business plan of bread production in Pakistan - Content.PK Study Bread Manufacturing Plant 2 EXXECCUUTTIIVVEE SSUUMMMMAARRYY The bread industry in Pakistan has seen many changes in

Pre-feasibility Study

(Bread Manufacturing Plant)

Turn Potential into Profit Small & Medium Enterprise Development

Authority Government of Pakistan

Http://www.smeda.org.pk

Karachi

Small and Medium Enterprise Development Authority, 5th floor, Bahria Complex-II

Moulvi Tameezuddin Khan Road, Karachi

Tel : 92-21-111-111-456, 5610432, 5610536, 5610459, Fax: 92-21-5610572

Email: [email protected]

June 2017

http://www.smeda.org.pk/

Pre-feasibility Study Bread Manufacturing Plant

1

11 DDIISSCCLLAAIIMMEERR

This information memorandum is to introduce the subject matter and provide a general

idea and information on the said matter. 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

Document Control

Document No. PREF-NO: 144

Revision No. 01

Prepared by SMEDA-Sindh

Revision Date June, 2017

For information Provincial Chief (Sindh)

[email protected]

http://www.smeda.org.pk/


2

EEXXEECCUUTTIIVVEE SSUUMMMMAARRYY

The bread industry in Pakistan has seen many changes in the last twenty-five years. It has

emerged as a small-scale bakery processing industry to numerous industrial bread making

units all over Pakistan. The bread industry in Pakistan is flourishing very quickly and

bread products are gaining much popularity. Bread has been accepted as a popular

substitute of rice, naan, chappati, paratha. Currently, around 5% of the total population of

Pakistan consumes packaged bread. The major factors for such a low percentage of

people consuming bread are mostly economical and cultural. However it shows an

increasing trend with the increase of population and change in dietary habits of people.

Pakistani diet consists of many substitutes for bread, which are cheaper and preferred

over bread by a majority of the population.

This proposed pre-feasibility study presents an investment opportunity for establishing a

Bread Manufacturing Plant with a capacity of 15,000 packs per day. The proposed

product line will consist of Bread and Rusks. Total utilized production capacity of bread

and rusks is 1,679,810 packs per year, where initial capacity utilization will be 40%.

The total project cost for setting up a plant is estimated at Rs. 28.57 million out of which

Rs. 22.36 million is capital cost and Rs. 6.21 million is working capital. The project is

proposed to be financed through 100% equity. The NPV is projected around Rs. 24.67

million, with an IRR of 42% and a Payback Period of 3.19 years.

The most critical considerations or factors for success of the project are:

Most significant consideration

Experienced & Strong Distributor.

Reasonable & competitive prices with respect to brand positioning.

Equally important factors

Compliance with standards & obtaining license from (PSQCA) Pakistan

Standards & Quality Control Authority.

Maintenance of quality and hygiene standards.

Efficient promotion of product through various TTL marketing activities.


3

IINNTTRROODDUUCCTTIIOONN TTOO SSMMEEDDAA

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 successful 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 and consultants and delivery of need based capacity building programs of

different types in addition to business guidance through help desk services.

PPUURRPPOOSSEE OOFF TTHHEE DDOOCCUUMMEENNTT

The objective of this Pre-feasibility study is primarily to facilitate the investor in

identification of project viability. This may form the basis of an important investment

decision and in order to serve this objective; the document/study covers various aspects

related to concept development, start-up, production, marketing & finance and business

management. The document also provides sectoral information, brief on Government

policies and international scenario, which have some bearing on the project itself.

This particular study is regarding production of purified drinking water on commercial

basis. Before studying the whole document one must consider following critical aspects,

which forms the basis of any investment decision.


4

PPRROOJJEECCTT PPRROOFFIILLEE

11..11 OOPPPPOORRTTUUNNIITTYY RRAATTIIOONNAALLEE

Increasing Market for Bread – The Population Boom

Pakistan, currently ranked as 6th in terms of total population, is characterized by a growth

rate of 1.92% (Pakistan Economic Survey 2014-15) and is set to take 5th position in

world in 2050 in terms of total population with already 191.71 Million people registered

in 2014-15.1 With this, the per capita income has increased to US$ 1368 while the

productive age group (15 to 59) years is said to take the major chunk of population (67%

of total population) by 2020.2

The Future of the Industry

The Pakistani economy is becoming increasingly service-oriented, and over the past

several decades, the foodservice industries that offer the highest levels of convenience

have been rewarded with strong sales growth. In the face of rising population, incomes

and increasingly hectic work schedules, a nearly insatiable demand for convenience will

continue to drive bread and bakery product sales. General store, milk shop and super

markets have made bread accessible to masses.

The value of consumer time, as well as the demand for consistent, high-quality products,

will continue to shape the bread industry. The role of convenience in this dietary shift

cannot be over-emphasized, and the future growth of the rest of the foodservice industry

will be driven in large part by its ability to find new ways to save consumers’ time.

11..22 PPRROOJJEECCTT BBRRIIEEFF

The proposed project envisages the setup of a bread manufacturing plant. Bread is a

staple food that is generally prepared by the baking of dough, although steaming or frying

are alternative techniques. It consists, minimally, of flour and water; salt is used in most

cases, as well as a leavening agent such as yeast. There are many varieties of bread, with

preferred types varying from region to region. Different kinds may contain sugar, dairy

products, spices, fruit, vegetables, nuts, and seeds, some of which, however, are used

primarily for decorative or flavoring purposes Determination of level of demand for

bread in any particular area and degree of competition from other brands are important

factors having a significant bearing on the project’s viability.

1 Economic Survey 2014-15 2 Population Projections 1998-2023, Planning Commission; NIPS


5

TTaabbllee:: TToottaall PPrroojjeecctt IInnvveessttmmeenntt

Total Investment Rs.

Capital Expenditure 22,360,000

Working Capital 6,210,056

Total Project Investment 28,570,056

The project is assumed to be 100% equity based. The financial model for the project is

based on the information collected through our research and analysis. The financial

statements of the project are presented in the annexure. Based on the financial model, the

project is commercially viable with the following expected returns.

TTaabbllee:: PPrroojjeecctt RReettuurrnnss

Description Details

IRR 42%

NPV 24,673,592

Payback period (years) 3.19

11..33 MMAARRKKEETT EENNTTRRYY TTIIMMIINNGG

In the face of rising population, incomes and increasingly hectic work schedules, a nearly

insatiable demand for convenience will continue to drive bread and bakery product sales.

The value of consumer time, as well as the demand for consistent, high-quality products,

will continue to shape the bread industry Therefore; a bread manufacturing unit could be

established at any time of the year.

11..44 PPRROOJJEECCTT CCAAPPAACCIITTYY AANNDD RRAATTIIOONNAALLEE

Initial Production capacity of the plant for the proposed bread manufacturing unit would

be 15,000 packed breads of different sizes per day. It is estimated that Karachi alone has

a daily demand of 1.5 million3 branded and unbranded breads. Changing life style, high

growth in population, convenience product; all these factors encourage a persistent high

growth and mass demand of bread consumption.

