Pre-feasibility Study

AGRICULTURAL
IMPLEMENTS
MANUFACTURIN
UNIT
November 2023

The figures and financial projections are approximate due to fluctuations in

exchange rates, energy costs, and fuel prices etc. Users are advised to focus on
understanding essential elements such as production processes and capacities, space,
machinery, human resources, and raw material etc. requirements. Project
investment, operating costs, andrevenues can change daily. For accurate financial
calculations, utilize financial calculators on SMEDA’s website and consult financial
experts to stay current with market conditions

Small and Medium Enterprises Development Authority

Ministry of Industries and Production
Government of Pakistan
Pre-Feasibility Study Agricultural Implements Manufacturing Unit

Table of Contents
1. DISCLAIMER................................................................................................... 6
2. EXECUTIVE SUMMARY ................................................................................. 7
3. INTRODUCTION TO SMEDA ......................................................................... 9
4. PURPOSE OF THE DOCUMENT ................................................................... 9
5. BRIEF DESCRIP TION OF PROJECT & PRODUCTS ................................. 10
5.1. Machinery and Equipment ................................................................................... 18
5.2. Production Process Flow ..................................................................................... 23
5.3. Installed and Operational Capacities ................................................................. 36
6. CRITICAL FACTORS .................................................................................... 38
7. GEOGRAPHICAL POTENTIAL FOR INVESTMENT .................................... 38
8. POTENTIAL TARGET Customers ................................................................. 38
9. PROJECT COST SUMMARY........................................................................ 39
9.1. Project Economics ................................................................................................ 39
9.2. Project Cost ............................................................................................................ 39
9.2.1 Land................................................................................................................. 39
9.2.2 Building and Renovation Cost ..................................................................... 40
9.2.3 Machinery & Equipment ............................................................................... 40
9.2.4 Lab Equipment............................................................................................... 41
9.2.5 Furniture & Fixtures ...................................................................................... 41
9.2.6 Office Equipment ........................................................................................... 42
9.2.7 Office Vehicles ............................................................................................... 42
9.2.8 Pre-Operating Cost ....................................................................................... 42
9.2.9 Security against Building .............................................................................. 43
9.3. Financial Feasibility Analysis ............................................................................... 43
9.4. Financial Feasibility Debt Financing................................................................... 43
9.5. Breakeven Analysis .............................................................................................. 44
9.6. Revenue Generation............................................................................................. 45
9.7. Variable Cost Estimate ......................................................................................... 45
9.7.1. Raw Material Cost of Reaper ...................................................................... 46
9.7.2. Raw Material of Rotavator ........................................................................... 47
9.7.3. Raw Material of Rabi Drill ............................................................................ 47
9.7.4. Raw Material of Ridger ................................................................................. 48
9.7.5. Raw Material of Zero Tillage ....................................................................... 48
9.7.6. Raw Material of Border Disc ........................................................................ 49
9.7.7. Raw Material of Wheat Straw Chopper ..................................................... 49
9.7.8. Raw Material of Cultivator ............................................................................ 50
9.7.9. Raw Material of Disc Harrow ....................................................................... 51
9.7.10. Raw Material of Wheat Thresher ................................................................ 52

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Pre-Feasibility Study Agricultural Implements Manufacturing Unit

9.7.11. Raw Material of Chaff Cutter ....................................................................... 52

9.7.12. Raw Material of Chisel Plough .................................................................... 53
9.7.13. Raw Material of Super Seeder .................................................................... 53
9.7.14. Raw Material of Silage Machine ................................................................. 54
9.7.15. Raw Material of Maize Sheller .................................................................... 55
9.8. Fixed Cost Estimate .............................................................................................. 55
9.9. Human Resource Requirement .......................................................................... 56
10. CONTACT DETAILS ..................................................................................... 57
11. USEFUL LINKS ............................................................................................. 59
12. ANNEXURES ................................................................................................ 60
12.1. Income Statement ................................................................................................. 60
12.2. Balance Sheet ....................................................................................................... 61
12.3. Cash Flow Statement ........................................................................................... 62
13. KEY ASSUMPTIONS .................................................................................... 63
13.1. Operating Cost Assumptions............................................................................... 63
13.2. Revenue Assumptions ......................................................................................... 63
13.3. Financial Assumptions ......................................................................................... 63
13.4. Debt related Assumptions .................................................................................... 64
13.5. Cash Flow Assumptions....................................................................................... 64

