FINANCIAL PLAN

The purpose of the financial plan is to estimate start-up and ongoing costs; identify revenue streams; and forecast net cash flow and profits. The venture will be funded partners through paid-in capital provided by the owners and debt will be taken from the bank.

Important Assumptions
The financial plan depends on important assumptions. The key underlying assumptions are: We assume that price will be a key competitive element in the first three years of operations where competitors in the business will seek to cut into our business through price cutting. The marketing expenses will be considered to be the 17 % of total assets. We assume continued popularity of products of the company and the growing demand for high quality and refreshing tea. We assume that average daily consumer drinks two cups of tea. We assume that the capacity of the production will be enhanced by 10% annually. Initially the company will utilize only 60% of the total installed capacity in the very first year. The sales price of the product will be directly releated to the competitors.

Some of the important assumption regarding the production, cash flow, expenses, depreciation and financing assumption are listed in the following tables.

Production Assumptions
Maximum Attainable Capacity In Percentage Capacity Utilization (1st Year) In Percentage Production Capacity In K.g (60% in first year) Production Capacity Utilization Growth Rate 100% 60% 900000Kilograms 10% per year

Cash Flow Assumptions

Raw Material Inventory Cycle (In Days) Accounts Receivables Accounts Payable 30 Days 2.5% of sales 25% of purchase

Expense Assumptions
Machine Maintenance Pre-Operational Expense Wages Growth Rate 1% of the cost Rs.2235000 10%

Deprecation Expense Assumptions

Plant & Machinery Depreciation Rate Furniture & Fixtures Depreciation Rate Vehicle Depreciation Rate Building 10% 5% 20% 5%

Financing Assumptions
Debt Equity Tax Rate 60% 40% 35% of sales

PROJECT ECONOMICS
Energizer Tea Company Private Limited

Estimated Cost of Project

(RS.000)
COST OF THE PROJECT - Project Land & Its Development - Building & Civil Works - Local Machinery - Engineering /Technical Fees - Erection & Installation - Furniture & Fixture - Vehicles - Mark-up during Construction - Pre-production Expenses contingencies TOTAL FIXED COST: - Initial Net Working Capital TOATL COST OF THE PROJECT: TOTAL

17000 25800 2280 200 50 500 425 2905 2235 200

51595
6,047

57643

Raw Material Requirement

For 50ml bottle

Total units at 100% operating capacity. {(250 units*8 hours*350 days*2)100%}=1400000 bottles of 50ml {(1400000 * 50ml)/1000} = 70000kg/annum. 70000 kg*150/Kg = Rs. 10500000 For Boxes (100 ml) Total units at 100% operating capacity: (150 uniits*8 hours*350days*2)100%=840000 units of 100ml {(840000 *100ml)/1000} = 84000 kg/ annum. 84000 kg/ annum* 150/ kg = Rs.1260000 For Boxes (250 ml) Total boxes at 100% operating capacity: (100units*8 hours*350days*2)100%=560000units of 250 ml {(560000 units*250ml)/1000}= 140000 kg/ annum. 140000kg/ annum* 150/ kg = 21000000 For Boxes (1000 ml) Total boxes at 100% operating capacity: (50 units*8 hours*350days*2)100%=280000units of 1000 ml {(280000 units*1000ml)/1000}= 280000 kg/ annum. 280000 kg/ annum* 150/ kg = Rs42000000 Total annual material requirement: (Rs 000) 10500+1260+21000+42000=74760 Raw Material Inventory Kept: Rs.74760/350*30 days= Rs.6408

Financial Plan:(Rs.000)
loan 60% Equity 40% Total Rs.
34586 23057

57643

Energizer Tea Company Private Limited Estimated Cost of Land

Sr. No 1 2 3

Description 10 cannal of Land Legal and Transfer Fee Development Charges

Rate per Unit

Total Cost (Rs. in, 000) 1500000 15000 10% of Cost 1500 500

Total

17000

Energizer Tea Company Private Limited Estimated Cost of Civil Works

Sr. No

Item

Type of Building

Area in Sq. ft.