3 Based on discussions with the existing business operators in the formal sector of Pakistan


6

1.5 Raw Material Sourcing

Ingredients to be used for the production of breads are available in the local market at

reasonable price. Main ingredient components include: white flour, sugar, salt, yeast,

ghee and preservatives.

Volatility in flour prices is the biggest threat while working in food industry. This risk

can be minimized by making long term supply contracts with the flour mills/suppliers

which is a common practice of large scale industrial consumers of flour.

1.6 Proposed Product Mix

For the purpose of this pre-feasibility, following products are assumed to be

manufactured:

Product Weight (Grams) Trade Price Retail Price

Bread

Small 200 26 30

Medium 400 38 45

Large 800 68 80

Rusk

Medium 220 47 55

Small 120 26 30

1.7 Proposed Location

Proposed location for setting up a baking plant unit largely depends on the availability of

labor and transportation of finished goods to the retailers at low cost; however, factors

like availability of raw material, utilities and easy access to the target markets should also

be carefully examined. For this feasibility, processing Unit can be set-up in any major

city with significant population such as Karachi, Hyderabad, Lahore, Rawalpindi,

Islamabad, Multan, Peshawar and Quetta.


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1.8 Key Success Factors/Practical Tips for Success

Bread like other low priced consumer products largely depends on the effectiveness of

distribution network and intensive marketing efforts; however, during the discussions

with the industry stake holders, following factors were found to be of significant

importance for the success of business.

Distribution Network

Advertising /Promotional Activities and Demand Creation

Product Mix and Innovation parameters

Product Life Cycle Management and Revitalization.

Existing Competition

Distribution Network

Distribution network has a major role in capturing market for any bakery item. The fact

that breads are of very small and medium retail price and the average inventory that a

retailer keeps on shop does not exceed four to five hundred rupees implies that

effectiveness of distribution coverage and practice is of paramount importance in

achieving the desired sales.

As in case of other consumer goods, the effectiveness of distribution network for bakery

item is also derived through same measures i.e. distribution margins, frequency of

distribution and product penetration. However, in this industry distribution margins are

relatively higher (around 10% to 15%) than other consumer goods due to low retail price

and high retail margins (about 25% to 35%).

Potential customer belongs to the age group of 2 to 80 years who uses this convenience

product daily. This fact coupled with the small volume that a retailer keeps on shop,

translates into a requirement of a higher frequency of visits of distributor to the retail

outlets.

All above factors reflect upon the importance of distribution and marketing network as

well as its high cost implications. Moreover during the discussions with industry experts,

it was also found that most of the existing operators in this business have a dedicated

market follow up team, who frequently visits the retail outlets and ensure permanent and

prominent availability of the product on the shelf.

Bread Distribution

A domestic producer is generally able to handle distribution within his home city and

surrounding areas. Most manufacturers, using their own sales force, distribute directly to

local retailers, concentrating on the large department stores, bakeries, general stores, milk

shops and supermarket chains (falling under the A, B or C category of retailers). During

the discussions with the market experts, it was observed that in Pakistani local market


8

mostly distribution is being done through informal networks. Commonly observed bread

distribution practices are elaborated in the following flowchart:

When a bread manufacturer expands his market to another city (or one outside his local

distribution capability) he normally signs up a distribution agent to cover the entire city

market. A distribution agent is a privately-controlled company whose main job is to sell,

distribute and sometimes market the manufacturer’s products within the retail (and

occasionally wholesale) market of one city or region. Most distribution companies

require exclusivity for the area they cover. Distribution agents generally work to target

the city market and cover the full spectrum of retailers.

Most agents are themselves food retailers or have a retail subsidiary. They own or have

access to warehouse facilities and keep a rolling stock of their main products. They own

their own vehicles and deliver directly to the retailers. Depending on the product’s

performance and popularity, distributors may pay up-front for stock or may only accept a

product on consignment. Sometimes regional agents go on to sign up separate city sub-

agencies that operate in the exact same manner as described above. Large volumes of

confectionery products still move through the traditional wholesale markets, heading

mainly to the smaller towns and the rural countryside.

A designated wholesaler is generally a private company such as a large successful

wholesaler, whose main job is to sell and promote the manufacturer’s product at one

wholesale market. Manufacturers generally appoint a designated (or primary) wholesaler,

BREAD MANUFACTURER (SALES FORCE)

Designated Wholesalers

Distribution Agents

Secondary

Wholesalers

Retailers

1. Departmental Stores 3. Supermarkets

2. Convenience/Town Shops 4. Bakeries/Staple food stores


9

either one per city, if the city is a bigger one and its markets cater to different non-

overlapping localities, or one per wholesale market. Smaller cities move all of their

consumer goods through a single major wholesale market. The designated wholesaler

gets preferential discounts and money incentives based on performance, has limited

storage facilities, and rarely owns any delivery vehicles. Sometimes manufacturers rent

or buy a stand in the major wholesale markets of their home city and act as their own

primary wholesaler, although this is rather uncommon.

In bigger cities, designated wholesalers may sell to some smaller retail shops if they do

not overlap with an existing distribution agent. In smaller cities, the designated

wholesaler acts as a de facto distribution agent. But the primary wholesalers’ major

customers are the so-called secondary wholesalers. They are relatively small private

wholesalers from surrounding towns and villages that buy all their products (food,

beverage and consumer goods) from the same city wholesaler.

Secondary wholesalers generally sell to small local retailers (convenience stores),

although sometimes their products go onto tertiary wholesalers in even smaller localities.

The retail price formation formula varies significantly for different products as they move

through the above distribution channels. Generally speaking, lower-value bulk

confectionery products are modestly marked up by manufacturers and wholesalers and

rely on large volumes to achieve profitability.

Distribution, being a critical factor has been managed in different ways by the local

manufacturers; to make it successful it is necessary to operate with a mixed distribution

setup. For the purpose of this project, we propose that company owned distribution team

would cover the home city and the factory surrounding areas to capture the niche market

which will provide business a room for survival whereas remote distribution operations

will be outsourced to the distribution agents playing around the distribution margins and

gift schemes. Designated wholesalers and secondary wholesalers may also play a key role

to capture the far off markets for the product.

Advertising /Promotional Activities and Demand Creation

Promotional activities play a key role in driving sales. It is very important to focus on

promotional activities to ensure a constant stream of business. Most of the bakery

producers offer variety of the same brand with different price mix to attract customers,

which do not give them the desired results though to some extent it works especially in

low income areas. The primary focus should be to introduce promotional activities in the

concerned locality to attract a larger volume of retail shops.

It is also important to ensure that the product has a meaningful point of difference (i.e.

color, package, flavor, type, etc). Most new products fail in the market because they are

"me-too" products with no unique benefit (or attraction) for the consumer.


10

It is generally said for the bread industry that advertising a bread is nothing but to

make it ‘top of the mind’ because customer’s level of involvement (in brand) when

buying bread or bun is very little, however, quality is the prime concern.

