Colonel Fisheries: Institute of Business Management

200
9
Colonel fisheries
Institute of Business Management

Colonel Fisheries Advance Financial Management
TERM REPORT FALL 2009

200
Advance Financial Management
SUBMITTED TO:
Ms.
Ms Naureen Ghafar
SUBMITTED BY:
Ahmed Saeed
Azzumudin
Ali Taha
Niam Ahmed
Manoj Kumar
DATED: 8th March 2009
SECTION “A”

LETTER OF TRANSMITTAL
Date: 08-03-09
Ms. Naureen Ghafar
Karachi
Dear Ms. Naureen,
Following is the Term Report that you had given us as our final project. The
project is made on Colonel Fisheries, a sea food processing plant.
All financial data used is authentic and real as on. All issues that were relevant to
the topic have been covered in this report in great detail. For further details and
queries about the compilation of this report you may feel free to contact me.
Yours Sincerely,

Ahmed Saeed
Azzumudin
Ali Taha
Niam Noor Ali
Manoj Kumar
LETTER OF ACKNOWLEDGEMENT
Date 09-03-09
This report is a comprehensive report covering all the topics given in the report
outline. This report has been prepared as a part of the course requirement for
Advance Financial Management. The material compiled and presented in this
report is a result of exhaustive work.
This report has proved to be a great experience. I would like to thank my course
instructor “Ms. Naureen Ghafar” who shared his knowledge in the light of his
vast experience.
Sincerely,
Ahmed Saeed
Azzumudin
Ali Taha

Niam Noor Ali

Manoj Kumar


TABLE CONTENTs
1. Over view of the International Scenario and its effect on Pakistan economy
• International pressure to stop terrorism
• Growing remittances
• Liquidity constraint in Global Financial Markets
• Impact of WTO on Pakistan’s economy
• Impact of rising food prices
• American Banking Financial Crises
• Impact of IMF loan
2. Review of Pakistan’s Economy
• Agriculture
• Manufacturing Sector
• Money and Credit
• Capital markets
• Inflation
• Unemployment
• Increase in Commodity prices
• Energy crises
• Transportation communication
• Population, labour force and Employment

3. Assessment of Target project Industry in Pakistan
• World fisheries and trade production
• Pakistan’s fisheries trade and production
• Opportunity Rationale
• Market entry timing
• Proposed Business legal status
• Locations
• Success factors
• Problems faced by the sector
• Future Prospects
4. Detailed Study of the Selected Project
• Background/introduction of the sponsors and the project
• Nature of the project
• Vision and mission
• Objectives
5. Market Aspects and Analysis
• Target Markets of Pakistan Fisheries
• Market Information

• International Certifications
6. Technical and Engineering Prospects
• Fish spoilage
• Fish spoilage in four phases
• Chilling process
• Types of freezers
• Packaging of fish products
7. Organizational setups and Legal Aspects
8. Financial Statement
• Income statement
• Balance Sheet
• Cash flow statements
9. Bibliography

Overview of the International

Scenario and Its Effects on
Pakistan

INTERNATIONAL PRESSURE TO STOP TERRORISM
Most western countries are taking steps to combat international terrorism. And the international
community (especially the United States) is increasing pressure on Pakistan to take steps to
reduce the number of militants in the country. Ever since Pakistan started taking action against
militants the number of terrorist attacks within the country has increased. The situation has
worsened since militants have started targeting political figures that support the war on terror.
The existing businesses are having a tough time just trying to survive; the suicide attack on the
Marriot hotel has raised questions about the security of the safety of the foreign diplomats and
investors. Death of the Czechoslovakian ambassador in that attack has really dented the image of
Pakistan’s security. This has brought about wide spread panic in the country and has scared off
most investors. Very few or virtually no significant investment (productive businesses) is being
made in recent months.
The support in war against terror to the US has proved to be counter productive for Pakistan’s
economy. As a front line state against war on terrorism Pakistan is subjected to many
restrictions. There is a travel advice to the western citizens against travel to Pakistan. Pakistan
conducts most of its trade with the US and European Union in fact more than 50% of our exports
go to these two destinations. After travel advice, the foreign buyers are reluctant to visit Pakistan.
Many reputable international buying houses that established their offices in Pakistan before 9/11
for procurement of value added textiles from not only Pakistan but the entire region have shifted
to Singapore, Hong Kong and India. Pakistani businessmen are subjected to strict scrutiny for
grant of visa. The visas to lucky few are issued after considerable delay. The one to one contact
of Pakistani businessmen with their foreign counterparts has been restricted or completely
denied. This has adversely impacted Pakistan’s exports. The foreign buyers have exploited the
situation to procure goods at lowest values. Pakistani knitwear is better in quality than its
competitors but fetch the lowest rates due to the denial of direct contact with outside
businessmen. The benefits of high growth have largely benefited the rich. In fact only those
benefited from the high growth that had contacts with the out side world before 9/11. The red
Crescent and Red Cross has termed Pakistan in “WAR ZONE” as millions of people from the
North West Frontier region has migrated to Afghanistan which has effected Pakistan’s trade and
international reputation as a progressive sate.
GROWING REMITTANCES
Remittances sent home by overseas Pakistanis continue to show a rising trend. According to the
State Bank, remittances of $5.319 billion were received in the first 10 months of the current
fiscal year, compared to $4.450 billion in the same period last year – an increase of 19.53 per
cent. These remittances contribute to our foreign exchange reserves and in the past have helped
to keep our exchange rate stable. The current exchange rate depreciation is due to shrinking
foreign inflows and not because of decline in remittances.

LIQUIDITY CONSTRAINTS IN GLOBAL FINANCIAL MARKETS
Liquidity constraints in global financial markets and the domestic political uncertainty have
impacted the net foreign inflows position. Burgeoning external current account deficit along with
slowdown in foreign direct investment and foreign portfolio outflows has resulted in drawdown
of reserves by US$3.7 billion over July 1- May 16 FY08 and by US$4.6 billion relative to end-
October 2007.
The external current account deficit is increasing at a pace that is difficult to sustain given the
slowdown in financial inflows. During July-April, FY08, the financial inflows stood at US$6.0
billion declining by 16.7 percent over the same period of last year. The decline in these inflows
mainly reflects net outflow from foreign portfolio investment on account of outflow from stock
market and delay in floatation of Global Depository Receipts (GDRs) and euro bonds. This stress
on the economy has been compounded by the continuing problems in the international financial
markets. While the country has largely been unaffected by the direct impact of these disruptions,
investors are increasingly risk averse, resulting in a reduction in liquidity flows to emerging
economies. This makes financing the twin deficits more challenging. Moreover, downward
revision in the sovereign credit rating would raise risk premium making external financing more
expensive. IMF projections indicate a decline in global growth to about 4.0 percent in 2008,
reflecting the slowdown in the United States, Europe, and Japan and some deceleration of growth
in most emerging market and developing countries.
IMPACT OF WTO ON PAKISTAN’S ECONOMY
In simple, WTO negates anything which blocks the way of free movement of goods and services
from one market to another on a basic assumption of improving the human lifestyle. WTO
demands open market access for foreign goods and services in the local market without any
discrimination by creation of tariff or non-tariff barriers. Pakistan is also required to provide a
Most Favored Nation (MFN) status to all trading partners which means non-discriminatory
treatment among the members implying on any imports or exports origination from respective
countries.
Take any industry or sector of economy i.e., textile, fertilizer, pharmaceutical, oil & gas, ship
building, sugar, banks, insurance, leasing, and agriculture — WTO directly effects the local
industry both at the import and export ends from the beginning to end focusing more on quality
standards, hygienic conditions, and the very existence of a product or service through intellectual
property clauses.
The world trade organization has been increasing pressure on developing countries like Pakistan
to remove trade barriers and to allow free trade of goods and services across international
borders. Pakistan is gradually removing these trade barriers however this is having a negative
impact on the local businesses. Goods produced by local companies/businesses have been unable
to compete with high standard and good quality of goods and services of the international