Rate/sq. ft. (Rs.)

Total Cost (Rs 000)

1 2 3 4 5 6

Main Factory Building Warehouse Office Block Canteen Wash rooms Free Area Total

RCC RCC RCC RCC RCC

15000 8000 4000 3000 400 14600 45000

800 800 1,000 1,000 1,000

12000 6400 4000 3000 400

25800

Energizer Tea Company Private Limited Pre-production expenses:

Salaries and wages Printing and stationary Wapda/KESC deposits Telephone, entertainment & other expenses. Project examination fee. Total 450 10 1500 150 125 2235

Estimated Cost of Plant and Machinery

Sr. No 1 2 3 4 5

Items and Specification Mixer Machine for 1000ml bottle Machine for 100 &250 ml bottle Machine for 50ml bottle Machine for Labeling and Printing Total

Quantity 2 2 2 2 2

Cost/Unit(000) 200 205 205 190 150

Total Cost(Rs, 000) 400 410 410 380 300 2280

Energizer Tea Company Private Limited

Estimated Cost of Net Initial Working Capital

Amount (Rs. 000)

CURRENT ASSETS Cash Accounts Receivable @2.5% of sales Raw materials Finished Goods Inventory 10% of production Stores & Spares Advances & deposits Total CURRENT LIABILITIES Accounts Payable Accrued Expenses Bank Borrowings 75% of inventories 0 0 11,992 11,992 INITIAL NET WORKING CAPITAL 150877 (Rs. in 000 ) 300 3,223 151858 5,738 1,500 250 162869

Assumptions
1. It has been assumed that Raw Material Inventory is kept for 30 days and amount. Is derived as {(Annual Requirement/350*30 days)} 2. 10% of cost of goods manufactured is kept as finished goods inventory. 3. 2.5% of total sales are assumed to be on account. 4. Bank will give loan of 75% of total inventory.

Energizer Tea Company Private Limited Assumptions Underlying Earning Forecasts Production and Sales
The purpose unit would be equipped with four types of machines. One for sachet packing of 8gram and other for boxes of 125 & 250 grams. The sachet machine is capable of producing 333 sachet /hour and 125 gram boxes machine is capable of making 233 boxes /hour and machine for 250 grams boxes is capable of producing 200 sachet /hour. The unit will be operated in only one shift of 8 hours and total number of working days is 350.

Annual Production at 100% Operational Capacity For Sachet:

(333 sachet*8 hours*350 days*2) 100%=1864800

For Boxes:
(233 boxes*8 hours*350days*2)100%=1304800 (200 boxes*8 hours*350days*2)100%=1120000 The above capacity is based on one shift working and 350 working days per annum at 100% capacity and the project would start commercial operations from. January 1, 2010.

Operational Efficiency
Operational efficiency of the project is assumed to be at 100% for all operating year.

Ending Inventory
There will be 10% unsold inventory at end of the year.

Production Plan Selling Price

Production plan includes three types of products and offer in the single market.

Selling price is set according to the demand and supply and due to competitiveness of market and increasing gradually due to increase in the raw material prices.

PRODUCTION AND SALE

 Geographical limits of project are Province Punjab, Sindh . Offer three types of products. Sachet of 8 grams. Box of 125 grams Boxes of 250 grams No. of shift = 1 8 hours in a shift. 350 days in year. Estimated capacity of machine per hour: 333 sachets of 8 grams per hour. 233 boxes of 125 grams per hour. 200 boxes of 250 grams per hour Operational capacity of machines is 100%.

