Cut Flower Farm - Rose (Rs. 2.20 Million) PDF

Pre-Feasibility Study
(Cut Flower Farm - Rose)
Small and Medium Enterprises Development Authority

Ministry of Industries & Production
Government of Pakistan
www.smeda.org.pk
HEAD OFFICE
4th Floor, Building No. 3, Aiwan-e-Iqbal Complex, Egerton Road,
Lahore
Tel: (92 42) 111 111 456, Fax: (92 42) 36304926-7
helpdesk@smeda.org.pk
REGIONAL OFFICE
Punjab
REGIONAL OFFICE
Sindh
REGIONAL OFFICE
Khyber Pakhtunkhwa
REGIONAL OFFICE
Balochistan
3rd Floor, Building No. 3,

Aiwan-e-Iqbal Complex,
Egerton Road Lahore,
Tel: (042) 111-111-456
Fax: (042) 36304926-7
helpdesk.punjab@smeda.org.pk
5th Floor, Bahria

Complex II, M.T. Khan Road,
Karachi.
Tel: (021) 111-111-456
Fax: (021) 35610572
helpdesk-khi@smeda.org.pk
Ground Floor
State Life Building
The Mall, Peshawar.
Tel: (091) 111-111-456
Fax: (091) 5286908
helpdesk-pew@smeda.org.pk
Bungalow No. 15-A

Chaman Housing Scheme
Airport Road, Quetta.
Tel: (081) 2831623, 2831702
Fax: (081) 2831922
helpdesk-qta@smeda.org.pk
Note: All SMEDA Services / information related to PM's Youth Business Loan are Free of Cost
December, 2013
Cut Flower Farm (Rose)
TABLE OF CONTENTS
1.
DISCLAIMER ......................................................................................................................... 2
2.
PURPOSE OF THE DOCUMENT .......................................................................................... 3
3.
INTRODUCTION TO SMEDA ................................................................................................ 3
4.
INTRODUCTION TO SCHEME.............................................................................................. 4
5.
EXECUTIVE SUMMARY ........................................................................................................ 4
6.
BRIEF DESCRIPTION OF PROJECT & PRODUCT............................................................. 5
7.
CRITICAL FACTORS ............................................................................................................ 5
8.
INSTALLED & OPERATIONAL CAPACITIES ...................................................................... 5
9.
GEOGRAPHICAL POTENTIAL FOR INVESTMENT ............................................................ 5
10.
POTENTIAL TARGET MARKETS / CITIES .......................................................................... 6
11.
PRODUCTION PROCESS FLOW ......................................................................................... 6
12.
PROJECT COST SUMMARY ................................................................................................ 7
12.1
12.2
12.3
12.4
12.5
12.6
12.7
12.8
12.9
PROJECT ECONOMICS .......................................................................................................... 7

PROJECT FINANCING ............................................................................................................ 7
PROJECT COST .................................................................................................................... 8
LAND AND PLANTS REQUIREMENT ......................................................................................... 8
FARM TOOLS, EQUIPMENT AND FURNITURE ........................................................................... 9
RAW MATERIAL REQUIREMENTS............................................................................................ 9
HUMAN RESOURCE REQUIREMENT ........................................................................................ 9
REVENUE GENERATION ...................................................................................................... 10
OTHER COSTS ................................................................................................................... 10
13.
CONTACTS SUPPLIERS, EXPERTS / CONSULTANTS ................................................ 10
14.
ANNEXURE.......................................................................................................................... 11
14.1
14.2
14.3
14.4
14.5
15.
INCOME STATEMENT ........................................................................................................... 11

