Marble Processing Plant Jan-2020
Marble Processing Plant Jan-2020
Marble Processing Plant Jan-2020
MARBLE
PROCESSING
PLANT
January 2021
TABLE OF CONTENTS
1 DISCLAIMER .................................................................................................... 2
2 EXECUTIVE SUMMARY ................................................................................... 3
3 INTRODUCTION TO SMEDA ........................................................................... 3
4 PURPOSE OF THE DOCUMENT ..................................................................... 4
5 BRIEF DESCRIPTION OF PROJECT & PRODUCT ........................................ 4
5.1 Production Process Flow .......................................................................... 5
5.2 Installed and Operation Capacity .............................................................. 5
6 CRITICAL FACTORS ....................................................................................... 6
7 GEOGRAPHICAL POTENTIAL FOR INVESTMENT ....................................... 6
8 POTENTIAL TARGET CUSTOMERS / MARKETS .......................................... 7
9 PROJECT COST SUMMARY ........................................................................... 7
9.1 Project Economics .................................................................................... 7
9.2 Project Cost .............................................................................................. 9
9.3 Land & Building Requirements ................................................................. 9
9.4 Machinery & Equipment Requirement .................................................... 10
9.5 Furniture & Fixtures Requirement ........................................................... 11
9.6 Vehicles Requirement............................................................................. 11
9.7 Office Equipment .................................................................................... 12
9.8 Human Resource Requirement .............................................................. 12
9.9 Utilities and Other Costs ......................................................................... 13
9.10 Revenue Generation............................................................................... 13
10 CONTACT DETAILS....................................................................................... 13
11 USEFUL WEB LINKS ..................................................................................... 13
12 ANNEXURES .................................................................................................. 15
12.1 Income Statement................................................................................... 15
12.2 Balance Sheet ........................................................................................ 16
12.3 Cash Flow Statement ............................................................................. 17
13 KEY ASSUMPTIONS ...................................................................................... 18
13.1 Operating Cost Assumptions .................................................................. 18
13.2 Production Cost Assumptions ................................................................. 18
13.3 Revenue Assumptions ............................................................................ 19
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1 DISCLAIMER
This information memorandum is to introduce the subject matter and provide a
general idea and information on the said matter. Although, the material included in
this document is based on data/information gathered from various reliable sources;
however, it is based upon certain assumptions, which may differ from case to case.
The information has been provided on as is where is basis without any warranties
or assertions as to the correctness or soundness thereof. Although, due care and
diligence has been taken to compile this document, the contained information may
vary due to any change in any of the concerned factors, and the actual results may
differ substantially from the presented information. SMEDA, its employees or agents
do not assume any liability for any financial or other loss resulting from this
memorandum in consequence of undertaking this activity. The contained
information does not preclude any further professional advice. The prospective user
of this memorandum is encouraged to carry out additional diligence and gather any
information which is necessary for making an informed decision, including taking
professional advice from a qualified consultant/technical expert before taking any
decision to act upon the information.
For more information on services offered by SMEDA, please contact our website:
www.smeda.org.pk
Document Control
Revision No. 1
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2 EXECUTIVE SUMMARY
Marble is calcareous metamorphic rock that is widely used in housing and building
construction as well as interior decorative, especially for floor, stairs, pavement,
external walls, kitchen slabs and novelties etc. The processing of marble mainly
entails the cutting (into predefined sizes), grinding and polishing of raw marble rocks
as per the required usages.
This particular pre-feasibility provides the basic information for setting up a small
scale ‘Marble Processing Plant’ that will process raw marble blocks and produce
marble strips, tiles and slabs for construction industry. The proposed unit will have
installed capacity of processing 1,500 sq. ft. of marble per day and 450,000 sq. ft.
per year.
The unit will operate on 8 hours single shift per day and total 300 days in a year.
Initial capacity utilization is estimated at 75% per annum with a gradual increase of
5% in subsequent years to achieve the maximum operational capacity (i.e. 95%).
The commercial viability of the proposed venture heavily depends on the quality of
produced marble slabs/tiles, variety of colors and regular orders from the customers.
Therefore, unit should preferably be located in or near to the marble processing
clusters where basic infrastructure and skilled labour is easily available.
The total project cost for setting up this unit is estimated at Rs. 68.688 million out of
which Rs. 66.805 million is capital cost and Rs. 1.883 million is working capital. The
project is proposed to be financed through 100% equity. The NPV is projected
around Rs. 13.483 million, with an IRR of 22% and a Payback Period of 4.76 years.
The project will provide employment opportunities to 17 people including the Owner.
The legal business status of this project is assumed to be ‘Sole Proprietorship.