Total Annual Capacity

For Sachet
(333 sachets*8hours*350days*2) = 1864800 Sachets

For Boxes
125 Grams (233 boxes*8hours*350days*2) = 1304800 Boxes 250 Grams (200 boxes*8hours*350days*2) = 1120000 Boxes

Production efficiency achieved

Year sachet Boxes (125g) Boxes(250g) 2010(60%) 1119000 783000 672000 2011(70%) 1305000 913000 784000 2012(80%) 1492000 1044000 896000

Es ti m ati

on of units sold.
Operating Years : Production Effeciency Assumed : a) Production of Sachet: Add : Begining Inventory Available for sale Less : End. Inventory 10% SALE b) Porduction of Boxes(125g): Add : Begining Inventory Available for sale Less : End. Inventory 10% SALE 2010 60% 1,119 0 1,119 112 1,007 60% 783 0 783 78 705 60% 672 0 672 67 605 2011 70% 1,305 112 1,417 131 1,287 70% 913 78 992 91 900 70% 784 67 851 78 773 2012 80% 1,492 131 1,622 149 1,473 80% 1,044 91 1,135 104 1,031 80% 896 78 974 90 885 2013 90% 1,678 149 1,828 168 1,660 90% 1,174 104 1,279 117 1,161 90% 1,008 90 1,098 101 997

c) Porduction of Boxes(250g): Add : Begining Inventory Available for sale Less : End. Inventory 10% SALE

Calculations
It has been earlier mentioned that total production capacity of the Machine is 333 sachet /hour and box machine capacity is two hundred (200) and 233 units /hour No. of working hour in day are eight and 350 days in a year 10 % of units produced are kept as ending inventory

Energizer Tea Company Private Limited

Estimated Sales Revenue

60% a) Packs of sachet per pack Rs b) 125g box. c) 250g box. 70% 80% 90%

65 30 70

65,454 21,138 42,336

83,636 27,009 54,096

95,757 30,924 61,936

107,879 34,838 69,776

TOTAL

128,928

164,742

188,617

212,493

Assumptions:
1. It has assumed that one pack contains 20 sachets 2. Per pack and box price is set according to demand and supply forces.

CALCULATION OF COST OF PRODUCTION

Raw Material Cost

For Sachets Total sachets at 100% operating capacity. {(333 sachet*8 hours*350 days*2)100%}=1864800 sachets of 8 grams {(1864800sachets * 8 grams)/1000} = 14918.4 kg/annum. 14918.4 kg*150/Kg = Rs. 2237760 For Boxes (125 grams) Total boxes at 100% operating capacity: (233 boxes*8 hours*350days*2)100%=1304800 Boxes of 125 grams {(1304800 Boxes *125 grams)/1000} = 163100 kg/ annum. 163100 kg/ annum* 180/ kg = Rs.29358000 For Boxes (250 grams) Total boxes at 100% operating capacity: (200 boxes*8 hours*350days*2)100%=1120000Boxes of 250 grams {(1120000 Boxes *250 grams)/1000}= 280000 kg/ annum. 280000 kg/ annum* 180/ kg = Rs50400000 Total annual material requirement: (Rs 000) 2238+29358+50400 =81996 Raw Material Inventory Kept: Rs.81996/350*30 days= Rs.7028

Direct Labor Cost

Category Nos Salary per Annual

Month(Rs.) Labour: For sachet machine for boxes machine for mixer machine for blend maker supervisor

Cost 0 300 960 132 72 60 0 1,524 381 1,905

5 16 2 1 1

5,000 5,000 5,500 6,000 5,000

TOTAL Add: Fringe Benefits @ TOTAL

25%

Assumption:
10% yearly increase in labour cost.