STATEMENT OF CASH FLOW ................................................................................................ 12
BALANCE SHEET................................................................................................................. 13
USEFUL PROJECT MANAGEMENT TIPS ................................................................................. 14
USEFUL LINKS .................................................................................................................... 14
KEY ASSUMPTIONS ........................................................................................................... 16
1. DISCLAIMER
This information memorandum is to introduce the subject matter and provide a
general idea and information on the said subject. Although, the material included
in this document is based on data / information gathered from various reliable
sources; however, it is based upon certain assumptions which may differ from
case to case. The information has been provided on as is where is basis without
any warranties or assertions as to the correctness or soundness thereof.
Although, due care and diligence has been taken to compile this document, the
contained information may vary due to any change in any of the concerned
factors, and the actual results may differ substantially from the presented
information. SMEDA, its employees or agents do not assume any liability for any
financial or other loss resulting from this memorandum in consequence of
undertaking this activity. The contained information does not preclude any further
professional advice. The prospective user of this memorandum is encouraged to
carry out additional diligence and gather any information which is necessary for
making an informed decision, including taking professional advice from a
qualified consultant / technical expert before taking any decision to act upon the
information.
For more information on services offered by SMEDA, please contact our website:
www.smeda.org.pk
SMEDA Services / Information related to PMs Youth Business Loan are FREE OF COST -
2. PURPOSE OF THE DOCUMENT

The objective of the pre-feasibility study is primarily to facilitate potential
entrepreneurs in project identification for investment. The project pre-feasibility
may form the basis of an important investment decision and in order to serve this
objective, the document / study covers various aspects of project concept
development, start-up, production, marketing, finance and business
management.
The purpose of this document is to facilitate potential investors in Cut Flower
Farm (Rose) by providing them a general understanding of the business with the
intention of supporting potential investors in crucial investment decisions.
The need to come up with pre-feasibility reports for undocumented or minimally
documented sectors attains greater imminence as the research that precedes
such reports reveal certain thumb rules; best practices developed by existing
enterprises by trial and error, and certain industrial norms that become a guiding
source regarding various aspects of business set-up and its successful
management.
Apart from carefully studying the whole document one must consider critical
aspects provided later on, which form basis of any Investment Decision.
3. INTRODUCTION TO SMEDA
The Small and Medium Enterprises Development Authority (SMEDA) was
established in October 1998 with an objective to provide fresh impetus to the
economy through development of Small and Medium Enterprises (SMEs).
With a mission "to assist in employment generation and value addition to the
national income, through development of the SME sector, by helping increase
the number, scale and competitiveness of SMEs" , SMEDA has carried out
sectoral research to identify policy, access to finance, business development
services, strategic initiatives and institutional collaboration and networking
initiatives.
Preparation and dissemination of prefeasibility studies in key areas of investment
has been a hallmark of SME facilitation by SMEDA.
Concurrent to the prefeasibility studies, a broad spectrum of business
development services is also offered to the SMEs by SMEDA. These services
include identification of experts, consultants and delivery of need based capacity
building programs of different types in addition to business guidance through help
desk services.
4. INTRODUCTION TO SCHEME
Prime Ministers Youth Business Loans Programme, for young entrepreneurs,
with an allocated budget of Rs. 5.0 Billion for the year 2013-14, is designed to
provide subsidised financing at 8% mark-up per annum for one hundred
thousand (100,000) beneficiaries, through designated financial institutions,
initially by the National Bank of Pakistan (NBP) and the First Women Bank Ltd.
(FWBL).
Loans of Rs. 0.1 million to Rs. 2.0 million with tenure up to 8 years including 1
year grace period, and a debt : equity of 90 : 10 will be disbursed to SME
beneficiaries across Pakistan, covering; Punjab, Sindh, Khyber Pakhtunkhwa,
Balochistan, Gilgit Baltistan, Azad Jammu & Kashmir and Federally Administered
Tribal Areas (FATA).
5. EXECUTIVE SUMMARY
Growing cut flowers, especially roses as they are most traded flowers of all
flower varieties around the world, is a profitable business if done properly. Local
demand for cut flowers is growing tremendously due to increased usage as
decorative items in weddings, birthday parties, seminars, and other social
gatherings.
In Pakistan, this sector has not gained its full potential yet. The major reason for
slow development of this sector has been the lack of requisite technical
knowledge on part of the farmers, traders and retailers. The credit goes to small
farmers / entrepreneurs who have kept on going without much technical and / or
financial support over the years.
Low cost of labor combined with reasonable land lease rates and a suitable
climate for most part of the year make investment in this business a lucrative
proposition.
The cost for setting up the proposed project at 05 acres land is Rs. 2.20 million
and will provide employment to 6 individuals in addition to seasonal labor for
picking and pruning etc. The project, under Prime Ministers Youth Business
Loan is proposed to be financed through 90% debt and 10% equity. The project
NPV is projected Rs. 9.55 million, with an IRR of 54% and a payback period of
2.56 years. The legal status of the business is proposed as Sole Proprietorship.
6. BRIEF DESCRIPTION OF PROJECT & PRODUCT

