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Pre-Feasibility Study Prime MinistersSmall Business Loan Scheme

(Security Agency)

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 helpdesk@smeda.org.pk REGIONAL OFFICE PUNJAB 3rdFloor, Building No. 3, Aiwan-e-Iqbal Complex, Egerton Road Lahore, Tel: (042) 111-111-456 Fax: (042) 36304926-7 helpdesk.punjab@smeda.org.pk REGIONAL OFFICE SINDH 5TH Floor, Bahria Complex II, M.T. Khan Road, Karachi. Tel: (021) 111-111-456 Fax: (021) 5610572 helpdesk-khi@smeda.org.pk REGIONAL OFFICE KPK Ground Floor StateLifeBuilding The Mall, Peshawar. Tel: (091) 9213046-47 Fax: (091) 286908 helpdesk-pew@smeda.org.pk REGIONAL OFFICE BALOCHISTAN Bungalow No. 15-A Chaman Housing Scheme Airport Road, Quetta. Tel: (081) 831623, 831702 Fax: (081) 831922 helpdesk-qta@smeda.org.pk

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Table of Contents
1. DISCLAIMER .......................................................................................................................................... 2 2. PURPOSE OF THE DOCUMENT ......................................................................................................... 3 3. INTRODUCTION TO SMEDA .............................................................................................................. 3 4. INTRODUCTION TO SCHEME ........................................................................................................... 4 5. EXECUTIVE SUMMARY ...................................................................................................................... 4 6. BRIEF DESCRIPTION OF PROJECT AND PRODUCT ................................................................... 5 7. CRITICAL FACTORS ............................................................................................................................ 6 8. INSTALLED AND OPERATIONAL CAPACITIES ........................................................................... 6 9. GEOGRAPHICAL POTENTIAL FOR INVESTMENT ..................................................................... 6 10. 11. 12. 12.1 12.2 12.3 12.4 12.5 12.6 12.7 12.8 12.9 13. 14. 14.1 14.2 14.3 14.4 14.5 15. POTENTIAL TARGET MARKETS / CITIES ............................................................................... 7 PRODUCTION PROCESS FLOW .................................................................................................. 7 PROJECT COST SUMMARY ......................................................................................................... 7 PROJECT ECONOMICS ................................................................................................................ 7 PROJECT FINANCING................................................................................................................... 8 PROJECT COST ........................................................................................................................... 8 SPACE REQUIREMENT................................................................................................................. 8 ARMS AND COMMUNICATIONS EQUIPMENT ................................................................................ 9 FURNITURE AND FIXTURES ......................................................................................................... 9 HUMAN RESOURCE REQUIREMENT ...........................................................................................10 REVENUE GENERATION .............................................................................................................11 OTHER COSTS............................................................................................................................12 CONTACTS - SUPPLIERS, EXPERTS/CONSULTANTS ......................................................... 14 ANNEXURE ..................................................................................................................................... 15 INCOME STATEMENT ...................................................................................................................15 STATEMENT OF CASH FLOW........................................................................................................16 BALANCE SHEET .........................................................................................................................17 USEFUL PROJECT MANAGEMENT TIPS ......................................................................................18 USEFUL LINKS ............................................................................................................................19 KEY ASSUMPTIONS ..................................................................................................................... 21

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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

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2. 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 Security Agency 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 its successful management. Apart from carefully studying the whole document one must consider critical aspects provided later on, which form basis of any Investment Decision.

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.
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4. INTRODUCTION TO SCHEME
Prime Ministers Small Business Loans Scheme, for young entrepreneurs, with an allocated budget of Rs. 5.0 Billion for the year 2013-14, is designed to provide subsidised financing at 8% mark-up per annum for one hundred thousand (100,000) beneficiaries, through designated financial institutions, initially through National Bank of Pakistan (NBP) and First Women Bank Ltd. (FWBL). Small business loans with tenure up to 7 years, and a debt: equity of 90 : 10 will be disbursed to SME beneficiaries across Pakistan, covering; Punjab, Sindh, Khyber Pakhtunkhwah, Balochistan, GilgitBaltistan, Azad Jammu & Kashmir and Federally Administered Tribal Areas (FATA).