Billboards, Television, Radio, F.M Channels, and Newspapers are the conventional

mediums, which have been powerfully used for the promotion of this product, but the fact

remains that availability and visibility of the product are key elements and it could only

be achieved through an effective distribution network.

Product Marketing and Budget Expenditures

Marketing and promotional activities will be critical in the success of any newly

introduced candy brand; however, it takes years to establish brand equity which is highly

dependent on electronic media and a continuous and persistent follow-up media

campaign. Television and Radio have the most in-depth penetration in the consumer

market of Pakistan and companies usually use these two electronic mediums for the

promotion of their products; however these are also high cost options for product

promotion and a new business entrepreneur will be constrained to afford this cost.

With the passage of time, new radio channels have been introduced, which are

comparatively cheaper and cover most of the urban areas. Other mediums like local and

national level Newspapers, evening newspapers, roadside hoardings, billboards etc. are

also used for the advertisement of products. The print media is supposed to be of limited

scope in terms of attracting (target) consumer.

Keeping in mind the above limitations, it is proposed for a new entrepreneur to adapt a

cost efficient marketing plan using flexible and innovative advertisement and

promotional mediums.

11..99 PPRROODDUUCCTT IINNFFOORRMMAATTIIOONN

Fresh bread is prized for its taste and texture, and retaining its freshness is important to

keep it appetizing. Bread that has stiffened or dried past its prime is said to be stale.

Modern bread is often wrapped in paper or plastic film, or stored in airtight containers

such as a breadbox to keep it fresh longer. Bread that is kept in warm moist environments

is prone to the growth of mold. It becomes stale more quickly in the low temperature of a

refrigerator, although by keeping it cool, mold is less likely to grow. A good way to keep

bread fresh is to put it in the freezer, thus allowing it to stay fresh for several weeks.

11..1100 BBRREEAADD TTYYPPEESS

There are three basic types of flour – white, brown and whole meal – and bread made

from it is usually described using the same terms. Bread is available in a whole range of

shapes and sizes, crusty or soft crusted, wrapped or unwrapped, sliced or unsliced. Here

are just a few examples:

http://en.citizendium.org/wiki/Paper

http://en.citizendium.org/wiki?title=Plastic&action=edit

http://en.citizendium.org/wiki?title=Breadbox&action=edit

http://en.citizendium.org/wiki?title=Mold&action=edit

http://en.citizendium.org/wiki?title=Refrigerator&action=edit

http://en.citizendium.org/wiki?title=Freezer&action=edit


11

White bread is made from flour that contains only the endosperm of the wheat

grain (about 75% of the whole grain).

Whole meal bread is made from the whole of the wheat grain with nothing taken

away. Whole-wheat is another name for whole meal.

Brown bread is made from flour from which some bran and wheat germ is

removed (it uses about 85% of the whole grain).

Soft grain bread is made from white flour with extra grains of softened rye and

wheat to increase the fiber content by 30% compared with standard white bread.

Sandwich loaves can be white or brown bread. They are baked in tins and have a

flat top, giving even and rectangular slices.

A cottage loaf has two round sections, one on top of the other. It is believed to

date back to Roman times when it was invented to make the most of the height of

the oven.

There are a huge range of specialty breads available, originating from different

cultures, e.g. pitta, naan, chapatti, ciabatta, bagels, soda bread and baguettes.

22 SSEECCTTOORR && IINNDDUUSSTTRRYY AANNAALLYYSSIISS

22..11 SSEECCTTOORR CCHHAARRAACCTTEERRIISSTTIICCSS AANNDD OOVVEERRVVIIEEWW

The Pakistani economy is becoming increasingly service-oriented, and over the past

several decades, the foodservice industries that offer the highest levels of convenience

have been rewarded with strong sales growth. In the face of rising population, incomes

and increasingly hectic work schedules, a nearly insatiable demand for convenience will

continue to drive fast food sales, and bread and buns are integral part of fast food items.

Even if incomes stagnate or attitudes change, consumers are unlikely to return to meal

preparation at home on a large scale. This suggests that even if consumers choose to

spend more time at home, for family or other reasons, much of the meal preparation will

still occur elsewhere.

The value of consumer time, as well as the demand for consistent, high-quality food

products, will continue to shape the fast food industry. Fast food, once considered a

novelty, has become an increasingly significant part of the young generation’s diet. The

role of convenience in this dietary shift cannot be over-emphasized, and the future growth

of the rest of the foodservice industry will be driven in large part by its ability to find new

ways to save consumers’ time.


12

33.. MMAARRKKEETT IINNFFOORRMMAATTIIOONN

33..11 MMAARRKKEETT PPOOTTEENNTTIIAALL

There is a large share of unbranded bread baked in local bakeries along with over a dozen

branded breads being sold to consumers. Since local bakeries organize in an unorganized

manner therefore no reliable data is available, precisely, for the production capacity and

the number of breads produced daily. However, there are more than a dozen branded

breads being sold alone in Karachi. A rough estimate of their combine daily production

capacity is around 0.3 to 0.4 million packs of average size breads. Among them some

well-known brands are Dawn, Bake Parlor, Wonder, Morning Fresh, Sunrise and

Brady’s, etc.

33..22 SSIIZZEE AANNDD WWEEIIGGHHTT

Breads are usually sold according to their weight. They are sold in 200, 400 and 800

grams. Among them 400 grams medium weight is most popular among the consumer,

However a few companies has started selling 600 grams bread which lies between

medium and large bread.

33..33 PPRROOBBLLEEMM//TTHHRREEAATTSS TTOO TTHHEE BBRREEAADD PPRROODDUUCCEERRSS

Stiff competition among the number of brands operating in country.

Easy entry of potential new entrepreneur.

High advertising and promotion cost due to competition.

Increasing price of raw materials.

Shortage of flour and sugar every now and then in the country.

Lack of investment friendly environment created by the relevant government

agencies.


13

44.. PPRROODDUUCCTTIIOONN PPRROOCCEESSSS

44..11 BBRREEAADD -- PPRROODDUUCCTTIIOONN PPRROOCCEESSSS FFLLOOWW

4.1.1 The Manufacturing Process

Bread has been baked for hundreds of years, and the same basic process is still used by

the baking industry today. The main ingredients are:

flour

yeast (to make the bread rise)

salt (to add taste and aid proving),

vinegar / food enzymes

vegetable fat (to make the loaf lighter and airier and extend its shelf life)

Water.

All white bread sold in Pakistan is made with white flour which has been fortified with

calcium, iron and B vitamins.

The flour is delivered daily to the bakeries. The bakery also needs stores of salt (to add

taste and aid proving), vinegar (a preservative), yeast (to make the bread rise) and

vegetable fat (to make the loaf lighter and airier and extend its shelf life).