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Table of Tables
Table 1: Raw Materials for Reaper..................................................................................... 23
Table 2: Raw Materials for Rotavator ................................................................................ 24
Table 3: Raw Materials for Zero Tillage............................................................................. 25
Table 4: Raw Materials for Cultivator ................................................................................. 25
Table 5: Raw Materials for Wheat Thresher ..................................................................... 26
Table 6: Raw Materials for Chisel Plough ......................................................................... 26
Table 7: Raw Materials for Silage Machine ...................................................................... 26
Table 8: Raw Materials for Maize Sheller ......................................................................... 27
Table 9: Raw Materials for Disc Harrow ............................................................................ 27
Table 10: Raw Materials for Rabi Drill ............................................................................... 28
Table 11: Raw Materials for Ridger .................................................................................... 28
Table 12: Raw Materials for Border Disc ........................................................................... 28
Table 13: Raw Materials for Wheat Straw Chopper ........................................................ 29
Table 14: Raw Material for Chaff Cutter ............................................................................ 30
Table 15: Raw Materials for Super Seeder ....................................................................... 30
Table 16: Capacity Calculation ........................................................................................... 37
Table 17: Project Cost .......................................................................................................... 39
Table 18: Breakup of Space Requirement ........................................................................ 40
Table 19: Renovation Cost .................................................................................................. 40
Table 20: Machinery & Equipment ..................................................................................... 40
Table 21: Lab Equipment Cost............................................................................................ 41
Table 22: Furniture & Fixtures ............................................................................................. 41
Table 23: Office Equipment ................................................................................................. 42
Table 24: Office Vehicles ..................................................................................................... 42
Table 25: Pre-Operating Cost ............................................................................................. 43
Table 26: Security against Building .................................................................................... 43
Table 27: Financial Feasibility Analysis ............................................................................. 43
Table 28: Financial Feasibility Debt Financing ................................................................. 43
Table 29: Breakeven Analysis ............................................................................................. 44
Table 30: Revenue Generation ........................................................................................... 45
Table 31: Variable Cost Estimate ....................................................................................... 45
Table 32: Raw material cost of Reaper ............................................................................. 46
Table 33: Raw material cost of Rotavator ......................................................................... 47
Table 34: Raw material cost of Rabi Drill .......................................................................... 47
Table 35: Raw material cost of Ridger ............................................................................... 48
Table 36: Raw material cost of Zero Tillage ..................................................................... 48
Table 37: Raw material cost of Border Disc ..................................................................... 49
Table 38: Raw material cost of Wheat Straw Chopper ................................................... 49
Table 39: Raw material cost of Cultivator ......................................................................... 50
Table 40: Raw material cost of Disc Harrow ..................................................................... 51
Table 41: Raw material cost of Wheat Thresher .............................................................. 52
Table 42: Raw material cost of Chaff Cutter ..................................................................... 52
Table 43: Raw material cost of Chisel Plough .................................................................. 53
Table 44: Raw material cost of Super Seeder .................................................................. 53
Table 45: Raw material cost of Silage ............................................................................... 54
Table 46: Raw material cost of Maize Shelter .................................................................. 55

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Table 47: Fixed Cost Estimate ............................................................................................ 55

Table 48: Human Resource................................................................................................. 56
Table 49: Contact Details ..................................................................................................... 57
Table 50: Useful Links .......................................................................................................... 59
Table 51: Operating Cost Assumptions ............................................................................. 63
Table 52: Revenue Assumptions ........................................................................................ 63
Table 53: Financial Assumptions ........................................................................................ 63
Table 54: Debt Related Assumptions ................................................................................ 64
Table 55: Cash Flow Assumptions ..................................................................................... 64

