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Pre-Feasibility Study
PET BOTTLES MANUFACTURING UNIT
Small and Medium Enterprise Development Authority
Government of Pakistan www.smeda.org.pk
HEAD OFFICE 6th Floor ,LDA Plaza , Egerton Road , Lahore 54000,
Pkaistan
Tel: (042) 111-111-456, Fax: (042) 6304926-7
[email protected]
www.smeda.org.pk
REGIONAL OFFICE PUNJAB
REGIONAL OFFICE SINDH
REGIONAL OFFICE NWFP
REGIONAL OFFICE BALOCHISTAN
8th Floor ,LDA Plaza , Egerton
Road , Lahore 54000,
Tel: (042) 111-111-456, Fax: (0426304926-7
[email protected]
5TH Floor, Bahria Complex II, M.T. Khan Road,
Karachi. Tel: (021) 111-111-456
Fax: (021) 5610572 [email protected]
Ground Floor State Life Building
The Mall, Peshawar. Tel: (091) 9213046-47
Fax: (091) 286908 [email protected]
Bungalow No. 15-A Chaman Housing Scheme
Airport Road, Quetta. Tel: (081) 831623, 831702
Fax: (081) 831922 [email protected]
May, 2010
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Pre-Feasibility Study PET Bottles Manufacturing Unit
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.
Therefore, the content of this
memorandum should not be relied upon for making any decision,
investment or otherwise.
The prospective user of this memorandum is encouraged to carry
out his/her own due
diligence and gather any information he/she considers necessary
for making an informed
decision.
The content of the information memorandum does not bind SMEDA in
any legal or other
form.
DOCUMENT CONTROL Document No. PREF-37
Revision 2
Prepared by SMEDA-Punjab
Approved by GM Punjab
Issue Date May, 2010
Issued by Library Officer
PREF-37/May, 2010/2
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Pre-Feasibility Study PET Bottles Manufacturing Unit
TTAABBLLEE OOFF CCOONNTTEENNTTSS Table of Contents
.................................................................................................................3
1 Executive
summary..................................................................................................1
2
Introduction..............................................................................................................2
2.1 Project Brief
...........................................................................................................2
2.2 Project Rationale
....................................................................................................2
2.3 Proposed
Capacity..................................................................................................3
2.4 Total Project
Cost...................................................................................................3
3 Current Industry Structure
....................................................................................3
4 Products Offered
......................................................................................................4
4.1 Production Mix
......................................................................................................4
5 Production
Process...................................................................................................5
5.1 Manufacturing
Stages.............................................................................................6
5.1.1 One-Step Process
...........................................................................................6
5.1.2 Two-Step
Process...........................................................................................6
6 Machinery
Requirement..........................................................................................7
6.1 Injection molding machines
...................................................................................8
6.2 Compressor
............................................................................................................8
6.3 Cooling tower, Chiller unit
....................................................................................8
6.4 Workshop Machines
..............................................................................................8
7
Production.................................................................................................................8
7.1 Injection
Molding...................................................................................................8
7.1.1 Injection Molding Capacity Details
...............................................................8
7.1.2 Injection Molding Process Details
.................................................................9
7.2 Stretch Blow
Process............................................................................................10
7.3 Production Capacity of the Project
......................................................................10
7.4 Starting Production Capacity
...............................................................................11
8 Human RESOURCE Requirement
......................................................................11
9 Land & building
.....................................................................................................11
10 Project
Economics..................................................................................................12
11 financial analysis
....................................................................................................13
11.1 Projected Income
Statement.................................................................................13
11.2 Projected Balance
Sheet.......................................................................................14
11.3 Projected Cash Flow Statement
...........................................................................15
12 Key
Assumptions....................................................................................................16
13 ANNEXTURE
........................................................................................................18
PREF-37/May, 2010/2
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Pre-Feasibility Study PET Bottles Manufacturing Unit
11 EEXXEECCUUTTIIVVEE SSUUMMMMAARRYY
The PET Bottles Manufacturing unit is a project of Plastic
Sector, in which, the most convenience-size bottles are made from
Polyethylene Terephthalate. PET has become the material of choice
for bottled beverages because it is lightweight and shatter
resistant, and PET has been extensively tested for safety. PET
resin has superior properties i.e. attractive, pure, safe, good
barrier, no leakage, design flexibility, recyclable, etc. Bottles
made with PET are widely used for everything from water and fruit
juice to soft drinks etc.
Every day, million of consumers rely on the safety and ease of
plastic bottles to help to preserve the quality and freshness of
what we drink and serve our families. Plastic make possible an
array of opportunities for transporting, storing and serving our
favorite beverages, and todays convenience-size bottles are an
increasingly popular choice for busy people everywhere.
A PET Bottles Manufacturing Unit with a capacity of 5.27 million
bottles per year needs a capital investment estimated at Rs. 10.97
million for construction and purchasing machinery & equipment.
In addition to this, an estimated sum of Rs. 2.72 million is
required as working capital. The total project cost is estimated at
Rs. 13.69 million. Projected IRR, Net Present Value (NPV) and
Payback of this project are 38%, Rs. 16,221,149 and 4.32 years
respectively.