Ordering &

Stockpiling

Mixing,

Dividing &

First

Proving

Kneading

Second

Proving

Baking

De-panning

& Cooling

Packing &

delivery


14

Mixing, dividing and first proving

All the ingredients are mixed at high speed. The process takes under 5 minutes. The

dough mixture is removed and divided into individual pieces by machine. It passes along

a conveyor belt and is left to 'prove' (when the yeast fills the dough with gas, causing it to

rise and aerate).

Kneading and preparation

The dough is continuously kneaded for about two minutes, as it circles through a spiral-

shaped machine. The kneaded dough passes along a conveyor belt until it is above the

baking tins. The dough is dropped into the pre-greased tins.

Second proving

The tins pass along the conveyor belt into a warm area. Here the second proving stage

takes place, lasting around 50 minutes.

Baking

The loaves pass into a huge oven on a conveyor belt. The trays move slowly through the

oven for about 20 minutes. Basic bread doughs are usually baked at 230°C (450°F, gas

mark 8).

Depanning and cooling

The baked loaves come out of the oven into the cooling area. The bread is sucked out of

the tins. The bread is left to cool for up to 1½ hours. Once cooled, it passes down the

conveyor belt to be sliced (if needed) and bagged. ICT is an important part of the process.

Large bakeries use PLC (Programme Logic Controllers) to control a number of the steps

during baking. For example, the press of a button can regulate the amount and type of

flour to be used, the temperature of ovens and the cooling times.


15

44..22 RRAAWW MMAATTEERRIIAALL RREEQQUUIIRREEMMEENNTT && CCOOMMPPOOSSIITTIIOONN

FFoorrmmuullaattiioonn

The amount of water and flour are the most significant measurements in a bread recipe,

as they affect texture and crumb the most. Professional bakers use a system of

percentages known as Bakers' Percentage in their recipe formulations, and measure

ingredients by weight instead of by volume. Measurement by weight is much more

accurate and consistent than measurement by volume, especially for the dry ingredients.

Flour is always 100%, and the rest of the ingredients are a percent of that amount by

weight. Common table bread in the uses approximately 40 to 50% water, resulting in

finely textured, light, bread. Most artisan bread formulas contain anywhere from 60 to

75% water. In yeast breads, the higher water percentages result in more CO2 bubbles, and

a coarser bread crumb.

FFlloouurr

Flour is a product made from grain that has been ground into a powdery consistency. It is

flour that provides the primary structure to the final baked bread. Commonly available

flours are made from rye, barley, maize, and other grains, but it is wheat flour that is most

commonly used for breads. Each of these grains provides starch and protein to the final

product.

Wheat flour in addition to its starch contains three water soluble proteins groups,

albumin, globulin, proteoses, and two non-water soluble proteins groups, glutenin and

gliadin. When flour is mixed with water the water-soluble proteins dissolve, leaving the

glutenin and gliadin to form the structure of the resulting dough. When worked by

kneading, the glutenin forms strands of long thin chainlike molecules while the shorter

gliadin forms bridges between the stands of glutenin. The resulting networks of strands

produced by these two proteins are known as gluten.

LLiiqquuiiddss

Water, or some other liquid, is used to form the flour into a paste or dough. The volume

of liquid required varies between recipes, but a ratio of 1 cup (2 dL) of liquid to 3 cups (7

dL) of flour is common for yeast breads while recipes that use steam as the primary

leavening method may have a liquid content in excess of one part liquid to one part flour

by volume. In addition to water, other types of liquids that may be used include dairy

products, fruit juices, or beer. In addition to the water in each of these they also bring

additional sweeteners, fats, and or leavening components.

LLeeaavveenniinngg

Leavening is the process of adding gas to dough before or during baking to produce

lighter, more easily chewed bread. Most bread consumed in the West is leavened.


16

CChheemmiiccaall lleeaavveenniinngg

A simple technique for leavening bread is the use of gas-producing chemicals. There are

two common methods. The first is to use baking powder or a self-rising flour that

includes baking powder. The second is to have an acidic ingredient such as buttermilk

and add baking soda. The reaction of the acid with the soda produces gas.

Chemically-leavened breads are called quick breads and soda breads. This technique is

commonly used to make muffins and sweet breads such as banana bread.

YYeeaasstt lleeaavveenniinngg

Many types of bread are leavened by yeast, a type of single-celled fungus. The yeast used

for leavening bread is Saccharomyces cerevisiae, the same species used for brewing

alcoholic beverages. This yeast ferments carbohydrates in the flour and any sugar,

producing carbon dioxide. Most bakers leaven their doughs with commercially produced

baker's yeast. Baker's yeast has the advantage of producing uniform, quick, and reliable

results, because it is obtained from a pure culture.

.

44..33 MMAACCHHIINNEERRYY RREEQQUUIIRREEMMEENNTT

Although small mixing and baking units are available in the local market, yet, complete

mechanized plants are not available and organized setups are using imported plant and

machinery for quality breads. European and American plants are available which give

good quality output; however, these are very expensive and not generally preferred even

by the leading players due to high capital requirement. Therefore, cost assumption is

based on Chinese machinery with few local components for the proposed project which

gives good quality output and is relatively more economical.

Detailed Plant Description

For the proposed pre-feasibility study we have assumed plant & machinery with a

capacity of baking approximately 25,000 breads of an average 400 (grams) weight of

breads on a single shift basis. Description and cost of the entire machinery and

components are given below.


17

TTaabbllee:: MMaacchhiinneerryy && EEqquuiippmmeenntt

Description Quantity Total Cost (Rs.)

SIFTING / MIXING / FERMENTATION SECTION

Flour Sifter 1 150,000

Spiral Mixer 3 1,500,000

Stainless Steel Fermentation Bowls 4 200,000

Water Mixing/Metering Device 1 125,000

Indoor Flour Silos

DOUGH SHAPING / PROOFING SECTION

Stainless Steel Top Tables 2 70,000

Proofing Chamber 1 500,000

Proofing Trolleys 20 400,000

Makeup Line 1 2,700,000

Continuous Divider / Rounder 1 100,000

BAKING SECTION

Reel Type Baking Ovens 3 1,950,000

DGF Tunnel Oven 1 1,400,000

Bread Depanner 1 650,000

COOLING SLICING / PACKAGING SECTION

Cooling Trolleys 20 500,000

High Speed Slicer 2 900,000

G.I. Top Packing Tables 6 90,000

Flow Wrap Packing Machine 1 600,000

GENERAL ITEMS

Wheel Barrow 2 9,000

Platform Trolleys 4 30,000

Pans / Trays 1 600,000

Dispatch Trays 700 455,000

OTHERS

Generator 30 kVA 550,000

Inland transportation 50,000

Installation Charges 150,000

TOTAL 13,679,000


18

44..44 PPLLAANNTT AANNDD MMAACCHHIINNEERRYY MMAAIINNTTEENNAANNCCEE

Machinery is expected to be serviced on an annual basis. During the projected period,

maintenance expenses are estimated to be around 1.5% of the total cost of machine.