market. The textile industry which was one of the most flourishing industries of Pakistan has
been one of the worst hit by the removal of the protective barriers.
IMPACT OF RISING INTERNATIONAL FOOD PRICES
The prices of food items and petroleum products are increasing very rapidly across the world.
Because of increase in the prices of rice, wheat and maize in the last three years prices of food
items recorded an increase of some 83 per cent. Due to the increase in the prices most of the
countries are banning or reducing export of their food produce.
India, China, Vietnam and Egypt have banned export of rice. The increasing prices of food items
have made things worse for the 100 million people across the world. Within the next three years
another 100 million people across the world will join the ranks of the poor due to possible
doubling of food prices. Under the present circumstances 40 countries are facing crisis like
situation due to increase in the prices of food items. This crisis has also resulted in creating social
problems.
Majority of population in the poor countries of Asia spends 70 per cent of their income on food
items. But the present situation has badly affected their income and expenditure balance. As on
one hand there is a rapid increase in the price of food items and on the other their income has
stayed limited.
The number of those suffering from food crisis in Pakistan has increased from 60 million to 77
million. This is almost half of the total population of the country.
A new crisis of food shortage has surfaced in Pakistan and this has turned ugly. According to the
State Bank of Pakistan the increase in international prices has considerably affected the domestic
economy. In the financial year 2008 an increasing trend was witnessed in all indices, which was
more than the average of past five years. During April 2008 the consumer prices indices of both
food and no food items increased at the rate of 17.2 per cent annually. Especially in the month of
April 2008, it reached some 25.5 per cent. According to experts many factors including the
problems related to supply and the rising demand have contributed to the inflationary pressure.
This inflationary pressure has resulted in increase in the prices of food items across the world.
According to the State Bank of Pakistan:
“The high prices of food items in the international market have actually caused the
increase in prices in the country and in the past few years there is an increased affect on the
domestic economy due to international price hike.”
Some of the news on international food situation is quite alarming. An increasing number of food
exporting are now importers of various food items or are going to import in the near future. The
perennial food importing countries in the past are now doubling or tripling their food imports.
For example, Bangladesh, which used to import around 1-2 million tons of food grain in the past
now plans to import 3 million tons this year including 1.5 million tons of wheat and similar
quantity of rice. Due to reduction in production and stock of various food items, India is

reportedly importing huge quantities of rice, wheat etc. Export of rice from India is likely to fall
from 5.50 million tons in 2007-08 to a mere 0.25 million tons in 2008-09. Due to a devastating
winter just encountered by China it also plants to import more food grains. Moreover, to meet the
rapidly growing standards of living of its urban population, China will surely increase the
imports of various food items from various sources. There is now heightened inflationary
pressure due to rising global food prices. Most countries, developed or developing, are likely to
register a slowdown, and have witnessed exceptional rise in inflation, which is now emerging as
the biggest challenge facing the global economy. Current rate of inflation has already started to
impact economic growth and has induced fresh threats to economic stability. There are further
risks of increasing inflationary pressures.
AMERICAN FINANCIAL BANKING CRISES
The United States has seen the collapse of a number of investment banks and, with the demise of
Washington Mutual Bank; it has also witnessed the largest bank failure in its history.
Intense competition among banks lowered their standards and many of them began to lend to the
borrowers who could not afford to purchase mortgages. Loans were given with little or no down
payment. Many borrowers were enticed into the housing market by new instruments, among
them adjustable rate mortgages (ARM) that had initially low rates of interest. The ARM rates
were increased later in the repayment cycle with adjustments made in line with the prevailing
rates.
This kind of lending to households who were at the margin of creditworthiness came to be called
“sub-prime lending”. When a couple of years ago, the Fed began to raise interest rates to cool
down the economy, the terms for the home owners hardened and the amounts they needed to pay
increased significantly. American households don’t have a cushion of savings to absorb these
kinds of shocks and many of them began to default on their payments to the banks.
This led to hundreds of thousands of foreclosures and the properties the banks had taken over
from the defaulting owners were dumped on the market. This led to sharp decline in the price of
houses. The prices fell to such an extent that for many buyers the amounts they owed to banks
were more than the value of the houses they owned. This situation of “negative equity” led to
more defaults and a vicious cycle was in full operation. This crisis could have been contained
had financial engineering not spread the risks to so many institutions that were not directly
involved in lending to the stressed home owners. The institutions that had bought the
complicated products sold to them by the original lenders found that they could not put a proper
value on the assets they owned. Pakistan’s financial system is not sufficiently integrated with
global finance to get engulfed by the spreading American crisis. As such the turmoil in the
United States will not have any direct consequence for the country. The second answer needs a
bit more explaining. This concerns the several lessons, the country’s central bank, the financial
regulators, and the bank owners and executives must draw from the American story
There are a number of lessons to be learned from this episode even for a relatively less
developed financial and banking system such as Pakistan’s. The first is that once people begin to
lose confidence in the system, it can very quickly unravel. This has already happened to the stock

market in Pakistan, one part of the financial system. The second is that extreme care must be
exercised by banks in making loans. At this time, the Pakistani banks have high exposure to
consumer finance, including credit card debt. There are many people who are not fully
creditworthy but have been given loans to purchase consumer durables that have only a fraction
of the value once the sale is made. As the economy weakens, personal incomes decline and
unemployment increases.
IMPACT OF IMF LOAN
IMF is back on the scene to ‘help’ Pakistan to overcome its financial crises. IMF macroeconomic
stabilization policy prescription and harsh conditions attached to its funding are immensely un-
popular because these invariably involve tax hikes, expenditure (including subsidies) cuts, and
exchange rate flexibility (for currency devaluation).
The package commits Pakistan to reduce fiscal deficit to 4.3 from 7.4 percent. Raise tax to GDP
ratio to 15 percent from the existing 10.5 percent in five years, maintain a flexible exchange rate,
achieve zero net borrowings from the central bank by cutting subsidies this year, and involve
private sector in the public sector development programme (PSDP).
Shaukat Tareen advisor to prime minister on Finance had said that the fund would give Pakistan
$3-5 billion immediately to improve cash flow and cover balance of payments obligations and
$8-10 billion in the next two years. This is what required in the short and medium term to steer
the economy from its financial crises.
The plan seems to work the depleting foreign reserves and slowed down, inflation has decreased
and a higher rate and things looks to be on the right path at a slow and steady pace, but the policy
prescription is not healthy for Pakistan on whole i.e. for the well being of the countries economic
growth and development.
The increase in tax to GDP ratio means that the government has to increase the tax rate and taxes
in the near future. Apart from the increase in tax rates the increase in interest rate will hurt and
dent the Pakistan economy. The tax hikes and monetary tightening would increase the cost of
doing business. At the moment Pakistan cannot afford to loose the growth momentum in the
manufacturing sector as it would have negative repercussion.
The increase in interest rate would reduce the competitive edge of the Pakistani products in the
international market and will lose the market share that it has captured for its products. So in
short the IMF could be a disaster for the country.

Review of Pakistan's
Economy

The Pakistani economy today faces the looming risk of a full-fledged balance of payments crisis.
Macroeconomic imbalances, the domestic fiscal imbalance and the external imbalance, have
increased to alarming proportions and show no signs of self-correcting or responding to policy
action. Inflation has accelerated to levels never seen before in our history and is set to rise
further, devastating the fixed income groups and the poor.
Economists agree that Pakistan's short-term prospects are grim. With economic policies likely to
remain broadly unchanged, the economy will continue to slide downward until the country runs
out of foreign exchange reserves. Unfortunately, Pakistan cannot print dollars. At the point of
reserve exhaustion, Pakistan will not be able pay for imports or meet its debt service obligations.
The country will be bankrupt.
Asia seems largely unhurt by the financial crisis gripping the United States and some European
states. In fact, there has been no direct impact on the economies of most of the developing and
poor states for these are basically domestic demand-driven and hardly exposed to what happens
in the advanced financial world. Nor have India and Pakistan been directly affected as such in
the immediate context.
Macro-economy is not in a good shape. According to many latest reports of World Bank, IMF,
ADB and the SBP, Pakistan’s economy is once again (since 1999) at a critical juncture.
Economy is shrinking as well as the confidence of local and foreign investors. The country is
now facing very serious economic strains and social challenges across a broad front.
However, growing macroeconomic imbalances, particularly the widening fiscal and current
account deficits continued to create complications and add to inflationary pressures.
AGRICULTURE
Agriculture is still the single largest sector of the economy, contributing 21 percent to GDP and
employing 44 percent of the workforce. Pakistan is largely a rural phenomenon; therefore,
development of agriculture will be a principal vehicle for alleviating rural poverty. The recent
global food crises, while creating difficulties for net food importing countries, is equally
providing opportunities for developing countries like Pakistan to benefit from the current
situation by giving more serious attention to agriculture.
The sustained higher growth in emerging economies has impacted the consumption patterns of
households, including dietary changes towards higher quality food such as meat and dairy
products. As a result, the production of these items is rising globally. In Pakistan, the livestock
and dairy sectors accounts for 52 percent of agriculture, 11 percent of GDP and affects the lives
of 30-35 million people in rural areas. In order to achieve higher sustained growth in agricultural