This pre-feasibility study is designed to provide information for establishing a 05
acre cut flower farm of Rose. The farm land is assumed to be acquired on long
term lease i.e. 10 years at any of the suitable locations. The farm can be
established at any of the locations identified in the geographical potential section
The farm will have 50 thousand rose plants having productive life of 10 years.
The farm will have a total production capacity of 5.00 million flowers per year,
however, for the first year farm productivity is assumed at 40%. The cut flowers
will be sold in the wholesale markets of the respective districts / metropolitan
cities.
The cost of this project is Rs. 2.20 million, with Rs. 0.52 million for working capital
and remaining Rs. 1.68 million as capital cost.
7. CRITICAL FACTORS
The proposed project has following factors critical to success:
Entrepreneurs knowledge, background and expertise in floriculture.
Ability to identify and procure quality saplings from certified nurseries,

preferably developing an in-house backup nursery.
Availability / selection of suitable land and irrigation systems.
Availability of trained farm labor for crop management and harvest
Forward linkages with the bulk buyers, and appropriate storage &
transportation services.
8. INSTALLED & OPERATIONAL CAPACITIES

The farm will consist of 5 acres of agriculture land for growing Roses. On
average there are 10,000 plants per acre producing 1 million flowers per year,
with adequate pruning, picking and delivery arrangements. The plants have
productive life of 10 years. Accordingly, the total production capacity of the
proposed farm is 5 million flowers per year. However, 20% of the total production
goes to rose petals, hence, quantity available for sale as rose petals would be
2,500 kg, derived from 1 million flowers.
9. GEOGRAPHICAL POTENTIAL FOR INVESTMENT

Although Kasur and Sheikhupura districts of Punjab, Matiari & Jhirk in Sindh and
Swat and Quetta valley have developed some expertise in this field. However, as
Pattoki still serves as the hub for floricultural trade in Pakistan, it is therefore
considered the most appropriate location. All major cities of the country with
comparable land and atmospheric conditions can be selected for establishment
of this kind of business.
Patto mandi is the major forum for buying and selling of fresh cut flowers,
especially roses. Flowers are distributed to all parts of the country including
Karachi, Peshawar, Lahore, and Islamabad from here.
There are few large players in this industry with an organized formal setup.
Therefore, there is good potential to tap into this opportunity to start a cut flower
business with a formal set up.
10. POTENTIAL TARGET MARKETS / CITIES

Potential markets for cut flowers (roses) are as under;
Flower Market such as Patto Mandi and Begumkot Mandi at Pattoki and
Sheikhpura districts respectively
Retail flower shops at major urban centers
Direct supply to corporate and institutional customers
Wholesales; bulk sales for social, cultural and religious events
11. PRODUCTION PROCESS FLOW

Purchase of
Saplings and
Transportation
Land Preparation
Sowing
Treatment with
life enhancing
solution
Picking, Washing
and Cleaning
Plant
Management
Visual Inspection
and Packing
Transportation
Auction
12. PROJECT COST SUMMARY

