SMEDA Housing Construction Company

Pre-Feasibility Study

HHoouussiinngg CCoonnssttrruuccttiioonn CCoommppaannyy

Small and Medium Enterprises Development Authority

Government of Pakistan www.smeda.org.pk

HEAD OFFICE 6th Floor LDA Plaza Egerton Road, Lahore

Tel (042)111 111 456, Fax: (042) 36304926-7

[email protected]

REGIONAL OFFICE PUNJAB

REGIONAL OFFICE SINDH

REGIONAL OFFICE KHYBER PAKTUNKHWA

REGIONAL OFFICE BALOCHISTAN

8th Floor LDA Plaza, Egerton Road,

Lahore. Tel: (042) 111 111 456,

Fax: (042) 36370474 [email protected]

5TH Floor, Bahria Complex II, M.T. Khan Road,

Karachi. Tel: (021) 111-111-456


Ground Floor State Life Building The Mall,

Peshawar. Tel: (091)111 111 456, 9213046-7


Bungalow No. 15-A Chamn Housing Scheme Airport Road,

Quetta. Tel: (081) 2831623, 2831702


April, 2011

Pre Feasibility Study Housing Construction Company

1 EXECUTIVE SUMMARY ________________________________________________________ 2

2 INTRODUCTION TO SMEDA ____________________________________________________ 3

3 PURPOSE OF THE DOCUMENT _________________________________________________ 3

4 CRUCIAL FACTORS & STEPS IN DECISION MAKING FOR INVESTMENT __________ 4

5 PROJECT PROFILE ____________________________________________________________ 4 5.1 OPPORTUNITY RATIONALE _____________________________________________________ 4 5.2 PROJECT BRIEF ______________________________________________________________ 7 5.3 MARKET ENTRY TIMING _______________________________________________________ 7 5.4 PROPOSED BUSINESS LEGAL STATUS _____________________________________________ 7 5.5 PROJECT CAPACITY AND RATIONALE _____________________________________________ 7 5.6 PROJECT INVESTMENT_________________________________________________________ 7 5.7 PROPOSED LOCATION _________________________________________________________ 8 5.8 KEY SUCCESS FACTORS/PRACTICAL TIPS FOR SUCCESS _______________________________ 8 5.9 STRATEGIC RECOMMENDATIONS ________________________________________________ 8

6 SECTOR & INDUSTRY ANALYSIS _______________________________________________ 8 6.1 SECTOR CHARACTERISTICS_____________________________________________________ 8 6.2 SUB SECTOR INFORMATION_____________________________________________________ 9

6.2.1 Sub sector Performance____________________________________________________ 10 6.2.2 Government Policy Direction _______________________________________________ 10

6.3 LEGAL ISSUES REGARDING HOUSING INDUSTRY ___________________________________ 11

7 MARKET INFORMATION______________________________________________________ 11 7.1 MARKET POTENTIAL_________________________________________________________ 11 7.2 TARGET CUSTOMERS ________________________________________________________ 12 TRADE STATISTICS _________________________________________________________________ 12

8 PRODUCTION PROCESS_______________________________________________________ 13 8.1 PRODUCTION PROCESS FLOW __________________________________________________ 13 8.2 RAW MATERIAL REQUIREMENT ________________________________________________ 14 8.3 MACHINERY REQUIREMENT ___________________________________________________ 14 8.4 PRODUCT/PROJECT STANDARDS AND COMPLIANCE ISSUES ___________________________ 14 8.5 RECOMMENDED HOUSE LAYOUT _______________________________________________ 14

9 LAND & BUILDING REQUIREMENT ____________________________________________ 17 9.1 COVERED AREA REQUIREMENT ________________________________________________ 17 9.2 RENT COST ________________________________________________________________ 17

PREF-80/Apr, 2011/Rev2


9.3 RECOMMENDED MODE _______________________________________________________ 17 9.4 UTILITIES REQUIREMENT _____________________________________________________ 17 9.5 SUITABLE LOCATION ________________________________________________________ 17

10 HUMAN RESOURCE REQUIREMENT ___________________________________________ 17

11 FINANCIAL ANALYSIS ________________________________________________________ 18 11.1 PROJECT COSTS_____________________________________________________________ 18 11.2 PROJECTED INCOME STATEMENT _______________________________________________ 19 11.3 PROJECTED BALANCE SHEET __________________________________________________ 20 11.4 PROJECTED CASH FLOW STATEMENT ____________________________________________ 21 11.5 REVENUES AND COST OF SALES ________________________________________________ 22

12 KEY ASSUMPTIONS ___________________________________________________________ 25

PREF-80/Apr, 2011/Rev2


DISCLAIMER

The purpose and scope of this information memorandum is to introduce the subject

matter and provide a general idea and information on the said area. All the material

included in this document is based on data/information gathered from various sources and

is based on certain assumptions. 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 does not assume any liability for any financial or other loss

resulting from this memorandum in consequence of undertaking this activity. The

prospective user of this memorandum is encouraged to carry out additional diligence and

gather any information he/she feels necessary for making an informed decision.

For more information on services offered by SMEDA, please contact our website: www.smeda.org.pk

DOCUMENT CONTROL

Document No. PREF-80

Prepared by SMEDA-Punjab

Approved by Provincial Chief Punjab

Issue Date February, 2005

Revised Date April, 2011

PREF-80/Apr, 2011/Rev 2

1

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


11 EEXXEECCUUTTIIVVEE SSUUMMMMAARRYY The proposed ‘Housing Construction’ business involves construction of residential houses in key areas of Lahore. The project will focus on modern design and superior quality material used for building. This pre-feasibility study proposes construction of houses covering an area of 5 Marla (1,125 sq. ft), 7 Marla (1,575 sq. ft) and 10 Marla (2,250 sq. ft) in Johar Town, Wapda Town, NFC, Multan Road, Ferozepur Road and Valencia Housing Society.

Housing construction not only improves the living standards of the public but also contributes towards the overall economic growth. The construction sector is linked with more than 40 industries and thus has multiple effects on the economy. Moreover, given the situation of Pakistan - a continuous growth in population and a huge housing shortage faced by most cities, the demand for houses is highly unlikely to slow down. There is a rapid growth in urbanization and the continuous struggle towards better quality of life. Consequentially, as a first step towards higher standards of living, the housing sector experiences growth.

The total project cost is estimated at Rs. 13.894 million. The project is financed through 50% debt and 50% equity. The Project’s NPV is around Rs. 120.657 million, with an IRR of 57% and payback period of 4.13 years. The legal business status of this project is proposed as ‘Sole Proprietorship’.

The project will start up by constructing 2 units of 5 marla houses and 1 unit of 7 marla house in the first year and will increase the number of units in the upcoming years. Selection of good location and purchase of land at competitive price will be the key success factor in timely selling of houses and maximising profit of the construction company.


2


22 IINNTTRROODDUUCCTTIIOONN TTOO SSMMEEDDAA

The Small and Medium Enterprises Development Authority (SMEDA) was established with the objective to provide fresh impetus to the economy through the launch of an aggressive SME support program.

Since its inception in October 1998, SMEDA had adopted a sectoral SME development approach. A few priority sectors were selected on the criterion of SME presence. In depth research was conducted and comprehensive development plans were formulated after identification of impediments and retardants. The all-encompassing sectoral development strategy involved recommending changes in the regulatory environment by taking into consideration other important aspects including finance, marketing, technology and human resource development.