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Table of Figures
Figure 1: Reaper.................................................................................................................... 11
Figure 2: Cultivator ................................................................................................................ 11
Figure 3: Zero Tillage Seed Drill ......................................................................................... 12
Figure 4: Wheat Straw Chopper ......................................................................................... 12
Figure 5: Rotavator ............................................................................................................... 13
Figure 6: Disc Harrow ........................................................................................................... 13
Figure 7: Border Disc ............................................................................................................ 14
Figure 8: Chisel Plough ........................................................................................................ 14
Figure 9: Ridger ..................................................................................................................... 15
Figure 10: Wheat Thresher .................................................................................................. 15
Figure 11: Maize Sheller ...................................................................................................... 16
Figure 12: Rabi Drill .............................................................................................................. 16
Figure 13: Silage Machine ................................................................................................... 17
Figure 14: Chaff Cutter ......................................................................................................... 17
Figure 15: Super Seeder ...................................................................................................... 18
Figure 16: Power Press ........................................................................................................ 18
Figure 17: Hand Grinder ...................................................................................................... 19
Figure 18: Hydraulic Press .................................................................................................. 19
Figure 19: Shearing Machine .............................................................................................. 20
Figure 20: Lathe Machine .................................................................................................... 20
Figure 21: Milling Machine ................................................................................................... 21
Figure 22: Welding Plant ...................................................................................................... 22
Figure 23: Vertical Drill Machine ......................................................................................... 22
Figure 24: Production Process ............................................................................................ 23
Figure 25: Punching and Blanking Operation ................................................................... 31
Figure 26: Deep Drawing Operation .................................................................................. 32
Figure 27: Edge Bending ..................................................................................................... 32
Figure 28: V bending ............................................................................................................ 33
Figure 29: U bending ............................................................................................................ 33
Figure 30: Single Point Cutting Tool .................................................................................. 33
Figure 31: Drilling Process................................................................................................... 34
Figure 32: Grinding Process ................................................................................................ 34
Figure 33: Assembling .......................................................................................................... 35
Figure 34: Product Testing .................................................................................................. 35
Figure 35: Painting Process ................................................................................................ 36

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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 to be obtained by the users. 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. 264
Revision 01
Prepared by SMEDA-Punjab
Revision Date November 2023
For information [email protected]

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2. EXECUTIVE SUMMARY
Agriculture is the art and science of cultivating the soil, growing crops and raising
livestock. It includes producing plant and animal products for people and distributing
those products to markets. Agricultural sector holds a very important position for any
country due to its crucial role in economic growth, food security, employment
generation and poverty alleviation, particularly at the rural level.
Agriculture farming originates from very early civilizations and has been in existence
since the earliest available history of mankind. Early agriculture was mostly based
around sowing and taking care of certain plants; however, as demand for food
increased, a need arose for new farming equipment and machinery, commonly known
as agricultural implements. In today’s modern farming, agricultural implements play a
crucial role in minimizing labor time, reducing effort and lowering the cost of agriculture
produce, thereby increasing the overall agricultural productivity and meeting the rising
demand of agricultural produce for the increasing global population. It is not possible
to obtain the required agricultural production without the use of modern agricultural
implements.
Agricultural implements comprises a wide range of machinery and tools that are used
in various farming processes to increase output and enhance the overall productivity
and crop quality. In Pakistan, a large variety of implements is used for farming. With
increasing awareness about modern practices, the use of traditional tools like Sickle,
Plough, Spade, Winnower, Khurpa, etc. is decreasing and these tools are being
replaced with new agricultural equipment like Reaper, Rotavator, Disc Harrow, etc.
Majority of agriculture implements manufacturers, operating in Pakistan, fabricate
various types of tillage implement, land preparation implements, sowing implements,
harvesting & threshing machines, tractor trolleys etc. These manufacturers buy
specialized parts (forged, heat treated, casting parts) and standard parts (bearing,
chains, nut bolts, etc.) and structural steel from vendors. After procuring all the
required parts, implements are assembled at the site by the manufacturer.
This “Pre-feasibility Document” provides details for setting up an Agricultural
Implements Manufacturing Unit. It may be established in cities like Faisalabad, Daska,
Mian Channu, Okara, Multan, Hafizabad, Jahanian, etc. These cities are well known
for manufacturing of agricultural implements and skilled labor is easily available in
these cities. The proposed project will be manufacturing Reaper, Cultivator, Zero
Tillage, Wheat Straw Chopper, Rotavator, Disc Harrow, Border Disc, Chisel Plough,
Ridger, Wheat Thresher, Maize Sheller, Rabi Drill and Silage Machine.
The proposed manufacturing unit has a maximum annual capacity of manufacturing
492 implements which includes 75 Reapers, 60 Cultivators, 14 Zero Tillages, 12
Wheat Straw Choppers, 65 Rotavators, 21 Disc Harrows, 21 Border Discs, 21 Chisel
Ploughs, 41 Ridgers, 9 Wheat Threshers, 7 Maize Shellers, 10 Rabi Drills, 11 Silage
Machines, 120 Chaff Cutters (Toka) and 5 Super Seeders.

