Pre Feasibility of Shampoo Plant

HAIR &
SHINE
PREFEASIBILITY STUDY
SHAMPOO MANUFACTURING
BY
NISA ENTERPRISES
THE ISLAMIA UNIVERSITY OF BAHAWALPUR

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Presented by:
Nadia Shoukat- 23
Saqib Hussain- 35
Syed Arsalan- 28
MBA Finance,4th sem

Section A, Morning
Presented to:
Mam Fadia Naz
Lecturer of Project Appraisal

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DEDICATION
WE DEDICATE THIS HUMBLE EFFORT TO
The Holy Prophet

“HAZRAT MUHAMMAD”
(P.B.U.H)
The greatest Social Worker,
Whose every tear was for
The Cause of humanity
And also dedicated to

THE UNFATHOMABLE LOVE, UNFLINCHING SUPPORT
UNTIRING MIDNIGHT PRAYERS AND STEADFASTNESS
OF
“OUR REVERED PARENTS”
WHO HAS BEEN A BEACONHOUSE

FOR USFOR THE WHOLE OF OUR LIFE, WHO HAS
ALWAYS SHOWED US THE RIGHT PATH, THE PATH OF
TRUTHFULNESS AND HONESTY AND WHO HAS BEEN
ALONG WITH US THROUGHOUT OUR
STUDYING CARRIER

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Acknowledgements
God never spoils any effort; every piece of work is rewarded
according to the nature of devotion for it. We are extremely thankful
to ALLAH ALMIGHTY Who, in spite of numerous difficulties,
vicissitudes and acute frustrations enabled us to probe the present
study and dissertation. We bow our head to ALLAH ALMIGHTY for
the buntings and the blessings that He has bestowed upon us. Who
has given us the courage and stamina to come up to the
expectations of our revered teachers and ever loving parents and to
sum up my maneuverings for the completion of this manuscript.
All the respects are for the last Prophet of God, HOLY
PROPHET MUHAMMED (Peace Be Upon Him) Who is the greatest
scientist of all the ages, whose moral and spiritual teachings
enlighten our heart, mind and soul and flourished our thoughts
towards achieving higher ideas of life.
We deem it utmost pleasure to avail this opportunity to

express the heartiest gratitude and deep sense of obligation to our
revered Teacher Mam Fadia Naz, Lecturer, Department of
Business Management Sciences, Islamia University, Rahim Yar Khan
for his skilled guidance, keen interest, constructive criticism,
constant encouragement, valuable suggestions and pains taking
supervision throughout the course of our study and research work.
The work presented in this manuscript is accomplished under his
dynamic, skillful, affectionate guidance and generous transfer of
knowledge. Whenever we sought help from him, he was the person
who was always there bearing a welcoming smile on his face and
having the doors of his good offices always opened for us. We have
learnt a great deal from him.
We have the honor to express our deep sense of gratitude

and profound indebtedness to ever affectionate Mam Fadia Naz for
his keen interest, encouragement, generous guidance and untiring
help at all times. In fact it was not possible to bring this work to
fruitful conclusions without his day and night persuasive and sincere
efforts. He has guided us at every step that we took throughout our
career at postgraduate level. He has always thought right for our
betterment and for our success in the professional field. We cannot
thank him, as we have no words that can have an idea of the
respect we have in my heart for him.

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Table of Contents
1- Project Profile…………...………………………………….2
2- Production Process……………………....……………...…10
3- Annexure…………...……………………………................19
4- Key Assumptions………………………………….……….27
5- Financial Plan.…………………………….……………….38
6- Financial Statements………………………………………40
7- Financial Analysis…………………..……………………...44
8- Ratio Analysis……………………………………………..49

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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. We do 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.

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01- PROJECT PROFILE

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1 Project Profile
1.1 Project Brief

Name of company: NISA Enterprises
Brand Name: Hair & Shine Shampoo
Target Market: People of all age group belong to particularly
middle class.
Plant Capacity: Rated capacity is 500-15000 liters. Daily
production capacity is 10,000 liters/day of 8
hours shift.
Legal Status: Partnership firm
1.2 Opportunity Rational

The Fast Moving Consumer Goods (FMCG) industry is poised to clock
a 16 per cent growth in sales during 2008-09, against a growth rate
of 14.5 per cent achieved during 2007 (surveyed by FICCI). Among
28 major items of FMCG sector, shampoo is among those which are
expected to achieve a growth of 20% i.e. anti-dandruff shampoo
22%.
Major reasons of growth are growing economic fundamentals,
increased literacy, rapid urbanization, rising population levels,
growing consumer demand and increased affordability of the
consumers. These changes are due to various incentives proposed
in the Union Budget 2008-09, including the major farm loan waiver
scheme worth Rs 60 billion. Consumers’ preference for FMCGs is
shifting towards higher lifestyle categories like skin care, shampoos,
deodorants, anti-aging solutions, fairness products and men’s
products. Traditionally in Pakistan and generally all over the
world people prefer to use shampoos rather then soaps for hair
solution and this perception is gaining more currency day by day
which also adds to the advantage of the shampoo industry.
Common people especially young generation and women are now
more inclined towards their appearance. Moreover the liberalization
of media and introduction of a lot of private channels have made
both males and females very conscious about looks and fashion,
and looks are incomplete without healthy and shiny hairs.
Furthermore, the growing number of MNEs of FMCG’s (Fast Moving

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Consumer Goods) have increased the competition in local market

and also opened new opportunities through competition.
http://www.plunkettresearch.com/Industries/HealthCare/tabid/205/D
efault.aspx#IndustryTrends
1.3 Production Process

1.3.1 Developing the Formula:
Shampoo, as a specialized cleaning product for the hair, was
introduced in the 1930s to accompany commercial hair curlers for
home hair care. Using soap on hair creates a dull film that
contributes to limp and lifeless hair. Shampoo companies developed
this as an argument to use the new commercial shampoo products.
The 1930s saw the introduction of synthetic products made from
polymers and plastics, and the new shampoo formula used forms of
these synthetic detergents. This basic shampoo formula was used
until the 1960s, when radical changes were made to the
ingredients. Conditioners, exotic fragrances, chemicals and
additional dyes were incorporated at that time.
Personal care companies develop a shampoo formula, apply for a
patent and then advertise the unique properties of the shampoo.
The basic elements of all shampoos are water (70 to 80 percent),
detergents and preservatives.
Most shampoos also include oils (coconut, palm kernel or soy bean),
sulfates (sodium lauryl, ammonium lauryl and ether), and
alkanolamides (to improve both the texture and the foaming ability
of the shampoo).
Other chemicals are added to the shampoos in small amounts to
improve shine and condition the hair. These include dimethicone,
quatemium-80 and guar hydroxypropyltrimonium chloride.
1.3.2 Testing the Formula:

Shampoo is tested at various times in the development and
production process. Modern shampoo is evaluated on the cleaning
abilities but also the color, odor and texture of the liquid. The first
testing is done in the laboratory to evaluate the formula. This may
be done on humans, but some companies use small animals to
evaluate the harshness of the detergent and the toxicity of the
chemicals. Chemical testing is also done to ensure the shampoo
qualities remain stable as the product is shipped and stored at the
retail outlet and in the consumers' home.
Once the product formulation is tested, new shampoos are tested by

consumer volunteers. Demographic studies are used to isolate key
groups of consumers who are most likely to use and buy the
product. Shampoo samples are distributed to test groups and the
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subjects are asked to evaluate the product based on smell, cleaning

results, texture, color and product packaging. Groups are also asked
to evaluate the cost of the product to determine sales success. The
results of the test groups are tabulated and changes to the formula
are made based on the consumer comments. The new formula (or
packaging) is then tested again.
1.3.3 Shampoo Production:

Once the test groups and the developers are satisfied with the
product, the shampoo is put into large-scale production. The formula
is broken down into steps, and the manufacturing plant mixes the
ingredients in large vats. Most of the work is done by machinery, but
human supervisors observe the process to ensure the shampoo
batches are mixed correctly. Some shampoos require refrigeration
or heating to create the correct chemical balance and mixing
process. The shampoo in each vat is then tested to guarantee the
ingredients match the original formula. The amounts of
preservatives are also evaluated at this point. Once approval of the
ingredients and mixture is given, the shampoo is transferred into
machinery to pump the shampoo into the packaging.
1.4 Market Entry Timing

FMCG sector enjoys an Evergreen season of demand. Shampoo
plant is one of those which can be run 24 hour in all seasons
because it is part of fast moving consumer good. So we need not to
worry about market entry time. It can be any season of a year.
However Hot and dry weather increase the consumption of shampoo
and soaps all over the country because usage rate is almost
doubled in summer as compare to winter season. Health care
products become more attractive and valuable for the general
public in metro cities and towns. All these conduce to a mass
consumption of FMCG’s in the form of shampoos, conditioners and
soaps. People everywhere in general and in northern areas
especially are inclined to use shampoo for fresh feeling. This is
the most suitable time to enter into market shampoo.

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1.5 Proposed Business Legal Status

The legal status of business tends to play an important role in
any setup; the proposed Shampoo Manufacturing setup is assumed
to operate as a Firm.
1.6 Project Capacity and Rationale

1.6.1 Basis/Rationale:
In recommending the plant capacity we have considered the
following main factors:

 Current and future demand for the products in the local
market.
 Trend of imports by the local market.
 Availability of raw materials and the seasonal supply.
 The need to have a medium sized but manageable shampoo
processing plant.
 Discussions with the industry experts and entrepreneurs.
1.6.2 Plant Capacity:

The proposed capacity of shampoo plant is 10,000 liters/ day of 8
hour shift.
The plant will be operated at 70% capacity utilization for 8 hours a
day in the beginning; however, a 10% annual increase in capacity
utilization is assumed.
1.6.3 Raw Material Sourcing – Backward Integration

In the FMCG sector, nearly all of the ingredients that can be used
are classified by the Cosmetic, Toiletry, and Fragrance Association
(CTFA) in the governmentally approved collection known as the
International Nomenclature of Cosmetic Ingredients (INCI). The more
important ingredients in shampoo formulations are water,
detergents, foam boosters, thickeners, conditioning agents,
preservatives, modifiers, and special additives. To support the
production operations, continuous supply of above ingredients play
a key role for the success in the shampoo segment of FMCG.
Therefore, it is proposed to finalize the buying deal with the
supplier six months prior to the commencement of the production
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operations because all chemicals have to be exported from thailand,

singapoor and malaysia.. A day store is also assumed for keeping
daily requirement of raw material.
1.7 Project Investment

Total cost of the project is estimated at around Rs. 18,774.012.
The working capital requirement is around Rs. 2,807.953 and the
rest will be the fixed capital. Annextures are attached at the end.
1.8 Proposed Product Mix

In start, we will launch only one variant of shampoo that is Anti-
Dandruff.
Around 10% of the total shampoo market is accounted for by
200 ml bottle packaging , 30 % for 100 ml and 60 % for sachet.
1.9 Proposed Site & Location

The factors which we consider before selecting site & location are
included:
1. Iqbal Abad is a factory area and all faciliteis that required by a

factory are already aailable there like well-established
infrastructure etc.
2. Iqbal Abad is far away from residential area and the fragrance
of shampoo during manufacturing will not affect cililians there.
3. It is near to highway.
4. It is situated near to market.
5. Transportation facility are well-establihed.
6. Water is major component of shampoo and and water
conditions are better in Iqbal Abad.
7. Local man power will be easily available.
8. transportation cost is less.

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1.10 Key Success Factors

Following are some factors that we will take into consideration in
order to compete the competitors and we will use them as tips for
success:
1. BACKWARD INTEGRATION
2. PRODUCT QUALITY
3. DISTRIBUTION NETWORK
4. PRODUCT MARKETING AND EXISTING COMPETITION
5. OTHER MARKETING ASPECTS
5.1-Seasonality of Demand
5.2-Market Characteristics
5.3-Packaging
5.4-Product Distribution.
A typical distribution setup in health care business involves the

following hierarchy starting from the manufacturer to the
consumer:
SHAMPOO
MANUFACTURER
Designated
Distribution Agent Own Field Force
Wholesaler
Retailers
1. Departmental Stores 3. Supermarkets 5. Hotels
2. Convenience/Town Shops 4. Bakeries/Staple food
stores
We will take the distribution services from AL-RAZAK

ASSOCIATES, 11-B Block-Y Ghulshan-e-Usman, Rahim Yar Khan.

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1.11 Type of project

It is a NEW project for Nisa Enterprises.
1.12 Sponsors
i) NADIA SHOUKAT
Qualification: MBA (Finance)
N.I.C #: 31303-3538390-2
E-Mail Adresse: diya@mbaiub.co.cc
ii) SAQIB HUSSAIN

N.I.C #: 31303-7523648-2
E-Mail Adresse: saqib_hussain@live.com
iii) SYED ARSALAN SHAH

N.I.C #: 31303-1254795-0
E-Mail Adresse: saqib_hussain@live.com
1.14 Current industry Structure

Major brands and Players are:
Shampoo Company Ctagory Available in Markat

Brand Nmae packaging Share
Pantene Proctor & Shiny hairs 200ml
Gamble
Head & Proctor & Anti- 200ml 50% by P
Shoulder Gamble Dandruff &G
Pert Plus Proctor & Silky hairs 200ml
Gamble
Sunsilk Unilever Shiny hairs 100ml, 28%
200ml
Dabur Vatika Dabur Medicated 300ml 12%
Bioamla Kala Kola Medicated 100ml, 10%
200ml
The flood of imported shampoos at the wholesale and retail outlets

in the local markets has posed a serious threat to the local shampoo
manufacturers.
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The customs duty on finished goods and raw material is the same,
which is encouraging imports of brand names which are
manufactured locally as well,” said Yaqoob Karim, chairman,
Pakistan Soap Manufacturers Association. There are no guidelines
for the import of such items, and any one can import them without
any approval, he said.
Total market share of imported and smuggled shampoos is about 29
percent.