SMEDA has so far successfully formulated strategies for industries such as horticulture, including export of fruits and vegetables, marble and granite, gems and jewellery, marine fisheries, leather and footwear, textiles, surgical instruments, transport and dairy. Whereas the task of SME development at a broader scale still requires more coverage and enhanced reach in terms of SMEDA’s areas of operation.

Along with the sectoral focus a broad spectrum of business development services is also offered to the SMEs by SMEDA. These services include identification of viable business opportunities for potential SME investors. In order to facilitate these investors, SMEDA provides business guidance through its help desk services as well as development of project specific documents. These documents consist of information required to make well-researched investment decisions. Pre-feasibility studies and business plan development are some of the services provided to enhance the capacity of individual SMEs to exploit viable business opportunities in a better way.

This document is in the continuation of this effort to enable potential investors to make well-informed investment decisions.

33 PPUURRPPOOSSEE OOFF TTHHEE DDOOCCUUMMEENNTT The objective of the pre-feasibility study is primarily to facilitate potential entrepreneurs to facilitate investment and provide an overview about housing construction business. The project pre-feasibility may form the basis of an important investment decision and in order to serve this objective, the document covers various aspects of housing construction business concept development, start-up, purchase of land, construction of houses, 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 pre-feasibility is regarding “Housing Construction Company” which comes under “Construction” sector.


3


44 CCRRUUCCIIAALL FFAACCTTOORRSS && SSTTEEPPSS IINN DDEECCIISSIIOONN MMAAKKIINNGG FFOORR IINNVVEESSTTMMEENNTT Housing construction plays a significant role in the economic growth of our Country, as a source of jobs and capital investment, as a secure investment for individual and family savings, and as an essential contributor to personal happiness. So before making any investment decision, it is advisable to evaluate the associated risk factors by taking into consideration certain key elements. These may include availability of resources, industry knowledge, and specific managerial and technical skill set.

The development of a vibrant housing industry is based on ample supply of affordable land, with easy access to transportation and efficient distribution of necessities such as energy and water.

Additionally, one of the demand drivers is the desire of many families to modernize, enlarge or otherwise renovate their homes. This has been an important part of the housing culture for decades.

Financial institutions are an important partner in the housing sector. To broaden the consumer base for home ownership, especially among low income families, banks and financial institutions play a vital role.

For the housing industry, abundant work force is essential. An added advantage for Pakistani housing industry is that skilled labour is available at fairly affordable rates.

55 PPRROOJJEECCTT PPRROOFFIILLEE

55..11 OOppppoorrttuunniittyy RRaattiioonnaallee

Housing is the basic and fundamental human need, yet millions are caught in the struggle to have a roof over their head. Pakistan is faced with a chronic shortage of housing against a backdrop of a rapidly rising population. Most recent estimates identify a national shortage of 7.9 million houses. By contrast, the current government is committed to building just 1 million houses. Other estimates paint a similar picture, the Punjab province with a population of 82 million is said to be facing a shortage of 5 million houses. By some accounts, nationally there is an incremental demand for 700,000 units a year against the annual construction of 150,000 units.1 The demand and supply gap is resulting into serious repercussions for the society as it has changed more than half of Pakistan urban land into squatter settlements and is eating away the agricultural land of the country.

The need of the hour is to exploit the hidden potentials of the housing sector. It is a two prong strategy to fight against poverty and raise the standards of public living. As in the first place this strategy provides public with houses and in the second, revive the industrial sector. Housing and construction are well recognized to generate maximum

4

1 Pakistan Real Estate Report Q1 2010 – BMI (http://www.reportlinker.com/p0169829/Pakistan-Real-Estate-Report-Q1-2010.html)



employment opportunities, being labour-intensive and an important source of employment for the less skilled.

Construction is linked with more than 40 other industries and contributes to the overall economic revival and growth. Its multiple effects on the economy have the robust potential to generate industrial activities, develop small and medium enterprises (SMEs) self-employment opportunities, business, commerce and trade activities and at the same time encouraging utilization of indigenous natural and man-made resources. It will create social cohesion and environmental improvements.

Chart 1: Construction Industry–A Growth Engine for a Host of Industries & Services

If all these factors are taken into account then the construction and real estate sector emerges as major contributor to the economy. Therefore, it is imperative to develop this industry to utilize the real estate and housing industry potential for the economic development of the country and certainly it has the necessary potential to become the engine of change and progress for the economy of Pakistan.


5


Chart 2: Public & Private Sector Stakeholders in Pakistan’s Construction Industry


6


55..22 PPrroojjeecctt BBrriieeff

The project under consideration will be for construction of residential houses of 5 Marla (1,125 sq. ft.), 7 Marla (1,575 sq. ft.) and 10 Marla (2,250 sq. ft.) within the proposed locations. The proposed sites for the construction are Johar Town, Wapda Town and Valencia Housing Society.

55..33 MMaarrkkeett EEnnttrryy TTiimmiinngg

Construction is not greatly dependent on any particular time period, but, as per industry norm, the ideal time for housing construction is from May till June and from September till November. These months are selected only to avoid the rainy season (July and August) which may cause delays in the process. Where as, in December, January and February the labour migrates to the rural areas for crop harvesting. During this season the labour is paid more in rural areas which causes shortage of labour and consequent rise in the daily labour wages.

55..44 PPrrooppoosseedd BBuussiinneessss LLeeggaall SSttaattuuss

The proposed legal structure of the business entity is either sole proprietorship or partnership. Although selection totally depends upon the choice of the entrepreneur but this financial feasibility is based on a Sole Proprietorship.

55..55 PPrroojjeecctt CCaappaacciittyy aanndd RRaattiioonnaallee

The proposed project size is simultaneous construction of two houses at nearby locations. This will provide the minimum feasible size for the project and minimum capital outlay for project initiation.

55..66 PPrroojjeecctt IInnvveessttmmeenntt

The total cost of the project is Rs.13.894 million.

TTaabbllee 55--11 PPrroojjeecctt CCoossttss Capital Investment 1,307,000Working Capital Requirement 12,586,740Total Investment 13,893,740

The proposed pre-feasibility is based on the assumption of 50% debt and 50% equity. However this composition of debt and equity can be changed as per the requirement of the investor.

TTaabbllee 55--22 PPrroojjeecctt FFiinnaanncciinngg Debt 50% 6,946,870 Equity 50% 6,946,870 Total project Investment 13,893,740


7


TTaabbllee 55--33 VViiaabbiilliittyy IRR 57%NPV @ 19% 120,656,976Pay Back Period (year) 4.13

55..77 PPrrooppoosseedd LLooccaattiioonn

The proposed locations for the construction of houses are as follows:

JJoohhaarr TToowwnn

WWAAPPDDAA TToowwnn

VVaalleenncciiaa TToowwnn

55..88 KKeeyy SSuucccceessss FFaaccttoorrss//PPrraaccttiiccaall TTiippss ffoorr SSuucccceessss

The key success factors for housing Construction Company are careful selection of construction site and a good architecture. The investment in good construction material and efficient use of labour are also critical factors. In short, over all quality pays off in the long run.