55.. LLAANNDD && BBUUIILLDDIINNGG RREEQQUUIIRREEMMEENNTT

55..11 SSIITTEE DDEEVVEELLOOPPMMEENNTT

The baking plant project is estimated to require a total area of one acre, which will be

used for stockpiling of raw material, production of breads, storage and storage of finished

product. Since heavy machinery and vehicles i.e. loading vehicles would be used which

require open space for the movement as well as there will be frequent movement of

heavy transportation and delivery vehicles; therefore, large land requirement is being

recommended. Moreover, the space would also be used for machinery installation,

storage and vehicle parking and different services necessary for the project.

55..22 LLAANNDD && BBUUIILLDDIINNGG RREEQQUUIIRREEMMEENNTTSS

Selecting a site

In selecting a site, consider location, access, ground slope and size. Each of these is

discussed below.

Location

This should be considered in relation to:

Supply of raw materials

Market for bread

Location of the labor force

Security of the area

Availability of services, i.e. roads, water, sewerage, electricity, etc.

Access

The site must be accessible to trucks and vans delivering aggregates and collecting

finished breads.

Size

The site should be big enough for stockpiles, storage, production (or stationary machine)

bread stacking, staff facilities, an office and on-site access. With all provisions for the

business, one acre would be sufficient for the project.


19

Store

The best way to store flour and other ingredients is in a silo. Flour in bags should

preferably be stored in a weather-proof room. Bags should be stacked on a plastic

tarpaulin or on closely spaced wooden strips so that they do not absorb damp from the

floor. The storeroom should be big enough to hold at least a week’s supply of ingredients.

If it is not possible to provide a storeroom, flour in bags should be stored in stacks raised

above the ground and completely covered with tarpaulins.

Office and Staff facilities

These include toilets, ablutions, and possibly change rooms. An office should be

provided for all but the smallest of yards. Renovation requirements for the project would

be as follows:

Table: Space Requirment

Description Estimated Area (Sq.ft.)

Unit Cost (Rs.)

Total Cost (Rs.)

Management Office 2,000 500 1,000,000

Production Hall 10,000 50 500,000

Store – Finished Goods 5,500 50 275,000

Cafeteria 1,000 150 150,000

Pavement / driveway 1,000 20 20,000

Open Space 29,500 03 88,500

Total 2,033,500

66.. HHUUMMAANN RREESSOOUURRCCEE RREEQQUUIIRREEMMEENNTT

Industrial bread making is a labor intensive; therefore, a total 21 persons will be required

to handle the production and management operations. The business unit will work on one

shift basis (12 hours daily). Technical staff with relevant experience will be required for

operating production plant. The staff will be provided training by the plant & machinery

supplier. Total approximate manpower required for the business operations along with

the respective salaries are given in the table below:


20

Table: Human Resource Requirment

Description No. of Employees Monthly Salary (Rs.)

CEO/Owner 01 200,000

Operations Manager 01 100,000

Marketing manager 01 75,000

Finance Manager 01 35,000

Procurement / Inventory In charge 01 50,000

Planning / Production In charge 01 35,000

Supervisor 01 25,000

Technician 01 25,000

Helpers 10 140,000

Peon 01 14,000

Guards 02 28,000

Total 21 727,000

77.. FFIINNAANNCCIIAALL AANNAALLYYSSIISS && KKEEYY AASSSSUUMMPPTTIIOONNSS

The project cost estimates for the proposed “Bread Manufacturing Plant” have been

formulated on the basis of discussions with industry stakeholders and experts. The

projections cover the cost of land, machinery and equipment including office equipment,

fixtures etc. Assumptions regarding machinery have been provided, however, the specific

assumptions relating to individual cost components are given as under.

77..11 LLAANNDD && BBUUIILLDDIINNGG

Land and Building for setting up the proposed unit would be on rental basis which will

monthly expense of approximately Rs. 3.0 million annually. Construction and renovation

of site will cost around Rs. 2 million which has been assumed to depreciate at 10% per

annum using diminishing balance method.


21

77..22 OOVVEERRAALLLL FFAACCTTOORRYY && OOFFFFIICCEE RREENNOOVVAATTIIOONN

To renovate the factory / office premises in Year 5 and Year 10, certain expenses will be

incurred for which an amount equivalent to 5% of the total site/office construction cost is

estimated.

77..33 FFAACCTTOORRYY // OOFFFFIICCEE FFUURRNNIITTUURREE

A lump sum provision of Rs. 535,000 for procurement of office/factory furniture is

assumed. This would include table, desk, chairs, and office stationery. The breakup of

Factory Office Furniture & Fixtures is as follows:

Table: Office Furniture

Description Quantity Unit Cost (Rs.)

Total Cost (Rs.)

Table & Chairs 05 35,000 175,000

Visitor Chairs 15 5,000 75,000

Cabinets 05 20,000 100,000

Air conditioners (1.5 ton split) 02 65,000 130,000

Sofa Set 01 55,000 55,000

Total 535,000

77..44 DDEEPPRREECCIIAATTIIOONN TTRREEAATTMMEENNTT

The treatment of depreciation would be on a diminishing balance method at the rate of

10% per annum on the following. The method is also expected to provide accurate tax

treatment.

1. Plant & machinery

2. Land & Building Construction and Renovation

3. Furniture and Fixtures etc.


22

77..55 UUTTIILLIITTIIEESS

Baking plant will be operated using electricity and gas for production purposes. This

would draw considerable amount of electricity and gas. The cost of the utilities including

electricity, diesel/fuel, gas and water is estimated to be around Rs. 1.99 million per

annum. Approximate cost of utilities has been given below:

Table: Utilities expense

Utility Total Annual Cost (Rs.)

1. Electricity (Direct & Indirect) 1,289,757

2. Water 103,550

3. Gas Expense 606,060

Total 1,999,367

77..66 WWOORRKKIINNGG CCAAPPIITTAALL RREEQQUUIIRREEMMEENNTTSS

It is estimated that an additional amount of 6.21 million rupees (approximately) will be

required as cash in hand to meet the working capital requirements. These provisions have

been estimated based on the following assumptions for the proposed business.

Table: Working Capital

Description Amount

Raw material inventory 4,090,481

Upfront insurance payment 612,360

Cash 1,500,000

Total Working Capital 6,210,056

77..77 PPLLAANNTT && MMAACCHHIINNEERRYY IINNSSTTAALLLLAATTIIOONN

Plant and machinery installation and trial run expenses has been assumed to be around

Rs. 200,000/-. It has been included in the plant and machinery cost.


23

77..88 SSEELLLLIINNGG && DDIISSTTRRIIBBUUTTIIOONN EEXXPPEENNSSEESS ((OORRDDEERR BBOOOOKKIINNGG AAGGEENNTTSS))

For the purpose of this prefeasibility study it is assumed that service of an experienced

distributor will be required, cost of which will be equivalent to 25% of the annual cost of

sales.

77..99 MMIISSCCEELLLLAANNEEOOUUSS EEXXPPEENNSSEESS

Miscellaneous and wastage expenses of running the business are assumed to be Rs.