A detailed financial model has been developed to analyze the commercial
viability of the Cut Flower Farm under the Prime Ministers Youth Business Loan
scheme. Various cost and revenue related assumptions along with results of the
analysis are outlined in this section.
The projected Income Statement, Cash Flow Statement and Balance Sheet are
attached as appendix.
12.1 Project Economics
All the figures in this financial model have been calculated for a target of
5,000,000 flowers per year for 5 acre farm, whereby in first year the plants will
give 40% of its capacity which is 2,000,000 flowers. In second year plants will
give flowers at full capacity.
The following table shows internal rates of return and payback period.
Table 1: Project Economics
Description
Internal Rate of Return (IRR)
Payback Period (yrs)
Net Present Value (NPV)
Details
54%
2.56
Rs. 9,550,712
Returns on the farm and its profitability are highly dependent on the efficiency of
raw material intake like good quality flower plants, fertilizers, pesticides, proper
irrigation, pruning and weeding. In case, these factors are not properly
managed, the required output cannot be attained. Farm owner will not be able to
cover the potential market and recover payments; hence cost of operating the
business will increase.
12.2 Project Financing
Following table provides details of the equity required and variables related to
bank loan;
Table 2: Project Financing
Description
Total Equity (10%)
Bank Loan (90%)
Markup to the Borrower (%age/annum)
Tenure of the Loan (Years)
Grace Period (Year)
Details
Rs. 219,605
Rs. 1,976,448
8%
8
1
12.3 Project Cost

Following requirements have been identified for operations of the proposed
business.
Table 3: Capital Investment for the Project
Capital Investment
Land Tillage and Rose Sapling
Furniture & Equipment for Farm
Land development and irrigation system
Total Capital Cost
Initial Working Capital
Total Project Cost
Amount (Rs.)
1,063,000
40,000
573,679
1,676,679
519,375
2,196,054
12.4 Land and Plants Requirement

The land has been calculated on the basis of market prices, economically viable
and sustainable area for this business is 4 acre, however, for this pre-feasibility
study we take 5 acre land, inclusive of small nursery to be leased.
Table 4: Land Requirement
Land Requirement (in acre)
Land Required
5 acre
Per Acre
Rent (Rs.)
55,000
Amount of rent
per year (Rs.)
275,000
Farm practices for per acre plantation varies according to land condition,
normally 6,000 to 12,000 plants per acre are cultivated; however, this prefeasibility study assumes 10,000 plants in one acre.
Table 5: Plants Requirement

Cultivated
Qty/acre
Rose Plants
Land Tillage
Total
10,000
Total Plants
required for 5
acre farm
50,000
Rate Per
Plant
(Rs.)
20
Total Amount
(Rs.)
1,000,000
63,000
1,063,000
12.5 Farm Tools, Equipment and Furniture

Following table provides list of tools and equipment required for an average 5
acre farm.
Table 6: List of Farm Tools, Equipment and Furniture
Cost
Rs/acre
Description
Farm Tools & Equipment
Furniture
Total
Total Amount
(Rs.)
20,000
20,000
40,000
4,000
12.6 Raw Material Requirements

On time irrigation, use of prescribed pesticides & fertilizers and proper weeding
are essential for required output and continuous supply in the market. Following
table shows raw material requirement for 1,000,000 flowers from one acre land:
Table 7: Annual Cost of Farm Inputs (Per Acre)
Amount (Rs.)
Fertilizer
Pesticides
Irrigation
Weeding
Total
50,000
45,000
70,000
40,000
205,000
* Considering first year to be most crucial for getting proper and continuous
output from the farm for around 10 years, cost of above mentioned farm inputs is
taken on higher side and therefore estimated at Rs. 512,500.
12.7 Human Resource Requirement
The table below provides details of human resource required to run such a farm.
Table 8: Human Resource Requirement
Description
Owner Manager
Worker
Total Staff
No. of Employees
1
5
6
Total Salary per

month (Rs.)
20,000
50,000
70,000
Normally one worker is required for one acre while weeding will be done from
outsourced laborers whose cost is already mentioned in Raw Material
Calculation table.
12.8 Revenue Generation

Table 9: Revenue Generation
Product
Unit
Flowers with
Stems
Flowers as Petal
Total
Flowers
Sales Price
(Rs./Flower)
1.52
Flowers
0.05
First Year
Production
1,600,000
First Year Sales