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Initially, the project is estimated to manufacture 297 agriculture implements at 60% of

the total production capacity, which includes 45 Reapers, 36 Cultivators, 9 Zero
Tillages, 7 Wheat Straw Choppers, 39 Rotavators, 13 Disc Harrows, 13 Border Discs,
13 Chisel Ploughs, 25 Ridgers, 5 Wheat Threshers, 4 Maize Shellers, 6 Rabi Drills, 7
Silage Machines, 72 Chaff Cutters (Toka) and 3 Super Seeders.
The “Agricultural Implements Manufacturing Unit” will be set up in a rented area of
6,725 square feet. The project requires a total investment of PKR 17.89 million. This
includes capital investment of PKR 15.03 million and working capital of PKR 2.86
million. This project is financed through 100% equity. The Net Present Value (NPV) of
project is PKR 0.72 million with an Internal Rate of Return (IRR) of 26% and a Payback
period of 4.85 years.
The proposed project will provide employment opportunities to 19 people. High return
on investment and steady growth of business is expected with the entrepreneur having
some prior experience similar businesses. The legal business status of this project is
proposed as “Sole Proprietorship”. Further, the proposed project may also be
established as a “Partnership Concern”.

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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.
National Business Development Program for SMEs (NBDP) is a project of SMEDA,
funded through Public Sector Development Program of Government of Pakistan.
The NBDP envisages provision of handholding support / business development
services to SMEs to promote business startup, improvement of efficiencies in existing
SME value chains to make them globally competitive and provide conducive business
environment through evidence-based policy-assistance to the Government of
Pakistan. The Project is objectively designed to support SMEDA's capacity of
providing an effective handholding to SMEs. The proposed program is aimed at
facilitating around 314,000 SME beneficiaries over a period of five years.

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 provide information to the potential investors about
“Agricultural Implements Manufacturing Unit”. The document provides a general
understanding of the business to facilitate potential investors in crucial and effective
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

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trial and error, and certain industrial norms that become a guiding source regarding
various aspects of business setup and its successful management.
Apart from carefully studying the whole document one must consider critical aspects
provided later on, which form the basis of any investment decision.

5. BRIEF DESCRIP TION OF PROJECT & PRODUCTS

Agriculture is a labor-intensive process, which traditionally used to be done by hand,
with some harder activities being performed with the help of cattle. Farmers had to
levy self-force for ploughing, sowing the seeds, planting, watering, and the ready crops
were reaped and harvested. The farmers had to spend their days and nights to
perform this hard job, along with their families and cattle. With the passing times, as
the technology advanced, agricultural implements and tools were developed and
introduced which made the lives of farmers easier and not only increased the overall
agricultural productivity, but also improved the quality of the produce.
Agricultural implements are the tools which are required to carry out various
agricultural practices, such as, land preparation, sowing, irrigation, reaping,
harvesting, threshing, hay making, shedding, etc. Large number of agricultural
implements is used in today's farming world. Use of agriculture implements helps
saves labor time and reduces the cost of production. Agriculture implements are
effective for increasing farm production as well as their use leads to doing more work
in lesser time.
Manufacturing of agriculture implements involves a series of multiple operations. The
process flow of agricultural implements is relatively short and simple and the final
product is completed after going through the required operations, which differ with the
type of the implement. The process flow starts from the procuring the required raw
materials, (steel and other metals bars, sheets, angle bars, etc.) and standard parts /
components for manufacturers, who serve as vendors. These procured parts go to
fabrication / assembling units, where final products are manufactured and sold in local
and export markets.
Agricultural implements have replaced human work with machine work. These
implements cannot be used alone because these are much heavier to pull hence,
tractors are commonly used to pull them. The products which have been included in
this project are Reaper, Cultivator, Zero Tillage, Wheat Straw Chopper, Rotavator,
Disc Harrow, Border Disc, Chisel Plough, Ridger, Wheat Thresher, Super Seeder,
Maize Sheller, Chaff Cutter, Rabi Drill and Silage Machine. These implements are
briefly described below.