In this pre-feasibility study, all the calculations have been
based on 5.27 million bottles of three different sizes 0.5, 1.5
& 5 litter bottles. Due to high demand of 1.5 litter bottles
its percentage in the product mix is high 65.57% as compared to 0.5
and 5.0 litter bottles which are 32.79% and 1.64% respectively.
PREF-37/May, 2010/2
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Pre-Feasibility Study PET Bottles Manufacturing Unit
22 IINNTTRROODDUUCCTTIIOONN
22..11 PPrroojjeecctt BBrriieeff PET bottles are a packaging
medium, made up of Polyethylene Terephthalate (PET). These are
widely used in food grade packaging and are the preferred packaging
medium in this segment, due to their several advantages over other
resins like PE, HDPE and PVE.1
The objective of this pre-feasibility study is to provide
information for setting up a PET bottles manufacturing unit.
Proposed location for this project is Lahore.
22..22 PPrroojjeecctt RRaattiioonnaallee PET bottles are used as
packaging in a variety of products. The demand of PET bottles is on
a rise as most of the food manufactures from different businesses
are converting to PET bottles for the packaging of their products.
The PET bottles/containers are commonly used for the packaging of
the following:
Mineral Water Carbonated Beverages Edible Oil Household Food
Containers Detergents Paints Lubricating Oils Feeding Bottles for
Babies
As PET bottles provide better packaging, and have a lower cost
than the bottles made from glass and other materials, different
businesses in beverage, food and non-food industry are shifting
towards PET bottles.
The PET resin has superior properties, which are as follows:
Attractive: Products look good, pure and healthy because of
attractiveness of PET bottles.
Pure: Products taste good as PET complies with international
food contact regulations. Safe: PET bottles are tough and virtually
unbreakable. If they do fail, they split, not
shatter. Their high impact and tensile strength makes them ideal
for carbonated products.
Good barrier: The low permeability of PET to oxygen, carbon
dioxide and water means that it protects and maintains the
integrity of products giving a good shelf life. PET also has good
chemical resistance.
Lightweight: One tenth the weight of an equivalent glass pack,
PET bottles reduce shipping costs, and because the material in the
wall is thinner, shelf utilization is
2
1 PE stands for Polyethylene, HDPE stands for High Density
Polyethylene, PVE stands for Poly Vinyl Ethylene
PREF-37/May, 2010/2
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Pre-Feasibility Study PET Bottles Manufacturing Unit
improved by 25% on volume compared to glass. High strength, low
weight PET bottles can be stacked as high as glass.
No leakage: Absolute closure integrity is possible because of
the injection molded neck finish. The absence of a weld line in the
base means that PET bottles have no leakage.
Design flexibility: PET bottles are suitable for containers of
all shapes, sizes, neck finish designs and colors.
Recyclable: Used PET bottles can be washed, granulated into
flakes and reshaped as PET bottles or employed as material for
strapping, carpeting, fiber filling, etc. Specially designed
thick-wall bottles can be washed, refilled and reused. PET is made
from the same three elements (carbon, oxygen, and hydrogen) as
paper, and contains no toxic substances. When burned, it produces
carbon dioxide gas and water, leaving no toxic residues. Being
recyclable is the most important factor of success of business of
PET bottles. It consumes less energy and produces less pollution
than glass or metal packaging. PET is completely recyclable
material, and in many European and Latin American countries, PET
bottles are designed to be refilled and used over and over again.
In the US, more than 600,000,000 pounds of PET bottles are recycled
annually.
22..33 PPrrooppoosseedd CCaappaacciittyy The production capacity
of the proposed project is estimated at 5.27 million bottles per
year.
22..44 TToottaall PPrroojjeecctt CCoosstt The cost of the
project is estimated at Rs 13.69 million having a Capital
Investment of Rs. 10.97 million and Working Capital provision of
Rs. 2.72 million.
33 CCUURRRREENNTT IINNDDUUSSTTRRYY SSTTRRUUCCTTUURREE Majority
of the businesses in Pakistan are converting from the bottle
containers of traditional material to plastic substitutes for
packaging of their products. The domestic manufacturing of plastic
products is growing at 10-15 percent annually. Businesses from
different fields are shifting from conventional packaging to PET
bottles. Carbonated beverage, edible oil and mineral water
industries are good examples for the increasing demand of PET
bottles, as majority of the players in these industries have
shifted to PET bottles. Within five years, the share of PET bottles
has grown from 2-3 percent to 18-20 percent in the carbonated
beverage market.
With every passing day, new industries are shifting to PET
bottling because of lower cost and better preservation of their
product.
3
Because of the high demand of PET bottles, there has been an
increase in small manufacturing units of PET bottles in the main
cities of Pakistan. The major players of the industry are Gatron
and Five Star Industries. There are around 35 small and medium
units working in Lahore including Mega Plast, Plas Pack, S.K. Plast
(Pvt.) Ltd, Uni Plast International, Al Quresh Bottles etc. These
units manufacture variety of products, ranging from bottles for
mineral water to packaging for pesticides.
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Pre-Feasibility Study PET Bottles Manufacturing Unit
44 PPRROODDUUCCTTSS OOFFFFEERREEDD The proposed project will be
capable of making PET bottles of different sizes. Commonly
manufactured sizes shall be 0.5, 1.5 and 5 liter. The size of
bottles will depend on customer specifications.