value added, it is absolutely necessary to give due attention to the livestock and dairy sector to
achieve multiple objectives, such as, the objectives of attaining food security and poverty
reduction.
The growth performance of agriculture over the last six years has fluctuated in the range of 1.5
percent to 6.5 percent. Agriculture performed poorly in 2007-08, growing at 1.5 percent against
the target of 4.8 percent. This poor performance is mainly because of equally poor performance
of major crops and forestry, registering negative growths of 3.0 percent and 8.5 percent,
respectively. Livestock, minor crops and fishing have been the saving grace for agriculture
as these sectors performed reasonably well and compensated for the performance of major crops
and forestry, which allowed the growth rate in agriculture to arrive at 1.5 percent this year.
Pakistan’s agricultural output is closely linked with the supply of irrigation water. Against the
normal surface water availability at canal heads of 103.5 million-acre feet (MAF), the overall
(both for Kharif and Rabi) water availability has been lower in the range of 5.9 percent (2003-
04) to 20.6 percent (2004-05). Relatively speaking, Rabi season faced more shortage of water
than Kharif during 2007-08.
MANUFACTURING SECTOR
Industrial production is declining, according to the federal finance ministry (April 2008) the
country’s industrial production slowed down further as they grew by a paltry 4.84 per cent in
first nine months (July-March) of current financial year. It was even bleaker in March 2008,
when it fell by 3.23 per cent over the corresponding month of previous year. It is feared now,
that LSM 10.5 per cent growth target set for the current financial year would not be achievable.
Large Scale Manufacturing (%)
2006-07 8.8
2004-05 19.9
Heightened political tension, deteriorating law and order situation, growing power shortages, the
cumulative impact of monetary tightening and rising cost of doing business are the reasons
responsible for the poor showing of manufacturing in 2007-08. Many factories are cutting back
on work force and causing unemployment for many factory workers. This is a global
phenomenon but its effects have crept into the Pakistan’s manufacturing sector.
A new SMEs Policy 2007 was launched in fiscal year 2007-08, where an attempt has been made
to define uniformly, small and medium sectors in manufacturing, trade and services sectors for
all the stake-holders and give a broad frame-work for the promotion of SMEs by improving the
regulatory, fiscal and business environment.
It is estimated that the falling growth in the manufacturing sector will also adversely affect the
country’s GDP and if the trend persisted, it would be hard to achieve the targeted GDP, which in

the recent years stayed over seven per cent on the back of strong performance of manufacturing
sector.
MONEY & CREDIT

During this period of transformation, the financial sector of Pakistan has evolved into a more
progressive and dynamic module of the economy, both in response to the financial sector
reforms and to the growing financing needs of an expanding economy. In response to the
growing demands of financial globalization, Pakistan’s financial system is starting to integrate
with international financial markets.
The process of the tightening of monetary policy began in FY05, from being broadly
accommodative to one more aggressive. The government’s December 2004 decision to lift the
freeze on domestic POL prices raised inflationary expectations, forcing a more aggressive
tightening of monetary policy. During FY08, the SBP continued with a tight monetary policy
stance, thrice raising the discount rate while also increasing the Cash Reserve Requirement
(CRR) and the Statutory Liquidity Requirement (SLR). The impact of the tight monetary stance
and liquidity management began to translate into a rise in other interest rates, with varied
magnitude, at different stages of the economy. For 2007-08, the SBP had assumed that with real
GDP growth target of 7.2 percent and inflation target of 6.5 percent, but recent economic
position of the country does not support the fact that the position of growth rate and inflationary
would be benefiting the country.
Credit to government for commodity operations expanded by Rs.60 billion compared to a

contraction of Rs.26 billion, while credit to government for budgetary support increased to
Rs.362 billion. The NFA of the banking system registered a net contraction of Rs.289 billion
compared to an expansion of Rs.84 billion during this period. This contraction in NFA is
attributable to delays in the issuance of GDRs, sovereign bonds, lower than expected receipts
on account of logistics support, decline in foreign investment, lower inflows from multilateral
institutions, and SBP’s decision to provide foreign exchange to support a part of oil payments
even when the oil prices are at their historic high levels.
Credit to private sector grew by 14.9 percent during July 2007-May 10, 2008 against 12.2
percent in the same period of last year. The key factors contributing to the recent acceleration in
private sector credit growth were (i) rise in working capital requirements due to higher input
costs; (ii) the need for bridge financing to settle price differential claims of OMCs and IPPs; and
(iii) the higher fixed investment in the month of March 2008.
The impressive performance of Pakistan’s banking sector has attracted considerable FDI inflows
in recent years. The banking sector of Pakistan has undergone a visible change as about eighty
percent of the banking assets are now controlled by the private sector. Assets of all banks
showed a net expansion of Rs.203.1 billion in the first six months of FY 08 and stood at Rs.5155
billion as compared to Rs.4351 billion in the same period of last year.
In economies such as Pakistan, which are dependent upon a high level of exports and imports,
inflation often leads to balance of payments difficulties. If other countries are not inflating to the

same extent, home-produced goods will become less competitive in foreign markets and foreign
goods will become more competitive in the home market. Exports will be depressed and imports
will rise. If this process continues it must lead to balance of payments deficit on the current
account. The problem will be a particularly difficult one where inflation is of the demand-pull
type, because in addition to the price effects the excess demand at home will tend to ‘draw in’
more imports. Every country endeavours to maintain value of its currency at par with other
strong currencies so that its economic growth, price stability, investment and international trade
remain on targeted path. A strong currency is an important contributor to political stability and
prosperity of the people, but the detoriating Pak. Rupee is a main concern for the people and the
economy. Dollar in exchange of Pak rupee reached to a high record of Rs 89.70/$1. Continuation
of the detoriating of the currency can cause serious problem for the sovereignty and the integrity
of the nation.
CAPITAL MARKETS
A strong economy requires a cutting-edge financial system that instils confidence and efficiently
provides a wide range of financial services to households and businesses alike; and capital
markets are an essential component of a strong financial system. A diversified financial system is
conducive to both financial stability and to efficient resource allocation in support of medium
term economic growth. Pakistan, with its large consumer base, has enormous and attractive
investment opportunities, and like other developing countries, needs both local and foreign
investment to support and sustain its economic growth.
Pakistan’s equity market has performed comparatively better in comparison to its regional
counterparts during the outgoing fiscal year 2007- 08, albeit with a volatile political scenario and
fragile economic outlook. A large number of mergers and acquisitions were witnessed during the
outgoing fiscal year, which is a healthy sign for a corporate assessment of the country. The
premier stock exchange index (KSE-100) broke the psychological barrier of 15,500 points to
close at 15,676 points on April 18, 2008. This level has never been achieved in Pakistan before,
portraying an attractive valuation of the domestic equity market. The unprecedented events of
November 3, December 27, February 18 and May 22 invited sharp corrections to the stock
market. Nevertheless, the stock market was able to survive through these periods of tumult which
increased the confidence of the equity market investors, despite the overall market return
remaining notably lower than those in the past several years.
In recent events the stock market has fallen and is performing at a negligible level. The market
has frozen and has reached its lowest level. Trading has become almost negligible and virtually
the market is at a stand still. Reason being that the foreign investment that was brought in has
been evaporated and people are not investing in Pakistan due to security reasons. The KSE-100
index has fallen to 7058 points as compared to a 15,676. The investors has lost confidence and it
is being regained at a slow pace.