3 INTRODUCTION TO SMEDA
The Small and Medium Enterprises Development Authority (SMEDA) was
established in October 1998 with an objective to provide fresh impetus to the
economy through development of Small and Medium Enterprises (SMEs).
With a mission "to assist in employment generation and value addition to the
national income, through development of the SME sector, by helping increase the
number, scale and competitiveness of SMEs", SMEDA has carried out ‘sectoral
research’ to identify policy, access to finance, business development services,
strategic initiatives and institutional collaboration and networking initiatives.
Preparation and dissemination of prefeasibility studies in key areas of investment
has been a successful hallmark of SME facilitation by SMEDA.
Concurrent to the prefeasibility studies, a broad spectrum of business development
services is also offered to the SMEs by SMEDA. These services include
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Marble Tiles /
450,000 337,500 427,500
Slabs
6 CRITICAL FACTORS
Following are the factors critical for the success of this business venture;
Efficient and cost effective procurement system for raw material.
Technical skills are vital for effectively operating the business, as skilled
workers can reduce wastage; ensure lower machine maintenance cost, in-
time delivery and quality finish of the product.
Factory location must take into account the availability of electric power and
water supply, proximity to supply sources and markets, and optimum visibility
and ease of access by customers.
Sufficient inventory of cutting blades and proper maintenance of machinery.
Availability, training, and retention of skilled labor.
Effective market linkages, especially with civil contractors focusing upon
construction of houses for lower middle and middle class.
Customer services through advice on cost effective transportation and
maintaining a list of transporters for the purpose. Clear communication to the
customers about expected color variation.
Careful selection of good location and acquiring the land at competitive rental
rates.
Strong networking with contractors and builders for repeat orders.
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Nowshera and Risalpur. As the production is dependent upon the easy availability
of marble and onyx, therefore, the project should be established nearby to stated
marble and onyx mines locations or marble and granite processing cluster.
Resources like skilled labour, utilities, infrastructure and transportation are also
easily available in these cities.
Description Details
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Break-Even
26,174,197 26,331,095 27,321,675 28,463,009 29,763,879 32,272,299 34,592,188 36,720,234 39,085,168 41,712,163
Revenue
Break-Even
193,883 177,314 167,258 158,405 150,586 148,434 144,640 139,580 135,063 131,037
Units
Margin of
37% 50% 54% 58% 62% 62% 62% 63% 63% 64%
Safety
However, for the purposes of further explanation the Project Economics based on
Debt:Equity (i.e. 50:50) Model has also been computed. On the basis of Debt:Equity
model the Internal Rate of Return, Payback Period and Net Present Value of the
proposed project are provide in the table below.
Table 4: Project Economics Based on Debt (50%):Equity (50%)
Description Details
Description Details
Debt Tenure 5
The projected Income Statement, Cash Flow Statement and Balance Sheet
enclosed as annexures are based on 100% Equity Based Business Model.
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Total 19,680,000
Total 3,600,000
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Total 113,000
Salary per
No. of Person
Description
Employees
(Rs.)
Owner / Manager 1 100,000
Gang Saw Operator 1 45,000
H/V Cutter Operator 1 45,000
Cutter Man 2 45,000
Crane Operator 1 35,000
Helper 6 22,000
P. Machine Operator 1 35,000
Accounts & Admin Officer 1 35,000
Security Guards 2 20,000
Procurement Officer 1 70,000
Total 17
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Finished Quantity
Quantity Unit Sale Sales
Goods
Description Produced for Sale Price Revenue
Inventory
(Sq. ft.) (Sq. ft.) (Rs.) (Rs.)
(Sq. ft.)
10 CONTACT DETAILS
In order to facilitate potential investors, contact details of machinery supplier
relevant to the proposed project are be given.
Table 14: Machinery Suppliers
Name of
Address Phone E-mail
Supplier
ZAK Marble Factory
0300-
Mr. Zahoor Kili Gul Mohammad, zakakar@yahoo.com
9383853
Airport Road, Quetta
M/s Zafar Zehri Marble
Mr. Zafar Industries (Pvt) Ltd.