5. EXECUTIVE SUMMARY
Over the last two decades law and order situation of the country, particularly of the metropolitan cities like Karachi and Lahore, has become complex. Karachi, the economic hub of Pakistan, has been facing severe security problems. The growing sense of insecurity among households and businesses has created a demand for private security services. Currently more than 800 private security companies/agencies are operating throughout the country. The demand for security and quality services is still on the rise and the sector is currently growing at 5-6% per annum. Location for a proposed Security Agency business largely depends on the type of security services it will provide to the client.TheSecurity Agency is proposed to be established as a Private Limited Company or as a Single Member Company under the Companies Ordinance 1984 with its office near a business and financial hub of a major city like Karachi, Hyderabad,Larkana, Sukkur, Multan, Lahore, Gujranwala, Faisalabad, Sialkot, Gujrat, Rawalpindi, Islamabad, Quetta, Hub, Lasbela or Peshawar etc.The proposed agencywillprovide general and executive security guard services to the corporate sector during the initial phase of the operations. All guards are proposed to be armedguards.66 personnel would be required to manage the operations of the security agency including 58 armed guards. Total Cost Estimates are Rs. 2,191,900/- with a fixed investment of Rs. 1,403,500/- and an initial working capital requirement of Rs. 788,400/-. Given the cost assumptions IRR and payback are 52% and 2.16 years respectively. The most critical considerations or factors for success of the project are

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1. Security clearance and experience profile 2. Hiring appropriate and experienced human resource 3. Trained guards 4. Linkages in the corporate sector

6. BRIEF DESCRIPTION OF PROJECT AND PRODUCT


This pre-feasibility gives insights into various aspects of how to setup a security agency and outlines the basic process involved in running the enterprise as a profitable business. The document is designed to provide relevant details to facilitate the entrepreneur in making the correct decision by providing various technical, legal and business details. Security Agencies are offering various services such assecurity guard service, executive escort services, security/ burglar alarm, vehicle tracking, armored car services and cash-in-transit services etc. The proposed Security Agency is envisaged to provide only general and executive security guard services to the Corporate/Business sector through armed personnel deployments. Security management staff including Manager (operations) and Shift Supervisors would facilitate and manage security services while the prospective entrepreneur will undertake the recruitment, training, business promotion and management activities. The Security Agencyis proposed to be established as a Private Limited Company or as a Single Member Company under the Companies Ordinance 1984. Technology: The proposed Agency is going to utilize the latest communication technology and technology based security solutions to provide services to Businesses and Corporate Clients. Location: The office is proposed to be established on rented premisesnear a business and financial hub in a major city like Karachi, Hyderabad, Lahore, Gujranwala, Faisalabad, Sialkot, Gujrat, Multan, Rawalpindi, Islamabad, Quetta or Peshawar etc. where services are planned to be offered. Services: The Agency is assumed to provide general and executive security guard services by deploying armed guards. The setup would have a capacity to deploy upto100 armed guards. Target Market: Karachi, Hyderabad,Larkana, Sukkur, Multan, Lahore, Gujranwala, Faisalabad, Sialkot, Gujrat, Rawalpindi, Islamabad, Quetta, Hub,

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Lasbela or Peshawar etc. are good markets for the services under consideration. Employment Generation: The proposed project will provide direct employment to 66 people. Financial analysis shows the agency shall be profitable from the very first year of operations.

7. CRITICAL FACTORS
Following guidelines can assist the prospective entrepreneur in building good name in the market. Some key success factorsare as follows: Security clearance and experience profile Build contacts in the corporate sector Hire appropriate resources Provide adequate training Pay reasonable compensation Keep appropriate working environment Repayment from clients on contracts

8. INSTALLED AND OPERATIONAL CAPACITIES


Considering a twelve (12) hour shift/duty cycle it is assumed that the proposed security company has the capacity to hire and deploy 100 security guards. However the company is estimated to operate with 58 security guardswith an investment cap of Rs. 2.2 million.Sales are estimated to increase by 10% due to increase in service charges.The license to operate from the Provincial Home Department would also include 58 weapons licenses

