Pre-Feasibility Study

Garlic Powder and Paste Production Unit

Small and Medium Enterprises Development Authority

Ministry of Industries & Production
Government of Pakistan
www.smeda.org.pk
HEAD OFFICE
4th Floor, Building No. 3, Aiwan-e-Iqbal Complex, Egerton Road,
Lahore
Tel: (92 42) 111 111 456, Fax: (92 42) 36304926-7
[email protected]

REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE

PUNJAB SINDH KPK BALOCHISTAN

3rd Floor, Building No. 3, 5TH Floor, Bahria Ground Floor Bungalow No. 15-A
Aiwan-e-Iqbal Complex, Complex II, M.T. Khan Road, State Life Building Chaman Housing Scheme
Egerton Road Lahore, Karachi. The Mall, Peshawar. Airport Road, Quetta.
Tel: (042) 111-111-456 Tel: (021) 111-111-456 Tel: (091) 9213046-47 Tel: (081) 831623, 831702
Fax: (042) 36304926-7 Fax: (021) 5610572 Fax: (091) 286908 Fax: (081) 831922
[email protected] [email protected] [email protected] [email protected]

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Table of Contents
1 DISCLAIMER ................................................................................................................................... 3
2 EXECUTIVE SUMMARY ................................................................................................................. 4
3 INTRODUCTION TO SMEDA ........................................................................................................ 5
4 PURPOSE OF THE DOCUMENT ................................................................................................... 5
5 BRIEF DESCRIPTION OF PROJECT & PRODUCT .................................................................... 6
5.1 HEALTH BENEFITS .......................................................................................................................................... 7
5.2 SULFUR-CONTAINING COMPOUNDS IN GARLIC ............................................................................... 7
5.3 DESCRIPTION .................................................................................................................................................... 7
5.4 HOW TO SELECT AND STORE ................................................................................................................... 9
5.5 LOCAL INDUSTRY ......................................................................................................................................... 10
5.6 PRODUCTION PROCESS FLOW ............................................................................................................. 11
5.7 MANUFACTURING PROCESS: ................................................................................................................. 11
5.8 INSTALLED AND OPERATIONAL CAPACITIES .................................................................................. 13
6 CRITICAL FACTORS .................................................................................................................... 13
7 GEOGRAPHICAL POTENTIAL FOR INVESTMENT ................................................................ 14
8 POTENTIAL TARGET CUSTOMERS / MARKETS .................................................................. 14
9 PROJECT COST SUMMARY ........................................................................................................ 14
9.1 PROJECT ECONOMICS .............................................................................................................................. 14
PROJECT FINANCING .................................................................................................................................................. 15
9.2 PROJECT COST ............................................................................................................................................ 15
9.3 SPACE REQUIREMENT............................................................................................................................... 16
9.4 MACHINERY & EQUIPMENT REQUIREMENT .................................................................................... 16
9.5 FURNITURE & FIXTURES REQUIREMENT .......................................................................................... 17
9.6 OFFICE EQUIPMENT REQUIREMENT ................................................................................................... 17
9.7 HUMAN RESOURCE REQUIREMENT .................................................................................................... 18
9.8 UTILITIES AND OTHER COSTS................................................................................................................. 18
9.9 REVENUE GENERATION ............................................................................................................................ 19
10 CONTACT DETAILS ..................................................................................................................... 20
10.1 MACHINERY SUPPLIERS ........................................................................................................................... 20
10.2 RAW MATERIAL SUPPLIERS.................................................................................................................... 20
10.3 TECHNICAL EXPERTS / CONSULTANTS ............................................................................................. 20
11 USEFUL WEB LINKS .................................................................................................................... 21
12 ANNEXURES .................................................................................................................................. 22
12.1 INCOME STATEMENT .................................................................................................................................. 22
12.2 BALANCE SHEET .......................................................................................................................................... 23
12.3 CASH FLOW STATEMENT............................................................................................................................... 24
13 KEY ASSUMPTIONS ..................................................................................................................... 25

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1 DISCLAIMER
This information memorandum is to introduce the subject matter and provide a
general idea and information on the said matter. Although, the material included in
this document is based on data/information gathered from various reliable
sources; however, it is based upon certain assumptions, which may differ from
case to case. The information has been provided on as is where is basis without
any warranties or assertions as to the correctness or soundness thereof. Although,
due care and diligence has been taken to compile this document, the contained
information may vary due to any change in any of the concerned factors, and the
actual results may differ substantially from the presented information. SMEDA, its
employees or agents do not assume any liability for any financial or other loss
resulting from this memorandum in consequence of undertaking this activity. The
contained information does not preclude any further professional advice. The
prospective user of this memorandum is encouraged to carry out additional
diligence and gather any information which is necessary for making an informed
decision, including taking professional advice from a qualified consultant/technical
expert before taking any decision to act upon the information.
For more information on services offered by SMEDA, please contact our website:
www.smeda.org.pk

Document Control

Document No. PREF-NO

Revision No.
Prepared by SMEDA-Balochistan
Revision Date NA
For information [email protected]

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2 EXECUTIVE SUMMARY
Garlic Powder and Paste Production Unit is proposed to be located at Quetta,
Loralai, Mach, Sibi, Harnai, Duki, Qilla Abdullah, Pishin, Karak, Dera Ismail Khan,
Kohat, Attock, Hub, Lahore, Faisalabad, Multan, Gujranwala, others
Products include Garlic Powder and Garlic Paste
Capacity; Installed capacity 1,044,000 Kgs and initial utilization 783,000 Kgs, 75%
Total Cost Estimates is Rs. 47,318,640 with fixed investment Rs. 42,819,765 and
working capital Rs. 4,498,875.
Given the cost assumptions IRR and payback are 46 % and 2.79 years
respectively
The most critical considerations or factors for success of the project are:
• Most significant consideration
Large quantity of garlic production in the country.
Availability of large quantities of three varieties mix.
Availability of hard working & low-cost labor.
Increasing inland trends towards use of garlic powder and paste.
Large and established world markets.
Improved technological changes available.
• Equally important factor
Emphasizing on excellent services to its customers such as standardized
products and timely order fulfillment.
New machinery should be purchased in order to increase the efficiency and
lower the maintenance cost.
Refurbished standardized machinery is also recommended.
Adapt to the rapid, social, economic and technological changes.
Hiring of well-trained / experienced staff will add in the efficiency of the facility.