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02- PRODUCTION PROCESS

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2- PRODUCTION PROCESS
New shampoos are initially created by cosmetic chemists in the
laboratory. These scientists begin by determining what
characteristics the shampoo formula will have. They must decide on
aesthetic features such as how thick it should be, what color it will
be, and what it will smell like. They also consider performance
attributes, such as how well it cleans, what the foam looks like, and
how irritating it will be. Consumer testing often helps determine
what these characteristics should be.
Once the features of the shampoo are identified, a formula is
created in the laboratory. These initial batches are made in small
beakers using various ingredients. In the personal care industry,
nearly all of the ingredients that can be used are classified by the
Cosmetic, Toiletry, and Fragrance Association (CTFA) in the
governmentally approved collection known as the International
Nomenclature of Cosmetic Ingredients (INCI). The more important
ingredients in shampoo formulations are water, detergents, foam
boosters, thickeners, conditioning agents, preservatives, modifiers,
and special additives.
Ingredients of Shampoo
Water
The primary ingredient in all shampoos is water, typically making up
about 70-80% of the entire formula. Deionized water, which is
specially treated to remove various particles and ions, is used in
shampoos. The source of the water can be underground wells, lakes,
or rivers.
Detergents
The next most abundant ingredients in shampoos are the primary
detergents. These materials, also known as surfactants, are the
cleansing ingredients in shampoos. Surfactants are surface active
ingredients, meaning they can interact with a surface. The chemical
nature of a surfactant allows it to surround and trap oily materials
from surfaces. One portion of the molecule is oil compatible
(soluble) while the other is water soluble that has little calcium and
magnesium. When a shampoo is applied to hair or textiles, the oil
soluble portion aligns with the oily materials while the water soluble
portion aligns in the water layer. When a number of surfactant
molecules line up like this, they form a structure known as a micelle.
This micelle has oil trapped in the middle and can be washed away
with water, thus giving the shampoo its cleansing power.

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Surfactants are derived from compounds known as fatty acids. Fatty

acids are naturally occurring materials which are found in various
plant and animal sources. The materials used most often to make
the surfactants used in shampoos are extracted from coconut oil,
palm kernel oil, and soy bean oil.
Most commonly used raw material is:

• Ammonium Chloride
• Ammonium Lauryl Sulfate
• Glycol
• Sodium Laureth Sulfate
• Sodium Lauryle Sulfate
These detergents work best in water that has little calcium and
magnesium, as these elements bind to the detergent and make an
insoluble scum. So tetrasodium EDTA is used to sequester the
calcium and magnesium from the detergent, while keeping them
soluble, so they rinse away without scum.
The detergent cocamidopropyl betaine is added for several of its

special properties. It is milder on the skin than the benzine
sulfonates, so adding it to the mix reduces the amount of the
harsher detergents needed. It is thicker than the other ingredients,
so it can be added to make the mix have the right viscosity. It has
anti-static properties, so the hair doesn't generate an electric
charge and jump to the plastic combs and brushes used when
drying the hair. It is a humectants, attracting moisture from the air,
thus keeping hair from drying out. Lastly, it has antibiotic properties
that can prevent spoiling of the shampoo.
The surfactant ammonium xylenesulfonate is a hydro trope, a
compound that makes it easier for water to dissolve other
molecules. It is added as a thickener, and to help keep some of the
odd ingredients added for marketing effect in solution, including
perfumes. Glycerol stearate is another emulsifier used for this
purpose.
Fungicides will be added for anti-dandruff solution.
Foam boosters
In addition to cleansing surfactants, other types of surfactants are
added to shampoos to improve the foaming characteristics of the
formulation. These materials, called alkanolamides, help increase
the amount of foam and the size of the bubbles. Like primary
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detergents, they are also derived from fatty acids and have both
water soluble and oil soluble characteristics. Cocamide DEA (or
MEA or TEA) is used as a foaming agent, to make the lather.
The other surfactants will generate a certain amount of suds, but

this foaming agent is added to get the amount just right. Besides its
foam stabilizing effects, it is also a viscosity booster.
Thickeners
To some extent, the alkanolamides i.e Cocamide DEA (or MEA or
TEA) that make shampoos foam also make the formulations thicker..
Preservatives
Since shampoos are made from water and organic compounds,
contamination from bacteria and other microbes is possible.
Preservatives are added to prevent such growth. Preservatives used
are:
DMDM hydantoin and imidazolidinyl urea . These are added to
shampoos, to prevent fungal and bacterial spoilage. They release
formaldehyde to kill germs.
Modifiers
Other ingredients are added to shampoo formulas to modify specific
characteristics. Opacifiers are added to make the formula opaque
and give it a pearly look. Materials known as sequestering agents
are added to offset the dulling effects of hard water. Acids or bases
such as citric acid or sodium hydroxide are added to adjust the pH
of a shampoo so the detergents will provide optimal cleaning.
Special additives
One of the primary factors that influence the purchase of a shampoo
is its color and odor. To modify these characteristics, manufacturers
add fragrance oils and governmentally approved and certified FD&C
dyes. Other special additives can also have a similar effect. Natural
materials such as botanical extracts, natural oils, proteins, and
vitamins all impart special qualities and help sell shampoos.
Additives such as zinc pyrithione are included to address the
problem of dandruff. Other additives are dyes which can color the
hair.

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Manufacturing Process
After a shampoo formula is developed, it is tested to ensure that its

qualities will minimally change over time. This type of testing, called
stability testing, is primarily used to detect physical changes in such
things as color, odor, and thickness.

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It can also provide information about other changes, like microbial

contamination and performance differences. This testing is done to
ensure that the bottle of shampoo that is on the store shelves will
perform just like the bottle created in the laboratory.
The manufacturing process can be broken down into two steps. First
a large batch of shampoo is made, and then the batch is packaged
in individual bottles.
Compounding
1 Large batches of shampoo are made in a designated area of the
manufacturing plant. Here workers, known as compounders, follow
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the formula instructions to make batches that can be 3,000 gal

(11,000 1) or more. Raw materials, which are typically provided in
drums as large as 55 gal (200 1) or in 50-lb (23-kg) bags, are
delivered to the compounding area via forklift trucks. They are
poured into the batch tank and thoroughly mixed.
2 Depending on the formula, these batches can be heated and
cooled as necessary to help the raw materials combine more
quickly. Some raw materials such as water or the primary
detergents are pumped and metered directly into the batch tank.
These materials are added simply by pressing a button on

computerized controls. These controls also regulate the mixing
speeds and the heating and cooling rates. Depending on the size
and type of shampoo, making a 3,000-gal (11,000-1) batch can take
anywhere from one to four hours.
Quality control check