TTaabbllee 44--11 DDeettaaiillss ooff PPrroodduucctt MMiixx
Product Offered 0.5 Liters PET Bottles 1.5 Liters PET Bottles 5
Liters PET Bottles
The target customers of Pet bottle are Mineral Water, Beverages
and Edible oil industries. The production of 1.5-liter bottles is
the highest, as they are used in the beverage and mineral water
industries which are the two largest consumers of PET bottles.
Along with this, the production of 0.5 liter bottles is also
increasing because of the increase of usage in mineral water
bottles. The production of 5 liter is lower then the other two
because they are mostly used in edible oil packaging.
44..11 PPrroodduuccttiioonn MMiixx Keeping in view the demand of
the product mix the proposed production is divided into the below
proportion.
TTaabbllee 44--22 PPrroodduuccttiioonn MMiixx Description
Production Ratio2
0.5 Liter bottle 32.79 %1.5 Liter bottle 65.57%5 Liter bottle
1.64% 100%
4
2 Production ratios have been calculated from the capacities of
the machinery and are explained in the following pages.
PREF-37/May, 2010/2
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Pre-Feasibility Study PET Bottles Manufacturing Unit
55 PPRROODDUUCCTTIIOONN PPRROOCCEESSSS FFiigguurree 55--11
PPrroocceessss FFllooww DDiiaaggrraamm ooff PPEETT BBoottttlleess
MMaannuuffaaccttuurriinngg
Drying the PET
Plasticizing the PET
Injection molding thePreform
PET absorbs moisture from the atmosphere.This must be removed
before processing
using a dehumidifying drier.
Dried PET Pellets are compressed andmelted by a rotating
injection Screw.
Molten PET is injected into aninjection cavity and cooled
rapidly to
form a "Preform".(The Original test-tube-like form, from
which
bottles are blown is know as a Preform).
Opitimizing thePreform
Temperature
The temperature of the preform isadjusted to the correct profile
for
blowing.
Stretch blow moldingthe container.
The hot Preform is simultaneously stretchedand blown (thereby,
orienting the crystals of
and strengthening the PET) into a shapedblow mold to form a
tough, lightweight
container.
Containerejection
The finished containeris ejected.
PREF-37/May, 2010/2
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Pre-Feasibility Study PET Bottles Manufacturing Unit
PET bottles manufacturing process involves two basic stages of
Pre-form manufacturing and Bottle Stretch Blow Molding. 1. Pre-form
manufacturing process consists of following steps:
a. Resin drying and dehumidification b. Melting of resin and
injection into mold c. Injection blow molding d. Primary cooling e.
Secondary cooling f. Ejection and storage
2. Bottle Stretch Blow Molding, process involves: a. Pre-form
feeding b. Pre-form heating c. Transfer of heated pre-forms to blow
wheel d. Bottle stretch blow molding e. Bottle ejection
55..11 MMaannuuffaaccttuurriinngg SSttaaggeess Bottles can be
made through two types of processes.
1. One-step process 2. Two-step process
55..11..11 OOnnee--SStteepp PPrroocceessss In a one-step
process, the PET bottles are made directly from the resin. Both the
pre-form manufacturing and stretch blow molding is performed on a
single line.
Main features of the one step process are as follows:
1. Lesser Power consumption. 2. Lower initial investment. 3.
Same number of injection cavities and blow molds as on conventional
machine. 4. Better thermal efficiency because the residual heat in
the pre-forms from the
injection molding process is used for blowing. 5. Bottles free
from scruff marks, as performs are not re-gripped before blowing.
6. Highly oval or rectangular cross-sectioned containers. 7.
Different pre-form designs, as pre-form wall is thicker to retain
heat where
stretching is required.
55..11..22 TTwwoo--SStteepp PPrroocceessss In a two-step
process, PET bottles are made in two discrete steps. The first step
involves making the pre-form, and the next, the production of
bottle. The pre-forms are produced earlier and stored, and stretch
blow molding is done as and when required.
Main features of two-step production process are as follows: 1.
Higher operating efficiency because of separate injection and blow
molding
function. 2. Higher initial investment. Buying pre-forms instead
of making them can save
money.
PREF-37/May, 2010/2
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Pre-Feasibility Study PET Bottles Manufacturing Unit
3. Different cycle times of the two separate machines, so the
outputs are matched by increasing the number of injection
cavities.
4. More suitable for high volume production of less technically
demanding containers such as carbonated soft drink bottles.
5. Thermal efficiency lower since the pre-forms are first cooled
to the room temperature for storage purposes and then re-heated to
suitable blowing temperature.
6. Better adaptability to fluctuation in demand, as pre-forms
can be stockpiled. Care must be taken in controlling storage
conditions to ensure consistent aging and moisture absorption of
different pre-form batches.
7. Centralized pre-form production facility can be created to
supply several blow molders.
8. Higher flexibility, as bottle makers can make or buy
pre-forms. 9. Higher inventory of pre-forms, as they are frequently
scuffed before blowing. 10. Degree of ovality restricted owing to
the difficult of temperature profiling of the
pre-forms. 11. Thinner pre-form walls, so that it heats up
faster where stretching is required.