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3 INTRODUCTION TO SMEDA
The Small and Medium Enterprises Development Authority (SMEDA) was
established in October 1998 with an objective to provide fresh impetus to the
economy through development of Small and Medium Enterprises (SMEs).
With a mission "to assist in employment generation and value addition to the
national income, through development of the SME sector, by helping increase the
number, scale and competitiveness of SMEs", SMEDA has carried out ‘sectoral
research’ to identify policy, access to finance, business development services,
strategic initiatives and institutional collaboration and networking initiatives.
Preparation and dissemination of prefeasibility studies in key areas of investment
has been a successful hallmark of SME facilitation by SMEDA.
Concurrent to the prefeasibility studies, a broad spectrum of business
development services is also offered to the SMEs by SMEDA. These services
include identification of experts and consultants and delivery of need based
capacity building programs of different types in addition to business guidance
through help desk services.
4 PURPOSE OF THE DOCUMENT
The objective of the pre-feasibility study is primarily to facilitate potential
entrepreneurs in project identification for investment. The project pre-feasibility
may form the basis of an important investment decision and in order to serve this
objective, the document/study covers various aspects of project concept
development, start-up, and production, marketing, finance and business
management.
The purpose of this document is to facilitate potential investors in Garlic Powder
and Paste Production Unit by providing them with a general understanding of the
business with the intention of supporting potential investors in crucial investment
decisions.
The need to come up with pre-feasibility reports for undocumented or minimally
documented sectors attains greater imminence as the research that precedes
such reports reveal certain thumb rules; best practices developed by existing
enterprises by trial and error, and certain industrial norms that become a guiding
source regarding various aspects of business set-up and it’s successful
management.
Apart from carefully studying the whole document one must consider critical
aspects provided later on, which form basis of any Investment Decision.

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5 BRIEF DESCRIPTION OF PROJECT & PRODUCT

This project envisages production of Garlic powder and Garlic paste which is
having a very bright prospect in Household use, Restaurants & Hotels and Export
Market.
Even more so, in the restaurant business, where using garlic is essential to
season and flavor all kinds of dishes. On that note, the time of workers will be
saved themselves from not having to peel hundreds of cloves of garlic each week!
And that translates into time that can be used productively in other aspects. In
addition, garlic of the best quality, knowing that the company follows the best
health standards.
Garlic (Allium sativum) is a species in the onion genus, Allium. Its close relatives
include the onion, shallot, leek, chive, and Chinese onion. Garlic is the second
most widely used cultivated allium after onion. It has long been recognized all over
the world as a valuable spice for foods and a popular remedy for various ailments
and physiological disorders.
Garlic is native to Central Asia and northeastern Iran, and has long been a
common seasoning worldwide, with a history of several thousand years of human
consumption and use. It was known to ancient Egyptians, and has been used both
as a food flavoring and as a traditional medicine. In Ancient Rome, it was "much
used for food among the poor". China produces some 80% of the world supply of
garlic.
It is grown throughout Pakistan and consumed by most of the people. It is used
practically all over the world for flavoring various dishes. In America about 50% of
the entire output of fresh garlic is dehydrated and sold to food processors.
In Pakistan, Middle East and other countries, it is already being used in several
food preparation especially in dishes, curry powders, curried vegetables, meat
preparation, tomato ketchup etc.
The important garlic producing countries in the world are china, Turkey, India,
Thailand, Korea, Egypt, Pakistan etc.
The proposed business has higher return on investment and a steady growth of
business is expected with the processors having some prior experience or
education in the related field of business. This pre-feasibility encompasses
essential information regarding various aspects of starting the production of Garlic
processed i.e. garlic powder and paste.
Garlic is considered as a rich source of carbohydrates, protein, phosphorous.
Ascorbic acid content was reported to be very high in green garlic. Nutritive
composition of fresh peeled garlic and dehydrated garlic powder is reported.

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Particular Fresh peeled garlic cloves Dehydrated garlic powder

Moisture% 62.8 5.2
Protien% 6.3 17.5
Fat% 0.1 0.6
mineral matter% 1 3.2
Fibre% 0.8 1.9
Carbohydrates% 29 71.4
Calcium% 0.03 0.1
Phosphours% 0.31 0.42
Potassium% 0 1.1
Iron% 0.001 0.004
Niacin% 0 0.7
Sodium% 0 0.01
Vitamin A.I.U. 0 175
Nicotinic acid(mg/100g) 0.4 0
Vitamin C (mg/100g) 13 12
Vitamin B(mg/100g) 0 0.68
Vitamin B2 (mg/100g) 0 0.08

5.1 Health Benefits

While garlic ranks as an excellent source of manganese and vitamin B6, a very
good source of vitamin C and copper, and a good source of selenium,
phosphorus, vitamin B1, and calcium, it is the sulfur compounds in garlic that
serve as its spotlight nutrients in terms of overall health benefits. The sulfur-
containing compounds in this allium vegetable have been shown to provide us with
health advantages in a wide variety of body systems, including: our cardiovascular
system, immune system, inflammatory system, digestive system, endocrine
system, and detoxification system.