3 After all the ingredients are added to the batch, a sample is taken
to the Quality Control (QC) lab for testing. Physical characteristics
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are checked to make sure the batch adheres to the specifications

outlined in the formula instructions. The QC group runs tests such as
pH determination, viscosity checks, and appearance and odor
evaluations. They can also check the amount of detergent that is in
the formula and whether there is enough preservative. If the batch
is found to be "out of spec," adjustments can be made. For instance,
acids or bases can be added to adjust the pH, or salt can be added
to modify the viscosity. Colors can also be adjusted by adding more
dye.
4 After a batch is approved by QC, it is pumped out of the main
batch tank into a holding tank where it can be stored until the filling
lines are ready. From the holding tank it gets pumped into the filler,
which is made up of a carousel of piston filling heads.
Filling
5 At the start of the filling line, empty bottles are put in a large bin
called a hopper. Here, the bottles are physically manipulated until
they are correctly oriented and standing upright. They are then
moved along a conveyor belt to the filling carousel, which holds the
shampoo.
6 The filling carousel is made up of a series of piston filling heads
that are calibrated to deliver exactly the correct amount of shampoo
into the bottles. As the bottles move through this section of the
filling line, they are filled with shampoo.
7 From here the bottles move to the capping machine. Much like the
bin that holds the empty bottles, the caps are also put in a hopper
and then correctly aligned. As the bottles move by the caps are put
on and twisted tight.
8 After the caps are put on, the bottles move to the labeling
machines (if necessary). Depending on the type of labels, they can
either be stuck on using adhesives or heat pressed. Labels are stuck
to the bottles as they pass by.
9 From the labeling area, the bottles move to the boxing area,
where they are put into boxes, typically a dozen at a time. These
boxes are then stacked onto pallets and hauled away in large trucks
to distributors. Production lines like this can move at speeds of
about 200 bottles a minute or more.
Flow Chart

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Water (80Cº) +
Salt+ Cabopol +
Jug war
T SPADD is used to
Melting and Inject
through vessel
Solution Add
Anti dandruff
Color Added, Dye,

Fertilizer
Perfume + Caustic
at low temperature
Yogert Amala and Anti Bacterial Add

Fertilizer To Save Shampoo
Garnishing from Bacteria
Water 80º C
+ Salt

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+ Cabopolo + Low PH dissolve

+ Jug war High PH dissolves
The Filling Process
Sensor
Hopper
Rappers
Blade
Storter
Packing in Boxes
Quality Control
In addition to the initial checks to make sure the product meets
specifications, other quality control checks are made. For example,
line inspectors watch the bottles at specific points on the filling line
to make sure everything looks right. They notice things like fill
levels, label placement, and whether the cap is on correctly. The
product is also routinely checked to see if there has been any
microbial contamination. This is done by taking a bottle off the filling
line and sending it to the QC lab. Here, a small amount of the
shampoo product is smeared onto a plate and inoculated with
bacteria and other organisms to see if they grow. Additionally, the
packaging is also checked to see if it meets specifications. Things
such as bottle thickness, appearance, and bottle weight are all
checked.

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03- ANNEXTURES

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01- FIXED COST OF THE PROJECT
ANNEXTURE I-
HAIR & SHNE SHAMPOO
Estimated Cost of Land
The shampoo plant is estimated to require a total area 5 KANAL.

This area will give ample space in the beginning for sitting buildings
and different services necessary for the project i.e. shampoo
processing and filling machinery installation, cold storage for
chemicals, day store for keeping daily requirement of raw material
along with godown for raw material, management offices and
vehicle parking area, etc.
Sr Area in Unit cost Total cost

Description
. Marla (Rs.) (Rs.) 000’s
1 Land 100 50,000 5000
2 Stamp Duty @ 2% 100 1000 100
3 Capital Value Tax (CVT) @ 4% 100 2000 200
4 Registry Fees @ 1% 100 500 50
5 Municipal Tax @ 1% 100 500 50
6 Misc. Charges @ 0.5% 100 2500 25
Total Cost of Land 56,500 5,425

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ANNEXTURE II
HAIR & SHNE SHAMPOO
Estimated Cost of Civil Works
Unit of
Type of Cost/sq.fe
Sr measureme Total cost
Nomenclature constructio et
. nt (Rs. 000)
n ( Rs )
(sq.feet)
Cemented,
80*110=88
1 Main factory building Bricks & 180 1,548
00
MS Sheet
Cemented
2 Chowky 20*10=200 400 80
& Bricks
Cemented
3 Guest room 20*20=400 500 200
& Bricks
Cemented
4 Masjid 20*30=600 700 420
& Bricks
Office Cemented 60*30=180
5 600 1,080
& Bricks 0
40*30=120
6 Material stores Ms Sheet 150 180
0
40*30=120
7 Store rooms Ms Sheet 150 180
0
8 Grounds Grassy 30*30=900 60 54
Other Services ( water plant,
9 roads, boundary wall, tool - 12,000 100 120
shop. boiler)
Total - 27,100 - 3,862

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ANNEXTURE III
HAIR & SHNE SHAMPOO
Estimated cost of Plant & Machinery
Totalcos
Cost/uni
quantit t
Sr. Item Specification t
y (Rs.
(Rs.
000)
000)
Pipes, pipe fittings
Automatic and valves are of SS
Oral 316, seamless,
Liquid internally electro
1 1 1000 1000
Process polished with DIN
Equipment standard unions and
silicon Gaskets.
5000-15000 liters
Installation
& Trial run
2 100
expenses
@ 10%
Total Cost 1100

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THE FACILITY CONSISTS OF :
Shampoo Syrup Vessel

Online shampoo syrup pre filter
Manufacturing Vessel
Storage Vessel
Vacuum system for transfer of shampoo syrup
Filter press / Inline Homogenizer
Product piping
Control panels

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HAIR &
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UNIQUE FEATURES OF THE FACILITY:
• The plant is designed to be operated by one operator and one

helper, saving on precious man-power costs.
• Shampoo syrup and manufacturing vessels are provided with
limpet coils for heating and cooling, designed for internal
vacuum to facilitate transfer of syrup directly from stores to
sugar syrup vessel.
• Shampoo syrup is transferred to manufacturing vessel through
online shampoo syrup pre filter by vacuum.
• Entry of all propeller agitators is from bottom through a
specially designed cartridge mechanical seal with TC/TC seal
face.
• The advantage of the bottom propeller agitator over the
conventional agitator is that there are no vibrations of shaft,
no couplings in the drive assembly, leading to lower
maintenance cost.
• Pipes, pipe fittings and valves are of SS 316, seamless,
internally electro polished with DIN standard unions and
silicon Gaskets.
• Manhole of all the vessels is equipped with davit fitting and
the cover of the manhole instead of being lifted.
PROCESS CONTROL:
Values like current, product temperature are displayed digitally on
the electrical control panel. The mechanical seal is equipped with a
water circulating system and has a water detection sensor which
trips the motor, if the water circulation to the seal is interrupted.
CAPACITIES AVAILABLE:
500 liters to 15000 liters

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HAIR &
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ANNEXTURE IV
HAIR & SHNE

SHAMPOO
Net Initial Working Capital
A- Current assets: Rs. (000)

Inventories:
Raw material (30 days) 4,530
Finished goods (10% of production-dep) 5051.812
Spares & Stores 50
Total inventories
9631.812
Advances & Deposits 100
Account receivables ----
Cash 300
Total current assets
10031.812
B- Current liabilities:
Less: Bank borrowings
(7223.859)
Net initial working capital
2807.953

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HAIR &
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ANNEXTURE V
HAIR & SHNE SHAMPOO

Total Estimated Cost of the Project
Total cost
Sr Items
(Rs. 000)
1. Estimated cost of land 5,425
2. Estimated cost of civil works 3,862
3. Estimated cost of P & E 1100
4. Fire Insurance 50
5. Generator 2000
6. Technical know how charges 20
7. Project examination fees 100
8. Pre Operation expenses 100
9. Vehicles 1850
10
Furniture and fixtures 1146
.
Total 15,653
Production charges/ contingencies (2% of total) 313.06
Total fixed cost of the project 15,966.06
Add: Initial working capital 2,807.953
Total cost of the project 18,774.012

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04- KEY ASSUMPTIONS

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4.1 – Assumptions regarding Production & Sales
 Rated Capacity of plant is 5000 to 15000 liters per day.