55..99 SSttrraatteeggiicc RReeccoommmmeennddaattiioonnss

The construction industry is only profitable if the projects are completed on time.

Quality of materials used ensures quality of houses built. Superior quality is the best competitive advantage these days.

Careful selection of residential area counts towards selling price and timely sales.

Investment focus should be on good architectural design. A good design is likely to catch the buyer’s eye.

66 SSEECCTTOORR && IINNDDUUSSTTRRYY AANNAALLYYSSIISS

66..11 SSeeccttoorr CChhaarraacctteerriissttiiccss

The construction sector in Pakistan today is still at low ebb. During the year 2008-2009, there was 13.88 per cent decline in domestic demand for cement, compared with the last fiscal year; this decline can be attributed to the slow down in construction activities. Pakistan’s per capita consumption is 131 kg of cement, as compared to India’s 135 kg. This per capita consumption is substantially below the world average of 270 kg and the regional average of over 400 kg in Asia and over 600 kg in the Middle East. However, this shows slight improvement compared with 117 kg per capita consumption of Pakistan in 2005.2 With public spending on the decline and most projects being funded under loans from international agencies, the fate of construction sector seems to be hanging in 2 http://jang.com.pk/thenews/oct2009-weekly/busrev-26-10-2009/p3.htm


8


the balance. There exists a large unfilled vacuum in the market and much needs to be done before this vacuum can be filled.

66..22 SSuubb sseeccttoorr IInnffoorrmmaattiioonn33

The country’s housing situation is aggravating each passing day. Our bourgeoning population, its stunning 1.73 annual growth rate and strong inward migration (rural-urban migration) trends are compounding the problem. The decrease in the average household size or the nuclear family notion is also gaining popularity in the urban centres. It is also resulting into more houses for small number of people.

There are nearly 21.7 million houses in the country against the population of 163.76 million and the required number of housing units for the population is 25.83 million. Thus we are falling short of nearly 8 million. This is huge number if seen against the backdrop of the housing units being built annually. The bulk of existing 21.7 million houses consist of 67 percent rural houses, while kuccha and semi pukka houses account for the 39 and 40 percent of total housing stock respectively. In the same vein the room density for India and Pakistan is nearly 3.5 persons per room while it is 1.3, 1.1 and 0.5 in the case of Turkey, China and USA respectively.

At present the urban housing demand stands at 8 percent per annum. In addition to this rural- urban migration is also gaining momentum. Although Urban- rural population migration is a global phenomenon and mega cities are facing the challenges caused by the deluge of the rural migrants and Pakistan is no exception to this rule. Only Karachi is attracting more than 250,000 to 300,000 people annually. This is adding to already tightly crowded population and scarce resources of the cities and in case of Karachi it deprives nearly1/3rd of population of the potable water. As cities are already over populated, so, these peoples are inhibiting in the squatter settlement or shanties called katchi abadis in the local jargon. According to the reports there are nearly “539 squatter settlements across Karachi” and nearly 49 percent of the city population lives in these squatter settlements. At present the number of housing units being constructed is only 300,000 which is really a fraction of the gigantic demand. According to a recent press release by the Ministry of Housing and Works, around 8 million more housing units are needed in the country, currently about 300,000 housing units are being constructed against an annual demand of 650,000 units, with the backlog of 6.50 million houses, continuing to increase.4 The household size is 6.6 persons and the occupancy per room is 3.3 persons. It is estimated that to make up the backlog and to meet the shortfall in the next 20 years, the overall housing production has to be raised to 500,000 housing units annually. The construction sector registered a growth rate of -10.8 percent against last year's growth of 3.9 percent and 24.3% of 2006-07. Housing and construction has been identified as one of the major drivers of growth and the government has taken various

9

3 Economic Survey of Pakistan, “An overview of housing in Pakistan” – The News – Jan 13, 2009 4 Board of Investment press release – August 19, 2009 (http://www.pakboi.gov.pk/Press/PDF/August_2009/19-August,%202009.pdf)



budgetary and non-budgetary measures to boost this sector which has responded positively despite higher input prices.

66..22..11 SSuubb sseeccttoorr PPeerrffoorrmmaannccee55

The construction industry recorded a decline of 10.8 percent in FY09 the largest fall in 37 years.6 Construction industry constitutes around 2.1 percent of GDP. The drag by construction sector to the growth of GDP and industry in FY09 was significant at -0.3 and -1.0 percentage points respectively. Construction industry in FY09 had to put up with sharp increase in building material prices during the first eight months of the current year, significant cut in disbursement of PSDP funds and dearth of financing facilities which caused the construction activities to shrink significantly. Not surprisingly, almost all other indicators of construction growth also paint a gloomy picture. The weakening construction activity is a source of disquiet especially from the perspective of employment generation among unskilled labour force and ultimately for poverty alleviation. Almost 3.3 million people were employed in construction sector in FY08 and the number for rural areas (2.2 million) is twice that of urban areas (1.1 million). Moreover, construction sector is also strongly associated with the growth in a number of manufacturing industries including cement, metals, glass, paints, etc. However, there are some hopes of a recovery in construction activities in FY10 keeping in view the decline in building material prices. The expectation of this recovery is further supported by higher PSDP allocations in the FY10 budget, expected initiation of power projects and reconstruction activity in Swat, as well as the impact of the recent easing of monetary policy. A performance indicator of the construction industry was domestic cement dispatches, which fell from 22.4 million tonnes in FY08 to 19.4 million tonnes in FY09. Iron and steel production declined from 8.238 million tonnes in FY08 to 5.975 million tonnes in FY09. Import of iron and steel dropped from 2.22 million tonnes to 2.04 million tonnes. Foreign direct investment in this sector took a deep plunge, going down from $193.2 million to $130.4 million.

66..22..22 GGoovveerrnnmmeenntt PPoolliiccyy DDiirreeccttiioonn

Construction industry alone provides impetus to over 40 other industries. As the Government of Pakistan aims at alleviating poverty and improving revenue collection, a focused attention to this industry can help in achieving both the objectives. On the one hand it has the potential to offer new job opportunities and, on the other hand, enhance revenue collection from other industries. Realizing this fact the Government of Pakistan has took a number of measures for reviving the housing and construction sector, which has been declared a priority industry.

The government has announced various incentives in the National Housing Policy for providing affordable housing for the poor. A rapid growth in housing finance will significantly contribute to the economy in the form of additional employment and support a variety of allied industries.

10

5 State Bank of Pakistan Annual Report 2008-09 6 Economic Survey 2008-09



These measures include; the improvement in the availability of housing finance by encouraging commercial banks to extend housing loans, the reduction in interest rates from 17-18% to 7.5 to 8.5%, streamlining of the legal frame work for loan recovery of financial institutions, and the enhancement of bank exposure to housing finance from 5% to 10% of net advances.

The maximum housing loans per party limit has been increased from Rs.5 million to Rs.10.0 million and the maximum debt-equity increased from 70:30 to 85:15. The maximum loan tenure for housing finance has been increased from 15 to 20 years and the maximum limit of lending for HBFC has been increased from Rs.20 million to Rs.50 million.