INFLATION
The inflation rate as measured by the Consumer Price Index (CPI) averaged at 10.3% during
(July- April) 2007-08 as against 7.9% in the same period last year. Remaining in double digits,
the inflation increased by 11.3% during February over the same period of the last year because of
surge in the prices of essential kitchen items. The official statistics showed that food and
beverage inflation soared by 16.05% during February 2008 over a year ago, resultantly the
general inflation measured by Consumer Price Index (CPI) registered a growth of 11.25%.
Non-food inflation increased to 6.8% versus 6.2% in the comparable period of last year.
During the period under review the inflation in the wholesale market turned to be worst as
compared to the retail market. The general inflation measured by Wholesale Price Index (WPI)
skyrocketed to 16.36%. A year ago the WPI inflation was only 5.09%. The food inflation in the
wholesale market recorded at 18.28% during February 2008 as against the same period of the last
year.
Major factors contributing to the rise in inflationary pressures in the economy include the
extremely high food and energy prices, which is in fact a global problem. Food inflation was
predominantly driven by unprecedented rise in the prices of few items like wheat, rice and edible
oil etc. owing to supply short-fall of key consumer items as well as the impact of the significant
increase in their global prices. The record high jump in oil prices lead to an increase in the cost
of Pakistani imports as well as aggravating food shortages across the world through the
conversion of many crops from human consumption to fuel which have also seriously spurred
the world-wide price level including those in Pakistan. Inflation is an important determinant of
the macroeconomic stability and thus attracted policy measures to contain it at tolerable level.
Purchasing power has been decreased due to high inflation and persistent price hike.
UNEMPLOYMENT
The unemployment rate and the number of unemployed - based on the historical pattern - would
continue to increase through 2010 (to 6.7 percent in the case of a mild-to-moderate recession) or
2011 (to 8.4 percent in the case of a more severe economic downturn).
INCREASE IN COMMDITY PRICES
The bifurcation of general inflation (16.36%) based on WPI showed that food group soared by
18.28%, raw materials 8.9%, fuel, lighting and lubricants 23.5%, manufactures 8.75% and
building materials 10.85%. The CPI based inflation ballooned by 0.49 per cent in February
2008.. The Wholesale Price Indicator ballooned by 1.24%. The main commodities in the food

basket, which illustrated increase in February include, tomatoes 45.6 per cent, vegetables 29.2
per cent, and pulse masoor 15.8 per cent, condiments 15.3 per cent, cooking oil 8.6 per cent,
vegetable ghee 6.3 per cent, fresh fruits 5.7 per cent, rice 5.3 per cent, mustard oil 4.4 per cent
and readymade food 2.97 per cent.
ENERGY CRISES
In 2008, Pakistan is faced with multiple energy crises. There is a serious shortage of electricity
which has manifested itself in the form of power outages — we call them “load shedding” —
that have already taken a heavy economic toll. The government itself estimates the demand–
supply gap in electric power at 4,000 to 5,000 MW or 20 to 25 per cent of the total installed
capacity.
This will impact economic growth; it will, probably, shave off two percentage points from the
rate of GDP growth this year, possibly also next year. By allowing load–shedding to affect
productive activities to such an extent, the government has allowed unemployment to increase.
The informal sector has been particularly affected and it is on this that most poor depend for their
livelihood. Power shortages will contribute to increase the incidence of poverty. This will be the
case in particular in the country’s larger cities.
Continued energy crisis (the government estimated power shortage to remain in the range of
1000-2000MW during the current year has already touched 3600 MW which has increased the
worries of the government. The economy is being run at almost 30 per cent energy shortage.
Now, it has reached to 4500 MW). High rates of utility bills (latest reports say that government
has increased the electricity charges by 70%, which has increased the cost of production and
made our exports unattractive in the international markets. Declining levels of water are adding
miseries to the government and has already reduced our per yield agricultural production. The
ADB issued its latest report “the Asian Water and Development Outlook (AWDO) once again
highlighted Pakistan's water and sanitation woes. The country has reached the water scarcity
threshold of 1,000 cubic meters per person a year and has been ranked among the worst
performers in Asia in terms of water use. The continued declining water shortage may be a
serious threat for even human survival in the country in the days to come adding on to the misery
in the recent events India blocked Pakistan water supply in the river Chenab and violated the
treaty agreement.
Furthermore, looming political chaos has discouraged the local businessmen, and disappointed
the common people too. The PML-N’s decision to pull out from the coalition government over
the judges’ issue has shaken the businessmen’s confidence. They anticipate a worst economic
meltdown if the judges’ issue is not resolved on a permanent basis. It is seemed that no body in
the government talks about serious issues like building new dams, new power plants, controlling
inflation and boosting exports.
The mantra of gross root devolution, people’s participation in decision making, trickle down
effects, and the last but not the least self-reliance magnetism is loosing its importance, scope and
utility. According to the Global Competitiveness Report (2007-08), Pakistan occupies 92nd
position among 131 countries in the global competitiveness index (GCI) while India ranked 48th.

In the 2006-07 indexes with 122 countries, Pakistan was on the 83rd position, and this year it has
shown a decline of ten positions. It also shows weakness in our structural systems.
TRANSPORT AND COMMUNICATION

A well performing Transport and communication structure is vital for a country’s development.
Investment in a country’s infrastructure directly affects economic growth as producers find the
best markets for their goods, reducing transportation time and cost, and generating employment
opportunities. The transport and communications sector accounts for about 10.0 percent of the
country’s GDP, and 20.9 percent of Gross Fixed Capital Formation in FY07/08. It provides over
2.3 million jobs in the country (6% of all employment) and receives 12 to 15 percent of funds
from the annual Federal Public Sector Development Program (PSDP). Apart from being a
significantly large source of budgetary expenditure, the transportation sector imposes huge
demand on Pakistan’s energy supply, absorbing approximately 35% of total energy annually.
The country generates a total domestic transport load of around 239 billion passenger kilometres
and 153 billion tone kilometres annually. Road transport is the backbone of Pakistan's transport
system. The 9,574 km long National Highway and Motorway network - which is 3.65 percent of
the total road network - carries 80 percent of Pakistan's total traffic. Recent initiatives and
developments in sectors such as shipping, railways, and aviation are a welcomed step towards a
more comprehensive, efficient, and multi-modal transportation system.
Port traffic in Pakistan has been growing at 8 percent annually in recent years. Two major ports,
Karachi Port and Port Qasim, handle 95 percent of all international trade. Gwadar Port, is aiming
to develop into a central energy port in the region. In addition, 14 dry ports cater to high value
external trade. During the first six months of FY 2007-08, Karachi Port had handled a total of
20.5 million tones of cargo. From July to March of the current financial year, 2007-08, Port
Qasim handled 19.76 million tones of cargo depicting a growth rate of 10% over the same period
last year.
Pakistan Railways (PR) suffered heavy losses and damage to property owing to violence and
rioting around the country this year. The network carried 59.74 million passengers and 5.2
million tons of freight during July-March of the outgoing fiscal year. Pakistan Railway’s
earnings stood at Rs. 13,954 million during the first nine months of FY 2007-08.
Telecom sector continued to show a stellar growth in last few years. Tele-density in the country
has jumped from a mere 6% to 57% (Mar- 08) in just a few years. On average, more than 2
million subscribers are being added on cellular mobile networks per month which is an
exemplary growth in the region.
Pakistan has become one of the fastest growing mobile markets among the emerging telecom
markets. This year the sector grew by 80% whereas average growth rate in last 4 years is more
than 100%.

Pakistan's broadband market has been slow despite the fact that services have been available
since almost five years. Currently there are a total of almost 12,689 Broadband subscribers.
According to estimates by the Internet Service Providers Association of Pakistan (ISPAK),
currently there are about 3.5 million internet subscribers all across in Pakistan where total users
crossed 17 million marks. Currently around 3,008 cities are connected to internet cities.
POPULATION, LABOUR FORCE AND EMPLOYMENT
Pakistan, with a population of 160.9 million in mid-2008, is the 6th most populous country in the
world. The country’s population is estimated to double in the year 2045 if it continues to grow at
1.8 percent. Movement of population to urban areas, attributed to well known “pull” and “push”
factors continues and as a result, the urban population has increased from 6 million in 1951 to
today’s 57 million. This has put enormous pressure on available infrastructure like housing,
transportation, electricity, water, sewerage, sanitation, health and educational facilities.
The CBR of more than 30 and less than 18 per 1000 population are respectively considered high
and low. The CBR in Pakistan is estimated at 26.1. It is worth mentioning that health statistics in
Pakistan are gradually improving; mortality rate is declining and was 7.1 (per thousand) in 2005-
06; the decline is attributed to the elimination of epidemic diseases and the improvement in
medical services.
Despite a considerable decline in the total mortality in Pakistan, infant mortality remains high at
76.7 per thousand live births in 2005-06. The major reasons for the high mortality rate include
diarrhoea and pneumonia. While maternal mortality ratio ranges from 350-400 per hundred
thousand births per year, the contraceptive prevalence rate (CPR) is estimated at 26 percent and
total fertility rate (TFR) has exhibited a decline from 4.5 percent in 2001-02 to 3.8 percent in
2005-06.
The labor force participation rate, though demonstrating an increasing trend in recent years, is
nevertheless lower than the global or regional rates. The increasing trend in labor force
participation witnessed in the recent years can be attributed to rising employment opportunities
owing to robust growth and lowering of socio-cultural barriers for females to enter the job
market. Total provincial LFPR (both sex) has however, witnessed a decline in all the four
provinces in the year 2006-07. The most pronounced reduction has been noted for NWFP (from
39.7% to 36.3%). A province-wise break up of refined participation rates suggest that against the
national average of 45.2 percent, the participation rate in Punjab is 48.5 percent followed by
Sindh (42.7%), Balochistan (43.6%) and NWFP (36.3%).
Agriculture employs 43.61 percent work force in Pakistan followed by trade (14.43%), services
sector (14.41%) and manufacturing (13.54%). In other words, over 86 percent of work force is
employed in these four sectors. As against 2005-06 the shares of agriculture and services in
employed workforce marginally increased in 2006-07 while those in manufacturing and trade
registered a marginal decline.