Revenue (Rs)
2,432,000
400,000
20,000
2,452,000
12.9 Other Costs

An essential cost to be borne by the farmer is the packing (which is assumed as
Rs. 0.2 per flower) and travelling cost (which is assumed as 2% on sales) from
farm to Mandi.
13. CONTACTS SUPPLIERS, EXPERTS / CONSULTANTS

Dr. M. Aslam Parvez
Director,
Institute of Horticultural Sciences,
Faculty of Agriculture,
University of Agriculture, Faisalabad
Ph: +92-41-9201281, +92-41-9200161
Ext. 2952
Dr. Ghulam Jellani,

PSO/ P.L (Vegetable)
Programme on Vegetable Crop
Horticulture Research Institute
National Agricultural Research Centre
Park Road, Islamabad
Ph: +92-51 9255061, +92-51 9255012
Fax: +92-51 9255034
Dr. Muhammad Anjum Ali

Director General (Extension)
Agriculture Department, Govt. of
Punjab
21-Davis Road, Lahore
Ph: 92-42-99200732
Fax No: 92-42-99200743
CEO
Pakistan Horticulture Development and
Export Company
30 N, Model Town Extension, Lahore
(54700), Pakistan.
Tel: +92-42-99232210-17
Fax: +92-42-99232220
10
14. ANNEXURE
14.1
Income Statement
Income Statement
Revenue
Cost of sales
Cost of goods sold 1
Packing Material
Operation costs 1 (direct labor)
Operating costs 3 (direct electricity)
Total cost of sales
Gross Profit
General administration & selling expenses
Administration expense
Land lease rental expense
Travelling expense
Communications expense (phone, fax, mail, internet, etc.)
Depreciation expense
Amortization of pre-operating costs
Subtotal
Operating Income
Earnings Before Interest & Taxes
Interest expense on long term debt (Debt facility : Bank 1)
Subtotal
Earnings Before Tax
Tax
NET PROFIT/(LOSS) AFTER TAX
Year 1
2,452,000
Year 2
4,045,800
Year 3
5,933,840
Year 4
6,527,224
Year 5
7,179,946
Year 6
7,897,941
Year 7
8,687,735
Year 8
9,556,509
Year 9
10,512,160
Year 10
11,563,375
512,500
320,000
600,000
36,000
1,468,500
983,500
1,148,000
672,000
660,000
39,600
2,519,600
1,526,200
1,285,760
1,003,520
726,000
43,560
3,058,840
2,875,000
1,440,051
1,123,942
798,600
47,916
3,410,510
3,116,714
1,612,857
1,258,815
878,460
52,708
3,802,840
3,377,106
1,806,400
1,409,873
966,306
57,978
4,240,558
3,657,383
2,023,168
1,579,058
1,062,937
63,776
4,728,939
3,958,796
2,265,948
1,768,545
1,169,230
70,154
5,273,878
4,282,631
2,537,862
1,980,771
1,286,153
77,169
5,881,955
4,630,204
2,842,406
2,218,463
1,414,769
84,886
6,560,523
5,002,852
240,000
275,000
49,040
24,000
110,300
57,368
755,708
227,792
264,000
302,500
80,916
26,400
110,300
57,368
841,484
684,716
290,400
332,750
118,677
29,040
110,300
57,368
938,535
1,936,465
319,440
366,025
130,544
31,944
110,300
57,368
1,015,621
2,101,093
351,384
402,628
143,599
35,138
110,300
57,368
1,100,417
2,276,689
386,522
442,890
157,959
38,652
110,300
57,368
1,193,692
2,463,692
425,175
487,179
173,755
42,517
110,300
57,368
1,296,294
2,662,502
467,692
535,897
191,130
46,769
110,300
57,368
1,409,157
2,873,474
514,461
589,487
210,243
51,446
110,300
57,368
1,533,305
3,096,899
565,907
648,436
231,268
56,591
110,300
57,368
1,669,869
3,332,983
227,792
164,044
164,044
63,748
684,716
150,184
150,184
534,532
1,936,465
131,967
131,967
1,804,498
2,101,093
112,239
112,239
1,988,854
2,276,689
90,872
90,872
2,185,817
2,463,692
67,733
67,733
2,395,959
2,662,502
42,673
42,673
2,619,829
2,873,474
15,533
15,533
2,857,942
3,096,899
3,096,899
3,332,983
3,332,983
3,187
60,560
57,680
476,853
248,174
1,556,324
275,828
1,713,027
305,372
1,880,445
336,893
2,059,065
370,474
2,249,355
406,191
2,451,751
442,035
2,654,864
477,447
2,855,536
11
14.2
Statement of Cash Flow
Cash Flow Statement