9. GEOGRAPHICAL POTENTIAL FOR INVESTMENT


Location for a security agency business largely depends on the type of security services provided to the client. Most of the security agencies station their operations office in the vicinity of the area where most of its clients are located.For the success of the project, it is important to find a location in or near a business and financial hub of a major city like Karachi, Hyderabad,Larkana, Sukkur, Multan, Lahore, Gujranwala, Faisalabad, Sialkot, Gujrat, Rawalpindi, Islamabad, Quetta, Hub, Lasbela or Peshawar etc.Such a location could also assist in creating linkages with corporate clients.Establishing the office in large citieswould have an advantage of being close to large corporate clients, financial institutions and multinational clients.
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10. POTENTIAL TARGET MARKETS / CITIES


The market for security services is growing at an average of 5-6% annually and is relying heavily on corporate clients that require specialized quality security services.Multinationals, local conglomerates, manufacturing concerns, business and trade hubs, financial institutions and telecom sector companies etc. are all based in urban areas and even more concentrated in large metropolitan cities of the country. The proposed security service agencymay therefore be established in any of the aforementioned major citiesof the country.

11. PRODUCTION PROCESS FLOW


The service delivery diagram of the proposed security agency is as follows. Service Flow Process

Agreement
Client Coordination Location survey

Temporary Deployment of Personnel

Yes Service Evaluation Permanent deployment of personnel/ supervisor

No

12. PROJECT COST SUMMARY


A detailed financial model has been developed to analyze the commercial viability of this project under the Prime Ministers Small Business Loan Scheme. Various cost and revenue related assumptions along with results of the analysis are outlined in this section. The projected Income Statement, Cash Flow Statement and Balance Sheet are attached as appendices. 12.1 Project Economics The following table shows internal rates of return and payback period for the proposed private security agency.

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Table 1 - Project Economics Description Internal Rate of Return (IRR) Payback Period (yrs) Net Present Value (NPV)

Details 52% 2 .16 years Rs 3,864,821

Returns on the project and its profitability are highly dependent on the quality of human resource and security guards, linkages in the corporate sector, marketing efficiency. 12.2 Project Financing Following table provides details of the equity required and variables related to bank loan;
Table 2 - Project Financing Description Total Equity (10%) Bank Loan (90 %.) Markup to the Borrower (%age/annum) Tenure of the Loan (Years) Details Rs. 219,190 Rs.1,972,710 08% 07

12.3 Project Cost Following requirements have been identified for operations of the proposed business.
Table 3: Capital Investment for the Project Capital Investment Office Renovation Cost Furniture & fixtures Weapons and Equipment Advance Rent Preliminary Expenses/ Licensing Costs Total Capital Costs Initial Working Capital Total Project Cost Amount (Rs.) 100,000 156,000 568,500 216,000 363,000 1,403,500 788,400 2,191,900

12.4 Space Requirement The office space requirement to operate the proposed security agency is estimated to be around800sqft.The allocation of space between different sections of the office is as follows:

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Table 4: Space Requirement Space Requirement (in ft.) Office Accounts and Administration Operations hall Reception Guard waiting area Store & armory Washroom/record room/ others Total Area Area (sqft.) 120 120 120 40 120 120 160 800 Cost/sqft. (Rs.) 125 125 125 125 125 125 125 Renovation Costs (Rs.) 15,000 15,000 15,000 5,000 15,000 15,000 20,000 100,000

The premises renovationcosts ofRs. 100,000/- would be depreciated at the rate of 10% per annum using diminishing balance method. 12.5 Arms and Communications Equipment Following arms and equipment will be required for the field operations of the security agency:
Table 5: List of Machinery and Equipment Description Quantity 6 15 14 1 5 Cost Rs/unit 4,000 7,500 7,500 40,000 15,000 Total (Rs.) 24,000 112,500 105,000 40,000 75,000 356,500

Metal Detector Repeater (Durra Made) Pistol (0.30 Caliber) Radio Communication System (base) Hand/Portable Communications Units Total

Communications equipment and local weapons are easily available in the market and an entrepreneur has the choice to select from international brands such as Winchester, Berretta, SIG Sauer, Glock etc., Chinese weapons or Local DarraMade weapons. Communication equipment made by Motorolla, Kenwood and IComare available in the local market and are used by most companies. 12.6 Furniture and Fixtures A total of Rs. 156,000 is required for purchase of office furniture and fixturefor the proposed Security Agency.