Assessment of Target Project’s

Industry in Pakistan

WORLD INDUSTRY STRUCTURE
World Fisheries Trade and Production:
Fish represents a valuable source of proteins and has a significant nutrient

value in the daily diet. Fish is an important part of the daily food intake of
most of the countries in the world and its importance in contributing to food
security is rising significantly. The total food supply available from fisheries
in live weight terms is estimated to be slightly higher than 16 kilos per year
for each of the world's inhabitants. Fisheries and aquaculture make an
important contribution to the animal protein supplies of many communities
in both the industrialized and developing worlds.
Fish is a major component of the sea food that provides a source of vitamin-
rich diet. Fish is very perishable food commodity that requires proper
handling and preservation to increase its shelf life and retain its quality and
nutritional attributes. Water is the main constituent, with considerable
variations, typically 80 percent in lean fish and 70 percent in fatty fish.
Carbohydrates, minerals, vitamins and some water extractable components
are examples of other minor substances present.
About 38% of world fish production is traded internationally. In 2001, total exports of Fish and
fishery products were US$ 55.9 billions in value terms. About 74 percent of world fish
production is used for direct human consumption, whereas the remainder (about 26 percent) is
utilized for various non-food products, mostly for conversion to fishmeal and oil.
In 2004, the per capita food fish supply was estimated at 13.5 kg, excluding
China. Overall, fish provided more than 2.6 billion people with at least 20
percent of their average per capita animal protein intake. The share of fish
proteins in the total world animal protein supplies grew from 14.9 percent in
1992 to 16.0 percent in 1996. In 2003 the percentage was 15%. The
estimates for 2005 indicate that the total world fishery production was 142
million tones, an increase of one million tones over 2004, and a record
production. The total amount of fish available for human consumption has
increased to 107 million tones.
China is the largest producer, with fisheries production of 47.5 million tones
in 2004, 16.9 million tones capture and 30.6 million tones aquaculture.
Developing countries, supplied more than 50% of the world fisheries
production. Shrimp is the main fish commodity traded in value terms,
accounting for about 19% of the total value of internationally traded fishery
products. In 2001, more than 80% of the total world import value was
concentrated in developed countries, in particular in Japan, the USA and in

several EU countries. Japan was the major importer accounting for about
23% of total import value. USA was the second main importer with a share of
17%, followed by Spain, France, Italy, Germany and the UK.
PAKISTAN FISHIRIES TRADE AND PRODUCTION
As a highly perishable commodity, fish has a significant requirement for

processing. More than 60 percent of total world fisheries production
underwent some form of processing. The most important of the fish products
destined for direct human consumption was fresh fish (a share of 53.7 %),
followed by frozen fish (25.7 %), canned fish (11.0 %) and cured fish (9.6 %).
Pakistan has a total coastline of 1,090 km and a total fishing area of

approximately 300,000 sq. kms. Pakistan’s fishing waters are termed as
highly rich in marine life with a vast variety of species having commercial
value. However, this potential is not reflected in the export earning from
fisheries sector. The exports of “Fish and Fish Preparation” were at $134.5
million (with a volume of 93,214 tons) in 2002-03. The total exports are in
the range of $170-$220 million. The total potential of Pakistani fisheries is of
$1billion. European Union countries, Japan and U.S.A are some of the big
export market for sea food.
Pakistan fisheries export’s ultimate aim will be to capture a bigger

percentage in EU and US markets. However, the quality standard and
restrictions for these markets are very stiff. In order to meet EU and US
quality standards, processing plants and supply chain management of
Pakistan sea food products should be up to the these standards. Pakistan’s
exports of fishery products stand at about 0.25% of world exports. In 2006
Pakistan’s seafood exports registered more than 40 percent growth last year,
reached $196.15 million up from $ 138.94 million exported during 2004-05.
Pakistan exported seafood worth $ 188 million during the financial year
2006-07, which was almost four percent less against $ 196 million of 2005-
06. August-September is the peak period of the season and before the ban
Pakistan used to export over 90 percent seafood products to the EU in these
months. Due to the EU ban, the shrimp exporters had explored some
markets in the Middle East, China and Korea.
Significant supply of fish exists along the Balochistan and Sindh coast. Some
of the species with major production along Pakistan coast are as follows,

S.NO. NAME NAME

1 Ribbon fish 12 Conger eel
2 White Pompfret 13 Chinese Pompfret
3 Black Pompfret 14 Indian Mackerel
4 Lady fish 15 Shells
5 Red Snapper 16 Yellow Croaker
6 Silver croaker 17 Ark shell
7 Tiger Tooth croaker 18 Green mussels
8 Razor shell 19 Fan shell
9 Baigai 20 Baby clam
10 Crabs 21 Salted jelly fish
11 Grouper 22 Tuna fish
OPPURTUNITY RATIONALE
After minerals and agriculture, fishery is the third largest sector in playing a
vital role in the economy of Balochistan. Coastal belt of Balochistan provide a
significant supply of the sea food to Pakistan and also have the potential to
play an important role in international sea food market.
Balochistan and Sindh coastal areas happened to be on the migration routes
of the various varieties of marine species which have a considerable demand
in local as well as international marine food markets.
There exist more than 30 species of shrimps, 10 species of crabs, 5 species

of lobster and about 70 commercial species of fish including sardine, Hilsa,
shark, Mackerel, Butterfish, Pomfret, Sole, Tuna, sea bream, Jew fish and Cat
Fish, Shark, and Eel. Pakistan’s exports of fishery products stand at about
0.25% of world exports. According to estimates, Pakistan total export
potential from this sector is near US$ 1.0 billion from existing natural
resources. Pakistan share signifies that a wide growth opportunity exist in
export markets.
Pakistan’s domestic consumption is termed as one of the lowest in the world,

at 1.6 kg per person per year (compared to world average of 16.2 kg per
person per year), this figure also portrays tremendous growth opportunity for
the local consumption of sea food. Hence, most of the fish catch goes to fish
meal that is treated as wastage to the product. Prime reason for the low
national sea food consumption and low export share in sea food export
market is attributed to the absence of proper processing, storage and
transportation facility in the coastal belt.
Properly developed cool chain and fish processing plants will help to
significantly decrease spoilage and ultimately increase the supply of quality
fish to local and international markets. Development of fishery can also play
an important role in provision of employment and growth opportunities to
many small and middle size communities along the coastlines.

MARKET ENTRY TIMING
Fish processing operations continues through out the year however it is

recommended that plant should be ready for operation during the months of
July to March so that it can avail full fish catch of the sea. As the peak fishing
season starts from the months of September
PROPOSED BUSINESS LEGAL STATUS
The business can be started as sole proprietorship or partnership.