5.2 Sulfur-Containing Compounds in Garlic

The six categories of sulfur-containing compounds will give you an initial look at
the remarkable complexity of this allium vegetable. In terms of potential health
benefits, each of these compounds has been studied fairly extensive. However, it
is also worth noting here that the majority of studies have not focused on the
presence of compounds in fresh garlic consumed as a food, but rather on garlic
supplements, whether they be oils, tablets, powders, or other types of extracts.

5.3 Description
Garlic—together with onions—are among the best known of all "allium
vegetables." Both of these plants (garlic and onions) belong to the same genus of

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plants called the Allium genus. "Allium" is actually the Latin word for garlic! Other
commonly enjoyed foods that belong to this Allium genus are leeks, chives,
scallions, and shallots.
Unlike this genus grouping for garlic which is very straightforward, the food family
for garlic can be confusing. The correct placement for garlic is within the very
broad amaryllis family (Amaryllidaceae) that includes the very popular flower by
that same name. The Allioideae are a subfamily within the amaryllis family and
garlic (Allium sativum) is a member of this Allioideae subfamily, along with onions,
leeks, chives, scallions, and shallots.
Garlic is arranged in a head, called a "bulb," which averages about 2 inches in
height and diameter and consists of numerous small separate cloves. Both the
cloves and the entire bulb are encased in paper-like sheathes that can be white,
off-white, or have a pink/purple hue. Although garlic cloves have a firm texture,
they can be easily cut or crushed. The taste of garlic is like no other—it hits the
palate with a hot pungency that is shadowed by a very subtle background
sweetness.
Most producers of garlic divide its varieties into four types:
• Hardneck
• Softneck
• Black
• Creole

Hardneck garlic, like the name suggests, has a central stalk that is hard and
woody. Purple Stripe is a popular variety of hardneck garlic, as are Rocambole
and Porcelain. In the case of Purple Stripe and other hardneck varieties, you will
typically find a light purplish or rosy tint to small portions of the cloves and skins.
Hardneck varieties of garlic typically have more "bite" than softnecked varieties.
Allium sativum subspecies ophioscorodon is usually the subspecies name to refer
to hardneck garlics.
Softneck varieties of garlic are the most common types that you will find in the
grocery store. They typically have less "bite" than hardneck varieties. Formidable,
Western Rose, Artichoke, and Silverskin are popular varieties of softneck garlic.
Allium sativum subspecies sativum is usually the subspecies name to refer to
softneck garlics. Softneck varieties of garlic are also typically the types that you
find braided in the supermarket.
Agricultural information on garlic that treats "Creole garlic" as a type of softneck.
However, there is also some genetic evidence to suggest that Creole garlic be
treated as its own type of garlic, separate from softneck. Creole garlic is usually

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recognizable by from the rosy/purplish color of the entire garlic bulb (and not just
intermittent rosy hues as can be present in hardneck varieties). You are less likely
to come across this variety of garlic in the grocery store. Worldwide, however,
well-known varieties of Creole garlic include Burgundy, Ajo Rojo, Cuban Purple,
and Creole Red.
Heat treatment, high humidity, and aging are typically the processes used to
create black garlic. Particularly when the aging process is allowed to continue not
only over the course of several days but over the course of several weeks (or even
longer), the color of the garlic cloves can turn into a rich black. This variety of
garlic has a special history of popularity in parts of Korean, Japan, and Thailand.
Although you will often hear the term "fermented garlic" being used to describe
black garlic, the use of this term is a matter of some controversy since
microorganisms (like bacteria) are not typically added during the garlic aging
process to help produce black garlic. (In the world of food, "fermentation" is usually
understood to involve the use of bacteria or yeasts in development of a "fermented
food.")
Elephant garlic (Allium ampeloprasum) is an unusual type of garlic because it is
actually more closely related to leeks (Allium porrum) than to garlic (Allium
sativum). When you see elephant garlic growing, its tall flower stalk and large
purplish flower head make it seem like an extremely large version of normal
garlic—and thus the name. Unlike leeks, however, elephant garlic does form a
bulb, and this bulb usually consists of very large cloves that are few in number.
(Elephant garlic bulbs may sometimes have only three to four cloves per bulb.)

5.4 How to Select and Store

We encourage the purchase of certified organically grown foods, and garlic is no
exception. Repeated research studies on organic foods as a group show that your
likelihood of exposure to contaminants such as pesticides and heavy metals can
be greatly reduced through the purchased of certified organic foods, including
garlic.
Store fresh garlic in either an uncovered or a loosely covered container in a cool,
dark place away from exposure to heat and sunlight. This will help maintain its
maximum freshness and help prevent sprouting, which reduces its flavor and
causes excess waste. It is not necessary to refrigerate garlic.
Depending upon its age and variety, whole garlic bulbs will keep fresh for about a
month if stored properly. Inspect the bulb frequently and remove any cloves that
appear to be dried out or moldy. Once you break the head of garlic, it greatly
reduces its shelf life to just a few days.

