36,000 /=
Rs. 22,16,000/=

Space Requirement
The building required is around 2000 sq ft in area in industrial area where all utilities
and facilities are available. The rented Building will allow proper installation of
production machines and machines of tool room, office and warehouse.
The allocation of space may be as follows :

Table Space Requirement

Space requirement
Production Area
Tool Shop
Office
Ware house
Total Area

P.S.T.C Karachi

Area (Sq. Ft.)

1100
150
150
600
2000

Page 8

Machinery and Equipment

The Injection Moulding Production Unit for production of plastic components and
Support Tool room would require following Tools and Equipment

Name and Specification of Machine

Qty.

Used/Refurbished Injection Moulding

Machine Capacity 10 ton for plastic
components up to 100 grams.
Machine lathe
Milling Machine
Mould Set
Accessories, Tools and Measuring
Instruments

Cost / unit Total Rupees

01

10,00000

1000000/=

01
01
02
Assorted

60,000/=
70,000/=
250000/=
50,000/=

80,000/=
70,000/=
500000/=
50000/=

Total 1700000/=

Furniture Fixture and Office Equipment

Description
Table and Chair
Chair for Visitors
Filing Cabinet
Steel Almirah
Computer with Printer

Qty
02
04
01
01
02

Cost

Amount
5000
10000
1000
4000
8000/=
6000
10000/=
10000
10000
20000
Total Rs. 50,000/=
The furniture
and office support equipment may be purchased
used/refurbished condition for cost saving.

in

Raw Material Requirement

Considering the price competition, decreasing margins at retail level, prevailing credit in
the market (2-3 months) and limited investment, toll manufacturing or contract
manufacturing mode is proposed for the injection molding project. The margins tend to
be above average, if the manufacturer is in possession of a rare or considering the price
competition, decreasing margins at retail level, prevailing credit in the market and
limited investment, toll manufacturing or contact manufacturing mode may be adopted
to avoid losses in the project.

P.S.T.C Karachi

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Human Resource Requirement

Designation
Manager (Owner )
Office assistant
Machine Operator
Fitter cum
Electrician
Helper

No of
employees
01
01
01
01

Salary per month

Total yearly salary

35,000 x 1 =
10,000 x 1 =
10,000 x 1 =
12,000 x 1 =

35,000 x 12 =420,000/=
10,000 x 12 = 120000/=
10,000 x 12 = 120,000/=
12000 x 12 = 144,000/=

35,000/=
10,000/=
20000/=
12000/=

01

8000 x 1 =
8000/=
9000 x 12 = 96000/=
Total
Rs. 75,000/=
Total Rs. 9,00,000/=
It is assumed that the owner would be managing the overall affairs of the plastic
molding setup. An accountant / Office Assistant is required to process bills, invoices,
receivables and also maintain accounts etc.
The Production Manager should have considerable knowledge about polymer
technology and its properties; preferably having a diploma in plastic technology with 5 to
7 years experience. The machine operators should also have relevant experience of
handling and operating injection molding machines and plastic processing.

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

The item wise generated revenue from injection molded plastic components is as
follows
Detail of
product
Plastic
Automobile
Component

Sales Price First Year Sales

(Rs. / Unit)
No, of components
12/= Per
424000 components or
component
5300 Kg

First year sales revenue

Rs. 5088000/=
(working 265 days per
year)

OTHER COST
Machinery Maintenance: The Injection Molding Machine and molds have a long life,
however, the maintenance cost of the machines are usually high, since they need to be
oiled and cleaned regularly specially before installing a new mold or starting a fresh
production process.

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The yearly maintenance cost has been taken to be 5% of the written down value of the
machine. It is anticipated that the machinery would require an overhaul after every five
years. It is, therefore, assumed that machinery overhauling expenditures would be
incurred at 10% of the price of the Machinery in 5 Years.

Rent and deposits: The proposed premises will be acquired on a rental basis with 6
months deposit after which rent will be payable on monthly basis. The monthly rent is
estimated to be Rs. 15 / Sq ft. amounting to Rs. 30,000 per month for the proposed
injection molding plastic products unit (2000 Sq Ft.). The rent is estimated to increase at
the rate of 10% per annum for the projected period.

Utilities Requirement
The following table gives the estimated breakup of utilities on monthly basis
Utilities
Monthly Charges Rs.
Electricity
100,000/=
Water
5000/=
Telephone
6000/=
Conveyance
5000/=
Miscellaneous
10,000/=
Total
126000/=
The Utilities expense is estimated to increase at the rate of 10% per annum for the
project period
Working Capital Requirements:
It is estimated that an additional amount of Rs. 2,36,000/= will be required as cash in
hand to meet the initial working capital requirements during operations. The requirement
is based on the rent, utilities and salaries expenses for at least one month. The
following table gives the break up.

Utilities
Salaries
Rent
Total

P.S.T.C Karachi

Description
Rs. 126,000/=
Rs 75,000/=
Rs. 30,000/=
Rs 231000/=

Month
01
01
01

Page 11

IMPORTANT ASSUMPTIONS
DETAILS
Sales Increase
Increase In Cost Of Raw Materials
Increase In Staff Salaries
Increase In Utilities(Electricity / Water / Gas)
Increase Rent
Increase In Office Expenses
Debt / Equity Ratio
Depreciation
o Plant Building
o Machinery & Moulds
o Office Furniture & Equipment
Machine Overhauling Cost
Machine Annual Maintenance Cost
Loan Period
Loan Grace Period
Loan Installments
Financial Charges(Loan Rate)
Tax Rate

P.S.T.C Karachi

ASSUMPTIONS
10% per year
10% per year
10% per year
10% per year
10% per year
10% per year
90 : 10
10% per annum (Diminishing Balance)
10% per annum (Diminishing Balance)
10% per annum (Diminishing Balance)
10% of Cost Price (Year 5 & Year 10)
5 % of Written Down Value
8 Years
1 Year
Monthly
08 % per annum
Tax rates for non-salaried individuals

Page 12

Income Statement
INJECTION MOULDING OF PLASTIC PRODUCTS
Income Statement
Revenue (Net Income)
(A)
Production Labor (Wages)
(B)
Utilities
(C)
Cost of sales (Expenses)
(B+C=D)
Gross Profit
(A-D=E)
General Administrative & Selling Expenses
Salaries
Rent Expenses
Office & Miscellaneous Expenses
Amortization Expenses
Depreciation Expenses
Maintenance
Sub-total
(F)
Operating Income
(E-F=G)
Financial Charges (08% per annum) (H)
Earnings before Taxes
(G-H)
Tax
Yearly Profit (Income)
Monthly profit (Income)

P.S.T.C Karachi

Amount
5088000
550000
1512000
2062000
3026000
900000
360000
150000
10000
200000
50000
1670000
1356000
125000
1231000
300000
931000
Approx. 77000

Page 13