Comparatively fewer complications are involved in forming, administering
and running the sole proprietorship or partnership businesses.
LOCATIONS
The proposed location for the establishment of such a facility could be the
areas with in the proximity of Balochistan and Sindh coastal belt. If the
project is closer to a fish harbor it will have an added advantage of being
nearer to the raw material supply.
The harbours and main landing points with their provincial location and
relative importance are as follows:


Gwadar Port:
If one wants to start its operation from Gwadar port, the locations associated with Gwadar port
are recommended for establishing sea food processing plant. These areas are Pasni, Ormara and
Surbendar.
Karachi Port and Port Qasim:
The locations associated with Port Qasim and Karachi Port is recommended for establishing sea
food processing plant in Sindh. The areas are Korangi Fish Harbour ( Ibrahim Haydery) and
Gaddani.
SUCCESS FACTORS:
• Availability of vast range and variety of fish and marine food in Arabian Sea waters along the
Pakistan coast.
• Proposed areas for the processing plant have quite considerable number of skilled fishermen
and boat owners.
• Significant number of suppliers exists for the production.
• Large and established world markets
• Growing trend in sea food consumption nationally and internationally.
• Rehabilitation in Afghanistan.
• 5-Stars hotels and restaurant chains are in continuous need of quality sea food supply.
• Improved technological changes available.
• Ample opportunity for exports.

• International recognition of the plant will boost the export orders.
PROBLEMS FACED BY THE SECTOR
• Lack of Processing Plants and technology:
Sea food processing plants play a vital role in the development and economy
of the fisheries sector. The fisheries industry can only attain its target
production when internationally standardized quality of the fisheries product
is produced.
In the prevailing circumstances the industry is unable to produce quality

product for the export markets. One of the major reasons has been the
absence of appropriate technology. There are quite few processing plants in
the Balochistan and Sindh coastal belt. The existing processing plants also
face problems attaining quality production certificates and technological up
gradation. Most of the processing units in the country are equipped with local
versions of the processing machinery with little or no calibration, high
electricity consumption and low quality production These plants have limited
production capacity with Primitive technology. These plants are most of the
times incapable to process large fish catch and cannot facilitate large orders
placed by the importing firms.
Another factor involved is the lack of skills among the processing workers,
who have not been provided with required training on handling fish catch.
This situation was mainly attributed to unorganized nature of private sector,
lack of focus in Government policies and little institutional investment (in
public and private sector projects) in this sector.
• Incapability of meeting cool chain system:
As there is no proper cool chain established, therefore, there exists a parallel

distribution system for the fresh fish reaching the processing plants. As an
industry practice, the processing units acquire fish catch supplies either,
directly from the boat owners in small lots, or from the auction hall. This
results in spoilage and degradation of fresh fish. As a result, the final product
fails to attain its target price.
• International Certifications:
As part of the food product, export of sea food to international market is

subject to the rules and international certifications. Most of the sea food

processors in Pakistan either do not have the knowledge to get international

certificate or do not comply to meet the certification requirements. Therefore
the final export product is sold at lower the market rate.
• Lack of Training and Development for Fisheries

Sector:
Fishing practices and processing is an interdependent process. The

processing plant cannot convert a fish catch of low quality into acceptable
quality grade. The processing industry suffers as a whole due to lack of
training and development for the fisheries sector. Product hygiene training
for fishermen is a must for good quality processing. Due to lack of training
and development in this area, the processing industry is not showing the
required results. Lack of skilled work force for sea food processing plant is
also another issue that pose problems for the processing industry.
FUTURE PROSPECTS
Pakistan's marine fishing activities are confined to the intense exploitation of inshore resources.
Most of the fishing effort is directed toward the shrimp resources, which are fully exploited.
Future increase in fish production has to come from a more intense exploitation of offshore
pelagic resources. Fishing in deeper waters could be done by upgraded and converted shrimp
trawlers or newly introduced industrial type of boats.
While the pelagic resources are now well known and are already well exploited, the prospects for
tuna fish in Pakistan EEZ seem to be good. It is estimated that Pakistan can earn an additional
US $80 to 100 million by exporting fresh and canned tuna fish, usually sold at throwaway prices
in dry form. About 2 hundred thousand tons of tuna fish is caught annually. This fish is
sometime exported to Sri Lanka at 50 cents per kg, in dry form, while it can easily fetch US $4
per kg or more if properly packed or in fresh form. Recently, Sri Lanka has shown interest in
importing salted tuna fish. However, the build-up of tuna fleets by other countries in the region
has affected catch rates. Sizeable stocks of mesopelagic fish have been discovered which in
future might be utilized for fish meal and oil production.
Good development prospects also exist in the field of inland fisheries and aquaculture. The
country has about 2 million hectares of freshwater bodies in the form of lakes, reservoirs and
rivers, the fisheries potential of which is only slightly utilized at present. Similarly, the
development of brackish-water farming of shrimp in the creeks and estuaries of Sindh offer some
prospects.

Improved institutional arrangements, better fish handling, marketing and quality control, the
rationalization of existing fleets and processing plants will all be required if future expansion is
to be more orderly and efficient.

Detailed Study of the Selected

Project

Background/Introduction of the sponsors and their

projects
Introduction to the venture:
• Name of the business: Colonel Fisheries
• Physical Address: Plot #10, Chashma Goth, Karongi fish harbour.
• Principal owners:
1. Partner: ………………Ahmed Saeed
2. Partner: ………………Azzumudin
3. Partner: ...…………….Ali Taha
4. Partner: ……………....Niam Ahmed
5. Partner: ………………Manoj Kumar
Entrepreneurs:
There are five main partners in Colonel Fisheries:
• Managing Director
Ahmed Saeed
• Factory Manager
Ali Taha
• Sales Manager
Azzumudin

• Finance Manager
Niam Ahmed
• Logistics Manager
Manoj Kumar
Nature of the Project
The project involves processing of Seafood, including fish, shrimps, lobsters

etc. for domestic and international markets. Processing of fish involves
primarily the application of preservation techniques in order to retain quality
and increase shelf life of the product. It may also deal with value-adding to
produce a variety of products. The quality production will ultimately increase
the product demand of sea food in Pakistan as well as in international
markets.
The major scope of processing activities will include post fish catch activities
i.e. pre-cooling grading, cutting and cleaning, packing, and freezing. Beside
this, local fish suppliers, dealers, contractors and boat owners will also be the
potential rental costumers of the plant, where they can get processing
services for their catch through paying a service charge as a rent.
The final product will be supplied to the food markets of major cities of
Pakistan that include Lahore, Sialkot, Islamabad, Karachi, Peshawar and
Quetta. Export quality products will be shipped to the international sea food
markets of European Union, Japan, USA, and Russia. Beside this, restaurant
chains and 5 star hotels across the country are also one of main consumers
of the sea food. The processing plant would be used to process the sea food
catch mainly coming from the Arabian Sea through fishing boats, launches
and international fishing trawlers.
Pakistan. Effective supply chain of fishery products in domestic markets can

increase the demand of fish in local markets. The process would include
undertaking value-added activities, which will increase the quality and shelf-
life of sea food for the national and international market.

Vision
To be the number one Seafood processing firm in the industry that provides quality
seafood products, and promoting our brand to far corners of the world.
Mission
To be the largest and fastest growing seafood processing firm using the cost
efficient machinery to minimize cost and utilize our experience for maximizing
profits.
OBJECTIVES
Short Term Objective
The short- term objective of Colonel Fisheries is to gain acceptance in the industry of Karachi by
producing high quality fresh fish products.
Long Term Objective

The long term objective is to expand our business in all other parts of the country and to expand
our export market in the far-east and North and South America.
Project Investment
The total project investment is Rs. 120,521,267 which includes capital cost of Rs. 91,416,722
and working capital of Rs. 29,104,545. It is assumed that the project would be partially equity
financed (50%) and partially debt financed (50%).
All the money that we require to initiate this project will come from two sources;
• Owners
• Debt Financing
The owners’ will contribute forty (40%) of the required initial investment equally, while the rest
will be borrowed through debt financing.
Entry Timing:
Fish processing operations continues through out the year however it is recommended that plant
should be ready for operation during the months of July to March so that it can avail full fish
catch of the sea. As the peak fishing season starts from the months of September.
Proposed Business Legal Status:
The business can be started as sole proprietorship or partnership. Comparatively fewer

complications are involved in forming, administering and running the sole proprietorship or
partnership businesses.
Project Capacity:
The plant will store the fish catch and process the same in the same cycle. The plant will be able
to handle approximately 60 tones of fish catch of varying varieties in 24 hours. It will have a
wider cold storage facility. Cold store of the project will be 10 times the size of the processing