66 MMAACCHHIINNEERRYY RREEQQUUIIRREEMMEENNTT TTaabbllee 66--11
MMaacchhiinneerryy RReeqquuiirreemmeenntt Unit Cost Total Cost
(Rs.)Injection Molding Machine I 1 500,000 500,000Injection Molding
Machine II 1 450,000 450,000Blow Molding Machine I 1 595,000
595,000Blow Molding Machine II 1 595,000 595,000Compressor 1
250,000 250,000Cooling Tower 1 170,000 170,000Chiller Unit 1
100,000 100,000Lathe 8 ft, refurbished 1 350,000 350,000Lathe 5.5
ft, 1 200,000 200,000Pillar Drill 26 inches, with pump
1 100,000 100,000
Facer 1 192,000 192,000Shaper 26 inch 1 168,000 168,000Die Molds
250,000 250,000Production Shells 150,000 150,000Generator (50 KWH)
Made in China3
1 295,000 295,000
Total Cost 4,365,000
7
3 As per prevailing policy, industrial grids provide consistent
electric supply to industrial units. In case if unit doesn't place
in industrial grid area then generator is required
PREF-37/May, 2010/2
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Pre-Feasibility Study PET Bottles Manufacturing Unit
66..11 IInnjjeeccttiioonn mmoollddiinngg mmaacchhiinneess
Injection molding machines of two different sizes are required as
the proposed production mix depends upon different sizes.
The refurbished injection molding machines of the following
brands are available in the market:
Kawaguchi, JSW, Meiki, Nessei, Net Star, Toshiba, Hayabusa,
Senki.
Usually, there is a guarantee of 6 months from the date of
installation for the machinery, but not for its electrical parts
and components. The machinery delivery time is 15-20 days if it is
available off-the-shelf, but if not, then it has to be imported,
which can take up to 4 months, depending upon the availability. The
stretch blow molding machines are also being manufactured
locally.
66..22 CCoommpprreessssoorr The compressor will be used with the
stretch blow machine. It will supply compressed air to the
blow-molding machine.
66..33 CCoooolliinngg ttoowweerr,, CChhiilllleerr uunniitt The
cooling tower is required to generate cooling water for cooling the
compressors.
66..44 WWoorrkksshhoopp MMaacchhiinneess Lathe machines, pillar
drill, facer and shaper are required for the workshop. All the
machines required for the workshop are manufactured locally.
77 PPRROODDUUCCTTIIOONN For the purpose of this project, the
injection molding machine with total barrel capacity of 111 grams
will be used for the production of pre-forms of 0.5 liter bottles
only. The other injection-molding machine will be used for the
production of pre-forms of 1.5 liters and 5 liter bottles in the
ratio of 80:20. This machine with high barrel capacity will enable
the business to make 19 liter bottles at a later stage.
77..11 IInnjjeeccttiioonn MMoollddiinngg
77..11..11 IInnjjeeccttiioonn MMoollddiinngg CCaappaacciittyy
DDeettaaiillss A JSW Series 70-ton machine is available in the
injection capacities of 111 grams, 145 grams or 192 grams. For the
purpose of this pre-feasibility study, the machine with injection
capacity of 111 grams has been used. For PET, it is recommended
that a factor of 70% be used to determine the shot size as a
percentage of total barrel capacity.
This means that for the 111 grams machine, it will be able to
make a shot size of 78 grams (111 grams X 70%)
0.5 liter bottle weighs roughly 15 grams, so the 111 gram
machine will be able to make maximum of 4 pre-forms.
PREF-37/May, 2010/2
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Pre-Feasibility Study PET Bottles Manufacturing Unit
Second machine will be used for the production of 1.5 and
5-liter PET bottles (Kawaguchi Series). 175 ton machine comes in
Shot Weights of 302 grams or 373 grams or 537 grams. For the
purpose of this study, the machine of 537 grams has been used.
Using the 70% recommended factor, this machine will be able to make
a shot size of 376 grams (537 grams X 70%)
A 1.5-liter Bottle weighs roughly 33 grams. Hence the 537-gram
machine will be able to make a maximum of 10 pre-forms in one
stroke.
A 5-liter Bottle weighs roughly 340 grams. Hence the 537-gram
machine will be able to make a maximum of 1 pre-form in one
stroke.
Both injection-molding machines take 18-20 seconds to complete
one stroke.
77..11..22 IInnjjeeccttiioonn MMoollddiinngg PPrroocceessss
DDeettaaiillss The primary role of the injection-molding machine is
to develop performs.
The raw material (PET bottles grade resin) is placed in the
hopper of an injection-molding machine where it is fed into a
chamber for melting. Melting is done by conducting heat into the
material in a "Plunger" machine, while the material is primarily
heated by shearing or mechanically working the material in a
"Screw" machine. Several shots of material are heated and held in
the injection unit.
Once melted, the material is forced, under pressure, into the
mold where it conforms to the shape of the cavity. The mold is
temperature controlled, usually by circulating
temperature-controlled water through it. Once the part is cooled,
the mold is opened and the part removed. The mold is then closed
and ready for the next shot. The mold is clamped shut while the
material is being injected in to the cavity since the cavity
pressure may be as high as 5,000 psi4. The clamp is sized by the
"Tonnage" it holds.