021-5863787
Zehri Mauripur Road
Karachi
M/s N-Traders Marble
Mr. Ilyas 0346-2332552
City, Gadani, Lasbela
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12 ANNEXURES
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Revenue 41,765,625 52,214,625 59,934,735 68,555,889 78,172,845 84,798,597 91,582,484 98,909,083 106,821,810 115,367,555
Cost of sales
Raw Material Cost 16,087,500 20,112,300 23,085,972 26,406,713 30,111,022 32,663,163 35,276,216 38,098,313 41,146,179 44,437,873
Direct labour 4,584,000 5,030,305 5,520,062 6,057,503 6,647,270 7,294,458 8,004,657 8,784,002 9,639,224 10,577,713
Machinery maintenance 231,000 288,792 331,491 379,173 432,363 469,010 506,530 547,053 590,817 638,082
Direct electricity 1,800,000 2,112,000 2,468,400 2,874,960 3,338,148 3,671,963 4,039,159 4,443,075 4,887,382 5,376,121
Diesel cost for generator 254,250 279,675 307,643 338,407 372,247 409,472 450,419 495,461 545,007 599,508
Operating costs 5 (Misc) 148,500 189,090 221,067 257,549 299,116 330,477 363,524 399,877 439,864 483,851
Total cost of sales 23,105,250 28,012,162 31,934,635 36,314,305 41,200,167 44,838,542 48,640,506 52,767,781 57,248,474 62,113,148
Gross Profit 18,660,375 24,202,463 28,000,100 32,241,584 36,972,679 39,960,054 42,941,978 46,141,302 49,573,336 53,254,407
Other income (interest on cash) 95,703 342,287 695,678 1,109,246 1,594,573 2,058,820 2,569,425 3,209,164 3,897,611 4,690,261
Earnings Before Interest & Taxes 7,061,763 12,339,791 15,931,734 19,964,781 24,490,108 26,811,042 29,291,522 32,220,397 35,332,496 38,690,064
Earnings Before Tax 7,061,763 12,339,791 15,931,734 19,964,781 24,490,108 26,811,042 29,291,522 32,220,397 35,332,496 38,690,064
Tax 1,591,617 3,438,926 4,696,107 6,107,673 7,691,537 8,503,864 9,372,033 10,397,139 11,486,373 12,661,522
NET PROFIT/(LOSS) AFTER TAX 5,470,147 8,900,864 11,235,627 13,857,108 16,798,571 18,307,178 19,919,490 21,823,259 23,846,123 26,028,542
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Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Assets
Current assets
Cash & Bank 504,376 7,151,828 20,231,110 35,423,150 53,316,509 74,249,295 90,456,316 115,097,670 141,635,448 170,173,430 205,047,435
Accounts receivable 1,716,396 1,931,101 2,304,439 2,640,218 3,014,974 3,348,728 3,624,269 3,914,210 4,227,347 4,565,535
Finished goods inventory 2,100,477 2,346,569 2,674,329 3,040,267 3,448,472 3,736,545 4,053,376 4,397,315 4,770,706 5,176,096
Equipment spare part inventory 9,625 12,635 15,228 18,289 21,898 24,941 28,283 32,073 36,371 41,245 -
Raw material inventory 670,313 905,054 1,121,978 1,386,036 1,706,905 1,999,704 2,332,455 2,720,576 3,173,279 3,701,313 -
Pre-paid insurance 698,400 617,760 537,120 456,480 375,840 295,200 389,223 291,917 194,611 97,306 -
Total Current Assets 1,882,714 12,504,149 26,183,106 42,262,723 61,101,637 83,032,586 100,291,551 125,819,881 153,351,235 183,011,347 214,789,066
Fixed assets
Land 20,000,000 20,000,000 20,000,000 20,000,000 20,000,000 20,000,000 20,000,000 20,000,000 20,000,000 20,000,000 20,000,000
Building/Infrastructure 21,344,000 19,209,600 17,075,200 14,940,800 12,806,400 10,672,000 8,537,600 6,403,200 4,268,800 2,134,400 -
Machinery & equipment 19,680,000 17,712,000 15,744,000 13,776,000 11,808,000 9,840,000 7,872,000 5,904,000 3,936,000 1,968,000 -
Furniture & fixtures 671,000 603,900 536,800 469,700 402,600 335,500 268,400 201,300 134,200 67,100 -
Office vehicles 3,600,000 2,880,000 2,160,000 1,440,000 720,000 - 5,102,096 3,826,572 2,551,048 1,275,524 -
Computer equipment 113,000 90,400 67,800 45,200 22,600 - 160,149 120,112 80,075 40,037 -
Security deposit for WAPDA 402,000 402,000 402,000 402,000 402,000 402,000 402,000 402,000 402,000 402,000 402,000
Total Fixed Assets 65,810,000 60,897,900 55,985,800 51,073,700 46,161,600 41,249,500 42,342,245 36,857,184 31,372,122 25,887,061 20,402,000
Intangible assets