plant i.e. it should have the capacity to store the product order of 10 days as such the cold storage
of the plant will be of 600 tons capacity.
Marketing aspects and analysis
Target Markets of Pakistan Fisheries:
European Union countries, Japan and U.S.A are some of the big export market for sea food.
Pakistan fisheries export’s ultimate aim will be to capture a bigger percentage in EU and US
markets. However, the quality standard and restrictions for these markets are very stiff. In order
to meet EU and US quality standards, processing plants and supply chain management of
Pakistan sea food products should be up to these standards.
The EU is a big market for Pakistani seafood and Pakistan is not getting a foreign exchange of $
47 to $ 50 million since 2005-06. There are also some US restrictions on seafood exports, which
needed to be lifted. The EU has banned seafood exports from Pakistan since April 2007. The
action was taken after its inspectors’ visit to Pakistan. They found the industry’s food processing
below their standards.. The European countries are the largest buyers of Pakistani seafood,
mainly shrimps, for more than two decades, sharing 53 percent of the total export to the world.
Regional Distribution
More then 30,000 people are associated directly with fisheries sector
employing about 6200 fishing boats. All boats are wooden with inboard
mechanized engines. Gwadar district annual production of fishery is more
than 107,568 metric tons. s. Town wise distribution of fish catch, boats and
fishermen is as follows:
S.NO. District Gawadar No. of Fishermen No. of Fishingboats Annual prod. (metricTon)
1 Gawadar 7715 1102 31520
2 Surbandar 3745 546 9683
3 Pasni 6466 1240 27270
4 Ormara 4796 860 15758
5 Pishokan 3468 438 96451
6 jewani 4248 573 13696
Total 30438 4759 194378

MARKET INFORMATION
International Export Market
European Union, Japan, and USA are the largest sea food consumers in the world. Whereas
U.A.E, Russia, Malaysia, Thailand, Singapore and Indonesia are also the emerging exports
markets for the sea food processing industry. Sea food exports to these regions are subject to the
international quality certifications and a processing plant should be able to meet the criteria set
by the importing country. Product hygiene, processing technique and machinery are some of the
major issues which must be catered to by the processing plant owner to export in these regions.
World Import Of fisheries products
S.No. Country Share in world Market Share in ($) value

1 E.U. 34%
2 Japan 23%
3 Developing Countries 18%
4 U.S.A 17%
5 others 8%
Total $50 billion
EU
Japan
DevelopingCountries
USA
Others

World Export of Fisheries Product
S.No. Country Share in World market Value in ($)

1 E.U 21%
2 Japan 1%
3 DeveloplingCountries 50%
4 U.S.A 6%
5 others 22%
Total $30billion
EU
Japan
Developing
Countries
USA
Local Sea Food Market
Pakistan’s domestic consumption is termed as one of the lowest in the world, at 1.6 kg per
person per year (compared to world average of 16.2 kg per person per year). This figure indicates
a huge potential for sea food sector in Pakistan. Quantity of processed sea food consumption in
Pakistan is negligible.
Frozen sea food supply to local markets of Pakistan cannot only increase consumption trends but
also have the potential to bring new business ventures in the supply chain. Karachi, Lahore,
Islamabad, Quetta and Peshawar are some of the markets which show a potential for sea food
supply. At present, only the Karachi markets have availability of fresh sea food in terms of
variety and quality because of existing supply chain and production. Lahore, Quetta, Peshawar
and Islamabad can be target market if a cool chain system is attained.
5-Star Hotels and restaurant chain owners in the said cities are also a
potential market for local sea food supply. The supply can be increased
through an effective cool chain and consistent production of variety of sea
food product.

Supply Chain of Fisheries in Pakistan:
Focusing on Sea Fishing Supply Chain, Pakistan Sea Food distribution is

similar to other countries or Sea Ports in which following stakeholders are
involved:
Sea Food Supply Chain can be categorized into three different types:
1. Sea Food distribution to different areas of Balochistan and Sindh from

Harbor.
2. Sea Food processing in Gwadar and Karachi for Export Market.
3. Sea Food exports from Gwadar and Karachi port.
Role of Stakeholder
Following are the stakeholders in the seafood supply:
• Fishermen
• Middlemen
• Local Mandi/ Market
• Processing Plant owners
• Transporters
• Middlemen Karachi
• Exporters
• Retail Shop keepers
• End User
Above-mentioned stakeholders might vary according to supply of seafood

items. For then only first 3 stakeholders might be involved.
To market your product well on the international front, one must have the following
certifications. These certifications prove to be vital for the success of the firm on the
international scene.


International Quality Certification, HACCP:
Export to international market is dependent on the Quality and safety assurance certifications.
These certifications legitimize the export process of the processing plant. The certifications will
help in getting market share to the EU, US and Japanese sea food market. These certifications are
issued after thorough inspection of the processes involved in the sea food processing plant. These
will help in assuring product hygiene I-e the final product is free from all Becteria’s and viruses.
HACCP certification is the most important certificate for the sea food processing plant. In order
to get a share in EU, US and Japanese markets following are some of the important quality
certifications that help in attaining a product share in the said markets.
HACCP Certification
The HACCP system was introduced in the United States in 1971 by the Pillsbury Company in
collaboration with the National Aeronautics and Space Administration (NASA) and the US
Army Natick Research and Development Laboratories. These agencies had the initial
responsibility for designing and manufacturing food products and hardware which were to
provide 100 percent assurance that either the food products would not be contaminated with
pathogens, bacteria or viruses which could cause illness or that the equipment would function
with zero defects.
The HACCP system has become the internationally recognized system for the management of
food safety for all companies involved in the production, transformation, storage and distribution
of food for human consumption. It has been adopted by the European Union (EU) for all food
processors and the Codex Alimentarius Commission as the principal food safety system (EU
Directive 93/43/EEC; Codex Alimentarius – Alinorm 93/131, 1993) The HACCP process
involves the identification of specific hazards throughout the entire process involved in the
production of a food product and focuses on the preventative measures for their control to assure
the quality and safety of the food.
This includes analysis of raw material sources and usage, processing equipment, operating
practices, packaging and storage, together with marketing and conditions for intended use. There
is less reliance on the traditional system of end product testing and food safety is built into the
product from conception through design and distribution. HACCP shifts the responsibility to the
food producer to ensure that the product is safely consumable.

FDA Certification:
The U.S. national regulatory authority for public protection and seafood regulation is vested in
the Food and Drug Administration (FDA). The FDA operates an oversight compliance program
for fishery products under which responsibility for the product's safety, wholesomeness, identity
and economic integrity rests with the processor or importer, who must comply with regulations
promulgated under the Federal Food, Drug and Cosmetic (FD&C) Act, as amended, and the Fair
Packaging and Labelling Act (FPLA).
Sea Food Product lines:
Sea food product lines mainly include frozen fish and shrimp products. Shrimps are categorized
as headless and head-on according to the market demand. Frozen shrimps are mostly packed into
paper boxes and weight ranges from 2- 4 kg packs. Frozen fish is packaged according to the
international requirements. Mainly the fish product is packed into 10kg cotton boxes with names
and company brand on it, whereas for national supply fish is packed into bags of weight ranging
from 2 kg to 10 kg packs.
Quality and Product line:
Sea food is a delicate and perishable food item. The quality of the product is defined by
• Appearance.
• Freshness.
• Packaging.
Target Customers
The target customers for a Sea food processing Plant mainly include:
• International Export Markets of European Union, USA and Japan.
• The processing plant can also exploit the growing consumer market of Afghanistan.
• Sea food supply market of Pakistan.