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The following table gives an estimated breakup:


Table 6: Furniture and Fixtures Costs Description Quantity 10 02 03 05 Lump sum Total Cost /Unit (Rs.) Amount (Rs.) 2,700 27,000 20,000 40,000 8,000 24,000 5,000 25,000 40,000 40,000 156,000

Chairs Sofa Set Office Tables Office Chairs Cupboard / Shelves

The Office Furniture & Equipment costs are estimated to depreciate at the rate of 10% per annum using diminishing balance method for the projected period. 12.7 Human Resource Requirement The following table presents the manpower requirement for the proposed Security Agency setup:
Table 9: Human Resource Requirement Description Owner Manager/Director Manager Operations Shift Supervisor Deployment Supervisor Accountant Special Guards General Guards Office boy Total Staff No. of Employees 1 1 2 2 1 6 52 1 66 Salary per month (Rs.) 30,000 20,000 13,000 13,000 18,000 13,000 10,000 10,000 Total monthly salary (Rs.) 30,000 20,000 26,000 26,000 18,000 78,000 520,000 10,000 728,000

Owner / Director: Due to sensitivity of the security agency business, AgencyDirector has critical responsibilities. He would be required to directly interact with management staff and closely monitorthe Agencys day to day activities. Manager Operations: Manager Operations would be responsible for supervising operations in the field/locations. His assignment depends on the level and span of operations that the agency is carrying out on a particular location. The position
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is proposed to report to Owner/Director. Manager Operations should preferably be an Ex-Serviceman. Shift and Deployment Supervisors: All supervisors would be the operational incharge of security locations. They would report to Manager Operations and assign duties and monitor performance of the guards. They will also coordinate with clients security officers. Guard/Special Guard: Guard would be a Sipahi level person and would report to supervisor. The guards would perform duties assigned to him such as guarding entrance, exit of the premises, checking vehicles movement and carrying out physical and baggage search etc.Special Guard would be commando level ex-serviceman who generally would perform Executives Escort duty and would beresponsible for their security. Retired SSGC commandos may be recruited for this category. The proposed project would need a total of 66 personnel to handle the security service operations.Salaries of all employees are estimated to increase by 10% annually. 12.8 Revenue Generation Revenue projections for the proposed security agency include sales streams from the following services: Table 10: Revenue
Service Guards 52 06 Service Charges (Rs./guard) 15,000 21,450 First Year Sales Revenue (Rs.) 9,360,000 1,544,400 10,904,400

General Security Service Executive Security Services

Total Sales Revenue

The Sales are expected to grow by 10% every year. The prices used to calculate the gross revenue earned are based on the billing rate at which the Agency will charge the customer. The services charges are estimated at 1.5 x guard salary and 1.65 x guard salary for general and executive security services respectively. Guard salariesare also estimated to increase at the rate of 10% per annum. It is assumed that any expiringsecurity contract will either be extended or be replaced by a new one.

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12.9 Other Costs Arms and Equipment Maintenance:All arms and equipment require regular maintenance which costs around 1% to 5% of the arms/equipment costs depending upon the use and operator's skill. The maintenance cost for arms and equipment is assumed at 2% of total costincluded in the operating cost estimates. Rent and deposits:The proposed premises will be acquired on a rental basis with 3 months security deposit and 3 months advance rent after which rent will be payable on a monthly basis. The monthly rent is estimated at approximately Rs. 45/ Sq.feet amounting to Rs. 36,000 per month for the proposed security company office (800 Sq Ft.). Rent is assumed to increase by 10% per annum. Utilities Requirements:The following table presents the assumed breakup of utilities on a monthly basis:
Description Electricity Water Telephone Total Monthly Charges (Rs.) 18,000 400 6,000 24,400

Working Capital Requirements:It is estimated that an additional amount of approximately Rs. 788,400 will be required as cash in hand to meet theworking capital requirements during operations. The requirement is based on the rent, utilities and salaries expenses for at least one month. The following table gives the break up.
Description Utilities Salaries Rent Total Month 01 01 01 Monthly Charges (Rs.) 24,400 728,000 36,000 788,400

Guard Uniforms:Guard uniform including shirt, trousers, belt, cap, boots and socks (two uniforms per guard) would be purchased annually. The cost of uniforms for 63 personnel is estimated to cost around Rs. 151,200 (Rs. 1200/uniform). The cost of uniforms is estimated to increase by 10% per year.