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Reaper
A reaper is a machine to cut down crops at harvest. The cut crops are laid down by
the machine for collection. There are different models. Reapers can be attached to a
power tiller or can be standalone machines. Figure 1 shows a reaper.
Figure 1: Reaper

Cultivator
Cultivators are farming machines used by the farmers to loosen hard soil surface,
distributing equal amount of fertilizer in each part of the land and removing unwanted
plants and weeds from the soil. Cultivators are usually either self-propelled or drawn
as an attachment behind a four-wheel tractor. It is usually attached by means of a
three-point hitch with a tractor and driven by a PTO (Power Take-Off). Figure 2 shows
a cultivator.
Figure 2: Cultivator

Zero Tillage Seed Drill

Zero Tillage is used for Zero Tillage Farming.1 The zero till consists of a seed box,
fertilizer box, seed and fertilizer metering mechanisms, seed tubes, furrow openers,
seed and fertilizer rate adjusting lever and transport cum power transmitting wheels.

1
Zero Tillage farming is an agricultural technique for growing crops or pasture without disturbing the soil through tillage.
No/zero-till farming decreases the amount of soil erosion caused by tillage in certain soils, especially in sandy and dry soils
on sloping terrain

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By using these machines, the seeds are placed into the ground. Zero tillage not only
helps farmer in significantly reducing cost of the land cultivation and irrigation
requirement but also helps saving the environment from issues like soil erosion and
weed effect. Figure 3 shows a zero-tillage machine.
Figure 3: Zero Tillage Seed Drill

Wheat Straw Chopper

Wheat Straw Chopper machine is operated by tractor's PTO. Wheat straw chopper is
a resource conservation technology that makes chaff2 from combine-harvested wheat
straw and saves the environment from smoke pollution, by preventing the straw to be
burnt in the field. Figure 4 shows a wheat straw chopper.
Figure 4: Wheat Straw Chopper

2
Chaff is the dry, scaly protective casing of the seeds of cereal grains or similar fine, dry, scaly plant material.

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Rotavator
Rotavator is a rotary tillage implement driven by power take of a tractor. It cuts, mixes
and levels the soil in single pass. Rotavator can be used in any type and texture of
soil, and for any type of crop. It is especially suitable for uprooting the stubbles of
sugarcane, cotton, banana and jowar etc. Fixing the rotavator to tractor is as simple
as fixing any other implement and needs no special skills. Figure 5 shows a rotavator.
Figure 5: Rotavator

Disc Harrow
This machine is used to form ridges around the fields. The straight and strong ridges
can be formed by it in short time and by less working. There are bushes and grass on
the edges of field, which creates problems in plowing which are also removed by disc
harrow. Figure 6 shows a disc harrow.
Figure 6: Disc Harrow

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Border Disc
A border disc is a farm implement that is used for temporary irrigation. A border disc
creates field boundaries and ridges. It also checks for soil erosion. A border disc earths
up plants like sugarcane and potatoes for enabling a better root system. Figure 7
shows border disc.
Figure 7: Border Disc

Chisel Plough
This plough is best for those lands particularly having upper layer of soil more fertilized
than deep soil, and also have salt at a deep layer of soil. After using chisel plough, the
natural factors like air, sunlight and rain water can affect the soil's layers. In this way,
the natural fertility of the soil increases significantly before the cultivation of wheat,
cotton, sugarcane and before tree plantation. If deep ploughing is done with chisel
plough, then the growth of these crops and plants increases extraordinarily. Figure 8
shows a chisel plough.
Figure 8: Chisel Plough