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5.5 Local Industry

Pakistani scientists have made a breakthrough by developing the highest-yield
garlic variety which is suitable for growing in all provinces of the country.
Keeping in view the present demand and yield gap, garlic variety development
programme launched under the vegetable crop research programme at the
National Agricultural Research Centre (NARC).
The new garlic variety, ‘NARC-G1’ is the highest garlic variety among all the
existing garlic variants in the country. The quality was found to be superior with 26
tonnes yield per hectare.
It has higher nutrient contents and medicinal value with suitability to
pharmaceutical, food processing industry and household level. Moreover, farmers’
income will increase due to low expenditure on plant protection and higher yield
potential, ultimately reducing the import bill.
The newly-developed variety of garlic was presented at the variety evaluation
committee of agricultural research scientists from all over the country at a meeting
of Pakistan Agri-culture Research Council to determine the potential of this new
variant.
Currently, Pakistan is spending precious foreign exchange on the import of garlic
due to high demand and low yield potential of existing varieties. Latest estimates
showed that the country is importing 34,375 tonnes of garlic from China, India and
Chile worth Rs66 million1.
The total indigenous production of garlic in the country stands at 70,925 tonnes
from an area of 7,882 hectares with an average yield of 8.99 tonnes per hectare.
Khyber-Pakhtunkhwa is the major garlic-producing province with 32,205 tonnes,
followed by Punjab (24,143 tonnes), Balochistan (7,880 tonnes) and Sindh (6,557
tonnes)2.
Following key parameters must be addressed as per pre-feasibility study under
preparation
• Technology: This proposed unit with modern processing and production
machines including Garlic splitter, Garlic peeler, Complete compressor for
peeler, Disinfection washing bath, Cooling coil for disinfection with hydro
cooling, Drying line with turbines for peeled garlic cloves, etc.
• Location: The unit would be located in or near an area where the raw material
is available easily like be located at Quetta, Loralai, Mach, Sibi, Harnai, Qilla

1
Pakistan Agriculture Research Council
2
Pakistan Agriculture Research Council

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Abdullah, Pishin, Karak, Dear Ismail Khan, Kohat, Attock, Hub, Lahore,
Faisalabad, Multan, Gujranwala, and Karachi or any other site where raw
material can be transported easily.
• Product: The unit would produce Garlic Paste and Garlic Powder for
commercial and residential uses.
• Target Market: In addition to local markets in Karachi, Lahore, Rawalpindi,
Quetta, Peshawar, and Islamabad an enormous export market for the Pakistani
Garlic Paste and Garlic Powder exists in Middle East, India, Europe and China
etc.
• Employment Generation: The proposed project will provide direct
employment to 12 people. Financial analysis shows the unit shall be profitable
from the very first year of operation.

5.6 Production Process Flow

5.7 Manufacturing Process:

Preparing and Processing Garlic

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• Procure the garlic from the farm.

• Wash them with water to clean up any foreign material
• Remove the skin of garlic by skin peeling machine
• Put the product in the mill/crusher machine or drying machine
• Put the output of the mill machine to pulper machine to further getting the
fine paste.
• Put the output in the stainless steel tank for mixing the preservative.
• Transfer the product to the pouch packing machine for packing in a
customized denomination.

Varieties of garlic bulbs can be obtained from the local market.

Selection:
The garlic bulbs should be sorted and selected for the following characteristics like
uniform shape and size, full matured with no greenness without sprouts and firm
texture. The bulbs should be cleaned to remove dust/earth, chaff, dry stalk and
any foreign materials.
Separation:
The clean bulbs are separated into cloves and winnowed to remove dust and dirt.
The cloves graded for their size. The peels or skin of the garlic is filtered through
one compartment, while the peeled garlic cloves leave through another
compartment.
Peeling:
The outer skin of the cloves are to be removed off by peeler. Whole cloves were
used for all the drying operations except freeze-drying.
Dry centrifugation peeled garlic process
It is called this because the machines used to peel garlic simulate the operation of
a large washing machine.
The main difference is that this machine does it entirely dry, spinning hundreds of
rotations per minute, which manages to detach the fragile outer layers of the
garlic.
Wet centrifugation peeled garlic process
This process includes water in the centrifugation, which allows the peels or skin of
the garlic to detach more easily.
In this type of machine, the garlic is placed in a space where the centrifugation is
carried out and water is received from an upper section.

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The difference is that in this type of process, the water is drained through a lower
compartment, which carries the husks and residues of the garlic with it.
All of the garlic cloves remain in the upper part, waiting to be released through a
top hatch once the process is finished.
This method, is equally useful and effective, while its difference lies basically in the
use of compressed air on small amounts of garlic cloves.
The machine works in such a way that it receives a portion of garlic and instantly
releases compressed air, instantly breaking the peels or skin off of the garlic.
These are expelled through a mesh and are released below, where a garbage
container awaits them. This occurs while the garlic cloves follow a linear path after
being cleaned, on the same upper mesh.

5.8 Installed And Operational Capacities

The total installed capacity of the project is 1,044,000 Kgs of Garlic Paste and
Powder along with assumed operational capacity of 75% during the first year of
operations i.e. 783,000 Kgs of Garlic Paste and Powder. A gradual increase of 3%
in production capacity per annum.

6 CRITICAL FACTORS
Garlic Paste and Powder have a wide range of application, not only in Household
sector but also in the Hoteling Sector. Certain critical factors involved during the
production process of Garlic Paste and Garlic Powder are:
• Identification of small scale, low cost Garlic processing
machines/technology for setting up of rural enterprises.
• Arrangement of raw material (Garlic)
• Testing of Garlic processing machines available
• Training of entrepreneurs in Garlic processing for value addition to be
deputed
• Problems observed during the operation of Garlic processing machines, if
any.
• Communicating the problem for improvement.
• Standardization of the machines for commercial use by the rural
entrepreneurs.
• Identification of manufacturer for commercial production of the machine.

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• Availability of skilled labor.

• Higher return on investment and a steady growth of business is closely
associated with regular training and capacity building of the entrepreneur
and employees.
• Prior experience and related / education in the related field of business.