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Preliminary & Licensing Expenses:The provision for preliminaryexpenses is assumed to be Rs. 20,000. The cost of license to operate and licenses for weapons and communications equipment is assumed to be Rs. 343,000. These pre-operating expenses will be amortized equally over a 5 year period. Miscellaneous& Maintenance Expenses:A monthly figure of Rs. 25,500 (850 per day) is assumed to be incurred for miscellaneous and arms maintenance expenses, which are expected to increase at the rate of 10% per annum for the projected period. Office Expenses:Monthly office expenses for the security company are estimated to be Rs. 21,000 (700 per day). These expenses are estimated to increase at the rate of 10% per annum for the projected period. Financial Charges:It is assumed that long-term financing for 7 years will be obtained in order to finance the security agency setup mainly includingrenovation, purchase of arms& equipment and furniture &fixtures etc. This facility would be acquired at a rate of 08% per annum with 84 monthly installments over a period of seven years. The installments are assumed to be paid at the end of every month. Taxation:The business is assumed to be run as a Single Member Company; therefore, tax rates applicable on the income of a non-salaried individual taxpayer are used for income tax calculation of the business. Cost of Capital:The cost of capital is explained in the following table:
Particulars Required return on equity Cost of finance Weighted average cost of capital Rate 20.0 % 08.0 % 09.2 %

The weighted average cost of capital is based on the debt/equity ratio of 90:10.

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13. CONTACTS - SUPPLIERS, EXPERTS/CONSULTANTS


There are many security companies operating in Karachi and other cities that may be contactedfor consultancy/guidance. Aamir Aziz, Security Consultant Muhafiz Security (Pvt.) Ltd. A-1/3,West Land Trade Centre,3rd Floor, Block 7&8,K.C.S.H.,Shaheed-e-Millat Road. Karachi Phone # : (92 21) 34550910, 34556331 Fax : (92 21) 34556331

Punjab Arms &Ammunition Company 3-4, Mall View Plaza, NilaGumbad Lahore 042-37231167

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14. ANNEXURE
14.1 Income Statement
PRIVATE SECURITY AGENCY

Projected Income Statement (Rs.)

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9

Year 10

Revenue Bad debts Net Sales/Revenue Cost of services provided Gross Profit General & Administrative Expenses Salaries Utilities Expense Rent Expense Licenses renewal charges Accidental and Life Insurance Expense Office, POL Expenses Amortization Depreciation Expense Subtotal Operating Income Financial Charges (08% Per Annum) Earnings Before Taxes Tax Net Profit Monthly Profit After Tax

10,904,400 54,522 10,849,878 8,551,200 2,298,678

11,994,840 59,974 11,934,866 9,406,320 2,528,546

13,194,324 65,972

14,513,756 72,569

15,965,132 17,561,645 79,826 87,808 15,885,306 17,473,837 12,519,812 13,771,793 3,365,494 3,702,044

19,317,810 96,589 19,221,221 15,148,972 4,072,248

21,249,591 106,248 21,143,343 16,663,870 4,479,473

23,374,550 116,873 23,257,677 18,330,257 4,927,420

25,712,005 128,560 25,583,445 20,163,282 5,420,162

13,128,352 14,441,188 10,346,952 11,381,647 2,781,400 3,059,540

336,000 292,800 432,000 52,000 306,000 252,000 72,600 82,450 1,825,850 472,828 149,900 322,928 322,928 26,911

369,600 322,080 475,200 57,200 336,600 277,200 72,600 74,205 1,984,685 543,861 131,718 412,143 1,214 410,929 34,244

406,560 354,288 522,720 62,920 370,260 304,920 72,600 66,785 2,161,053 620,348 112,026 508,322 10,832 497,489 41,457

447,216 389,717 574,992 69,212 407,286 335,412 72,600 60,106 2,356,541 703,000 90,701 612,299 21,230 591,069 49,256

491,938 428,688 632,491 76,133 448,015 368,953 72,600 54,095 2,572,914 792,581 67,605 724,976 32,498 692,478 57,707