 Production capacity of plant is 10,000 liters daily in 8 hours
shift
 The product is 100ml and 200ml bottles, and 5ml sachet of
shampoo.
 Daily production is 1000 liters.
 Annul production is (1,000ltr X 300 days = 300,000ltr)
 Operating efficiency of the project is assumed at 70% for the
first year operations, 80% for the second and 90% for the third
year.
 Year end inventory is assumed at 10% of production of that
particular year.
 100% sales are assumed to be local.
 Selling prices are assumed in accordance with the prevailing
rates in the local market.
A-Production:
2010 2011 2012

Description (in liters) (in liters) (in liters)
000’s 000’s 000’s
70% 80% 80%
Production
300 330 330
+ opening inventory
--- 30 36
(10%)
Available for sale
300 360 366
- ending inventory (30) (36) (36)
Quantity sold 270 324 330

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B-Sales Revenue:
Sales revenue = quantity sold x price
Type I product 200ml:

(270 thousand liter x 0.10) /0.20 liter bottle = 135 thousand
bottles
135 thousand bottles X Rs. 105 = Rs. 14175
thousand
Type II product 100ml

(270 thousand liter x 0. 30) /0.10 liter bottle= 810 thousands
bottles
810 thousands bottles x Rs. 45 = Rs. 36,450
thousand
Type III product sachet (5ml)

(270 thousand liter x 0. 60) /0.005 liter bottle= 32,400 thousands
bottles
32,400 thousands bottles x Rs. 3 = Rs. 97,200
thousand
2010 2011 2012

Local sales
(Rs. 000) (Rs. 000) (Rs. 000)
70% 80% 80%
Sachet 141,75 15,592.5 17,151.75
100 ml 36,450 40,095 44,104.5
200 ml 97,200 106,920 117,612
Total sales
147,825 162,607.5 178,868.25
revenue
A 10% increase is expected in sales revenue per

year.

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4.2– Assumptions regarding Cost of Production
1. Raw material cost:
Raw material requirement =total number of unit produce X per unit

material
Total # of sachet produced (5 ml): annual production/0.005 liter

: (300,000 x 0.60)/ 0.005 liter
: 36,000 thousand sachet
1. Raw material required: 36,000 thousand sachets X Rs.
0.90
: Rs. 32,400 thousand
Total # of bottles produced (100ml): annual production/0.1 liter

: (300,000.x 0.30)/ 0.1 liter
: 900 thousand bottles
2. Raw material required: 900 thousand bottles X Rs. 9

: Rs. 8,100 thousand
Total # of bottles produced (200ml): annual production/0.2 liters

: (300,000 x 0.10)/ 0.2liters
: 150 thousand bottles
3. Raw material required: 50 thousand bottles X Rs. 32 =

Rs.4800 thousand
Sizes 2010 (Rs. 2011 (Rs. 2012 (Rs.

000) 000) 000)
Sachet 32,400 35,640 35,640
100 ml 8,100 8,910 8,910
200 ml 4,800 5,280 5,280

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Total raw material 45,300 49,830 49,830

cost
• 10% increase in material cost annually
B- Labor cost:
Monthly
NO. of Annual Salary
Sr. Staff Title Salary
persons (Rs.000)
(Rs. 000)
Production Staff (Factory)
1
Factory Manager (Technical
. 02 50 1200
Manager)
2.
Processing Supervisors 02 25 600
3.
Filling area Supervisors 02 25 600
4.
Engineer 02 30 720
5.
Helpers or Shift men 08 12 1152
6.
Packaging Staff 02 10 240
Total 18 4512
Fringe benefits at 50% 2256
Total Labor Cost 6768
• 10% increase in labor cost annually
Labor cost 2010 2011 2012

(Rs.000) (Rs.000) (Rs.000)
6768 7444.8 8189.28

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C- Manufacturing Overhead cost:
1- Fixed cost
Fixed Costs Total monthly Total annual

cost (Rs.000) cost (Rs.000)
Electricity 40 480
Gas and Lubricants etc 10 120
Water 5 60
Stores & spars 50
Insurance (15966.06 x .05) 798.303
Repair & Maintenance:

• Machinery @ 5% of installation
cost of P&M 50
(1,000,000x.05)
• Building @ 3% of 115.88
construction cost
• Vehicles @ 5% cost of 92.5

vehicles
Total 1766.683
2. Variable cost
It is expected to increase @ 10% p.a.

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Rs.
Electricity (Rs.250/hr x 8 hrs x 300 days) =
600,000
Generator Diesel (Rs. 73/ltr x 10ltr/hr x 3 hrs x 300 days) =
657,000
Total variable cost
=12,57,000
2010 2011 2012

Total Overhead Cost
(Rs. 000) (Rs. 000) (Rs.000)
Total fixed cost
1766.683 1766.683 1766.683
Total variable cost 1257 1382.7 1382.7
Total Overhead Cost 3023.683 3149.383 3149.383
D- Depreciation cost:
Depreciation Rate (per annum) Cost of asset Depreciatio

(Rs. 000) n cost
Plant and machinery @ of 10%
1000 100
Building @ 5%
3862 193.1
Furniture and fixture @ 8%

1146 91.68
Vehicles @ 10%
1850 185

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Total depreciation cost 569.78
Straight line method of depreciation is used here.
4.3– Assumptions regarding Operating Expenses
A- Administrative Expenses
Monthly Annual
Sr
General Administrative Staff # Salary Salary
.
(Rs. 000) (Rs.000)
1.
M.D 01 40 480
2.
Finance Manager 01 30 360
3.
Marketing head 01 25 300
4. Selling & Distribution In
01 20 240
charge
5.
Selling & Distribution Officers 02 15 360
6.
Accountant/Cashiers 01 20 240
7.
Store Keepers 02 8 192
8.
Purchase Officer 01 15 180
9.
Drivers 01 12 144
1
0. Guards 02 8 192

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1
1. Sweepers 02 5 120
1
2. Office Boys 02 8 192
Total 17 206 3000
Fringe Benefits @ 50% 1500
Total Admin Expenses 4500
These expenses are assumed to be increased @ 10% p.a.
B- General expenses:
These expenses are assumed to be increased @ 10% p.a.
2010 2011 2010

General Expenses
(Rs.000) (Rs.000) (Rs.000)
Printing and stationary 100 110 121
Telephone, fax and postage
expenses 50 55 60.5
Entertainment
500 550 605
Miscellaneous 250 275 302.5
Total General expenses 900 990 1089
C- Selling expenses
2010 2011 2010

Selling Expenses
(Rs.000) (Rs.000) (Rs.000)

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Advertisement exp. 10% of

17,886.82
sales 14,782.5 16,260.75
5
Commission of sale agents
5% of sales 7,391.25 8,130.375 8,943.413
22,173.7 24,391.12 26,830.2

Total selling expenses
5 5 38
Distribution and R & D expenses will be 5% of sales each

year.
4.4- Land & Building

As we have given above, factory land would be purchased and
factory building would be constructed. Total initial outflow for
acquisition of land and factory building would be as follows:
Land for factory Purchased Rs.