Year 0
Operating activities
Net profit
Add: depreciation expense
amortization of pre-operating costs
Deferred income tax
Accounts receivable
Raw material inventory
Accounts payable
Cash provided by operations
Financing activities
Debt facility : Bank 1 - principal repayment
Add: land lease expense
Land lease payment
Additions to Debt facility : Bank 1
Issuance of shares
Cash provided by / (used for) financing activities
Investing activities
Capital expenditure
Acquisitions
Cash (used for) / provided by investing activities
NET CASH
Year 1
Year 2
(69,375)
60,560
110,300
57,368
3,187
(33,589)
(97,458)
41,068
141,437
476,853
110,300
57,368
57,680
(10,916)
(64,002)
43,212
670,493
1,556,324
110,300
57,368
248,174
(23,848)
(53,554)
21,486
1,916,250
1,713,027
110,300
57,368
275,828
(16,996)
(65,978)
14,001
2,087,549
1,880,445
110,300
57,368
305,372
(8,535)
(81,285)
15,985
2,279,649
2,059,065
110,300
57,368
336,893
(9,388)
(100,144)
18,277
2,472,372
2,249,355
110,300
57,368
370,474
(10,327)
(123,377)
20,931
2,674,724
2,451,751
110,300
57,368
406,191
(11,360)
(152,000)
24,011
2,886,260
2,654,864
110,300
57,368
442,035
(12,496)
(187,264)
27,592
3,092,398
2,855,536
110,300
57,368
477,447
(13,746)
994,439
(18,584)
4,462,760
(275,000)
1,976,448
219,605
1,921,054
275,000
(302,500)
(27,500)
(219,480)
302,500
(332,750)
(249,730)
(237,697)
332,750
(366,025)
(270,972)
(257,426)
366,025
(402,628)
(294,028)
(278,792)
402,628
(442,890)
(319,054)
(301,931)
442,890
(487,179)
(346,220)
(326,991)
487,179
(535,897)
(375,709)
(354,132)
535,897
(589,487)
(407,721)
589,487
(648,436)
(58,949)
648,436
648,436
(69,375)
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 10
(1,676,679)
(1,676,679)
175,000
113,937
420,763
1,645,278
1,793,521
1,960,595
2,126,151
2,299,015
2,478,539
3,033,449
5,111,196
12
14.3
Balance Sheet
Balance Sheet
Year 0
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 10
175,000
69,375
275,000
519,375
288,937
33,589
166,833
302,500
791,859
709,700
44,505
230,836
332,750
1,317,791
2,354,979
68,354
284,390
366,025
3,073,747
4,148,499
85,350
350,368
402,628
4,986,845
6,109,094
93,885
431,653
442,890
7,077,522
8,235,245
103,273
531,797
487,179
9,357,495
10,534,260
113,601
655,174
535,897
11,838,932
13,012,799
124,961
807,174
589,487
14,534,421
16,046,249
137,457
994,439
648,436
17,826,580
21,157,444
151,202
21,308,647
Fixed assets
Saplings & Land Tillage
Machinary & Equipment
Furniture & fixtures
Total Fixed Assets
1,063,000
20,000
20,000
1,103,000
956,700
18,000
18,000
992,700
850,400
16,000
16,000
882,400
744,100
14,000
14,000
772,100
637,800
12,000
12,000
661,800
531,500
10,000
10,000
551,500
425,200
8,000
8,000
441,200
318,900
6,000
6,000
330,900
212,600
4,000
4,000
220,600
106,300
2,000
2,000
110,300
Intangible assets
Pre-operation costs
Total Intangible Assets
TOTAL ASSETS
573,679
573,679
2,196,054
516,311
516,311
2,300,870
458,943
458,943
2,659,135
401,575
401,575
4,247,422
344,207
344,207
5,992,852
286,839
286,839
7,915,862
229,472
229,472
10,028,166
172,104
172,104
12,341,935
114,736
114,736
14,869,757
57,368
57,368
17,994,247
41,068
41,068
84,281
84,281
105,767
105,767
119,768
119,768
135,753
135,753
154,030
154,030
174,962
174,962
198,973
198,973
226,565
226,565
207,981
207,981
3,187
1,976,448
1,979,636
60,867
1,756,968
1,817,835
309,041
1,519,272
1,828,313
584,869
1,261,846
1,846,715
890,241
983,054
1,873,296
1,227,135
681,123
1,908,258
1,597,609
354,132
1,951,741
2,003,800
2,003,800
2,445,834
2,445,834
2,923,282
2,923,282
219,605
60,560
280,166
2,300,870
219,605
537,413
757,018
2,659,135
219,605
2,093,737
2,313,342
4,247,422
219,605
3,806,763
4,026,368
5,992,852
219,605
5,687,208
5,906,813
7,915,862
219,605
7,746,273
7,965,878
10,028,166
219,605
9,995,628
10,215,233
12,341,935
219,605
12,447,379
12,666,984
14,869,757
219,605
15,102,243
15,321,848
17,994,247
219,605
17,957,779
18,177,384
21,308,647
Assets
Current assets
Cash & Bank
Accounts receivable
Raw material inventory
Pre-paid annual land lease
Total Current Assets
Liabilities & Shareholders' Equity