Technical and Engineering aspects

Fish Spoilage:
As soon as a fish dies, spoilage begins. Spoilage of fresh fish is a complex process and is caused
by a number of inter-related systems, some of which are suppressed by others. The factors which
principally contribute to the spoilage are the degradation of protein with a subsequent formation
of various products like hypoxanthine, trim ethylamine, development of oxidative rancidity and
the action of micro-organisms.
The first obvious way to avoid spoilage and loss of quality is to keep caught fish alive until
cooking and consumption. Fish begins to spoil immediately after death. This is reflected in
gradual developments of undesirable flavors, softening of the flesh and eventually substantial
losses of fluid containing protein and fat. By lowering the temperature of the dead fish, spoilage
can be retarded and, if the temperature is kept low enough, spoilage can be almost stopped.
Four Phases in Fish Spoilage:

Chilling Process
Chilling is the process of cooling fish or fish products to a temperature approaching that the
purpose of chilling is to prolong the shelf-life of fish, which it does by slowing the action of
enzymes and bacteria, and the chemical and physical processes that can affect quality. Reducing
the temperature at which the fish is kept lowers the rate of deterioration. During chilling the
temperature is reduced to that of melting ice, 0 °C/32 °.
All species of fish, when properly chilled, will stay fresh for longer periods than those that are
not preserved in any way. The use of chilling techniques such as ice, therefore, effectively
prolongs the length of time of the catch. Products brought to market in a well preserved
condition will generally command higher prices, both at wholesale and retail levels, and thus
give better returns to the fishing operation. Most effective method employed for chilling process
is a combination of ice and water.
Ice is widely used for the purpose. For the purpose of fish handling, flake ice recommended for
chilling process as the physical shape of the flake ice favors fish
Types of Freezers
The three basic methods of freezing fish are:
• Blowing a continuous stream of cold air over the fish - air blast freezers.
• Direct contact between the fish and a refrigerated surface - contact or plate freezers.
• Immersion in or spraying with a refrigerated liquid - immersion or spray freezers
Blast Freezers
This is the most efficient and effective method of freezing. The method
recommended in this pre feasibility is Blast freezers. In this method, the use
of air to transfer heat from the product being frozen to the refrigeration
system is probably the most common method used in commercial
refrigeration. The natural convection of the air alone would not give a good
heat transfer rate; therefore, forced convection by means of fans has to be
introduced. To enable the product to be frozen in a reasonable time the air
flow rate should be fairly high.
Batch air blast freezers use pallets, trolleys or shelf arrangements for loading
the product. The freezer is fully loaded, and when freezing is complete, the
freezer is emptied and reloaded for a further batch freeze. Apart from this
difference in mode of operation, the batch freezer gives rise to bigger

fluctuations in the refrigeration load than continuous or batch-continuous

freezers. Because of compatibility and efficiency in the present industry
structure, freezing technology recommended for the proposed project will be
batch air blast Freezers.
Model of Blast Freezer
Plate Freezers:
Plate freezers and air blast freezers are the types of freezer most commonly used for freezing fish
in industrial countries. Plate freezers do not have the versatility of air blast freezers and can only
be used to freeze regularly shaped blocks and packages. Plate freezers can be arranged with the
plates horizontal to form a series of shelves and, as the arrangement suggests, they are called
horizontal plate freezers (HPF). When the plates are arranged in a vertical plane they form a
series of bins and in this form they are called vertical plate freezers (VPF).
Spraying with a refrigerated Liquid (Liquid Nitrogen / carbon dioxide):
In this freezer, the product is brought into direct contact with the refrigerant.
High Speed air flow to agitate fish

Fish Loaded
Open mesh belt with air flash from
below
Fish do not
adhere to belt

The fish on the stainless steel conveyor belt initially come into contact with
the counter current flow of nitrogen gas at a temperature of about -50°C.
Alternatively liquid carbon dioxide can also be sprayed on the fish as
refrigerant at a temperature of about -50 C. As the fish progress through the
pre-cooling stage of the freezer, the gaseous nitrogen partially freezes the
fish and up to 50 percent of the product heat is extracted. The product then
passes below the liquid spray where freezing is completed by the boiling
liquid. The last stage in the freezer provides a few minutes for the fish
temperature to reach equilibrium before the fish are discharged.
This method is considered the most advance and expensive practice in

freezing technology. This method is employed in those countries which have
regular supply of liquid nitrogen or liquid carbon dioxide.
Packaging of Frozen Fish:
After fish has been frozen, it can be subjected to many forms of deterioration
between production and eventual consumption. Contamination from
humans, animals, insect and atmospheric sources are possible. To prevent or
reduce losses in product quality, it is essential that the frozen product is
packaged in such a way as to provide an effective barrier with sufficient
impact and compression strength to prevent damage.
The packaging material must have adequate barrier properties to reduce

losses due to dehydration and pick-up of taints. The range of packaging
material for frozen fish is very wide and is dependant on the form of the
product being packed. For the export market in fisheries sector, primarily
plastics and Cartons are employed for packaging frozen fish products.
However for local supply across Pakistan, the fish product can be packages
in Bags as well. A brief of the packaging material is as follows:
• Plastics:
The primary package in contact with the frozen product is generally a

plastic derived from a natural hydrocarbon source. The choice of which
plastic wrapper is dependant on the type of barrier required, and if the
product is to be cooked or heated in the container
• Cartons::
Cartons are also regarded as primary packages when used as a protective

sleeve to the product. The boards for the cartons can be made of:

 Kraft boards. These are frequently used for packaging frozen foods and
are usually made from fully bleached materials. They are strong, of
good appearance and are suitable for direct contact with food.
 Folding box boards. These usually have one fully bleached side which
is suitable for direct contact with food.
• Bags:
Due to its availability and cost effectiveness, frozen fish and shrimps can
be packed directly into bags made from materials with good gas vapor and
moisture barrier properties. The level of sophistication can range from
manual weighing and loading to a highly sophisticated form-fill-seal
technology where a specified weight, volume or count of product is filled
into a formed bag which is heat sealed. Such equipment can be used for
packing peeled shrimp and fish fingered.
Flow Chart:
The process flow chart for the Sea Food Processing Plant is given below

Organizational Setup and Legal Aspects

GOVERNANCE
The business of the company is to be managed under the directions of the equity partners. The
partners will be responsible for establishing broad corporate policies and for the overall
performance of the company. The core responsibility of the equity partners is to exercise their
business judgement and act in what they reasonably believe to be the best interests of the
company.
Management Team Flow Chart

Managing
Director
Factory Sales Finance Logistics

Manager Manager Manager Manager
Quality
Control Processing Asst.
Asst.
&Packing Production manager
manager
for export
for local
sales
sales
Asst.
Manager
Asst. Executive
Domestic Purchase
Exports Manager Quality
Sales
Logistics control

HUMAN RESOURCE REQUIREMENT
The manpower required for operating the Warehouse is as follows:
There will be a partnership agreement among the five partners of the business. The share of each
partner is as follows:
Ahmed Saeed 40% Niam Noor Ali 10%

Azzumudin 25% Manoj Kumar 5%
Ali Taha 20%
The agreement will be contained in an elaborate document called “Deed of Partnership” and will
be drafted by a Lawyer. The deed will be stamped according to the provisions of Stamp Act.
Following points will be included in the deed,
1. The nature and place of business, the name of the firm and names of partners.
2. The date at which partnership is to commence and the period of its duration.
3. Capital, banking account and who is to sign cheques.
4. How profit losses are to be shared.
5. Management
6. Account
7. Whether firm is to continue after the death or insolvency of a partner.
8. Arbitration clause.


Colonel Fisheries: Institute of Business Management

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Institute of Business Management

TERM REPORT FALL 2009

Advance Financial Management

DATED: 8th March 2009

Institute of Business Management

Ms. Naureen Ghafar

Institute of Business Management

Dear Ms. Naureen,

Institute of Business Management

Institute of Business Management

Niam Noor Ali

Institute of Business Management

Institute of Business Management

• International pressure to stop terrorism

• Liquidity constraint in Global Financial Markets

• Impact of WTO on Pakistan’s economy

• Impact of rising food prices

• American Banking Financial Crises

• Impact of IMF loan

2. Review of Pakistan’s Economy

• Money and Credit

• Increase in Commodity prices

• Population, labour force and Employment

Institute of Business Management

3. Assessment of Target project Industry in Pakistan

• World fisheries and trade production

• Pakistan’s fisheries trade and production

• Market entry timing

• Proposed Business legal status

• Problems faced by the sector

4. Detailed Study of the Selected Project

• Background/introduction of the sponsors and the project

• Nature of the project

• Vision and mission

5. Market Aspects and Analysis

• Target Markets of Pakistan Fisheries

Institute of Business Management

6. Technical and Engineering Prospects

• Fish spoilage in four phases

• Packaging of fish products

7. Organizational setups and Legal Aspects

• Cash flow statements

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Overview of the International

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INTERNATIONAL PRESSURE TO STOP TERRORISM

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LIQUIDITY CONSTRAINTS IN GLOBAL FINANCIAL MARKETS

IMPACT OF WTO ON PAKISTAN’S ECONOMY

Institute of Business Management

IMPACT OF RISING INTERNATIONAL FOOD PRICES

According to the State Bank of Pakistan:

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AMERICAN FINANCIAL BANKING CRISES

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IMPACT OF IMF LOAN

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Large Scale Manufacturing (%)

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