7 GEOGRAPHICAL POTENTIAL FOR INVESTMENT

It is suitable to establish the production unit Quetta, Swat, Hub, Khuzdar, Loralai
Bostan, Peshawar, Lahore and Karachi. However such a unit could be established
in other parts of the country provided the main conditions are fulfilled such as
Availability of Garlic Bulb and man power availability, accessibility to markets, and
reasonable demand & usage of Garlic Powder and Garlic Paste.
8 POTENTIAL TARGET CUSTOMERS / MARKETS

Due to demand of garlic paste and garlic powder there exist a vast market
required. Garlic paste and garlic powder was born from a real market demand.
The garlic paste and garlic powder has good market potential. If the product is
manufactured and packed in small quantities such as 50 gms and 100 gms
packets. The market is widespread especially in rural areas.

Especially in an urban area, people are looking for instant food and ginger paste
make it happen all household consume this product. Apart from domestic use
garlic paste and powder is used in hotels, restaurants are a major consumer.

The local consumer is the main customer of this business; therefore, it has huge
market through Pakistan.
9 PROJECT COST SUMMARY

9.1 Project Economics

All the figures in this financial model have been calculated for estimated sales of
Rs. 258.39 million in the year one. The capacity utilization during year one is
worked out at 75% with 3% increase in subsequent years up to the maximum
capacity utilization of 95%.
The following table shows internal rate of return, payback period and net present
value of the proposed venture.

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Table 1: Project Economics

Description Details

Internal Rate of Return (IRR) 46%

Payback Period (yrs.) 2.79

Net Present Value (Rs.) 112,843,123

Project Financing
Following table provides details of the equity required and variables related to
bank loan;

Table 2: Project Financing

Description Details
Total Equity (50%) Rs. 23,659,320
Bank Loan (50%) Rs. 23,659,320
Markup to the Borrower (%age / annum) 14%
Tenure of the Loan (Years) 5 Years

9.2 Project Cost

Following fixed and working capital requirements have been identified for
operations of the proposed business.

Table 3: Project Cost

Description Amount Rs.
Capital Cost
Land 4,400,000
Building / Infrastructure 9,639,387
Plant and Machinery 27,342,503
Furniture & Fixture 267,500
Office Equipment 452,500
Pre-operating Cost 717,876
Total Capital Cost 42,819,765

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Working Capital
Equipment Spare Parts Inventory 897,188
Raw Material Inventory 1,734,563
Up-front Insurance Payments 1,367,125
Cash 500,000
Total Working Capital 4,498,875
Total Project Cost 47,318,640

9.3 Space Requirement

The space requirement for the proposed Garlic Paste and Garlic Powder
production Unit is estimated considering various facilities including management
office, production hall, storage, open space, etc. Details of space requirement and
cost related to land & building is given below;
Table 4: Space Requirment
Estimated Area Unit Cost Total Cost
Description
(Sqft) (Rs.) (Rs.)
Management Office 400 1,450 580,000
Processing Area 5,000 892 4,459,387
Raw Material Shed 4,000 500 2,000,000
Laboratory 200 1,000 200,000
Finished Goods Store 2,000 800 1,600,000
Drive way / Pavement 20,000 30 600,000
Grounds 10,000 20 200,000
Total 41,600 9,639,387

9.4 Machinery & Equipment Requirement

Plant, machinery and equipment for the proposed project are stated below.

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Table 5: Machinery & Equipment

Description Quantity Unit Cost Total Cost
(Rs.) (Rs.)

Garlic splitter 450 Kg/hour 1 2,571,250 2,571,250

Garlic peeler 200 Kg/hour 1 5,652,500 5,652,500
Complete compressor for peeler 1 4,079,320 4,079,320
Disinfection washing bath 450L 1 2,944,740 2,944,740
Cooling coil for disinfection with hydro
1 391,000 391,000
cooling
Drying line with turbines for peeled
1 3,153,500 3,153,500
garlic cloves
Transformer 1 1,200,000 1,200,000
Generator 1 2,000,000 2,000,000
Tube Well 1 800,000 800,000
Installation 1 150,000 150,000
Total machinery cost 22,942,310
GST 17% 0.17
Total 26,842,503
Transportation charges 1 500,000 500,000
Total 27,342,503

9.5 Furniture & Fixtures Requirement

Details of the furniture and fixture required for the project are given below;

Table 6: Furniture & Fixture

Description Quantity Unit Cost Total Cost
(Rs.) (Rs.)

Tables 2 6,000 12,000

Executive Chairs 2 5,000 10,000
Visitors Chairs 7 3,500 24,500
Carpeting 400 300 120,000
Air Conditioners (2 ton Split) 1 90,000 90,000
Total 267,500

9.6 Office Equipment Requirement

Following office equipment will be required for Garlic Paste and Garlic Powder
production Unit;

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Table 7: Office Equipment

Description Quantity Unit Cost Total Cost
(Rs.) (Rs.)

Laptop 1 125,000 125,000

Desktop Computer with UPS 1 80,000 80,000
Printer 1 20,000 20,000
Fax Machine 1 20,000 20,000
Telephone Sets 3 2,500 7,500
Photo Copier 1 200,000 200,000
Total 452,500

9.7 Human Resource Requirement

In order to run operations of Garlic Paste and Garlic Powder production Unit
smoothly, details of human resources required along with number of employees
and monthly salary are recommended as under;

Table 8: Human Resource Requirment

Description No. of Employees Monthly Salary
per person (Rs.)
CEO/ Manager 1 50,000
Supervisor 1 35,000
Accountant cum Receptionist 1 22,000
Salesman 2 22,000
Skilled Worker/ Machine Operator 2 22,000
Loading Worker 2 18,000
Security Guard 2 18,000
Peon 1 18,000
Total 12 285,000

9.8 Utilities and other costs

An essential cost to be borne by the project is the cost of electricity and gas. The
electricity expenses are estimated to be around Rs. 1,896,873 / year. Furthermore,
promotional expense being essential for marketing of Garlic Paste and Garlic

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Powder production Unit is estimated as 1% of administrative / Cost of Sales

expenses.