Current liabilities
Accounts payable
Total Current Liabilities
Other liabilities
Deferred tax
Long term debt (Debt facility : Bank 1)
Total Long Term Liabilities
Shareholders' equity
Paid-up capital
Retained earnings
Total Equity
TOTAL CAPITAL AND LIABILITIES
1,976,448
1,976,448
219,605
219,605
2,196,054
(0)
(0)
21,308,647
13
14.4
Useful Project Management Tips
Technology
Apart from emphasis on the farm technology, storage & delivery equipment
and best practices to be ensured.
Marketing
Product Development & Packaging: Expert's help may be engaged for

product development and packaging
Ads & P.O.S. Promotion: Business promotion and dissemination through

banners and launch events is highly recommended.
Sales & Distribution Network: Expert's advise and distribution agreements

should be taken.
Price - Bulk Discounts, Cost plus Introductory Discounts: Price should

never be allowed to compromise quality. Price during introductory phase may
be lower and used as promotional tool. Product cost estimates should be
carefully documented before price setting. Government controlled prices shall
be displayed, where ever applicable.
Human Resources
Training & Skill Development: Encouraging training and skill of self &
employees through exposure to similar facilities elsewhere.
14.5
Useful Links
Prime Ministers Office, www.pmo.gov.pk
Small and Medium Enterprise Development Authority, www.smeda.org.pk
National Bank of Pakistan (NBP), www.nbp.com.pk
First Women Bank Limited (FWBL), www.fwbl.com.pk
Government of Pakistan, www.pakistan.gov.pk
Ministry of Industries & Production, www.moip.gov.pk
Ministry of Education, Training & Standards in Higher Education,

http://moptt.gov.pk
Government of Punjab, www.punjab.gov.pk
Government of Sindh, www.sindh.gov.pk
Government of Khyber Pakhtunkhwa, www.khyberpakhtunkhwa.gov.pk
14
Government of Balochistan, www.balochistan.gov.pk
Government of Gilgit Baltistan, www.gilgitbaltistan.gov.pk
Government of Azad Jammu Kashmir, www.ajk.gov.pk
Trade Development Authority of Pakistan (TDAP), www.tdap.gov.pk
Securities & Exchange Commission of Pakistan (SECP), www.secp.gov.pk
Federation of Pakistan Chambers of Commerce and Industry (FPCCI)

www.fpcci.com.pk
State Bank of Pakistan (SBP), www.sbp.org.pk
University of Agriculture, Faisalabad, www.uaf.edu.pk
Barani Agriculture Research Institute, Chakwal, www.barichakwal.org
Pakistan Horticulture Development & Export Company, www.phdeb.org
Parks and Horticulture Authority, www.pha.gop.pk
15
15. KEY ASSUMPTIONS