In the fiscal area, the measures taken include the enhancement of Tax credits on borrowing under housing loans from financial institutions from Rs.100,000/- or 25% of the income of the mortgager, to Rs.500,000/- or 40% of the income of the mortgager, whichever is less. The limit of property income for withholding tax has been raised from Rs.100,000/- to Rs.200,000/-. The rate of withholding tax on property income has been reduced from 7.5% to 5%. CED on wires and cables has been withdrawn and excise duty on cement has been reduced by 25% to lessen the cost of construction7.

66..33 LLeeggaall IIssssuueess RReeggaarrddiinngg HHoouussiinngg IInndduussttrryy

Following government departments are involved in the Housing Industry.

Lahore Development Authority (For more info please visit http://www.lda.gop.pk ). WAPDA Town housing Society

77 MMAARRKKEETT IINNFFOORRMMAATTIIOONN

77..11 MMaarrkkeett PPootteennttiiaall

The construction industry of Pakistan underwent a miserable couple of years with a contraction of 10.8% in 2009. The market has suffered from the global economic downturn and fallout from political turmoil, which has provided a serious setback to the foreign investment and wider business activity in the country. However, as stated in the Pakistan Infrastructure Report – 2010, the industry looks more optimistic, partly in view of the nascent recovery in the global economy and the decision taken by the IMF to increase the standby loan available to the country. This loan should not only bolster the foreign investor but also domestic confidence in the country. The report forecasts that the real construction sector growth in Pakistan in 2010 will move into positive territory at the rate of 0.5% for the year, before accelerating slightly to 2.2% in 2011 and 3.2% in 2012. A faster than expected recovery in the global economy and foreign investment would

7 Economic Survey of Pakistan 2004


11

http://www.lda.gop.pk/


likely see Pakistan achieve faster growth in the construction sector, driven largely by a significant revival of private sector activity.

As the current situation lies, there is a huge and growing demand for housing in Pakistan. The natural population increase alone adds more than three million people a year to the country’s population. Add to this the attrition of existing housing stock, and we have a demand for three good-sized cities a year to be accommodated. The supply side is abysmally low, particularly in the public sector. The gap has been met by private sector development. There is a huge shortage of housing in major urban centres like Lahore and people are looking forward for better living standard.

TTaabbllee 77--11 HHoouussiinngg UUnniittss bbyy TTeennuurree ((IInn mmiilllliioonn))88

Census 1998 Tenure All Areas Rural Urban

All Types 19.3 13.1 6.2 (100) (100) (100)Owned 15.6 11.4 4.2 (80.8) (87.1) (67.6)Rented 1.7 0.3 1.4 (9.0) (2.3) (23.2)Rent Free 2.0 1.4 0.6 (10.2) (10.6) (9.2)

Note: The figures in parenthesis are percent shares

77..22 TTaarrggeett CCuussttoommeerrss

The target customers are the general public of upper-middle income group.

TTrraaddee SSttaattiissttiiccss

A brief overview of major industry segments is as below.

TTaabbllee 77--22 TToottaall NNuummbbeerr ooff CCoonnssttrruuccttiioonn CCoommppaanniieess99 Category C-1 242 Numbers Project Cost Limit No limit Category C-2 127 Numbers Project Limit Cost Upto Rs 100 million Category C-3 900 Numbers

8 Source: Population and Housing Census 1998

3 SSoouurrccee:: PPaakkiissttaann BBooaarrdd ooff IInnvveessttmmeenntt


12


13

Project Cost Limit Upto Rs 50 million Category C-4 769 Numbers Project Cost Limit Upto Rs 20 million Share in GDP (%age): Construction 3.5 Housing 6.0 GDP/GNP Real Growth Rates ( %age): Construction 6.24 Housing 5.28 Gross Fixed Capital Formation: Construction Rs 13,532 million Housing Rs 56,093 million Contribution to Employment: Total Employed Labor Force 37.03 million Construction Sector Share 2.50 million Foreign Direct Investment (Jul-2003.) US$ 21.1 million Import of Construction Machinery US$ 67.9 million Average turn over per year Rs 250 billion

88 PPRROODDUUCCTTIIOONN PPRROOCCEESSSS This section will include the production details of the project, which includes the raw material required, product mix, production capacity, production proportion of each product etc.

88..11 PPrroodduuccttiioonn PPrroocceessss FFllooww

The production process includes the following steps.

Procurement of Land

Architecture Design

Materials Procurement

Erection of Foundations

Construction of Structure

Installation of Electrical Wire Pipes

Construction of roof.

Plaster of cement

Sewerage and water pipe installation

Construction of floors and bathrooms



Paints and electrification

88..22 RRaaww MMaatteerriiaall RReeqquuiirreemmeenntt

Following raw materials will be used:

Bricks Steel Doors and Grills Sand Wood Crush Win board Steel Chipboard Mud Glass Cement Varnish Floor Tiles Paints Bath Room Fittings Hardware Cupboards Wires Lighting accessories Misc. electrification equipment Sewerage and Water Supply Pipes PVC Pipes Dadex Pipe

88..33 MMaacchhiinneerryy RReeqquuiirreemmeenntt

All the required machinery like Mixer, Lifts etc are available widely on rental basis.

88..44 PPrroodduucctt//PPrroojjeecctt SSttaannddaarrddss aanndd CCoommpplliiaannccee IIssssuueess

Please check with the relevant authorities (Like LDA for Johar Town and WAPDA Cooperative Housing Society for WAPDA Town) for more specific details about the Construction and Compliance issues. These Compliance Issues vary widely by location and by size of plot. Detailed requirements can be obtained from concerned authority upon request.

88..55 RReeccoommmmeennddeedd HHoouussee LLaayyoouutt

For a 5 Marla house following layout is recommended, (front 25 feet X length 45 feet )

Ground Floor 2 bedrooms (11X12 ft) + attached bathrooms (5X6 ft)

1 kitchen (6X10 ft)

A car porch (16X10 ft)

1 TV Lounge (13X10)

1 Drawing Room (11X13 ft)


14


Vacant Space (5 ft on front and 5 ft at back)

1st Floor 2 bedrooms (11X12 ft) + attached bathrooms (5X6 ft)

1 store (6X8 ft)

A stair room (10X10 ft)

1 TV Lounge (14X12 ft)

1 Living Room (7X10 ft)

Terrace (5 Feet)

Doors and Windows Windows 7 (5X6 ft)

Windows 4 (2.5X2 ft)

Front Door 1 (7X4 ft)

Room Doors 13 (7X3 ft)

Bathroom Doors 4 (7X2.25)

For a 7 Marla house following layout is recommended, (front 28 feet X length 50 feet)


1 kitchen (15X6 ft)

1 Store (10X8)


1 TV Lounge (15X10)


Vacant Space (7 ft on front and 7 ft at back)


1 store (10X8 ft)

1 kitchen (15X7 ft)




Terrace (5 Feet)


15






Bathroom Doors 4 (7X2.25 ft)

For a 10 Marla house following layout is recommended, (front 35 feet X length 65 feet)


1 kitchen (12X10 ft)

1 store (10X10 ft)




Vacant Space (10 ft on front 7 ft at back and 5 ft Galley)


1 store (10X10 ft)

1 kitchen (12X10 ft)




Tarries (5 Feet)





Bathroom Doors 4 (7X2.25 ft)


16



17

99 LLAANNDD && BBUUIILLDDIINNGG RREEQQUUIIRREEMMEENNTT

99..11 CCoovveerreedd AArreeaa RReeqquuiirreemmeenntt

The required space for office is 400 Sq. Feet office

99..22 RReenntt CCoosstt

The Rent Cost for office will be Rs. 15,000 per month.