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Ridger
Ridger is a primary soil tillage machine which is mounted and trailed from tractor’s
hydraulic lifting unit and universal three-point linkage system. As per crop type, it helps
in making perfect ridges and also helps in uprooting unwanted roots. Figure 9 shows
a ridger.
Figure 9: Ridger

Wheat Thresher
Wheat Thresher threshes the wheat to separate the grains and the straw. In addition
to wheat, mustard and soya bean can also be threshed with this equipment. It is
operated with a tractor. Without standing on the height, the wheat can be put into the
thresher by standing on the ground level very easily. Two or four men can work easily.
It is soundless and does not overload the tractor. In case any technical problem occurs,
the field service team can handle it immediately. Figure 10 shows a wheat thresher.
Figure 10: Wheat Thresher

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Maize Sheller
This machine is used for shelling of Maize. It is operated through shaft of the tractor
and is available in different sizes. Figure 11 shows a maize sheller.
Figure 11: Maize Sheller

Rabi Drill
This device is used in agriculture for sowing seeds of crops by positioning them in the
soil and burying them to a specific depth. Seed boxes, along with cup feed type seed
metering mechanism, are mounted on the cultivator frame and the seeds are dropped
in the furrows opened by the cultivator shovels. This arrangement ensures even
distribution of seeds. The seed drill sows the seeds at the proper seeding rate and
depth, ensuring that the seeds are covered by soil and saving the seeds from being
eaten by birds and animals, or being dried up due to exposure to the sunlight. Figure
12 shows a rabi drill.
Figure 12: Rabi Drill

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Silage Machine
Silage3 making machine makes and wraps silage bales. Proper wrapping of bales
retains their oxygen free condition through the storage period so that the silage is
perfectly preserved until fed to animals. Figure 13 shows a silage machine.
Figure 13: Silage Machine

Chaff Cutter (Toka)

A chaff cutter is a mechanical device to cut straw or hay into small pieces before being
mixed with other forage and fed to horses and cattle. Figure 14 shows chaff cutter.
Figure 14: Chaff Cutter

3
Silage, also called ensilage, forage plants such as corn (maize), legumes and grasses that have been chopped and stored in
tower silos, pits, or trenches for use as animal feed

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Super Seeder
Super Seeder is a combination of rotary tiller and seed planter with press wheels. It is
extensively used for planting a wide variety of seeds like wheat, soybean and grass.
It is useful for removing the paddy stubbles and mixing it with soil, preparing land, and
simultaneously sowing seeds. Figure 15 shows super seeder.
Figure 15: Super Seeder

5.1. Machinery and Equipment

Different types of machines are used for manufacturing agricultural implements. The
machinery and equipment used in the proposed project are described below.
Power Press
Power press is a locally available metal working machine, used primarily to cut, punch,
or form metal using tooling (dies) attached to the slide (ram) and bed.4 Power press is
used to form hard parts of the machinery. The agriculture implements manufacturers
prefer to purchase local power press than the imported one due to easy access to
technical assistance and repair services. Figure 16 shows power press.
Figure 16: Power Press

4
The slide and bed are equipped with combination dies that allow metal sheets to be shaped into particul ar
forms.

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Hand Grinder
A hand grinder, also known as a side grinder or disc grinder, is a handheld power tool
used for grinding and polishing. Although, developed originally as a tool for rigid
abrasive discs, the availability of an interchangeable power source has encouraged
the use of this machine with a wide variety of cutters and attachments. The proposed
project will use small and large hand grinder. Figure 17 shows a hand grinder.
Figure 17: Hand Grinder

Hydraulic press
A hydraulic press is a machine press that generates compressive force using a
hydraulic cylinder. Hydraulic press is used for forging, molding, blanking dep drawing
and metal forming operations. Hydraulic press allows more versatility in drawing and
forming complex parts as compared to power press. Figure 18 shows hydraulic press.
Figure 18: Hydraulic Press

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Shearing Machine
Shearing machines are multipurpose devices used in the cutting of alloys and other
metal sheets. Some shearing machines use a scissor-like, angular shear action to cut
metal into sheets or strips. Other, larger machines use a straight shear action with the
blade fixed at an angle as opposed to the angular movement. Figure 19 shows
shearing machine.
Figure 19: Shearing Machine