Table 10: Cash Flow Assumptions
Accounts Payable (Days)
Accounts Receivable (Days)
Raw Material Inventory (Days)
15
5
30
Table 11: Expense Assumptions

Communication Expenses
Travelling Expense
10% of administration expenses

2% of sales
Table 12: Capacity Utilization Assumptions

Starting Capacity Utilization
Annual Growth Rate
Maximum Capacity Utilization for the Project
40%
20%
80%
16

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Pre-Feasibility Study

(Cut Flower Farm - Rose)

Small and Medium Enterprises Development Authority

3rd Floor, Building No. 3,

5th Floor, Bahria

Bungalow No. 15-A

Cut Flower Farm (Rose)

PURPOSE OF THE DOCUMENT .......................................................................................... 3

INTRODUCTION TO SMEDA ................................................................................................ 3

EXECUTIVE SUMMARY ........................................................................................................ 4

BRIEF DESCRIPTION OF PROJECT & PRODUCT............................................................. 5

CRITICAL FACTORS ............................................................................................................ 5

INSTALLED & OPERATIONAL CAPACITIES ...................................................................... 5

GEOGRAPHICAL POTENTIAL FOR INVESTMENT ............................................................ 5

POTENTIAL TARGET MARKETS / CITIES .......................................................................... 6

PRODUCTION PROCESS FLOW ......................................................................................... 6

PROJECT COST SUMMARY ................................................................................................ 7

PROJECT ECONOMICS .......................................................................................................... 7

CONTACTS SUPPLIERS, EXPERTS / CONSULTANTS ................................................ 10

INCOME STATEMENT ........................................................................................................... 11

Cut Flower Farm (Rose)

Cut Flower Farm (Rose)

2. PURPOSE OF THE DOCUMENT

Cut Flower Farm (Rose)

Cut Flower Farm (Rose)

6. BRIEF DESCRIPTION OF PROJECT & PRODUCT

Entrepreneurs knowledge, background and expertise in floriculture.

Ability to identify and procure quality saplings from certified nurseries,

Availability / selection of suitable land and irrigation systems.

Availability of trained farm labor for crop management and harvest

8. INSTALLED & OPERATIONAL CAPACITIES

9. GEOGRAPHICAL POTENTIAL FOR INVESTMENT

Cut Flower Farm (Rose)

10. POTENTIAL TARGET MARKETS / CITIES

11. PRODUCTION PROCESS FLOW

Cut Flower Farm (Rose)

12. PROJECT COST SUMMARY

Cut Flower Farm (Rose)

12.3 Project Cost

12.4 Land and Plants Requirement

Table 5: Plants Requirement

Cut Flower Farm (Rose)

12.5 Farm Tools, Equipment and Furniture

12.6 Raw Material Requirements

Total Salary per

Cut Flower Farm (Rose)

12.8 Revenue Generation

First Year Sales

12.9 Other Costs

13. CONTACTS SUPPLIERS, EXPERTS / CONSULTANTS

Dr. Ghulam Jellani,

Dr. Muhammad Anjum Ali

Cut Flower Farm (Rose)

Cut Flower Farm (Rose)

Statement of Cash Flow

Cash Flow Statement

Cut Flower Farm (Rose)

Liabilities & Shareholders' Equity

Cut Flower Farm (Rose)

Useful Project Management Tips

Product Development & Packaging: Expert's help may be engaged for

Ads & P.O.S. Promotion: Business promotion and dissemination through

Sales & Distribution Network: Expert's advise and distribution agreements