Factory Overhead
a) FIXED COSTS -Pwer KW 600 -Insurance @ -Repairs &Maintenance: - Machinery @ Miscellaneous Total Fixed cost b) VARIABLE COST 90 7.5 8 Total 350 1,890 1,890 180 0.50% 1.00% per K.W on Fixed Assets installed cost (Rs.000) 1,296 11 25 100 1,433

Power: KW

Assumptions
1. Estimated utilization capacity is 90kw and rate is charged 7.5/kw/hour 2. Insurance is .5% of machinery cost. 3. Repair and Maintenance cost is 1% of machinery
THE FIXED COST HAS BEEN PROJECTED AS CONSTANT WHILE THE VARIABLE COST HAS BEEN BUDGED AS PER OPERATIONAL LEVEL FOR THE CORRESPONDING YEARS.

Depriciation
Assets Cost of Assets
(Rs. 000)

Depreciation
(Rate)

Total Amount
(Rs. 000)

Building Plant and Machinery Furniture and Fixture Vehicle Total

16800 2280 500 3000

5% 10% 5% 20%

840 228 225 600 1693

OPERATING EXPENSES
Administrations Expenses

a) Administrative Salaries Chairman Chief Executive Financial Controller Purchase Manager Personal Manager Assistants Clerks and Typists Driver and Peons Sweepers TOTAL Add: Fringe Benefits @ TOTAL

Nos 1 1 1 1 1 5 8 5 4

Salary per Month (Rs.) 40,000 35,000 20,000 20,000 10,000 4,000 2,500 2,000 1,000

Annual Cost (000) 480 420 240 240 120 240 240 120 48 2,148 1,074 3,222

50%

General Expenses
b) General Expenses Traveling & Conveyance Telephone, Telex, Postage Rates and Taxes Entertainment Miscellaneous TOTAL Total Administrative & General Expenses (a+b) 400 300 100 100 50 950 4,172

FURTHER, THESE EXPENSES ARE ASSUMED AT 10% PER ANNUM.

Selling Expenses
Selling expenses are 1% of sales Revenue.

Energizer Tea Company Private Limited

Total Cost of Production

2010(60%) 2011(70%) 2012(80%) 2013(90%)

Raw material Depreciation cost of labour F.O.H

51,211 1,693 1,905 2,567

59,747 1,693 2,096 2,756

68,282 1,693 2,305 2,945

76,817 1,693 2,536 3,134

total

57,376

66,291

75,225

84,179

Energizer Tea Company Private Limited

Financial Plan

Source
Bank (@16%) Equity Total

Ratio
60% 40% 100%

Amount (Rs. 000)

34586 23057 57643

All amounts are in the Local Currency (In Rupees).

Energizer Tea Company Private Limited

Estimated Income Statement

For the year ending Sept. 30, Efficiency Assumed : SALES COST OF GOODS SOLD : - Raw Materials - Labour - Manufacturing Expenses - Excise Duty \ Sales tax -Royalty fee Depreciation Cost of Goods Manufactured Add: Beginning Inventory Less: Ending Inv. 10% Cost of Goods Sold : GROSS PROFIT OPERATING EXPENSES - Admin & General Expenses - Selling Expenses Total Operating Expenses OPERATING PROFIT OTHER INCOME NON OPERATING EXPENSES - Financial Expenses Bank borrowing@ 10%. amortization of preliminary exp. at 5 years Sub-Total PRE-TAX PROFIT Provision for Taxes 40% NET PROFIT Dividend RETAINED EARNINGS

2010 60% 128,928

2011 70% 164,742

2012 80% 188,617

2013 90% 212,493

51,211 1,905 2,567

59,747 2,096 2,756

68,282 2,305 2,945

76,817 2,536 3,134

1,693 57,376 0 5,738 51,639 77,290 4,172 1,289 6001 71,288

1,693 66,291 5,738 6,629 65,399 99,342 5183 1,647 6831 92512

1,693 75,225 6,629 7,522 74,331 114,286 5702 1,886 7588 106698

1,693 84,179 7,522 8,418 83,284 129,209 6272 2,125 8397 120812

5534 672 447 6,653 64636 22622 87258 0 87258

4,204 806 447 5680 86832 30391 117223 0 117223

3320 918 447 4,685 102,013 35705 66309 0 66309

2213 1,030 447 3,690 117,122 40993 76129 0 76129

RATIOS
- Gross Margin (%) - Operating Margin (%) - Net Margin (%) 59.9% 55.3% 67.7% 60.3% 56.2% 71.2% 60.6% 56.6% 35.2% 60.8% 57.9% 35.8%