541,131 471,557 695,740 83,747 492,816 405,849 48,686 2,739,526 962,518 42,592 919,926 60,489 859,437 71,620

595,244 518,713 765,314 92,121 542,098 446,433 43,817 3,003,741 1,068,507 15,503 1,053,004 80,451 972,553 81,046

654,769 570,584 841,846 101,333 596,307 491,077 39,436 3,295,352 1,184,121 1,184,121 100,118 1,084,003 90,334

720,246 627,643 926,030 111,467 655,938 540,184 35,492 3,617,000 1,310,420 1,310,420 119,063 1,191,357 99,280

792,270 690,407 1,018,633 122,613 721,532 594,203 31,943 3,971,602 1,448,561 1,448,561 139,784 1,308,777 109,065

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14.2 Statement of Cash Flow


PRIVATE SECURITY AGENCY Projected Statement of Cash Flows (Rs.) Cash Flow From Operating Activities Net Profit Add: Depreciation Expense Amortization Expense (Increase) / Decrease in Receivables Net Cash Flow From Operations Cash Flow From Financing Activities Receipt of Long Term Debt Repayment of Long Term Debt Owner's Equity Net Cash Flow From Financing Activities Cash Flow From Investing Activities Arms and Communication Eq. Purchase Renovation Preoperating Costs Furniture Preliminary Expenses Advance Rent (568,500) (100,000) (343,000) (156,000) (20,000) (216,000) (1,403,500) NET CASH FLOW Cash at the Beginning of the Period Cash at the End of the Period 788,400 788,400 31,738 788,400 820,138 297,769 820,138 1,117,907 354,946 1,117,907 1,472,853 418,023 1,472,853 1,890,876 487,577 1,890,876 2,378,452 548,489 2,378,452 2,926,942 626,322 2,926,942 3,553,263 1,083,193 3,553,263 4,636,456 1,182,579 4,636,456 5,819,036 1,292,022 5,819,036 7,111,058 1,972,710 (219,065) 219,190 2,191,900 (219,065) (237,247) (256,939) (278,264) (301,360) (326,373) (353,462) (237,247) (256,939) (278,264) (301,360) (326,373) (353,462) 322,928 82,450 72,600 (227,175) 250,803 410,929 74,205 72,600 (22,718) 535,016 497,489 66,785 72,600 (24,989) 611,885 591,069 60,106 72,600 (27,488) 696,287 692,478 54,095 72,600 (30,237) 788,937 859,437 48,686 (33,261) 874,862 972,553 43,817 (36,587) 979,784 1,084,003 39,436 (40,245) 1,083,193 1,191,357 35,492 (44,270) 1,182,579 1,308,777 31,943 (48,697) 1,292,022 Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

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14.3 Balance Sheet

PRIVATE SECURITY AGENCY

Projected Balance Sheet (Rs.) Assets Current Assets Cash & Bank Balance Account Receivable Prepaid Rent Pre Operating Costs Total Current Assets Fixed Assets Arms and Communication & Other Equipment Furniture & Fixtures Premises Renovation Total Fixed Assets Total Assets Owner's Equity Long Term Liability Total Equity & Liabilities

Year 0

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9

Year 10

788,400 216,000 363,000 1,367,400

820,138 227,175 216,000 290,400 1,553,713

1,117,907 249,893 216,000 217,800 1,801,600

1,472,853 274,882 216,000 145,200 2,108,935

1,890,876 302,370 216,000 72,600 2,481,846

2,378,452 332,607 216,000 2,927,059

2,926,942 365,868 216,000 3,508,809

3,553,263 402,454 216,000 4,171,718

4,636,456 442,700 216,000 5,295,156

5,819,036 486,970 216,000 6,522,005

7,111,058 535,667 216,000 7,862,725

568,500 156,000 100,000 824,500 2,191,900 219,190 1,972,710 2,191,900

511,650 140,400 90,000 742,050 2,295,763 542,118 1,753,645 2,295,763

460,485 126,360 81,000 667,845 2,469,445 953,047 1,516,398 2,469,445

414,437 113,724 72,900 601,061 2,709,995 1,450,536 1,259,459 2,709,995

372,993 102,352 65,610 540,954 3,022,800 2,041,605 981,195 3,022,800

335,694 92,116 59,049 486,859 3,413,918 2,734,083 679,835 3,413,918

302,124 82,905 53,144 438,173 3,946,982 3,593,520 353,462 3,946,982

271,912 74,614 47,830 394,356 4,566,074 4,566,074 4,566,074

244,721 67,153 43,047 354,920 5,650,076 5,650,076 5,650,076

220,249 60,438 38,742 319,428 6,841,434 6,841,434 6,841,434

198,224 54,394 34,868 287,485 8,150,210 8,150,210 8,150,210

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14.4 Useful Project Management Tips Technology List of Arms& Equipment