1,500,000 per annum.

77..1100 FFIINNIISSHHEEDD GGOOOODDSS IINNVVEENNTTOORRYY

The proposed setup is assumed to maintain a Finished Goods Inventory of 1 day of the

total annual production.

77..1111 RREEVVEENNUUEE PPRROOJJEECCTTIIOONNSS

For the revenue projections, packed breads are assumed to be produced as follows:

Product Percentage Annual Production Annual Sales

Bread

Small 25% 1,910,385 48,714,818

Medium 50% 1,910,385 73,072,226

Large 25% 477,596 32,476,545

154,263,589

Rusk

Medium 50% 344,324 16,097,130

Small 50% 757,512 19,316,556

35,413,686

5,400,202 189,677,275

Working with the proposed plant, the project will be capable of producing 15,000 pieces

of breads at 40% capacity utilization with single shift of 8 to 12 hours a day. It has been

assumed that it will take some time for the business to reach the optimal capacity

utilization point for the projected period. Therefore, the first year production of breads

has been estimated with 40% capacity utilization. Annual increase of 5% in capacity

utilization is assumed over the projection period. All projections are based on 8-12

working hrs a day with 30 days a month.

Based on our discussions with the industry experts and entrepreneurs it is assumed that

the sales price will increase with a nominal rate of 07% on all product categories during

the projected period.


24

77..1122 AACCCCOOUUNNTTSS RREECCEEIIVVAABBLLEESS

Considering the industry norm, it has been assumed that 100% of the sales will be on

cash. A collection period of 7 days is assumed for the credit sales.

All of the above assumptions are based on our findings during the discussions with the

industry experts and stakeholders. A provision for bad debts has been assumed equivalent

to 3% of the annual credit sales.

88 LLEEGGAALL RREEGGUULLAATTIIOONNSS

8.1 Rule No. 13 Pure Food Rules 1965:

No person shall sell by retail or display for sale by retail, any pre packed food, unless

there appears on a label marked on or securely attended to the wrapper or container a true

statement which,

a. Shall be clearly legible and shall appear conspicuously and in a prominent

position on the label and if the food is pre packed in more than one wrapper or

container, the label shall be marked on or attached to the innermost wrapper or

container and if it is not clearly legible through the outermost wrapper or

container a label bearing a like statement shall be marked on or securely attached

to or be clearly legible through, the outermost wrapper or container. For the

purpose of this clause a plain immediate wrapping which under ordinary

conditions of use would not be moved from the next outer wrapper or container

shall not be counted as a wrapper or container.

b. Shall specify the name of either the packer or the labeler of the food and an

address at which such person carries on business.

Provided that where the food is packed or labeled on behalf of or on the instructions of

another person and such other person carries on business at an address in West Pakistan,

the statement may specify the name and said address of the packer or labeler as the case

may be;

c. shall also specify;

i. in the case of food consisting of one ingredient, the appropriate

designation of the ingredient;

ii. in the case of food made of two or more ingredients, the common or usual

name (if any) of the food and the appropriate designation of each

ingredient and unless the quality or proportion of each ingredient is


25

specified, the ingredients shall be specified in the order of the proportion

in which they were used in the greatest proportion (by weight) being

specified first.

8.2 Rule No 19. Pure Food Rules 1965:

Manner, in which articles of food may be manufactured, sold or kept for sale:

1. Every utensil or vessel used for manufacturing, preparing or keeping any articles

of food or ingredient for food, intended for sale, shall be kept at all times in good

order and repair and in a clean and sanitary condition. No such utensil or vessel

shall be used for any other purpose.

2. No person shall use for manufacturing, preparing or keeping any article of food,

or ingredient of food intended for sale, any utensil or vessel which is imperfectly

enameled or imperfectly tinned or which is made of such materials or is in such

state as to be likely to injure such food or render it noxious.

3. Every utensil or vessel containing any article of food or ingredient of food

intended for sale shall at all times be either provided with tight fitting cover or

kept closed or covered by properly fitting lid, or by close fitting cover of gauze,

net or other material or a texture sufficient fine to protect the article of food or

ingredient of food completely from dirt, flies or other insects.

4. No utensil or vessel for the manufacture or preparation of or containing any

article of food or ingredient of food intended for sale shall be kept in any place in

which such utensil or vessel is likely by reason of impure air or dust or any

offensive, noxious or deleterious gas or substance or any noxious or injurious

examination, exhalation, or effluvium, to be contaminated and thereby render

such food noxious.

5. All packages, wrappers or containers, containing food meant for sale shall be of

such material as will not contaminate the food and render it noxious.

6. All vehicles, carriers and other devices whether power or hand driven used for

inter factory movement or transmission or ex-factory transportation of food shall

be kept in all times in good order and repair and in clean and sanitary condition.

8.3 Rule No. 28 Pure Food Rules 1965:

Licenses


26

Any person who intends to use any place for the purpose for which the license is required

under section 11 shall apply in writing to the Licensing Authority concerned stating the

purpose for which the place is intended to be used and shall submit block plans in

triplicate showing:-

a. the actual area so intended to be used

b. the location at which the various operation connected therewith are to be

carried on.

On receipt of such applications and plan the public analysts concerned or the District

Health Officer/Municipal Medical Officer of Health, as the case may be, shall inspect the

said place and recommend the issue of the necessary license in Form 8, if the said place

confirms to the requirements as laid down under sub rule (13) for sale or manufacture of

food.

99 SSTTAANNDDAARRDDSS

Following standards can be obtained from PSQCA Karachi Office.

PSQCA Standard PS 382-1964

ISO 5530 (Section 1 – 4)


27

1100.. CCOONNTTAACCTT DDEETTAAIILLSS

In order to facilitate potential investors, contact details of private sector Service Providers

relevant to the proposed project be given.

Machinery Suppliers

Name of Supplier Plastipack Machines (PVT.) LTD

Address G-2, State Life Building No. 3, Dr.Ziauddin Ahmed Road,

Karachi – 75530, Pakistan.

Phone (+92-21) 35684449 Fax (+92-21) 35682150

E-mail [email protected]

Website www.plastipack.com

Name of Supplier Al-Abd Corporation

Address

21-D, Wahab Arcade, M.A Jinnah Road, Karachi, Pakistan.

Phone

+92-21-2621920

Fax +92-21-2620823


Website www.alabdcorp.com.pk

mailto:[email protected]

http://www.plastipack.com/


28

Raw Material Suppliers

Name of Expert

/Organization Fawad Aftab / Premier Plastic Industries (PVT) LTD

Address Plot # 229 Suparco Road, on Hub River Road, Opp. TCF

School Mowach Goth, Karachi, Pakistan.

Phone (+92-21) 32819055-6 Fax (+92-21) 32819057


Website www.premierplastics.com.pk

Name of Expert

/Organization Adil Zafar / Novozymes Industries

Address F-80/1, Block F North Nazimabad, Karachi, Pakistan.