An injection-molding machine usually takes 18-20 seconds,
depending upon the make and the model, to complete one stroke. The
number of pre-forms made depends upon the mold/die and the number
of cavities. The higher the number of cavities in a mold, the
higher will be the clamping force required.
The injection molding machine making pre-forms for 5-liter
bottle is the same as the one making pre-form for 1.5 liter bottle,
but the production of the 5 liter bottles will be less. The details
of production capacity for the injection molding machines are given
in below table:
9
4 pounds per square inch
PREF-37/May, 2010/2
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Pre-Feasibility Study PET Bottles Manufacturing Unit
TTaabbllee 77--11 PPrroodduuccttiioonn CCaappaacciittyy ooff
IInnjjeeccttiioonn MMoollddiinngg MMaacchhiinnee
Production Per Stroke Production
Stroke per
minute
Installed cap/day
Share in Production
Product Mix Cap./Day
Annual Production
0.5 Liters PET bottle 4 3 5,760 100% 5,760 1,728,000
1.5 Liters PET bottle 10 3 14,400 80% 11,520 3,456,000
5 Liters PET bottles 1 3 1,440 20% 288 86,400
Total 17,568 5,270,400
77..22 SSttrreettcchh BBllooww PPrroocceessss The stretch
blow-molding machine has a capacity of handling about 360 pre-forms
in an hour using one shell. The pre-forms are to be manually fed
into the stretch blow-molding machine by an operator.
The stretch blow-molding machine has a conveyor, which feeds
pre-heated pre-forms into the stretch blow-molding machine. The
stretch blow-molding machine blows a bottle of 1.5-liter capacity
in about 14 seconds. By incorporating the operator handling time,
the time of stretch blow molding along with ejection is about 17
seconds.
TTaabbllee 77--22 PPrroodduuccttiioonn CCaappaacciittyy
SSttrreettcchh BBllooww MMoollddiinngg MMaacchhiinnee Time
Required
(Sec)/Stroke5Hourly
Production Installed
Capacity/Day 0.5 Liter 11 2,252 18,018 1.5 Liter 17 1,447 11,574
5 Liter 59 409 3,269
77..33 PPrroodduuccttiioonn CCaappaacciittyy ooff tthhee
PPrroojjeecctt Since every bottle has to pass through both the
processes of injection molding and stretch molding, so the total
production capacity of the unit will be determined by the
bottleneck of the process. This means that the lower of the
capacities of the two processes will be the total capacity of the
unit.
As the maximum capacity of injection molding machine for 0.5
liter bottles is 5,760 and the capacity of stretch blow molding
machine for 0.5 liters bottles is 18,018, so the maximum production
of 0.5 liters bottles that can be obtained from the unit is 5,760
bottles. Similarly, the total production capacities of the 1.5
liter and 5 liter bottles can be worked out. Table 7-5 summarizes
the production capacities of the three sizes of PET bottles being
recommended in this pre-feasibility study.
10
5 Stretch Blow machine blows 4 bottles in one stroke.
PREF-37/May, 2010/2
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Pre-Feasibility Study PET Bottles Manufacturing Unit
TTaabbllee 77--33 MMaaxxiimmuumm PPrroodduuccttiioonn
CCaappaacciittyy ooff UUnniitt
Product Injection Molding
Production
Stretch Blow
Molding Capacity
Maximum Production of
the unit per day
Annual Installed Capacity
Percentage Share in
Production
0.5 Liter 5,760 18,018 5,760 1,728,000 32.79%1.5 Liter 12,672
11,574 11,574 3,456,000 65.57%5 Liter 288 3,269 288 86,400
1.64%Total 5,270,400 100%
77..44 SSttaarrttiinngg PPrroodduuccttiioonn CCaappaacciittyy
Starting capacity utilization of this unit is 40%. The maximum
capacity level that can be achieved is 90%.