9.9 Revenue Generation

Based on the capacity utilization of 75% for Garlic Paste and Garlic Powder Sales
revenue during the first year of operations is estimated as under;

Table 9: Revenue Generation – Year 1

Description No. of Finished Units Sale Sales
Kgs Goods available Price / Revenue
Produced Inventory for Sale unit (Rs.)
(No.) (No.) (No.) (Rs.)

Garlic Paste 469,800 39,150 430,650 300 129,195,000

Garlic Powder 313,200 26,100 287,100 450 129,195,000

Total 783,000 65,250 717,750 258,390,000

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10 CONTACT DETAILS
In order to facilitate potential investors, contact details of private sector Service
Providers relevant to the proposed project be given.

10.1 Machinery Suppliers

Name of Address Phone Fax E-mail Website
Supplier

Turchmir Nawab Chowk, 042- 042-

info@ www.
Engineering Bagrian Road, 35113377 35123388
turchmir turchmir
(services) Town ship,
.pk .pk
Comapny Lahore

10.2 Raw Material Suppliers

Name of Supplier Address Phone Fax E-mail Website

Golimar, 0300-2364558
Khwaja Spices
Sukkur
People 057-2603333
Watan Dealer Colony
Attock
Shahmir Nazimabad, 021-4915500
Marketing Karachi

10.3 Technical Experts / Consultants

Name of Address Phone Fax E- Website
Expert/ mail
Organization
Pakistan G-5, Islamabad 051- 051-
Agricultural 90762000 9255034 www.parc
Research .gov.pk
Council

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11 USEFUL WEB LINKS

Small & Medium Enterprises Development Authority www.smeda.org.pk

(SMEDA)
Government of Pakistan www.pakistan.gov.pk
Ministry of Industries & Production www.moip.gov.pk
Ministry of Education, Training & Standards in Higher http://moptt.gov.pk
Education
Government of Punjab www.punjab.gov.pk
Government of Sindh www.sindh.gov.pk
Government of Khyber Pakhtunkhwa www.khyberpakhtunkhwa.gov.pk
Government of Balochistan www.balochistan.gov.pk
Government of Gilgit Baltistan www.gilgitbaltistan.gov.pk
Government of Azad Jamu Kashmir www.ajk.gov.pk
Trade Development Authority of Pakistan (TDAP) www.tdap.gov.pk
Security Commission of Pakistan (SECP) www.secp.gov.pk
Federation of Pakistan Chambers of Commerce and www.fpcci.com.pk
Industry (FPCCI)
State Bank of Pakistan (SBP) www.sbp.org.pk
Punjab Small Industries Corporation www.psic.gop.pk
Sindh Small Industries Corporation www.ssic.gos.pk
Pakistan Horticulture Development and Export Company www.phdec.org.pk
(PHDEC)
Punjab Vocational Training Council (PVTC) www.pvtc.gop.pk
Technical Education and Vocational Training Authority www.tevta.org
(TEVTA)
Pakistan Readymade Garment Technical Training Institute www.prgmea.org/prgtti/
Pakistan Council of Scientific and Industrial Research http://www.pcsir.gov.pk
(PCSIR).
Punjab Industrial Estates (PIE) www.pie.com.pk
Faisalabad Industrial Estate Development and Management www.fiedmc.com.pk
Company (FIEDMC)

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12 ANNEXURES

12.1 Income Statement

Statement Summaries SMEDA

Income Statement
Rs. in actuals
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Revenue 258,390,000 321,437,160 367,223,868 418,953,546 477,356,921 543,251,435 617,551,283 694,564,867 765,364,097 841,900,507
Cost of goods sold 222,185,623 277,095,861 316,357,674 360,700,880 410,749,144 467,200,045 530,833,631 596,837,731 657,655,929 723,408,538
Gross Profit 36,204,377 44,341,299 50,866,194 58,252,666 66,607,777 76,051,390 86,717,652 97,727,136 107,708,169 118,491,969

General administration & selling expenses

Administration expense 2,244,000 4,200,699 4,609,686 5,058,491 5,550,993 6,091,445 6,684,517 7,335,331 8,049,509 8,833,221
Rental expense - - - - - - - - - -
Utilities expense 1,896,873 2,086,560 2,295,216 2,524,738 2,777,212 3,054,933 3,360,426 3,696,469 4,066,116 4,472,728
Travelling & Comm. expense (phone, fax, etc.) 20,400 38,188 41,906 45,986 50,464 55,377 60,768 66,685 73,177 80,302
Office vehicles running expense - - - - - - - - - -
Office expenses (stationary, etc.) 20,400 38,188 41,906 45,986 50,464 55,377 60,768 66,685 73,177 80,302
Promotional expense 2,583,900 3,214,372 3,672,239 4,189,535 4,773,569 5,432,514 6,175,513 6,945,649 7,653,641 8,419,005
Insurance expense 1,367,125 1,230,413 1,093,700 956,988 820,275 683,563 546,850 410,138 273,425 136,713
Professional fees (legal, audit, etc.) 1,291,950 1,607,186 1,836,119 2,094,768 2,386,785 2,716,257 3,087,756 3,472,824 3,826,820 4,209,503
Depreciation expense 3,288,220 3,288,220 3,288,220 3,288,220 3,288,220 3,288,220 3,288,220 3,288,220 3,288,220 3,288,220
Amortization expense 143,575 143,575 143,575 143,575 143,575 - - - - -
Property tax expense - - - - - - - - - -
Miscellaneous expense - - - - - - - - - -
Subtotal 12,856,443 15,847,401 17,022,567 18,348,287 19,841,556 21,377,686 23,264,819 25,282,000 27,304,086 29,519,992
Operating Income 23,347,934 28,493,898 33,843,627 39,904,378 46,766,222 54,673,705 63,452,833 72,445,136 80,404,083 88,971,977