- Interest Coverage (Times)

12.88

20.90

32.14

57.58

Energizer Tea Company Private Limited

Estimated Balance Sheet
Construction. ASSETS I II III IV

Cash Accounts Receivables Inventory: Finished Goods Inventory Raw Material Inventory Stores & Spares Advances & Deposits Total Current Assets Other assets Fixed Assets at cost Less: Accumulated Dep. Net Fixed Assets: Preliminary Expenses: Total Assets: LIABILITIES & EQUITY Current Liabilities - Accounts Payable - Accrued Expenses - Dividends Payable - Taxes Payable - Bank Borrowings - Cur. Mat. of L T Debt Total Current Liabilities: Long-term Liabilities IDBP loan Total Long-term Liab.: EQUITY - Paid-up Capital (Sponsors) - Un-appropriated Profit Total Equity: Total Liab. & Equity: R A T I O S: Current Ratio Debt as %-age of total capital.

6,037 3,223 0 7,028 1,500 250 18,038 0 49360 0 49360 2,235 69634

81,790 3,223 5,738 7,028 1,594 500 99,873 0 49360 1,693 47667 2,000 149540

142985 4,119 6,629 7,028 1,700 1,000 163460 0 49360 3,386 45974 1,500 210935

211317 4,715 7,522 7,028 1,800 2,000 234383 0 49360 5,079 44281 1,000 279665

288659 5,312 8,418 7,028 1,900 4,000 315317 0 49360 6772 42588 447 358353

0 0 0 0 11,992 0 11,992 34586 34586 23057 0 23057 69634

12,803 546 0 0 6,721 12451 32520 27668 27668 23057 87987 111044 171,698 3.07 20%

14,937 624 0 0 8,061 11344 34,965 20751 20751 23057 206012 229069 284785 4.67 8%

17,070 693 0 0 9,178 10237 37180 13,834 13,834 23057 272745 295802 346816 6.30 4%

19,204 768 0 0 10,298 9131 39400 6917 6917 23057 349342 372399 418716 8.00 2%

Energizer Tea Company Private Limited Estimated Cash Flow

For the year ending Sept. 30, Const. Yr. I II III IV

SOURCES Operating Profit Add Back: Depreciation Amortization Funds from Operations - Paid-up Capital (Sponsors) IDBP loan Increase in Current Liab. Increase in Bank Borrowings TOTAL SOURCES

0 0 0 23057 34586 0 11,992 69634 ======

71,828 1,693 235 73,756 0 0 20529 6721 101006 ======

93,106 1,693 500 95,299 0 0 2,500 8,061 105,860 ======

107,352 1,693 500 109,545 0 0 2,215 9,178 120,938 ======

121,531 1,693 553 123,777 0 0 2221 10,298 136295 ======

APPLICATION OF FUNDS Investment in Fixed Assets: -Preliminary Exp Financial Expenses Repayment of : IDBP loan - Bank Borrowings Taxes Increase in current Assets: TOTAL

49360 2,235 0 0 0 0 12,001 63597 ====== 6,037 0 6,037

0 0 5534 6917 6,721 0 6,082 25253 ====== 75,753 6,037 81,790

0 0 4,427 6,917 8,061 22811 2,393 44609 ====== 61195 81,790 142985

0 0 3,320 6,917 9,178 30599 2,590 52605 ====== 68333 142985 211317

0 0 2213 6917 10,298 35933 3,592 58954 ====== 77341 211317 288659

Surplus/(Deficit) Cash Balance - Opening Cash Balance - Ending