88 HHUUMMAANN RREESSOOUURRCCEE RREEQQUUIIRREEMMEENNTT TTaabbllee
88--11 HHuummaann RReessoouurrccee RReeqquuiirreemmeenntt Number
of
Personnel Monthly Salary
(Rs) Annual Salary
in (Rs)CEO 1 50,000 600,000Production Manager 1 30,000
360,000Accountant 1 14,000 168,000Injection Machine Operators 2
12,000 288,000Blow Machine Operators 2 12,000 288,000Pre-form
Handler 1 8,000 96,000Helpers 4 7,000 336,000Guards 2 7,000
168,000Total 14 192,000 2,304,000
99 LLAANNDD && BBUUIILLDDIINNGG For the proposed
project, an area of about 5,000 sq. ft. is required. It is
recommended that the land should be bought. The details of the area
required for different activities are given below:
TTaabbllee 99--11 BBuuiillddiinngg CCoovveerreedd AArreeaa
RReeqquuiirreemmeenntt
11
Description Area (sq. ft) Cost per Sq. ft. Total in
(Rs)Management building 100 1300 130,000Production Area 1,728 800
1,382,400Raw Material Store 252 700 176,400Finished goods store 510
700 357,000Loading area 696 700 487,200Workshop Area 855 700
598,500Cooling Tower/Chiller 684 600 410,400Total Construction Cost
4,950 3,541,900
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Pre-Feasibility Study PET Bottles Manufacturing Unit
PREF-37/May, 2010/2
12
1100 PPRROOJJEECCTT EECCOONNOOMMIICCSS
Capital Investment Rs. In actualsLand 2,358,889
Building/Infrastructure 3,541,900 Machinery & equipment
4,365,000 Furniture & fixtures 81,250 Office equipment 112,000
Pre-operating costs 508,000 Total Capital Costs 10,967,039
Working Capital Rs. In actualsRaw material inventory
2,312,572
als
ect38%4.32
Cash 410,710 Total Working Capital 2,723,282
Total Investment 13,690,320
Initial Financing Rs. In actuDebt 50% 6,845,160 Equity 50%
6,845,160
Initial Financing Equity ProjIRR 48%Payback Period (yrs) 4.25
Net Present Value (Rs.) 17,945,535 16,221,149
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Pre-Feasibility Study PET Bottles Manufacturing Unit
1111 FFIINNAANNCCIIAALL AANNAALLYYSSIISS
1111..11 PPrroojjeecctteedd IInnccoommee SSttaatteemmeenntt
Statement Summaries SMEDAIncome Statement
Rs. In actualsYear 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
Year 8 Year 9 Year 10
Revenue 16,257,024 22,353,408 29,506,499 37,866,673 47,603,818
58,909,724 64,800,697 71,280,766 78,408,843 86,249,727 Cost of
goods sold 12,347,210 16,470,549 20,664,692 25,304,121 30,431,003
36,091,566 38,341,738 40,748,705 43,324,710 46,083,045 Gross Profit
3,909,814 5,882,859 8,841,806 12,562,553 17,172,815 22,818,158
26,458,959 30,532,061 35,084,133 40,166,682
General administration & selling expensesAdministration
expense 1,272,000 1,027,130 1,127,133 1,236,872 1,357,296 1,489,444
1,634,459 1,793,592 1,968,219 2,159,847 Rental expense - - - - - -
- - - - Utilities expense 143,119 157,431 173,174 190,492 209,541
230,495 253,544 278,899 306,789 337,468 Office expenses
(stationary, etc.) 12,720 10,271 11,271 12,369 13,573 14,894 16,345
17,936 19,682 21,598 Promotional expense 325,140 447,068 590,130
757,333 952,076 1,178,194 1,296,014 1,425,615 1,568,177 1,724,995
Insurance expense - - - - - - - - - - Professional fees (legal,
audit, etc.) 81,285 111,767 147,532 189,333 238,019 294,549 324,003
356,404 392,044 431,249 Depreciation expense 632,920 632,920
632,920 632,920 632,920 632,920 632,920 632,920 632,920 632,920
Amortization expense 50,800 50,800 50,800 50,800 50,800 50,800
50,800 50,800 50,800 50,800
Subtotal 2,517,985 2,437,388 2,732,961 3,070,120 3,454,225
3,891,297 4,208,085 4,556,166 4,938,631 5,358,876 Operating Income
1,391,829 3,445,471 6,108,845 9,492,433 13,718,589 18,926,861
22,250,874 25,975,896 30,145,502 34,807,806
Other income 21,471 27,017 44,007 113,337 247,239 494,816
871,180 1,340,227 1,894,188 2,739,840 Earnings Before Interest
& Taxes 1,413,300 3,472,488 6,152,852 9,605,770 13,965,829
19,421,677 23,122,054 27,316,122 32,039,690 37,547,646
Interest expense - 1,014,823 820,366 592,410 325,184 48,291 - -
- - Earnings Before Tax 1,413,300 2,457,666 5,332,486 9,013,360
13,640,645 19,373,386 23,122,054 27,316,122 32,039,690
37,547,646
Taxable earnings for the year 1,413,300 2,457,666 5,332,486
9,013,360 13,640,645 19,373,386 23,122,054 27,316,122 32,039,690
37,547,646 Tax 494,655 860,183 1,866,370 3,154,676 4,774,226
6,780,685 8,092,719 9,560,643 11,213,891 13,141,676 NET
PROFIT/(LOSS) AFTER TAX 918,645 1,597,483 3,466,116 5,858,684
8,866,419 12,592,701 15,029,335 17,755,480 20,825,798
24,405,970
PREF-37/May, 2010/2