Phone +92-300-9257055 Fax -


Website www.karamkimya.com

mailto:[email protected]

http://www.premierplastics.com.pk/


29

1111.. AANNNNEEXXUURREESS

11.1 Income Statement

11.2 Balance Sheet

11.3 Cash Flow Statement


30

Calculations SMEDA

Income Statement

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Revenue 75,870,910 91,329,608 108,580,756 127,799,550 149,176,929 172,920,923 199,258,110 228,435,191 260,720,698 296,406,843

Cost of sales

Cost of goods sold Bread 27,879,219 32,932,327 38,421,049 44,376,311 50,831,047 57,820,316 65,381,435 73,554,114 82,380,608 91,905,866

Cost of goods sold Rusk 4,844,631 5,722,721 6,676,507 7,711,366 8,833,019 10,047,560 11,361,471 12,781,655 14,315,454 15,970,678

Operation costs 1 (direct labor) 4,186,000 4,607,211 5,055,963 5,548,387 6,088,739 6,681,690 7,332,363 8,046,380 5,928,654 6,505,956

Operating costs 2 (machinery maintenance) 173,160 204,545 238,636 275,625 315,716 359,126 406,089 456,850 511,672 570,834

Operating costs 3 (direct electricity) 739,200 813,120 894,432 983,875 1,082,263 1,190,489 1,309,538 1,440,492 1,584,541 1,742,995

Operating costs 4 (direct water) 103,550 128,524 157,090 190,085 228,108 271,834 322,025 379,535 445,328 520,483

Operating costs 5 (direct gas) 606,060 749,999 916,666 1,109,166 1,330,999 1,586,107 1,878,926 2,214,449 2,598,287 3,036,748

Total cost of sales 38,531,820 45,158,447 52,360,343 60,194,815 68,709,891 77,957,123 87,991,848 98,873,476 107,764,543 120,253,560

Gross Profit 37,339,090 46,171,161 56,220,413 67,604,735 80,467,038 94,963,801 111,266,262 129,561,715 152,956,154 176,153,283

49% 51% 52% 53% 54% 55% 56% 57% 59% 59%

General administration & selling expenses

Administration expense 4,524,000 4,964,463 5,447,810 5,978,217 6,560,264 7,198,981 7,899,884 8,669,028 8,579,414 9,414,718

Distribution & Commission expense 9,632,955 12,388,784 15,763,108 19,886,032 24,909,098 31,013,033 38,413,206 47,366,098 56,651,757 69,372,144

Building rental expense 3,000,000 3,300,000 3,630,000 3,993,000 4,392,300 4,831,530 5,314,683 5,846,151 6,430,766 7,073,843

Electricity expense 550,557 605,613 666,174 732,791 806,071 886,678 975,345 1,072,880 1,180,168 1,298,185

Water expense 542,880 655,309 791,022 954,841 1,152,586 1,391,284 1,679,415 2,027,218 2,206,888 2,663,930

Travelling expense 633,360 695,025 762,693 836,950 918,437 1,007,857 1,105,984 1,213,664 1,201,118 1,318,061

Communications expense (phone, fax, mail, internet, etc.) 452,400 496,446 544,781 597,822 656,026 719,898 789,988 866,903 857,941 941,472

Office vehicles running expense 115,595 149,023 190,068 240,358 301,794 376,652 467,649 578,029 693,009 850,655

Office expenses (stationary, entertainment, janitorial services, etc.) 361,920 397,157 435,825 478,257 524,821 575,918 631,991 693,522 686,353 753,177

Promotional expense 6,069,673 7,306,369 8,686,460 10,223,964 11,934,154 13,833,674 15,940,649 18,274,815 20,857,656 23,712,547

Insurance expense 612,360 544,604 476,848 409,092 341,336 378,585 302,868 227,151 151,434 75,717

Professional fees (legal, audit, consultants, etc.) 379,355 456,648 542,904 638,998 745,885 864,605 996,291 1,142,176 1,303,603 1,482,034

Depreciation expense 1,900,125 1,900,125 1,900,125 1,900,125 1,900,125 2,099,151 2,099,151 2,099,151 2,099,151 2,099,151

Amortization of pre-operating costs 714,400 714,400 714,400 714,400 714,400 - - - - -

Amortization of legal, licensing, and training costs 80,000 80,000 80,000 80,000 80,000 - - - - -

Bad debt expense 1,517,418 1,826,592 2,171,615 2,555,991 2,983,539 3,458,418 3,985,162 4,568,704 5,214,414 5,928,137

Miscellaneous & Wastage 1,500,000 1,650,000 1,815,000 1,996,500 2,196,150 2,415,765 2,657,342 2,923,076 3,215,383 3,536,922

Subtotal 32,586,998 38,130,558 44,618,834 52,217,338 61,116,987 71,052,029 83,259,608 97,568,566 111,329,057 130,520,692

Operating Income 4,752,092 8,040,602 11,601,578 15,387,397 19,350,051 23,911,771 28,006,655 31,993,149 41,627,098 45,632,591

Other income (interest on cash) 511,233 1,287,768 2,226,156 3,424,099 4,821,072 6,517,498 8,653,625 11,171,632 14,279,292 19,251,381

Gain / (loss) on sale of office vehicles - - - - 652,000 - - - -

Earnings Before Interest & Taxes 5,263,324 9,328,370 13,827,735 18,811,496 24,823,124 30,429,269 36,660,280 43,164,781 55,906,390 64,883,972

Earnings Before Tax 5,263,324 9,328,370 13,827,735 18,811,496 24,823,124 30,429,269 36,660,280 43,164,781 55,906,390 64,883,972

Tax 1,842,164 3,264,930 4,839,707 6,584,024 8,688,093 10,650,244 12,831,098 15,107,673 19,567,236 22,709,390

NET PROFIT/(LOSS) AFTER TAX 3,421,161 6,063,441 8,988,028 12,227,472 16,135,030 19,779,025 23,829,182 28,057,108 36,339,153 42,174,582

5% 7% 8% 10% 11% 11% 12% 12% 14% 14%


31

Calculations SMEDA

Balance Sheet

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Current assets

Cash & Bank 1,500,000 8,724,651 17,030,702 27,492,423 40,989,562 55,431,883 74,918,076 98,154,429 125,278,220 160,307,622 224,720,000

Accounts receivable 415,731 458,084 547,700 647,617 758,840 882,460 1,019,669 1,171,762 1,340,153 1,526,377

Finished goods inventory 128,869 150,584 174,593 200,710 229,097 259,924 293,376 329,652 359,290 400,924

Equipment spare part inventory 7,215 8,949 10,962 13,295 15,990 19,098 22,675 26,785 31,499 36,898 -

Raw material inventory 4,090,481 5,073,475 6,215,007 7,537,250 9,065,256 10,827,315 12,855,354 15,185,387 17,858,015 20,918,991 -

Pre-paid insurance 612,360 544,604 476,848 409,092 341,336 378,585 302,868 227,151 151,434 75,717 -