Description

Metal Detector Repeater (Durra Made) Pistol (0.30 Caliber) Radio Communication System (base) Hand/Portable Radio Communications Units

Quantity 6 15 14 1 5

Required spare parts & consumables: Suppliers credit agreements and availability as per schedule of maintenance be ensured before start of operations. Energy Requirement: The energy requirements should be properly assessed and alternate source of energy for critical operations must be arranged in advance. Machinery Suppliers: Suppliers should be asked for training and after sales services through a proper contract. Quality Assurance Equipment & Standards: Products quality standards must be defined and a system to check them instituted; this improves credibility.

Marketing Product Development & Packaging: design & development of Services. Expert's help may be engaged for

Ads & P.O.S. Promotion: Business promotion and dissemination through banners and launch events is recommended. Product Brochures should be developed from quality service providers. Sales & Distribution Network: agreements are required. Expert's advise and distribution

Price - Bulk Discounts, Cost plus Introductory Discounts: Price should never be allowed to compromise quality. Price during introductory phase may be lower and used as a promotional tool. Service cost estimates should be carefully documented before price setting.
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Human Resources List of Human Resource

Description Owner Manager/Director Manager Operations Shift Supervisor Deployment Supervisor Accountant Special Guards General Guards Office boy Total Staff

No. of Employees 1 1 2 2 1 6 52 1 66

Adequacy & Competencies: Skilled and experienced staff should be considered an investment even to the extent of offering share in business profit. Performance Based Remuneration: Attempt to manage human resource cost should be focused through performance measurement and performance based compensation. Training & Skill Development: Encouraging training and skill of self & employees through experts and exposure of best practices is route to success. Least cost options for Training and Skill Development (T&SD) may be linked with compensation benefits and awards. 14.5 Useful Links Prime Ministers Office www.pmo.gov.pk Small & Medium Enterprises Development Authority (SMEDA) www.smeda.org.pk National Bank of Pakistan (NBP) www.nbp.com.pk First Women Bank Limited (FWBL) www.fwbl.com.pk
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Government of Pakistan www.pakistan.gov.pk Ministry of Industries & Production www.moip.gov.pk Ministry of Education, Training & Standards in Higher Education http://moptt.gov.pk Government of Punjab www.punjab.gov.pk Government of Sindh www.sindh.gov.pk Government of Khyber Pakhtoonkhwa www.khyberpakhtunkhwa.gov.pk Government of Balochistan www.balochistan.gov.pk Government of GilgitBaltistan www.gilgitbaltistan.gov.pk Government of Azad Jammu 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 Industry (FPCCI) www.fpcci.com.pk State Bank of Pakistan (SBP) www.sbp.org.pk Pakistan Institute of Fashion Design (PIFD) www.pifd.edu.pk
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Pre-Feasibility Study

Security Agency

Pakistan Fashion Design Council (PFDC) www.pfdc.org

15. KEY ASSUMPTIONS


Particulars
Sales Increase Increase in Staff Salaries Increase in Utilities (Electricity / Water / Gas) Increase in Rent Increase in Incidental Expenses Increase in Office Expenses Debt / Equity Ratio Depreciation o Renovation o o Bad debts Loan Period Loan Installments Financial Charges (Loan Rate) Tax Rate Arms and Equipment Office Furniture &Fixtures

Assumption
10 % per year 10 % per year 10 % per year 10 % per year 10 % per year 10 % per year 90 : 10 10 % per annum (Diminishing Balance) 10 % per annum (Diminishing Balance) 10 % per annum (Diminishing Balance) 0.5 % of Sales/Services 7 Years Monthly 08 % per annum Tax rates for OMC

21 September 2013

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