99..33 RReeccoommmmeennddeedd MMooddee

It is recommended to rent an office on the preferred locations provided below.

99..44 UUttiilliittiieess RReeqquuiirreemmeenntt

Electricity and two phone lines will be required in office.

99..55 SSuuiittaabbllee LLooccaattiioonn

The office should be located near the construction sites for administrative purpose. The suitable location can be Faisal Town, Johar Town and Garden Town.

1100 HHUUMMAANN RREESSOOUURRCCEE RREEQQUUIIRREEMMEENNTT Following Human Resource would be required initially for office and management work and rest labour will be hired accordingly as per the site requirements:

Designation Number Salaries / Month Accounts/Purchase Officer 1 15,000 Diploma Engineer 1 20,000 Office Boy 1 7,000Security Guard 1 8,000


1111 FFIINNAANNCCIIAALL AANNAALLYYSSIISS

1111..11 PPrroojjeecctt CCoossttss

Initial Investment

Capital Investment Rs. in actualsMachinery & equipment 1,000,000 Furniture & fixtures 210,000 Office equipment 87,000 Pre-operating costs 10,000 Total Capital Costs 1,307,000

Working Capital Rs. in actualsEquipment spare part inventory 2,500 Raw material inventory 11,354,240 Upfront building rent 180,000 Cash 1,000,000 Total Working Capital 12,586,740

Total Investment 13,893,740

Initial Financing Rs. in actualsDebt 6,946,870 Equity 6,946,870

Net Present Value Internal Rate of Return Payback Period (Yrs)

Project Returns EQUITY

81,645,978 79%

3.14

PROJECT 120,656,976

57%4.13


18


1111..22 PPrroojjeecctteedd IInnccoommee SSttaatteemmeenntt

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

5 Marla House 9,250,000 21,275,000 30,582,813 42,204,281 48,534,923 65,117,689 96,281,154 123,025,919 155,627,788 195,242,134 7 Marla House 6,125,000 7,043,750 16,200,625 18,630,719 32,137,990 49,278,251 56,669,989 81,463,109 93,682,575 129,281,954 10 Marla House - - - 12,547,219 28,858,603 33,187,394 38,165,503 43,890,328 75,710,816 87,067,438 Revenue 15,375,000 28,318,750 46,783,438 73,382,219 109,531,516 147,583,334 191,116,646 248,379,356 325,021,179 411,591,526

Cost of salesLand cost 5,205,000 9,102,500 14,453,450 21,994,775 31,778,291 40,866,691 50,392,053 62,583,050 78,658,991 95,178,559 Material cost 4,458,460 7,946,329 12,462,586 18,753,268 26,631,694 34,248,345 42,572,387 52,823,339 66,229,767 80,105,136 Labour cost 1,340,800 2,399,980 3,753,541 5,617,619 7,933,079 10,208,540 12,719,277 15,784,609 19,760,673 23,906,760 Rent of mixer 30,000 55,000 84,700 119,790 161,051 209,366 265,734 331,282 407,282 495,169 Utilities connection 57,900 96,500 135,100 173,700 212,300 250,900 289,500 328,100 366,700 405,300 Electricity Chg. 262,080 288,288 317,117 348,828 383,711 422,082 464,291 510,720 561,792 617,971

Total cost of sales 11,354,240 19,888,597 31,206,493 47,007,980 67,100,126 86,205,924 106,703,241 132,361,098 165,985,205 200,708,895 Gross Profit 4,020,760 8,430,154 15,576,944 26,374,239 42,431,391 61,377,409 84,413,405 116,018,258 159,035,974 210,882,631

1,098 1,185 1,294 1,413 1,549 1,701 1,868 2,052 2,254 2,477 General administration & selling expenses

Administrative Salaries 600,000 660,000 726,000 798,600 1,493,382 1,642,720 1,806,992 1,987,691 2,186,461 2,405,107 Printing & Stationary 50,000 55,000 60,500 66,550 73,205 80,526 88,578 97,436 107,179 117,897 Consultancy Charges & Audit Fee 20,000 22,000 24,200 26,620 29,282 32,210 35,431 38,974 42,872 47,159 Entertainment 60,000 66,000 72,600 79,860 87,846 96,631 106,294 116,923 128,615 141,477 Office Rent 180,000 198,000 217,800 239,580 263,538 289,892 318,881 350,769 385,846 424,431 Telephone 60,000 66,000 72,600 79,860 87,846 96,631 106,294 116,923 128,615 141,477 Internet 24,000 26,400 29,040 31,944 35,138 38,652 42,517 46,769 51,446 56,591 Insurance expense 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 Professional fees (legal, audit, consultants, etc.) 76,875 141,594 233,917 366,911 547,658 737,917 955,583 1,241,897 1,625,106 2,057,958 Depreciation expense 129,700 129,700 129,700 129,700 129,700 129,700 129,700 129,700 129,700 129,700 Commission on Sale of House 153,750 283,188 467,834 733,822 1,095,315 1,475,833 1,911,166 2,483,794 3,250,212 4,115,915 Amortization of pre-operating costs 2,000 2,000 2,000 2,000 2,000 - - - - -

Subtotal 1,406,325 1,694,881 2,076,192 2,590,447 3,874,910 4,645,711 5,521,437 6,625,876 8,046,052 9,642,711 Operating Income 2,614,435 6,735,272 13,500,753 23,783,792 38,556,480 56,731,698 78,891,968 109,392,382 150,989,922 201,239,920

Other income (interest on cash) 656,664 256,568 544,687 1,155,654 2,459,160 4,837,599 8,729,369 14,625,305 23,201,008 36,689,427 Earnings Before Interest & Taxes 3,271,099 6,991,840 14,045,440 24,939,446 41,015,641 61,569,297 87,621,337 124,017,686 174,190,930 238,038,048

Interest expense on long term debt (Project Loan) 97,954 81,976 63,245 41,288 15,548 - - - - - Interest expense on long term debt (Working Capital Loan) 558,664 - - - - - - - - - Subtotal 656,618 81,976 63,245 41,288 15,548 - - - - - Earnings Before Tax 2,614,481 6,909,865 13,982,194 24,898,158 41,000,092 61,569,297 87,621,337 124,017,686 174,190,930 238,038,048

Tax 653,620 1,727,466 3,495,549 6,224,539 10,250,023 15,392,324 21,905,334 31,004,422 43,547,732 59,509,512 NET PROFIT/(LOSS) AFTER TAX 1,960,861 5,182,399 10,486,646 18,673,618 30,750,069 46,176,973 65,716,003 93,013,265 130,643,197 178,528,536