5,000,000
Construction Rs. 3,862,000
Total Rs. 8,862,000
Vehicles for Transportation

The proposed setup would require two vehicles to carryout all
factory and office activities and to cater delivery requirements.
The cost of vehicles is assumed to be Rs. 1,850,000.

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Cost/ vehicle Total Cost

Description Unit
(Rs. 000) (Rs.000)
Delievery
1 1,100 1,200
Truck(Second Hand)
Hyundai Shehzor 1 650 650
Total 1,850
4.6- Factory office Furniture, Fixtures &

Equipments
Description Unit Cost per Unit Total cost

(Rs. 000) (Rs. 000)
Office Furniture & Fixture
AC 5 50 250
Electrical 1 200 200
Fittings
Furniture 1 350 350
Total 600 800
Office Equipment
Computers 10 28 280
Printers 2 18 3
Fax 2 10 20
Scanners 1 10 10
Total 22 660 346
Grand Total 1146
4.4 Power Generator

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Operations can be stopped and delieveries can be delayed

due to power failure/non-availability. Therefore to cover up
this risk, a power generator with 200 KVA capacities will be
purchased. A generator of this capacity will cost around Rs.
2,000,000/-.

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05- FINANCIAL PLAN

46
HAIR &
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NISA ENTERPRISES
FINANCIAL PLAN
(in Rs. 000’s)
Years Interest Principal Installemen Total loan

t amount
0 0 0 0 11,264.407
1 1,802.305 1,126.441 4,132.936 10,137.966
2 1,622.075 1,126.441 2,748.516 9,011.525
3 1,441.844 1,126.441 2,568.285 7,885.084
4 1,261.613 1,126.441 2,388.054 6,758.643
5 1,081.383 1,126.441 2,207.824 5,632.202
6 901.152 1,126.441 2,027.593 4,505.761
7 720.923 1,126.441 1,847.364 3,379.32
8 540.691 1,126.441 1,667.132 2,252.879
9 360.461 1,126.441 1,486.902 1,126.441
10 180.231 1,126.441 1,306.672 0.00
PMT = Total Loan Amount / 10

= 11,264.407 / 10
= 1,126.441

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06- FINANCIAL STATEMENTS

48
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ANNEXTURE VI
NISA Enterprises
Estimated Income Statement
Rs. In ‘000
Year ending September 30, 2011 2012 2013
Sales 147,825 162,607.5 178,868.2
5
Less Cost of Sales:
Raw Material 45,300 49,830 49,830
Labor 6,768 7444.8 8189.28
Manufacturing Overheads 3,023.683 3149.383 3149.383
Depreciation 569.78 569.78 569.78
Total Cost of Manufacture 55,661.46 60,993.96 61,738.44
3 3 3
Inventory Adjustment – Less (5,566.14 (533.250) (74.448)
6)
Cost of sales (50,095. (60,460. (61,663.
317) 713) 995)
Gross Profit 97,729.6 102,146. 117,204.
83 787 255
Operating Expenses
General & Administration 5,589 6,147.9 6,762.69
Expenses
Selling Expenses 22,173.75 24,391.12 26,830.23
5 8
Distribution Charges (5% of 7,391.25 8,130.375 8943.413
sales)
Total Operating Expenses (35,154) (38,669. (42,536.
4) 341)
Operating Profit / EBI 62,575.6 63,477.3 74,667.9
83 87 15
Other Expenses
Financial Charges on:
Alfalah Loan @ 16% 1,802.305 1,622.075 1,441.844
Bank Borrowings @ 20% 400 0 0
Amortization of pre-production 33 33 34
expenses
R & D (5% of sales) 7391.25 8130.375 8943.413
Total Other Expenses (9,626.5 (9785.45 (10,419.
55) ) 257)
Profit before Tax & Worker’s 52,949.1 53,691.9 64,248.6
Fund 28 37 58
Worker’s Fund (10% of (5,294.9 (5369.19 (6,424.8
PBT&WF) 13) 4) 66)
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Profit/ (Loss) before Tax 47,654.2 48,322.7 57,823.7

15 46 92
Tax Provision 0 0 0
Net Profit 47,654.2 48,322.7 57,823.7
15 46 92
ANNEXTURE VII
NISA Enterprises
Estimated Balance Sheet
Rs. in ‘000
Year Ending September End of Operating Years
30, Con.
2010 2011 2012 2013
ASSETS
CURRENT ASSETS:
Cash and Bank Balance 127.952 860.445 1,904.139 2,761.826
Short Term Investment 0 42,000 87,000 144,000
Accounts Receivable 0 3,695.625 4,065.188 4,471.706
Inventories:
Raw Material 4,530 4530 4,983 4,983
Finished 0 5,108.79 6,099.396 6,173.844
Goods
Stores and 50 55 60.5 66.5
Spares
Advances, Deposits and 100 110 121 133.1
Prepayments
Total Current Assets 4,807.95 56,359.8 104,233. 162,590.
2 6 223 026
FIXED ASSETS:
Fixed Assets at Cost 15,866.06 15,866.06 15,866.06 15,866.06
Less: Accumulated 0 569.78 1,139.56 1,709.34
Depreciation
Fixed Assets Net 15,866.0 15,296.2 14,726.5 14,156.7
6 8 6 2
Intangibles 100 67 34 0
Total Fixed Assets 15,966.06 15,363.28 14,760.5 14,156.72
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Total Assets 20,774.0 71,723.1 118,993. 176,746.