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Pre-Feasibility Study PET Bottles Manufacturing Unit
1111..22 PPrroojjeecctteedd BBaallaannccee SShheeeett Statement
Summaries SMEDABalance Sheet
Rs. In actualsYear 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
Year 7 Year 8 Year 9 Year 10
AssetsCurrent assets
Cash & Bank 410,710 1,020,712 780,453 2,153,334 5,402,478
11,080,153 21,907,564 36,171,111 53,177,352 73,101,830 109,554,201
Accounts receivable - 812,851 1,930,522 2,592,995 3,368,659
4,273,525 5,325,677 6,185,521 6,804,073 7,484,480 8,232,929
Finished goods inventory - 102,893 137,255 172,206 210,868 253,592
300,763 319,514 339,573 361,039 384,025 Equipment spare part
inventory - - - - - - - - - - - Raw material inventory 2,312,572
3,187,013 4,216,419 5,423,369 6,833,445 8,475,607 9,344,356
10,302,153 11,358,124 12,522,331 -
Total Current Assets 2,723,282 5,123,470 7,064,648 10,341,904
15,815,449 24,082,876 36,878,361 52,978,300 71,679,121 93,469,681
118,171,155
Fixed assetsLand 2,358,889 2,358,889 2,358,889 2,358,889
2,358,889 2,358,889 2,358,889 2,358,889 2,358,889 2,358,889
2,358,889 Building/Infrastructure 3,541,900 3,364,805 3,187,710
3,010,615 2,833,520 2,656,425 2,479,330 2,302,235 2,125,140
1,948,045 1,770,950 Machinery & equipment 4,365,000 3,928,500
3,492,000 3,055,500 2,619,000 2,182,500 1,746,000 1,309,500 873,000
436,500 - Furniture & fixtures 81,250 73,125 65,000 56,875
48,750 40,625 32,500 24,375 16,250 8,125 - Office equipment 112,000
100,800 89,600 78,400 67,200 56,000 44,800 33,600 22,400 11,200
-
Total Fixed Assets 10,459,039 9,826,119 9,193,199 8,560,279
7,927,359 7,294,439 6,661,519 6,028,599 5,395,679 4,762,759
4,129,839
Intangible assetsPre-operation costs 508,000 457,200 406,400
355,600 304,800 254,000 203,200 152,400 101,600 50,800 -
Total Intangible Assets 508,000 457,200 406,400 355,600 304,800
254,000 203,200 152,400 101,600 50,800 - TOTAL ASSETS 13,690,320
15,406,789 16,664,247 19,257,783 24,047,607 31,631,315 43,743,080
59,159,298 77,176,400 98,283,240 122,300,993
Liabilities & Shareholders' EquityCurrent liabilities
Accounts payable - 797,824 1,586,584 2,037,245 2,519,583
3,055,295 3,597,872 3,984,755 4,246,377 4,527,419 4,139,202 Total
Current Liabilities - 797,824 1,586,584 2,037,245 2,519,583
3,055,295 3,597,872 3,984,755 4,246,377 4,527,419 4,139,202
Other liabilitiesLong term debt 6,845,160 6,845,160 5,716,375
4,393,134 2,841,936 1,023,513 - - - - -
Total Long Term Liabilities 6,845,160 6,845,160 5,716,375
4,393,134 2,841,936 1,023,513 - - - - -
Shareholders' equityPaid-up capital 6,845,160 6,845,160
6,845,160 6,845,160 6,845,160 6,845,160 6,845,160 6,845,160
6,845,160 6,845,160 6,845,160 Retained earnings - 918,645 2,516,128
5,982,244 11,840,928 20,707,347 33,300,048 48,329,383 66,084,863
86,910,661 111,316,631
Total Equity 6,845,160 7,763,805 9,361,288 12,827,404 18,686,088
27,552,507 40,145,208 55,174,543 72,930,023 93,755,821 118,161,791
TOTAL CAPITAL AND LIABILITIES 13,690,320 15,406,789 16,664,247
19,257,783 24,047,607 31,631,315 43,743,080 59,159,298 77,176,400
98,283,240 122,300,993
PREF-37/May, 2010/2
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Pre-Fea
PREF-37/May
sibility Study PET Bottles Manufacturing Unit
, 2010/2
15
Statement Summaries SMEDACash Flow Statement
Rs. In actualsYear 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
Year 7 Year 8 Year 9 Year 10
Operating activitiesNet profit - 918,645 1,597,483 3,466,116
5,858,684 8,866,419 12,592,701 15,029,335 17,755,480 20,825,798
24,405,970 Add: depreciation expense - 632,920 632,920 632,920
632,920 632,920 632,920 632,920 632,920 632,920 632,920
amortization expense - 50,800 50,800 50,800 50,800 50,800 50,800
50,800 50,800 50,800 50,800 Deferred income tax - - - - - - - - - -
- Accounts receivable - (812,851) (1,117,670) (662,474) (775,663)
(904,866) (1,052,153) (859,844) (618,552) (680,407) (748,448)
Finished good inventory - (102,893) (34,361) (34,951) (38,662)
(42,724) (47,171) (18,751) (20,058) (21,467) (22,986) Equipment
inventory - - - - - - - - - - - Raw material inventory (2,312,572)
(874,441) (1,029,405) (1,206,950) (1,410,076) (1,642,162) (868,750)
(957,797) (1,055,971) (1,164,208) 12,522,331 Accounts payable -
797,824 788,760 450,661 482,338 535,712 542,576 386,884 261,622
281,042 (388,217)
Cash provided by operations (2,312,572) 610,003 888,526
2,696,122 4,800,341 7,496,099 11,850,924 14,263,547 17,006,241
19,924,478 36,452,370