19


1111..33 PPrroojjeecctteedd BBaallaannccee SShheeeett

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

Current assetsCash & Bank 11,693,952 1,439,334 3,692,031 7,201,710 15,911,369 33,271,836 63,480,149 111,107,233 181,398,862 282,621,304 451,167,239 Accounts receivable 6,318,493 8,978,168 15,431,956 24,691,573 37,585,014 52,831,819 69,595,886 90,307,398 117,822,028 151,358,775 Equipment spare part inventory 2,500 4,813 7,782 11,556 16,313 22,268 29,676 38,846 50,145 64,014 - Raw material inventory 805,288 1,491,772 2,472,911 3,930,913 5,916,475 7,988,995 10,381,770 13,532,365 17,838,890 22,660,212 - Pre-paid annual land lease 20,000 22,000 24,200 26,620 29,282 32,210 35,431 38,974 42,872 47,159 - Pre-paid building rent 15,000 16,500 18,150 19,965 21,962 24,158 26,573 29,231 32,154 35,369 - Pre-paid insurance 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 -

Total Current Assets 12,586,740 9,337,912 15,233,241 26,657,720 46,616,974 78,949,481 126,805,418 194,357,535 289,680,320 423,255,086 602,526,014

Fixed assetsMachinery & equipment 1,000,000 900,000 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 - Furniture & fixtures 210,000 189,000 168,000 147,000 126,000 105,000 84,000 63,000 42,000 21,000 - Office equipment 87,000 78,300 69,600 60,900 52,200 43,500 34,800 26,100 17,400 8,700 -

Total Fixed Assets 1,297,000 1,167,300 1,037,600 907,900 778,200 648,500 518,800 389,100 259,400 129,700 -

Intangible assetsPre-operation costs 10,000 8,000 6,000 4,000 2,000 - - - - - -

Total Intangible Assets 10,000 8,000 6,000 4,000 2,000 - - - - - - TOTAL ASSETS 13,893,740 10,513,212 16,276,841 27,569,620 47,397,174 79,597,981 127,324,218 194,746,635 289,939,720 423,384,786 602,526,014

Current liabilitiesAccounts payable 919,730 1,609,687 2,543,277 3,846,626 5,472,518 7,046,782 8,778,196 10,983,017 13,809,885 14,447,578

Total Current Liabilities - 919,730 1,609,687 2,543,277 3,846,626 5,472,518 7,046,782 8,778,196 10,983,017 13,809,885 14,447,578

Other liabilitiesDeferred tax 125,000 125,000 125,000 125,000 125,000 100,000 75,000 50,000 25,000 - Long term debt (Project Loan) 653,500 560,751 452,025 324,568 175,154 - - - - - - Long term debt (Working Capital Loan) 6,293,370 - - - - - - - - - -

Total Long Term Liabilities 6,946,870 685,751 577,025 449,568 300,154 125,000 100,000 75,000 50,000 25,000 -

Shareholders' equityPaid-up capital 6,946,870 6,946,870 6,946,870 6,946,870 6,946,870 6,946,870 6,946,870 6,946,870 6,946,870 6,946,870 6,946,870 Retained earnings 1,960,861 7,143,260 17,629,905 36,303,524 67,053,593 113,230,566 178,946,569 271,959,834 402,603,031 581,131,567

Total Equity 6,946,870 8,907,731 14,090,130 24,576,775 43,250,394 74,000,463 120,177,436 185,893,439 278,906,704 409,549,901 588,078,437 TOTAL CAPITAL AND LIABILITIES 13,893,740 10,513,212 16,276,841 27,569,620 47,397,174 79,597,981 127,324,218 194,746,635 289,939,720 423,384,786 602,526,014

Liabilities & Shareholders' Equity

Assets


20


1111..44 PPrroojjeecctteedd CCaasshh FFllooww SSttaatteemmeenntt

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

Operating activitiesNet profit 1,960,861 5,182,399 10,486,646 18,673,618 30,750,069 46,176,973 65,716,003 93,013,265 130,643,197 178,528,536 Add: depreciation expense 129,700 129,700 129,700 129,700 129,700 129,700 129,700 129,700 129,700 129,700 amortization of pre-operating costs 2,000 2,000 2,000 2,000 2,000 - - - - - amortization of training costs - - - - - - - - - - Deferred income tax 125,000 - - - - (25,000) (25,000) (25,000) (25,000) (25,000) Accounts receivable (6,318,493) (2,659,675) (6,453,789) (9,259,617) (12,893,441) (15,246,804) (16,764,068) (20,711,512) (27,514,630) (33,536,747) Finished goods inventory - - - - - - - - - - Equipment inventory (2,500) (2,313) (2,969) (3,774) (4,757) (5,954) (7,408) (9,170) (11,299) (13,869) 64,014 Raw material inventory (805,288) (686,484) (981,138) (1,458,002) (1,985,562) (2,072,520) (2,392,775) (3,150,595) (4,306,526) (4,821,321) 22,660,212 Pre-paid building rent (15,000) (1,500) (1,650) (1,815) (1,997) (2,196) (2,416) (2,657) (2,923) (3,215) 35,369 Advance insurance premium (50,000) 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 Accounts payable 919,730 689,957 933,590 1,303,349 1,625,891 1,574,264 1,731,414 2,204,821 2,826,868 637,693 Other liabilities - - - - - - - - - -

Cash provided by operations (872,788) (3,866,499) 2,363,623 3,639,557 8,861,735 17,538,550 30,211,534 47,630,627 70,295,526 101,226,729 168,498,777

Financing activitiesProject Loan - principal repayment (92,749) (108,727) (127,457) (149,414) (175,154) - - - - - Working Capital Loan - principal repayment (6,293,370) - - - - - - - - - Add: land lease expense 20,000 22,000 24,200 26,620 29,282 32,210 35,431 38,974 42,872 47,159 Land lease payment (20,000) (22,000) (24,200) (26,620) (29,282) (32,210) (35,431) (38,974) (42,872) (47,159) - Additions to Project Loan 653,500 - - - - - - - - - - Additions to Working Capital Loan 6,293,370 - - - - - - - - - - Issuance of shares 6,946,870 - - - - - - - - - - Purchase of (treasury) shares

Cash provided by / (used for) financing activities 13,873,740 (6,388,119) (110,927) (129,877) (152,076) (178,082) (3,221) (3,543) (3,897) (4,287) 47,159

Investing activitiesCapital expenditure (1,307,000) - - - - - - - - - -

Cash (used for) / provided by investing activities (1,307,000) - - - - - - - - - -

NET CASH 11,693,952 (10,254,618) 2,252,697 3,509,680 8,709,659 17,360,468 30,208,313 47,627,084 70,291,629 101,222,442 168,545,936


21


1111..55 RReevveennuueess aanndd CCoosstt ooff SSaalleess

Year - I Year - II Year - III Year - IV Year - V Year - VI Year - VII Year - VIII Year - IX Year - XOperation - - - - - - - - - - Land cost 5,205,000 9,102,500 14,453,450 21,994,775 31,778,291 40,866,691 50,392,053 62,583,050 78,658,991 95,178,559 Material cost 4,458,460 7,946,329 12,462,586 18,753,268 26,631,694 34,248,345 42,572,387 52,823,339 66,229,767 80,105,136 Labour cost 1,340,800 2,399,980 3,753,541 5,617,619 7,933,079 10,208,540 12,719,277 15,784,609 19,760,673 23,906,760 Rent of mixer 30,000 55,000 84,700 119,790 161,051 209,366 265,734 331,282 407,282 495,169 Utilities connection 57,900 96,500 135,100 173,700 212,300 250,900 289,500 328,100 366,700 405,300 Electricity Chg. 262,080 288,288 317,117 348,828 383,711 422,082 464,291 510,720 561,792 617,971