Other income - - - - - - - - - -
Gain / (loss) on sale of assets - - - - - - - - - -
Earnings Before Interest & Taxes 23,347,934 28,493,898 33,843,627 39,904,378 46,766,222 54,673,705 63,452,833 72,445,136 80,404,083 88,971,977

Interest expense 2,998,171 2,323,646 1,777,890 1,150,630 429,694 - - - - -

Earnings Before Tax 20,349,763 26,170,252 32,065,737 38,753,748 46,336,527 54,673,705 63,452,833 72,445,136 80,404,083 88,971,977

Tax 6,511,924 8,374,481 10,261,036 12,401,199 14,827,689 17,495,586 20,304,907 23,182,443 25,729,306 28,471,033
NET PROFIT/(LOSS) AFTER TAX 13,837,839 17,795,772 21,804,701 26,352,549 31,508,839 37,178,119 43,147,926 49,262,692 54,674,776 60,500,944

Balance brought forward 13,837,839 23,725,208 34,147,432 45,374,985 57,662,868 71,130,740 85,709,000 101,228,769 116,927,659
Total profit available for appropriation 13,837,839 31,633,611 45,529,909 60,499,980 76,883,824 94,840,987 114,278,667 134,971,692 155,903,546 177,428,603
Dividend - 7,908,403 11,382,477 15,124,995 19,220,956 23,710,247 28,569,667 33,742,923 38,975,886 44,357,151
Balance carried forward 13,837,839 23,725,208 34,147,432 45,374,985 57,662,868 71,130,740 85,709,000 101,228,769 116,927,659 133,071,453

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12.2 Balance Sheet

Statement Summaries SMEDA
Balance Sheet
Rs. in actuals
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Assets
Current assets
Cash & Bank 500,000 573,608 9,383,681 15,297,418 21,452,859 27,336,792 38,216,163 49,479,837 61,247,525 72,917,218 104,019,612
Accounts receivable - 13,450,438 15,091,392 17,924,054 20,462,152 23,328,629 26,563,779 30,212,674 34,150,968 37,998,151 41,832,914
Finished goods inventory - 20,198,693 23,165,570 26,444,759 30,148,133 34,327,738 39,041,786 44,355,371 49,823,888 54,804,661 60,284,045
Equipment spare part inventory 897,188 1,171,906 1,405,779 1,683,997 2,014,689 2,407,437 2,873,534 3,393,481 3,926,359 4,534,944 -
Raw material inventory 1,734,563 2,373,575 2,982,844 3,743,331 4,691,678 5,873,251 7,344,181 9,086,065 11,013,461 13,326,288 -
Pre-paid annual land lease - - - - - - - - - - -
Pre-paid building rent - - - - - - - - - - -
Pre-paid lease interest - - - - - - - - - - -
Pre-paid insurance 1,367,125 1,230,413 1,093,700 956,988 820,275 683,563 546,850 410,138 273,425 136,713 -
Total Current Assets 4,498,875 38,998,634 53,122,966 66,050,546 79,589,786 93,957,409 114,586,294 136,937,565 160,435,626 183,717,975 206,136,571

Fixed assets
Land 4,400,000 4,400,000 4,400,000 4,400,000 4,400,000 4,400,000 4,400,000 4,400,000 4,400,000 4,400,000 4,400,000
Building/Infrastructure 9,639,387 9,157,417 8,675,448 8,193,479 7,711,509 7,229,540 6,747,571 6,265,601 5,783,632 5,301,663 4,819,693
Machinery & equipment 27,342,503 24,608,252 21,874,002 19,139,752 16,405,502 13,671,251 10,937,001 8,202,751 5,468,501 2,734,250 -
Furniture & fixtures 267,500 240,750 214,000 187,250 160,500 133,750 107,000 80,250 53,500 26,750 -
Office vehicles - - - - - - - - - - -
Office equipment 452,500 407,250 362,000 316,750 271,500 226,250 181,000 135,750 90,500 45,250 -
Total Fixed Assets 42,101,889 38,813,669 35,525,450 32,237,230 28,949,010 25,660,791 22,372,571 19,084,352 15,796,132 12,507,912 9,219,693

Intangible assets
Pre-operation costs 717,876 574,301 430,725 287,150 143,575 - - - - - -
Legal, licensing, & training costs - - - - - - - - - - -
Total Intangible Assets 717,876 574,301 430,725 287,150 143,575 - - - - - -
TOTAL ASSETS 47,318,640 78,386,603 89,079,141 98,574,926 108,682,371 119,618,200 136,958,865 156,021,917 176,231,758 196,225,887 215,356,264

Liabilities & Shareholders' Equity

Current liabilities
Accounts payable - 18,284,320 22,743,890 26,017,607 29,724,914 33,921,212 38,668,965 44,028,716 49,593,749 54,763,948 58,625,492
Export re-finance facility - - - - - - - - - - -
Short term debt - - - - - - - - - - -
Other liabilities - - - - - - - - - - -
Total Current Liabilities - 18,284,320 22,743,890 26,017,607 29,724,914 33,921,212 38,668,965 44,028,716 49,593,749 54,763,948 58,625,492