12 4 473 746
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Bank Borrowings 2,000 0 0 0
Worker’s Payable 0 5294.913 5,369.194 6,424.866
Current Maturity Fund 0 1126.441 1,126.441 1,126.441
Payable
Total Current Liabilities 2,000 6421.354 6,495.63 7,551.30
5 7
LONG TERM DEBTS:
Alfalah FCY Loan 11,264.40 101,37.96 9,011.525 7,885.084
7 6
Total Long Term Debt 11,264.4 101,37.9 9,011.52 7,885.08
07 66 5 4
EQUITY:
Paid up capital 7,509.605 7,509.605 7,509.605 7,509.605
Retained Earnings 0 47,654.21 95,976.95 153,800.7
5 8 5
Total Equity 7,509.60 55,163.8 103,486. 161,310.
5 2 563 355
Total Liabilities & Equity 20,774.0 71,723.1 118,993. 176,746.
12 4 473 746
ANNEXTURE VIII
NISA Enterprises
Estimated Cash Flow Statements
Rs. in ‘000
Year Ending September End of Operating Years
30, Const.
2010 2011 2012 2013
SOURCES OF FUNDS
Operating Profit 0 62,575.68 63,477.3 74,667.9
3 87 15
Add back: Depreciation 0 569.78 569.78 569.78
Total Funds from 0 63,145.4 64,.047. 75,237.6
Operations 63 167 95
Other Sources:
Alfalah loan @ 16% 11,264.4 0 0 0
07
Bank Borrowings 2,000 0 0 0
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HAIR &
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Paid up Capital 7509.60 0 0 0

5
Total Sources of Funds 20,774. 63,145.4 64,.047. 75,237.6
012 63 167 95
APPLICATION OF FUNDS
Investment in Fixed Assets 15,866.0 0 0 0
6
R & D charges 0 7391.25 8,130.37 0
5
Pre-production Expenses 100 0 0 0
Repayment of:
Alfalah Loan 0 0 1,126.44 1,126.44
1 1
Bank Borrowings 0 2000 0 0
Financial Charges on:
Long-term Loans @ 0 1,802.305 1,622.07 1,441.84
16% 5 4
Bank Borrowings @ 0 400 0 0
20%
PAYMENT OF:
Worker’s Fund 0 0 5,294.91 5,369.19
3 4
Short term investments 0 40,000 45,000 57,000
Increase in Current Assets 4680 8,819.415 1,829.66 499.116
(other than cash) 9
Total Application of funds 20,646. 62,412.9 63,003. 74,380.0
06 7 473 08
Cash Surplus 127.952 732.493 1,043.69 857.687

4
Cash at beginning of year 0 127.952 860.445 1,904.13
9
Cash at the end of year 127.952 860.445 1,904.1 2,761.82
39 6

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07- FINANCIAL ANALYSIS

53
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ANNEXTURE IX
NISA Enterprises
Weighted Average Cost of Funds
Sources Weights Rates (%) WACF (%)

16(1-0.40)=
Debt 0.60 5.76
9.6
Equity 0.40 15 6
Total 11.76
Profit sharing ratio is 15% and it will be given from 4th year.
ANNEXTURE X
NISA Enterprises
Calculation of Internal Financial Rate of Return (IFRR)
In (000’s)
Capital Ope. Net cash Net cash

Y Dep. W.Fund Tax
outlay Income returns inflows
0 206,460. 0 0 0 0 0 (20,646.0
06 6)
1 8,819.41 62,575.6 569. 0 0 63,145.4 54,326.0
5 83 78 63 48
2 1,829.66 63,477.3 569. 6,257.56 0 57,789.5 55,959.9
9 87 78 8 69 00
3 499.116 74,667.9 569. 6,347.73 0 68,889.9 68,390.8
15 78 9 56 4
4 0 74,667.9 569. 7,466.79 0 67,770.9 67,770.9
15 78 2 03 03
5 0 74,667.9 569. 7,466.79 0 67,770.9 67,770.9
15 78 2 03 03
6 1,850 74,667.9 569. 7,466.79 0 67,770.9 65,920.9
15 78 2 03 03
7 0 74,667.9 569. 7,466.79 26,880.4 40,890.4 40,890.4
15 78 2 49 54 54
8 0 74,667.9 569. 7,466.79 26,880.4 40,890.4 40,890.4
15 78 2 49 54 54
9 0 74,667.9 569. 7,466.79 26,880.4 40,890.4 40,890.4
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15 78 2 49 54 574
1 (9,968.15 74,667.9 569. 14,933.5 53,760.9 6,543.24 16,511.3
0 3) 15 78 38 17 93
209,490. 498,676.
107 19
PVIFA = Capital Outlay / Ave. Net Inflows

= 209,490.107 / 49,867.619
= 4.201 or 11%
Assumptions:
i. The economic life of the asset would be 10 years.
ii. The entire capital outlay would be incurred one year before
the commencement of commercial operations.
iii. Vehicles would be replaced after every 5 years.
iv. Salvage value at the end of the project would represent
recovery of working capital, salvage value of building, office
furniture & fixtures and origional value of land ( as it is
assumed to be remain constant within 10 years).
In (000’s)
years Inflows 24% 24.5%

1. 54,326.048 43,811.329 43,635.380
2. 55,959.900 36,394.316 36,102.579
3. 68,390.84 35,870.124 37,148.126
4. 67,770.903 28,665.303 28,207.582
5. 67,770.903 23,117.179 22,656.693
6. 65,920.903 18,133.976 17,701.376
7. 40,890.454 9,071.313 8,819.348
8. 40,890.454 7,315.575 7,083.814
9. 40,890.4574 5,899.657 5,689.810
10. 16,511.393 1,921.175 1,845.399
Tot 210,199.947 208,8910.10
al 7
Capital outlay = 209,490.107

24% = 210,199.947
24.5% = 208,890.107
R1 = DCF @ 24% - Capital Outlay
= 210,199.947 – 209,490.107
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= 709.84
R2 = DCF @ 24% - DCF @ 24.5%

= 210,199.947 – 208,890.107
= 1,309.84
D1= 24.5% - 24% = 0.50%
R3 = D1 x R1
= 0.50% x 709.84
= 354.92
= R3 / R2
= 354.92 / 1,309.84
= 0.2710
IFRR = 24% + 0.2710

= 24.2710%
Since IFRR (24.2710) is greater than WACF (11.76%). So,

project is attractive and viable.
Commercial BreakEven Point:

ANNEXTURE XI
(In Rs 000’s)
Items Variable cost Fixed Cost Total Cost

Material 45,300 45,300
Labor 6,768 6,768
FOH 1,257 1,766.683 3,023.683
Depreciation 569.78 569.78
Selling Expense 22,173.75 22,173.75
Admin & Gen. 5,589 5,589
Interest on loan 1,802.305 1,802.305
Interest on 400 400
bank borrowing
Total 83,290.055 2,336.463 85,626.518

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Commercial BE =Fixed Cost /( Sales value of production–

Variable cost)xO.E
= 2,336.463 / (147,825 – 83,290.055) x 70%
= 2.54 %
Cash Break- Even Ratio:

ANNEXTURE XII
(In Rs 000’s)
Items Variable cost Fixed Cost Total Cost

Material 49,830 49,830
Labor 8,189.28 8,189.28
FOH 1,520.97 1,766.683 3,287.653
Selling Expense 26,830.238 26,830.238
Admin & Gen. 6,762.69 6,762.69
Interest on loan 1,441.844 1,441.844
Loan 1,126.441 1,126.441
installemnet
Worker’s fund 6,424.860 6,424.860
Total 102,126.323 1,766.683 103,893.006
Cash BE = Fixed Cost/ [( Sales – A/R – Variable Cost ] x OE

= 1,766.683 / [( 17,8868.25 – 4,471.706) – 102,126.323]
x 80 %
= 1.96 %

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08- RATIO ANALYSIS

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8.1- Profitability Ratios
8.1.1- Gross Profit Ratio
GROSS PROFIT RATIO= GROSS PROFIT/NET SALES
Years Gross profit Sales GP Ratio %