Total Current Assets 6,210,056 14,896,278 24,342,187 36,174,351 51,260,471 67,644,817 89,241,357 114,906,796 144,820,583 183,038,671 226,647,301

Fixed assets

Land - - - - - - - - - - -

Building/Infrastructure 2,033,500 1,931,825 1,830,150 1,728,475 1,626,800 1,525,125 1,423,450 1,321,775 1,220,100 1,118,425 1,016,750

Machinery & equipment 13,679,000 12,311,100 10,943,200 9,575,300 8,207,400 6,839,500 5,471,600 4,103,700 2,735,800 1,367,900 -

Furniture & fixtures 535,000 481,500 428,000 374,500 321,000 267,500 214,000 160,500 107,000 53,500 -

Office vehicles 1,630,000 1,304,000 978,000 652,000 326,000 2,625,131 2,100,105 1,575,079 1,050,053 525,026 -

Office equipment 510,500 459,450 408,400 357,350 306,300 255,250 204,200 153,150 102,100 51,050 -

Total Fixed Assets 18,388,000 16,487,875 14,587,750 12,687,625 10,787,500 11,512,506 9,413,355 7,314,204 5,215,053 3,115,901 1,016,750

Intangible assets

Pre-operation costs 3,572,000 2,857,600 2,143,200 1,428,800 714,400 - - - - - -

Legal, licensing, & training costs 400,000 320,000 240,000 160,000 80,000 - - - - - -

Total Intangible Assets 3,972,000 3,177,600 2,383,200 1,588,800 794,400 - - - - - -

TOTAL ASSETS 28,570,056 34,561,753 41,313,137 50,450,776 62,842,371 79,157,324 98,654,712 122,221,000 150,035,635 186,154,573 227,664,051

Current liabilities

Accounts payable 728,373 864,655 1,014,266 1,178,389 1,358,311 1,555,439 1,771,310 2,007,603 2,266,152 2,079,813

Export re-finance facility - - - - - - - - - - -

Short term debt - - - - - - - - - - -

Other liabilities

Total Current Liabilities - 728,373 864,655 1,014,266 1,178,389 1,358,311 1,555,439 1,771,310 2,007,603 2,266,152 2,079,813

Other liabilities

Deferred tax 1,842,164 2,393,825 2,393,825 2,393,825 2,393,825 1,915,060 1,436,295 957,530 478,765 -

Total Long Term Liabilities - 1,842,164 2,393,825 2,393,825 2,393,825 2,393,825 1,915,060 1,436,295 957,530 478,765 -

Shareholders' equity

Paid-up capital 28,570,056 28,570,056 28,570,056 28,570,056 28,570,056 28,570,056 28,570,056 28,570,056 28,570,056 28,570,056 28,570,056

Retained earnings 3,421,161 9,484,601 18,472,629 30,700,101 46,835,132 66,614,157 90,443,339 118,500,446 154,839,600 197,014,182

Total Equity 28,570,056 31,991,217 38,054,658 47,042,685 59,270,158 75,405,188 95,184,213 119,013,395 147,070,503 183,409,656 225,584,238

TOTAL CAPITAL AND LIABILITIES 28,570,056 34,561,753 41,313,137 50,450,776 62,842,371 79,157,324 98,654,712 122,221,000 150,035,635 186,154,573 227,664,051

Liabilities & Shareholders' Equity

Assets


32

Calculations SMEDA

Cash Flow Statement

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 3,421,161 6,063,441 8,988,028 12,227,472 16,135,030 19,779,025 23,829,182 28,057,108 36,339,153 42,174,582

Add: depreciation expense 1,900,125 1,900,125 1,900,125 1,900,125 1,900,125 2,099,151 2,099,151 2,099,151 2,099,151 2,099,151

amortization of pre-operating costs 714,400 714,400 714,400 714,400 714,400 - - - - -

amortization of training costs 80,000 80,000 80,000 80,000 80,000 - - - - -

Deferred income tax 1,842,164 551,661 - - - (478,765) (478,765) (478,765) (478,765) (478,765)

Accounts receivable (415,731) (42,353) (89,616) (99,918) (111,222) (123,620) (137,209) (152,094) (168,391) (186,224)

Finished goods inventory (128,869) (21,715) (24,009) (26,118) (28,386) (30,827) (33,452) (36,275) (29,638) (41,634)

Equipment inventory (7,215) (1,734) (2,013) (2,332) (2,695) (3,108) (3,577) (4,110) (4,714) (5,399) 36,898

Raw material inventory (4,090,481) (982,994) (1,141,532) (1,322,243) (1,528,006) (1,762,059) (2,028,039) (2,330,033) (2,672,628) (3,060,975) 20,918,991

Pre-paid building rent - - - - - - - - - - -

Pre-paid machinery & equipment lease interest - - - - - - - - - - -

Pre-paid office equipment lease interest - - - - - - - - - - -

Pre-paid office vehicles lease interest - - - - - - - - - - -

Advance insurance premium (612,360) 67,756 67,756 67,756 67,756 (37,249) 75,717 75,717 75,717 75,717 75,717

Accounts payable 728,373 136,282 149,612 164,122 179,922 197,128 215,871 236,293 258,549 (186,339)

Other liabilities - - - - - - - - - -

Cash provided by operations (4,710,056) 7,224,651 8,306,052 10,461,720 13,497,139 17,067,452 19,486,193 23,236,353 27,123,792 35,029,402 64,412,377

Financing activities

Issuance of shares 28,570,056 - - - - - - - - - -

Cash provided by / (used for) financing activities 28,570,056 - - - - - - - - - -

Investing activities

Capital expenditure (22,360,000) - - - - (2,625,131) - - - - -

Acquisitions

Cash (used for) / provided by investing activities (22,360,000) - - - - (2,625,131) - - - - -

NET CASH 1,500,000 7,224,651 8,306,052 10,461,720 13,497,139 14,442,321 19,486,193 23,236,353 27,123,792 35,029,402 64,412,377

Cash balance brought forward 1,500,000 8,724,651 17,030,702 27,492,423 40,989,562 55,431,883 74,918,076 98,154,429 125,278,220 160,307,622

Cash available for appropriation 1,500,000 8,724,651 17,030,702 27,492,423 40,989,562 55,431,883 74,918,076 98,154,429 125,278,220 160,307,622 224,720,000

Dividend - - - - - - - - - -

Cash balance 1,500,000 8,724,651 17,030,702 27,492,423 40,989,562 55,431,883 74,918,076 98,154,429 125,278,220 160,307,622 224,720,000

Cash carried forward 1,500,000 8,724,651 17,030,702 27,492,423 40,989,562 55,431,883 74,918,076 98,154,429 125,278,220 160,307,622 224,720,000

business plan of bread production in Pakistan - Content.PK Study Bread Manufacturing Plant 2 EXXECCUUTTIIVVEE SSUUMMMMAARRYY The bread industry in Pakistan has seen many changes in

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