Other liabilities
Lease payable - - - - - - - - - - -
Deferred tax - 4,374,800 4,374,800 4,374,800 4,374,800 4,374,800 3,499,840 2,624,880 1,749,920 874,960 (0)
Long term debt 23,659,320 18,230,324 14,575,923 10,375,767 5,548,352 - - - - - -
Total Long Term Liabilities 23,659,320 22,605,124 18,950,724 14,750,568 9,923,152 4,374,800 3,499,840 2,624,880 1,749,920 874,960 (0)

Shareholders' equity
Paid-up capital 23,659,320 23,659,320 23,659,320 23,659,320 23,659,320 23,659,320 23,659,320 23,659,320 23,659,320 23,659,320 23,659,320
Retained earnings - 13,837,839 23,725,208 34,147,432 45,374,985 57,662,868 71,130,740 85,709,000 101,228,769 116,927,659 133,071,453
Total Equity 23,659,320 37,497,159 47,384,528 57,806,751 69,034,305 81,322,188 94,790,060 109,368,320 124,888,089 140,586,979 156,730,772
TOTAL CAPITAL AND LIABILITIES 47,318,640 78,386,603 89,079,141 98,574,926 108,682,371 119,618,200 136,958,865 156,021,917 176,231,758 196,225,887 215,356,264

Note: Total assets value will differ from project cost due to first installment of leases paid at the start of year 0
- - - - - - - - - - -

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12.3 Cash Flow Statement

- - - - - - - - - - -

Statement Summaries SMEDA

Cash Flow Statement
Rs. in actuals
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Operating activities
Net profit - 13,837,839 17,795,772 21,804,701 26,352,549 31,508,839 37,178,119 43,147,926 49,262,692 54,674,776 60,500,944
Add: depreciation expense - 3,288,220 3,288,220 3,288,220 3,288,220 3,288,220 3,288,220 3,288,220 3,288,220 3,288,220 3,288,220
amortization expense - 143,575 143,575 143,575 143,575 143,575 - - - - -
Deferred income tax - 4,374,800 - - - - (874,960) (874,960) (874,960) (874,960) (874,960)
Accounts receivable - (13,450,438) (1,640,953) (2,832,662) (2,538,098) (2,866,477) (3,235,151) (3,648,894) (3,938,295) (3,847,183) (3,834,763)
Finished good inventory - (20,198,693) (2,966,877) (3,279,189) (3,703,374) (4,179,605) (4,714,048) (5,313,584) (5,468,517) (4,980,773) (5,479,384)
Equipment inventory (897,188) (274,719) (233,873) (278,218) (330,692) (392,748) (466,097) (519,947) (532,878) (608,586) 4,534,944
Raw material inventory (1,734,563) (639,013) (609,269) (760,487) (948,348) (1,181,573) (1,470,930) (1,741,884) (1,927,396) (2,312,827) 13,326,288
Pre-paid building rent - - - - - - - - - - -
Pre-paid lease interest - - - - - - - - - - -
Advance insurance premium (1,367,125) 136,713 136,713 136,713 136,713 136,713 136,713 136,713 136,713 136,713 136,713
Accounts payable - 18,284,320 4,459,570 3,273,717 3,707,307 4,196,298 4,747,753 5,359,752 5,565,032 5,170,200 3,861,544
Other liabilities - - - - - - - - - - -
Cash provided by operations (3,998,875) 5,502,604 20,372,876 21,496,369 26,107,852 30,653,241 34,589,618 39,833,341 45,510,611 50,645,580 75,459,545

Financing activities
Change in long term debt 23,659,320 (5,428,996) (3,654,400) (4,200,156) (4,827,416) (5,548,352) - - - - -
Change in short term debt - - - - - - - - - - -
Change in export re-finance facility - - - - - - - - - - -
Add: land lease expense - - - - - - - - - - -
Land lease payment - - - - - - - - - - -
Change in lease financing - - - - - - - - - - -
Issuance of shares 23,659,320 - - - - - - - - - -
Purchase of (treasury) shares - - - - - - - - - - -
Cash provided by / (used for) financing activities
47,318,640 (5,428,996) (3,654,400) (4,200,156) (4,827,416) (5,548,352) - - - - -

Investing activities
Capital expenditure (42,819,765) - - - - - - - - - -
Acquisitions - - - - - - - - - - -
Cash (used for) / provided by investing activities
(42,819,765) - - - - - - - - - -

NET CASH 500,000 73,608 16,718,476 17,296,213 21,280,436 25,104,889 34,589,618 39,833,341 45,510,611 50,645,580 75,459,545

Cash balance brought forward 500,000 573,608 9,383,681 15,297,418 21,452,859 27,336,792 38,216,163 49,479,837 61,247,525 72,917,218
Cash available for appropriation 500,000 573,608 17,292,084 26,679,895 36,577,854 46,557,748 61,926,410 78,049,503 94,990,448 111,893,105 148,376,763
Dividend - - 7,908,403 11,382,477 15,124,995 19,220,956 23,710,247 28,569,667 33,742,923 38,975,886 44,357,151
Cash carried forward 500,000 573,608 9,383,681 15,297,418 21,452,859 27,336,792 38,216,163 49,479,837 61,247,525 72,917,218 104,019,612

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13 KEY ASSUMPTIONS

13.1 Operating Assumptions

Description Details
Days operational per month 22.5
Days operational per year 270

13.2 Production Assumptions

Description Details
Maximum Capacity Utilization 95%
Total Production of Kgs per day 3,867
Total Production of Kgs per month 87,000
Total Production of Kgs per year (100%) 1,044,000

13.3 Economy Related Assumptions

Description Details
Electricity price growth rate 10%
Wage growth rate 10%
Sales price growth rate 10%

13.4 Cash Flow Assumptions

Description Details
Accounts Receivable cycle (in days) 19
Accounts payable cycle (in days) 30

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