2011 97,729.683 147,825 66
2012 102,146.787 162,607.5 62.81
2013 117,204.255 178,868.25 65.52
66%
65%
64% 2011
2012
63% 2013
62%
61%
8.1.2- OPERATING PROFIT RATIO
Years Ope. profit Sales Ratio %

2011 62575.683 147,825 42.33
2012 63477.387 162,607.5 39.03
2013 74667.915 178,868.25 41.75

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43.00%
42.00%
41.00%
2011
40.00% 2012
39.00% 2013
38.00%
37.00%
8.1.3- NET PROFIT RATIO
Years Net profit Net Sales NP Ratio %

2011 47654.215 147,825 32.23
2012 48322.746 162,607.5 29.71
2013 57823.792 178,868.25 32.23
32.50%
32.00%
31.50%
31.00%
2011
30.50%
2012
30.00%
2013
29.50%
29.00%
28.50%
28.00%

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8.2- Short Term Solvency Ratio
8.2.1 - CURRENT RATIO
Years Current Assets Current Liab. Current Ratio

%
2011 56359.36 6421.354 8.77
2012 118993.473 6495.635 18.31
2013 176746.746 7551.307 23.40
25.00%
20.00%
15.00% 2011
2012
10.00% 2013
5.00%
0.00%
8.2.2 QUICK RATIO
Quick Ratio=CASH EQUILANTS+MARKETABLE SEURITIES+NET

RECEIVEABLES/CURRENT LIAB.
Most Liquid Current

Years Quick Ratio %
Current Assets Liabilities
2011 46,556.07 6421.354 7.25
2012 92,969.327 6495.635 14.32
2013 151,233.532 7551.307 20.02

61
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25.00%
20.00%
15.00% 2011
2012
10.00% 2013
5.00%
0.00%
8.3- Long Term Solvency Ratio
8.3.1- DEBT RATIO
Debt ratio =T .LIABILTIES/T.ASSETS
Years Total liabilities Total Assets Debt Ratio %

2011 16559.32 71723.14 23.08
2012 15507.16 118993.473 13.0
2013 15436.391 176746.746 8.73
25.00%
20.00%
15.00% 2011
2012
10.00% 2013
5.00%
0.00%
8.3.2- DEBT EQUITY RATIO

62
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Years Total liabilities Total Equity D/E Ratio %

2011 16559.32 161310.355 30.01
2012 15507.16 103486.563 14.98
2013 15436.391 55163.82 9.56
35.00%
30.00%
25.00%
20.00% 2011
2012
15.00%
2013
10.00%
5.00%
0.00%
8.4- Turnover Ratios
8.4.1- Inventory turnover Ratio
Inventory turnover =CGS/AVG. INVENTRY
Years Inventory turnover

Ratio (times)
2011 18
2012 20
2013 202

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2013
2012.5
2012
East
2011.5 West
North
2011
2010.5
2010
8.4.2- Account Receivable Turnover Ratio
A/R turnover =NET SALES/AVG. GROSS RECIEVEBLES
Years A/R turnover Ratio

(%)
2011 40
2012 40
2013 40
40%
35%
30%
25% 2011
20% 2012
15% 2013
10%
5%
0%
8.4.3- Assets Turnover Ratio
Assets Turnover = NET SALES /AVG TOTAL SALES

64
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Years Assets turnover (%)

2011 2.06
2012 1.36
2013 1.01
2.50%
2.00%
1.50% 2011
2012
1.00% 2013
0.50%
0.00%
8.4.4- FIXED ASSETS
Fixed Assets
Years Net Sales Fixes Assets
Ratio %
2011 147825 14156.72 9.62
2012 162607.5 1460.5 11.015
2013 178868.25 15363.28 12.63
14.00%
12.00%
10.00%
2011
8.00%
2012
6.00%
2013
4.00%
2.00%
0.00%

65
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REFRENCES
• http://www.plunkettresearch.com/Industries/HealthCare/tabid/
205/Default.aspx#IndustryTrends
• www.sameda.gov.pk

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HAIR &

THE ISLAMIA UNIVERSITY OF BAHAWALPUR

MBA Finance,4th sem

THE ISLAMIA UNIVERSITY OF BAHAWALPUR

The Holy Prophet

And also dedicated to

“OUR REVERED PARENTS”

WHO HAS BEEN A BEACONHOUSE

THE ISLAMIA UNIVERSITY OF BAHAWALPUR

We deem it utmost pleasure to avail this opportunity to

We have the honor to express our deep sense of gratitude

THE ISLAMIA UNIVERSITY OF BAHAWALPUR

THE ISLAMIA UNIVERSITY OF BAHAWALPUR

The purpose and scope of this information memorandum is to

THE ISLAMIA UNIVERSITY OF BAHAWALPUR

01- PROJECT PROFILE

1.1 Project Brief

1.2 Opportunity Rational

THE ISLAMIA UNIVERSITY OF BAHAWALPUR

Consumer Goods) have increased the competition in local market

1.3 Production Process

1.3.2 Testing the Formula:

Once the product formulation is tested, new shampoos are tested by

subjects are asked to evaluate the product based on smell, cleaning

1.3.3 Shampoo Production:

1.4 Market Entry Timing

THE ISLAMIA UNIVERSITY OF BAHAWALPUR

1.5 Proposed Business Legal Status

1.6 Project Capacity and Rationale

1.6.2 Plant Capacity:

1.6.3 Raw Material Sourcing – Backward Integration

operations because all chemicals have to be exported from thailand,

1.7 Project Investment

1.8 Proposed Product Mix

1.9 Proposed Site & Location

1. Iqbal Abad is a factory area and all faciliteis that required by a

THE ISLAMIA UNIVERSITY OF BAHAWALPUR

1.10 Key Success Factors

A typical distribution setup in health care business involves the

We will take the distribution services from AL-RAZAK

THE ISLAMIA UNIVERSITY OF BAHAWALPUR

1.11 Type of project

ii) SAQIB HUSSAIN

iii) SYED ARSALAN SHAH

1.14 Current industry Structure

Shampoo Company Ctagory Available in Markat

The flood of imported shampoos at the wholesale and retail outlets

THE ISLAMIA UNIVERSITY OF BAHAWALPUR

02- PRODUCTION PROCESS

THE ISLAMIA UNIVERSITY OF BAHAWALPUR

THE ISLAMIA UNIVERSITY OF BAHAWALPUR

Surfactants are derived from compounds known as fatty acids. Fatty

Most commonly used raw material is:

The detergent cocamidopropyl betaine is added for several of its

Fungicides will be added for anti-dandruff solution.

The other surfactants will generate a certain amount of suds, but

THE ISLAMIA UNIVERSITY OF BAHAWALPUR

After a shampoo formula is developed, it is tested to ensure that its

THE ISLAMIA UNIVERSITY OF BAHAWALPUR

It can also provide information about other changes, like microbial

the formula instructions to make batches that can be 3,000 gal

These materials are added simply by pressing a button on

Quality control check

are checked to make sure the batch adheres to the specifications