11,354,240 19,888,597 31,206,493 47,007,980 67,100,126 86,205,924 106,703,241 132,361,098 165,985,205 200,708,895

Projected Cost of Sales


22


Year - I Year - II Year - III Year - IV Year - V Year - VI Year - VII Year - VIII Year - IX Year - XRevenue (PKR):

Revenue5 Marla 9,250,000 21,275,000 30,582,813 42,204,281 48,534,923 65,117,689 96,281,154 123,025,919 155,627,788 195,242,134 7 Marla 6,125,000 7,043,750 16,200,625 18,630,719 32,137,990 49,278,251 56,669,989 81,463,109 93,682,575 129,281,954

10 Marla - - - 12,547,219 28,858,603 33,187,394 38,165,503 43,890,328 75,710,816 87,067,438

15,375,000 28,318,750 46,783,438 73,382,219 109,531,516 147,583,334 191,116,646 248,379,356 325,021,179 411,591,526

Year - I Year - II Year - III Year - IV Year - V Year - VI Year - VII Year - VIII Year - IX Year - XCost (PKR):

LANDCost 5,100,000 8,100,000 11,700,000 16,200,000 21,300,000 24,900,000 27,900,000 31,500,000 36,000,000 39,600,000 Designing Fee 60,000 100,000 140,000 190,000 240,000 280,000 320,000 360,000 410,000 450,000 Submission Drawing Fees 45,000 75,000 105,000 135,000 165,000 195,000 225,000 255,000 285,000 315,000

5,205,000 8,275,000 11,945,000 16,525,000 21,705,000 25,375,000 28,445,000 32,115,000 36,695,000 40,365,000

MaterialBricks 11% 476,000 773,500 1,100,750 1,504,500 1,938,000 2,265,250 2,562,750 2,890,000 3,293,750 3,621,000 Sand 2% 100,000 160,000 230,000 315,000 410,000 480,000 540,000 610,000 695,000 765,000 Crush 3% 114,000 186,000 264,000 372,000 486,000 564,000 636,000 714,000 822,000 900,000 Brick Ballast 1% 29,700 47,700 68,400 90,900 116,100 136,800 154,800 175,500 198,000 218,700 Steel 11% 510,000 834,000 1,182,000 1,584,000 2,010,000 2,358,000 2,682,000 3,030,000 3,432,000 3,780,000 Cement 16% 697,000 1,139,000 1,615,000 2,167,500 2,754,000 3,230,000 3,672,000 4,148,000 4,700,500 5,176,500 Mud 0% 17,000 27,000 39,000 54,000 71,000 83,000 93,000 105,000 120,000 132,000 Water Proofing & Heat Insulation 3% 122,950 193,950 281,400 372,300 479,650 567,100 638,100 725,550 816,450 903,900 Tiles on Roof 1% 35,280 57,330 81,585 111,510 143,640 167,895 189,945 214,200 244,125 268,380 Graphy Paint on Front 2% 85,000 135,000 195,000 270,000 355,000 415,000 465,000 525,000 600,000 660,000 Flooring 10% 431,360 679,455 986,768 1,385,018 1,842,485 2,149,798 2,397,893 2,705,205 3,103,455 3,410,768 Pipe 6% 280,000 455,000 647,500 885,000 1,140,000 1,332,500 1,507,500 1,700,000 1,937,500 2,130,000 Electric Wires 2% 109,225 172,925 250,300 341,150 445,675 523,050 586,750 664,125 754,975 832,350 Electric Fittings 2% 85,000 135,000 195,000 290,000 395,000 455,000 505,000 565,000 660,000 720,000 Grills 2% 76,800 128,000 179,200 249,600 320,000 371,200 422,400 473,600 544,000 595,200 Stair & Balcony Railing 3% 115,000 185,000 265,000 375,000 495,000 575,000 645,000 725,000 835,000 915,000 Aluminum Windows 3% 120,000 200,000 280,000 390,000 500,000 580,000 660,000 740,000 850,000 930,000 Gate 1% 61,425 102,375 143,325 191,100 238,875 279,825 320,775 361,725 409,500 450,450 Glass 1% 28,800 48,000 67,200 93,600 120,000 139,200 158,400 177,600 204,000 223,200 Paint 5% 220,000 360,000 510,000 700,000 900,000 1,050,000 1,190,000 1,340,000 1,530,000 1,680,000 Doors 3% 147,420 245,700 343,980 447,930 551,880 650,160 748,440 846,720 950,670 1,048,950 Room Cupboards 5% 216,000 360,000 504,000 676,000 848,000 992,000 1,136,000 1,280,000 1,452,000 1,596,000 Kitchen Cabinets 1% 66,500 91,000 145,250 241,500 367,500 421,750 446,250 500,500 596,750 651,000 Hardware fittings 2% 90,000 140,000 205,000 290,000 390,000 455,000 505,000 570,000 655,000 720,000 Bath room fittings 5% 224,000 368,000 520,000 692,000 872,000 1,024,000 1,168,000 1,320,000 1,492,000 1,644,000

4,458,460 7,223,935 10,299,658 14,089,608 18,189,805 21,265,528 24,031,003 27,106,725 30,896,675 33,972,398

Projected Revenue & Cost Schedule


23

Pre Fea

PREF-80/Apr

sibility Study Housing Construction Company

, 2011/Rev 2

24

FLOORINGHouse 235,730 372,900 540,045 782,870 1,055,670 1,222,815 1,359,985 1,527,130 1,769,955 1,937,100 Bath & Kitchen 140,750 218,875 320,563 416,388 535,775 637,463 715,588 817,275 913,100 1,014,788 Vacant Space & Porch 54,880 87,680 126,160 185,760 251,040 289,520 322,320 360,800 420,400 458,880

431,360 679,455 986,768 1,385,018 1,842,485 2,149,798 2,397,893 2,705,205 3,103,455 3,410,768

PPRC & Sewage Pipes 280,000 455,000 647,500 885,000 1,140,000 1,332,500 1,507,500 1,700,000 1,937,500 2,130,000 280,000 455,000 647,500 885,000 1,140,000 1,332,500 1,507,500 1,700,000 1,937,500 2,130,000

Electric Wires3 x 29 37,125 59,625 85,500 117,000 151,875 177,750 200,250 226,125 257,625 283,500 7 x 29 34,300 53,900 78,400 105,350 137,200 161,700 181,300 205,800 232,750 257,250 7 x 44 37,800 59,400 86,400 118,800 156,600 183,600 205,200 232,200 264,600 291,600

109,225 172,925 250,300 341,150 445,675 523,050 586,750 664,125 754,975 832,350 Electric Fittings 85,000 135,000 195,000 290,000 395,000 455,000 505,000 565,000 660,000 720,000

UTILITIES CONNECTIONElectricity 30,000 50,000 70,000 90,000 110,000 130,000 150,000 170,000 190,000 210,000 Water 7,500 12,500 17,500 22,500 27,500 32,500 37,500 42,500 47,500 52,500 Gas 15,000 25,000 35,000 45,000 55,000 65,000 75,000 85,000 95,000 105,000 Telephone 5,400 9,000 12,600 16,200 19,800 23,400 27,000 30,600 34,200 37,800