Financing activitiesChange in long term debt 6,845,160 -
(1,128,785) (1,323,242) (1,551,197) (1,818,424) (1,023,513) - - - -
Issuance of shares 6,845,160 - - - - - - - - - -
Cash provided by / (used for) financing activ 13,690,320 -
(1,128,785) (1,323,242) (1,551,197) (1,818,424) (1,023,513) - - -
-
Investing activitiesCapital expenditure (10,967,039) - - - - - -
- - - -
Cash (used for) / provided by investing activ (10,967,039) - - -
- - - - - - -
NET CASH 410,710 610,003 (240,259) 1,372,881 3,249,143 5,677,676
10,827,411 14,263,547 17,006,241 19,924,478 36,452,370
1111..33 PPrroojjeecctteedd CCaasshh FFllooww
SSttaatteemmeenntt
-
Pre-Feasibility Study PET Bottles Manufacturing Unit
1122 KKEEYY AASSSSUUMMPPTTIIOONNSS TTaabbllee 1122--11::
OOppeerraattiinngg AAssssuummppttiioonnss Hours operational per day
8Days operational per month 25Days operational per year 300
TTaabbllee 1122--22:: PPrroodduuccttiioonn
AAssssuummppttiioonnss Annual production capacity (Bottles)
5,270,400Capacity utilization (1st Year) 40%Capacity growth rate
(yearly) 10%Maximum Capacity utilization 90%First Year utilized
production (Bottles) 2,108,160
TTaabbllee 1122--33:: EEccoonnoommiicc AAssssuummppttiioonnss
Electricity growth rate 10%Wages growth rate 10%Machine maintenance
growth rate 5%
TTaabbllee 1122--44:: CCaasshh FFllooww AAssssuummppttiioonnss
Accounts Receivable cycle (in days) 30Accounts Payable cycle (in
days) 30Raw material inventory (in days) 30Finished Goods inventory
(in days) 3
TTaabbllee 1122--55:: RRaaww MMaatteerriiaall
AAssssuummppttiioonnss Initial Cost /Kg (Rs) 110Sales Tax 16%
17.60Freight Cost per Truck 26,000 Weight per Truck (kg) 9,000
Freight Cost per kg 2.89Total Raw material Cost (Rs/kg) 130Raw
material growth rate 5%Raw Material Inventory in store (Months)
3
PREF-37/May, 2010/2
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Pre-Feasibility Study PET Bottles Manufacturing Unit
TTaabbllee 1122--66:: EExxppeennssee AAssssuummppttiioonnss
Professional fees (audit, legal etc.) 0.5% of Revenue Office
Expenses (stationery, entertainment, etc.) 1% of total
administrative costs Promotional Expenses 1% of revenue
TTaabbllee 1122--77:: DDeepprreecciiaattiioonn RRaatteess
Depreciation Method Straight Line Building & infrastructure
5%Machinery & Equipment 10%Furniture & Fixtures 10%
TTaabbllee 1122--88:: FFiinnaanncciiaall AAssssuummppttiioonnss
Project life (Years) 10Debt: Equity 50:50Interest rate on long term
debt 16%Discount rate for calculation of NPV 20%
TTaabbllee 1122--99:: RRaaww MMaatteerriiaall
CCoonnssuummppttiioonn PPeerr BBoottttllee Size Weight (grams) Rate
Total Cost (Rs.)0.5 Liter 15.75 130 2.061.5 Liter 34.65 130 4.525
Liter 350.20 130 45.70Weighted average cost of Raw material per
bottle (Rs.) 4.39
TTaabbllee 1122--1100:: PPrroodduucctt AAvveerraaggee SSaallee
PPrriiccee Size Price (Rs)0.5 Liter 3.601.5 Liter 7.925 Liter
81.60Weighted Average Price (Rs) 7.71
PREF-37/May, 2010/2
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Pre-Feasibility Study PET Bottles Manufacturing Unit 1133
AANNNNEEXXTTUURREE
Raw Material Supplier:
Company Name Gatron Industries Liminted. Address 8th Floor,
Textile Plaza, M.A. Jinnah / Dunnolly Road, P.O. Box
5801,Karachi-74000, Pakistan Phone: 0092-21- 111-71-71-71 Fax
0092-21- 2416532 Email [email protected]
www.gatronova.com
Machinery Suppliers & Consultant:
Company Name KNC International Address Suit No.1, 5th Floor
Sharja Centre 62-Shadman Market Lahore
Pakistan Phone: 0092-42-7532157-58 Fax 0092-42-7532159 Email
[email protected] www.knc.com.pk
Company Name Universal Resources & Traders Address 387 A,
Geo Plaza near Picking Hotel, Model Town, Gujranwala Phone:
0092-55-3840241 Fax 0092-55-3840241 Email [email protected]
PREF-37/May, 2010/2
18
PET BOTTLES MANUFACTURING UNITTEXECUTIVE
SUMMARYINTRODUCTIONProject BriefProject RationaleProposed
CapacityTotal Project Cost
CURRENT INDUSTRY STRUCTUREPRODUCTS OFFEREDProduction Mix
PRODUCTION PROCESSManufacturing StagesOne-Step ProcessTwo-Step
Process
MACHINERY REQUIREMENTInjection molding machinesCompressorCooling
tower, Chiller unitWorkshop Machines
PRODUCTIONInjection MoldingInjection Molding Capacity
DetailsInjection Molding Process Details
Stretch Blow ProcessProduction Capacity of the ProjectStarting
Production Capacity
HUMAN RESOURCE REQUIREMENTLAND & BUILDINGPROJECT
ECONOMICSFINANCIAL ANALYSISProjected Income StatementProjected
Balance SheetProjected Cash Flow Statement
KEY ASSUMPTIONSANNEXTURE