PROJECT SUMMARY

NAME OF PROJECT. GUL FLOUR MILLS

HEAD OFFICE . KHANAWAL ROAD

MULTAN.

LOCATION. KHANAWAL ROAD ,

MULTAN.

NATURE OF INDUSTRY. FLOUR MILL – A NEW PROJECT

CORPORATE SET UP. PARTNERSHIP

NAME OF PARTNERS:

(1) MUHAMMAD HASHAM 35%

(2) MUHAMMAD IMRAN 40%

(3) MUZAMIL YASMEN 25%

BRIEF DESCRIPTION MACHANERY WOULD BE

OF MACHINERY. PURCHASED FROM GER-
MAN COMPANY HAVING
GOOD REPUTATION IN
MARKET.

INTRODUCTION
GUL FLOUR MILLS is a partnership concern proposed to set up flour mill at khanewal
road, Multan.land measuring 24 kanals already acquired.
There is no need to obtain any license/permission from Government for setting up a flour
mill. The project cost has been estimated as Rs.287.946 Million including the working
capital. The sponsors of the project will contribute Rs.287.946 Million.
 SUMMARY PROJECT
The project is estimated to complete at total cost of Rs. 287.946 Million which is
Summarized as under.

COST OF THE PROJECT (In Million)

LAND 3.6
BUILDING 5.996
MACHINERY 220.0
ELECTRICITY CONNECTION FEE 3.0

FURNITURE & FIXTURES 0.5

____________

ESTIMATED FIXED COST. 233.096

PERMANENT WORKING CAPITAL 54.85

___________

TOTAL COST OF PROJECT 287.946

INITIAL INVESTMENT

Installed cost (estimated (in million)

Fixed cost) 233.096

Working capital 54.85

Initial investment 287.946

 LAND AND BULDING
(in million)

LAND (24 Kanals) 3.6

BUILDING 5.996

DESCRIPTION PROPOSED.

Area. Rate per Amount

Sq.ft Sq.ft (in (In rupee)
rupee) Rs 000

Main building 1,993.5 450 897

First Flour 1,993.5 425 847
Second Flour 1,993.5 400 797
Third Flour 1,993.5 375 748
Fourth Flour 460.25 375 173
Godown No.1 984.8 400 394
Godown No.2 1,589.6 400 636
Office Block 275
Quarters / bathroom 610 375 229
Boundary Wall (1725sft) Main Gates, etc. 1,000
Total 11,619 5,996

DETAIL OF MACHINERY
(In Million)

Complete 10 bodies’ roller flour mills along with Electric motors, switches, starters,
Panel board and installation charges.

Total 220
 WORKING CAPITAL
(in million)

Raw material 52.65

Administration expenses, (labour, employees, 2.20

Daily expenses)
_______

Working capital 54.85

Assumptions for calculations (operating expenses)

Operating time 3 shifts / day

Production period 360 days / annum

Increment in wages & salary 10% / annum

Purchasing prize of wheat (40kg) 970 rupee

Requirement of wheat per annum

(40kg = 1 unit)

Year 1 2 3 4 5

Number of units require 1,360,800 1,458,000 1,555,200 1,555,200 1,652,400

Expense for wheat per annum (in million)

Year 1 2 3 4 5

Expense (no. unit * prize of 1319.976 1414.26 1508.544 1508.544 1602.828

each unit )

Factory wages and salaries (in million)

(10 % increment / year)
 Year 1 2 3 4 5

Wages and salaries 3.672 4.0392 4.44312 4.88 5.36

Description NO. Salary/ month Amount/annum in

rupee
Factory manager 1 50000 600000

Accountant 1 22000 264000

Clerk 3 12000 432000

Cashier 1 14000 168000

Miller 1 10000 120000

Electrician 1 10000 120000

Fitter 1 10000 120000

Labour 16 8000 1536000

Chowkidar / 2 7000 168000

godown keeper
Peon / sweeper 2 6000 144000

Total 39 306000 3672000

Average operating expense on 40 kg bag is 40 rupee.

Cost of sale (expected operating expenses)

(in million)

Year 1 2 3 4 5
Raw material (wheat) 1319.97 1414.26 1508.544 1508.544 1602.828

Factory wages and salaries 3.672 4.0392 4.44312 4.88 5.36

Electricity , tele phone and 50.760 54.28 57.768 57.328 60.736

other expenses

Total expenses 1374.402 1472.57 1570.74 1570.748 1668.93

ASSUMPTIONS FOR CALCULATIONS (SALE)

Total capacity of unit. 200 TPD

Estimated life of unit 5year

Capacity used per year

Year 1 2 3 4 5
Used 70% 75% 80% 80% 85%
capacity

Retail Price of each bag(40kg) RS 1080

Estimated growth per year 5%

Formula for the calculation of number of unit (40kg bag)

Per year sale. *
Retail price of each unit

Number of units produced

Per year .(40kg)

Year 1 2 3 4 5
No. unit 1,360,800 1,458,000 1,555,200 1,555,200 1,652,400
 Expected sales (revenue in million)

Year 1 2 3 4 5

Sales (number of unit * 1469.664 1574.64 1679.616 1679.616 1784.592

retail prize of each unit)

Depreciation under straight line method

(in million)
Installed cost of plant 220

Building cost 5.996

Total cost 225.996

Expected life of plant 5year

Depreciation / year 45.1992

Operating Cash flows (in million)

Year 1 2 3 4 5
SALES 1469.66 1574.64 1679.616 1679.616 1784.592
(-)OPERATING EXPENSES 1374.402 1472.579 1570.74 1570.748 1668.924
E B T & DEPRICIATION 95.258 102.07 108.876 108.86 115.668
(-) DEPRICIATION 45.199 45.199 45.199 45.199 45.199
EBT 50.059 56.871 63.677 63.661 70.469
(-) TAX (40%) 20.023 22.748 25.463 25.464 28.187
EARNING AFTER TAX 30.036 34.123 38.214 38.197 42.282
(+) DEPRICIATION 45.199 45.199 45.199 45.199 45.199
AFTAR TAX CASH FLOW. 75.235 79.322 83.413 83.396 87.481

Payback period

Year cashflows balance PBP

0 (287.946) (287.946) 0
1 75.235 212.711 1
2 79.322 133.389 1
3 83.413 49.976 1
4 83.396 NIL 3 years 7 month 5days
5 87.481

Net Present Value

Year cashflows pvif 12% P.V

0 (287.946) 1.00 (287.946)
1 75.235 .893 67.184
2 79.322 .797 63.219
3 83.413 .712 59.390
4 83.396 .636 53.039
5 87.481 .567 50.389
Net present value 5.275

Trial and error technique

Year cash flows pvif 13% P.V
0 ( 287.946) 1.00 (287.946)
1 75.235 .885 66.582
2 79.322 .783 62.109
3 83.413 .693 57.805
4 83.396 .613 51.121
5 87.481 .543 47.502
(2.827)

Internal Rate of Return,,

IRR= r1+ [ NPVr1 ] r2-r1

NPVR1+NPVR2

= .12 + [ 5.275] .01

8.102

= 12.65%

Profitablity Index
PI= pv of operating cashflows
Initial investment

= 293.221
287.946

=1.018