57,900 96,500 135,100 173,700 212,300 250,900 289,500 328,100 366,700 405,300 LABOUR

Civil works 840,000 1,365,000 1,942,500 2,655,000 3,420,000 3,997,500 4,522,500 5,100,000 5,812,500 6,390,000 Electriction 67,200 109,200 155,400 212,400 273,600 319,800 361,800 408,000 465,000 511,200 Sanitation 67,200 109,200 155,400 212,400 273,600 319,800 361,800 408,000 465,000 511,200 Paint 134,400 218,400 310,800 424,800 547,200 639,600 723,600 816,000 930,000 1,022,400 Carpenter 220,000 360,000 510,000 680,000 860,000 1,010,000 1,150,000 1,300,000 1,470,000 1,620,000 Guard 12,000 20,000 28,000 36,000 44,000 52,000 60,000 68,000 76,000 84,000

1,340,800 2,181,800 3,102,100 4,220,600 5,418,400 6,338,700 7,179,700 8,100,000 9,218,500 10,138,800 RENT

Mixer 30,000 50,000 70,000 90,000 110,000 130,000 150,000 170,000 190,000 210,000


1122 KKEEYY AASSSSUUMMPPTTIIOONNSS

TTaabbllee 1122--11 MMiisscceellllaanneeoouuss AAssssuummppttiioonnss

Growth Rate Sale Price 15%Land 10%Material, Labour etc. 10%

Sale Price / Marla - 5 Marla 925,000 Sale Price / Marla - 7 Marla 875,000 Sale Price / Marla - 10 Marla 825,000 Sale Price Rs.

5 Marla 4,625,000/House7 Marla 6,125,000/House10 Marla 8,250,000/House

Cost Rs.Land 300,000/MarlaFee 15,000/HouseDesigning Fee (5-7 Marla) 20,000/HouseDesigning Fee (10 Marla) 30,000/House

Material Cost Rs.Bricks 4,250/ThousandSand 2,500/TruckCrush 30/Cubic ftSteel 60/KgCement 340/BagBrick Blast 9/Cubic ftMud 1,000/TrolleyTiles on roof 3,500/ThousandWater Proofing & Heat Insulation 50/Sq ftGrills including Labour 160/Sq ftAluminium window including Labour 250/Sq ftGate including Labour 325/Sq ftGlass 60/Sq ftGraphy Paint on Front Lump sum

Flooring Rs.Inside House (5 & 7 Marla) 50/Sq ftInside House (10 Marla) 75/Sq ftBath room & Kitchen 50/Sq ft


25


26

Car Porch & Open Areas 40/Sq ft Doors 135/Sq ftRoom Cupboards Lump sum

Pipe Rs.PPRC & Sewage Pipes 50/Sq Ft

Electric wire Rs.3 x 29 1,125/Coil7 x 29 2,450/Coil7 x 44 5,400/Coil

Electric switches & Appliances for 5 25,000/HouseElectric switches & Appliances for 7 35,000/HouseElectric switches & Appliances for 10 70,000/HousePaint cost (5 Marla) 70,000/housePaint cost (7 Marla) 80,000/housePaint cost (10 Marla) 120,000/houseUtilities Expense

Electricity Single Phase 10,000/Connection Three Phase 15,000/ Connection Water 2,500/ Connection including one year Gas 5,000/ Connection Telephone 1,800/ Connection

Rent Expense Mixer machine 5,000/Day/lanter

Labour Cost Civil work 150/Sq ftElectrification 12/Sq ftSanitation 12/Sq ftGlass 60/Sq ftAluminium 250/Sq ftPaint 8/Sq ftGuard 8,000/MonthBroker Commission 1.0% of Revenue

TTaabbllee 1122--22 OOppeerraattiinngg AAssssuummppttiioonnss

Annual construction (No. of houses) 3 5 marla 2 7 marla 1



27

10 marla 0

TTaabbllee 1122--33 RReevveennuuee AAssssuummppttiioonnss Sales prices Rs.5 Marla 4,625,0007 Marla 6,125,00010 Marla 8,250,000Sales price growth rate 15%

TTaabbllee 1122--44 FFiinnaanncciiaall AAssssuummppttiioonnss Project life (Years) 10Debt 50%Equity 50%Interest rate on long term debt 16%Debt tenure (Years) 5Principal debt repayments per year 653,500No. of instalments in a year 2Amortization (years) 5

TTaabbllee 1122--55 MMaatteerriiaall RReeqquuiirreemmeenntt AAssssuummppttiioonnss

Materials Estimated Requirement Bricks 20 / sq ft Sand 1 Truck/ 145 Sq. ft Crush 1.45 Cubic feet / sq ft Steel 0.75 kg / sq ft Cement 1 Bag / 2.69 sq ft Mud 1 Trolley / 87 sq ft Tiles on roof 3150 for 5 Marla; 3780 for 7 Marla and 5400 for 10 Marla

House Tiles (for front) 52.02 Sq m for 5 Marla; 59.83 Sq m for 7 Marla; & 65.03

Sq m for 10 Marla Grills 160 sq ft for 5 Marla; 160 Sq ft for 7 Marla and 280 sq ft

for 10 Marla Glass 160 sq ft for 5 Marla; 160 sq ft for 7 Marla and 280 sq ft

for 10 Marla House Lamination Rs. 84,250 for 5 Marla House; Rs. 114,000for 7 Marla and

Rs. 184,000 for 10 Marla House



TTaabbllee 1122--66 MMaatteerriiaall ccoosstt AAssssuummppttiioonnss

Material Rs Price Unit Bricks 4,250 Thousand Sand 2500 Truck (350 cub ft) Crush 30 Cubic ft Steel 60 Kg Cement 340 Bag Mud 1,000 Trolley Tiles 3,500 Thousand Grills including labour 160 Sq ft Gate including labour 325 Sq ft Glass 60 Sq ft Tiles for Front 750 Sq m Flooring : Covered area 50 Sq ft Bath rooms 50 Sq ft Others (Front, Back & Galli) 50 Sq ft Door 135 Sq ft Lamination 1500 Sheet Chipboard 850 Sheet Ply 425 Sheet TTaabbllee 1122--77 LLaabboouurr ccoosstt AAssssuummppttiioonnss

Category Rate Basis of Pricing Civil work 150 Sq. ftElectrification 12 Sq. ftSanitation 12 Sq. ftAluminium 250 Sq. ftGuard 8,000 MonthGlass Work 60 Sq. ft


28


TTaabbllee 1122--88 EExxppeennssee AAssssuummppttiioonnss Land Price per Marla Rs. 300,000Land Price growth rate 10%Fees for land Rs. 15,000Material, Labour growth rate 10%

TTaabbllee 1122--99 MMiisscceellllaanneeoouuss AAssssuummppttiioonnss Telephone Expense for the first year Rs. 60,000Printing & stationery Rs. 50,000Legal & professional charges Rs. 76,875Entertainment Rs. 60,000Office rent Rs.180,000Depreciation Rs. 31,000Amortization of Preliminary expenses Rs. 10,000


29

SMEDA Housing Construction Company

Documents

attached bathrooms

pre feasibility

equipment

working capital

housing construction

long term

valencia housing

building material