Pre-operation costs 995,000 796,000 597,000 398,000 199,000 - - - - - -
Total Intangible Assets 995,000 796,000 597,000 398,000 199,000 - - - - - -
TOTAL ASSETS 68,687,714 74,198,049 82,765,906 93,734,423 107,462,237 124,282,086 142,633,795 162,677,064 184,723,357 208,898,408 235,191,066
Other liabilities
Deferred tax (668,147) (1,177,954) (1,580,002) (1,861,059) (2,006,356) (2,082,026) (2,083,280) (1,996,669) (1,816,694) (1,535,993)
Total Long Term Liabilities - (668,147) (1,177,954) (1,580,002) (1,861,059) (2,006,356) (2,082,026) (2,083,280) (1,996,669) (1,816,694) (1,535,993)
Shareholders' equity
Paid-up capital 68,687,714 68,687,714 68,687,714 68,687,714 68,687,714 68,687,714 68,687,714 68,687,714 68,687,714 68,687,714 68,687,714
Retained earnings 5,470,147 14,371,011 25,606,638 39,463,746 56,262,317 74,569,495 94,488,985 116,312,243 140,158,366 166,186,908
Total Equity 68,687,714 74,157,860 83,058,725 94,294,352 108,151,460 124,950,030 143,257,208 163,176,698 184,999,957 208,846,079 234,874,622
TOTAL CAPITAL AND LIABILITIES 68,687,714 74,198,049 82,765,906 93,734,423 107,462,237 124,282,086 142,633,795 162,677,064 184,723,357 208,898,408 235,191,066
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Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Operating activities
Net profit 5,470,147 8,900,864 11,235,627 13,857,108 16,798,571 18,307,178 19,919,490 21,823,259 23,846,123 26,028,542
Add: depreciation expense 4,912,100 4,912,100 4,912,100 4,912,100 4,912,100 5,485,061 5,485,061 5,485,061 5,485,061 5,485,061
amortization of pre-operating costs 199,000 199,000 199,000 199,000 199,000 - - - - -
Deferred income tax (668,147) (509,807) (402,048) (281,057) (145,297) (75,669) (1,255) 86,612 179,975 280,702
Accounts receivable (1,716,396) (214,705) (373,338) (335,779) (374,756) (333,754) (275,541) (289,942) (313,137) (338,188)
Finished goods inventory (2,100,477) (246,091) (327,760) (365,938) (408,205) (288,073) (316,830) (343,940) (373,391) (405,389)
Equipment inventory (9,625) (3,010) (2,593) (3,061) (3,608) (3,044) (3,342) (3,790) (4,298) (4,874) 41,245
Raw material inventory (670,313) (234,741) (216,925) (264,057) (320,869) (292,800) (332,751) (388,121) (452,704) (528,034) 3,701,313
Advance insurance premium (698,400) 80,640 80,640 80,640 80,640 80,640 (94,023) 97,306 97,306 97,306 97,306
Accounts payable 708,336 176,799 134,938 151,763 166,576 120,201 125,034 136,423 148,954 (16,586)
Cash provided by operations (1,378,338) 6,647,452 13,079,282 15,192,040 17,893,359 20,932,786 22,784,827 24,641,354 26,537,777 28,537,982 34,874,005
Financing activities
Issuance of shares 68,687,714 - - - - - - - - - -
Cash provided by / (used for) financing activities 68,687,714 - - - - - - - - - -
Investing activities
Capital expenditure (66,805,000) - - - - - (6,577,806) - - - -
Cash (used for) / provided by investing activities (66,805,000) - - - - - (6,577,806) - - - -
NET CASH 504,376 6,647,452 13,079,282 15,192,040 17,893,359 20,932,786 16,207,021 24,641,354 26,537,777 28,537,982 34,874,005
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13 KEY ASSUMPTIONS
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Small and Medium Enterprises Development Authority
HEAD OFFICE
4th Floor, Building No. 3, Aiwan-e-Iqbal Complex, Egerton Road, Lahore
Tel: (92 42) 111 111 456, Fax: (92 42) 36304926-7
www.smeda.org.pk, helpdesk@smeda.org.pk
3rd Floor, Building No. 3, 5TH Floor, Bahria Ground Floor Bungalow No. 15-A
Aiwan-e-Iqbal Complex, Complex II, M.T. Khan Road, State Life Building Chaman Housing Scheme
Egerton Road Lahore, Karachi. The Mall, Peshawar. Airport Road, Quetta.
Tel: (042) 111-111-456 Tel: (021) 111-111-456 Tel: (091) 9213046-47 Tel: (081) 831623, 831702
Fax: (042) 36304926-7 Fax: (021) 5610572 Fax: (091) 286908 Fax: (081) 831922
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