Lathe Machine
Lathe machine is used for turning, facing, grooving threading, boring, knurling and
tapping on the piece of metal to get the desired shape of metal. Turning is the most
common use of lathe machine. During the turning process, cutting tool removes
material from the outer diameter of the work piece rotating on lathe machine. The main
objective of turning is to reduce the work piece diameter to the desired dimension. The
proposed project will use lathe machine of 2 different bed sizes, 10 feet and 6.5 feet.
Bed size indicates the maximum diameter workpiece can turn on a lathe machine
Figure 20 shows lathe machine.
Figure 20: Lathe Machine

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Milling Machine
Milling machines are also known as the multi-tasking machines (MTMs) which are
multi-purpose machines capable of milling and turning the materials as well. The
milling machine has the cutter installed on it which helps in removing the material from
the surface of the work piece. When the material gets cooled down then it is removed
from the milling machine. Figure 21 shows milling machine.
Figure 21: Milling Machine

Welding Plant
A welding plant is used to join metals together. Welding machines produce heat that
melts electrodes on the metal parts so that the two metals parts can be joined. When
melted electrode cools, it becomes a fixed and resistant joint. Electrode welding, Arc
welding and CO2 Welding are the common types of welding techniques in Agricultural
Implements manufacturing industry. Proposed business will use digital welding plant
and CO2 welding plant. Figure 22 shows welding plant.

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Figure 22: Welding Plant

Vertical Drill Machine

Vertical drilling machine is used to cut holes on the components or work pieces with
the help of drill bits, also known as multiple-point cutting tools. It removes the material
at faster rate making holes on the work piece. The proposed project will use vertical
drill machine of 3 different sizes i.e., large, medium and small vertical drill machines
to cut different size of holes as per the requirements. Size of the drill machine is
determined by the maximum drilling diameter of a drill machine. Figure 23 shows a
vertical drill machine
Figure 23: Vertical Drill Machine

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5.2. Production Process Flow

A general production process flow of manufacturing agriculture implements is shown
in Figure 24.
Figure 24: Production Process

Procurement
Cutting / Press Work Turning and Testing of
of Raw Product
Shearing Drilling
Materials

Painting Shaping Grinding Assembling

Procurement of Raw Materials

Iron and Steel are the two major materials used in the manufacturing of agricultural
implements. These raw materials are in the form of steel rods, sheets and angles. In
addition to iron and steel, some other alloys are also used. The main suppliers of the
raw materials are located in Karachi, Lahore, Gujranwala and Faisalabad. They sell
steel bars, steel sheets and various types of alloys to fabricators/assemblers of
agricultural implements. Alternatively, some manufacturers also purchase raw
materials from scrap houses. In case of purchase of raw materials from scrap houses,
the quality of raw material is not certain. Other standard parts such as bearings, gear,
chains, paints, nuts and bolts, etc. are also used in manufacturing of agricultural
implements and are procured from the local vendors.

Raw Materials for Reaper

Major raw materials for manufacturing reaper includes iron sheet, iron rod, flat bar,
steel casting, angle, iron plates, pipes, gear, chain, blade, fingers, bearings, belt, nut
bolts, springs plastic stars. Table 1 shows the materials required for reaper.
Table 1: Raw Materials for Reaper
Material Specification
Iron Sheet MS sheet of 0.160 inches (8 gauge), 0.128
inches (10 gauge), 0.080(14 gauge) thickness
Iron Rod 5 mm of thickness (1060 number iron)
Flat Bar 0.036 inches (20 gauge) thickness.
Steel Casting 3 mm diameter

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Angle width 2 inches, 0.276 inches thickness

Iron Plates 4-8 ft length, thickness 0.40-0.48 inches
Pipe 0.60 inches, 0.80 inches or 1 inch of diameter
pipe
Gear (Grari) (11 inch diameter & 18 teeth)
Chain Peer 60 Roller chain
Blade 29 number having 2 mm Thickness
V Shaped Fingers Manufacture from 1070 number hard pig iron
Bearings 6202 (15mm bore diameter, 35mm outside
Diameter, 11mm width), 6207 (35mm bore
diameter, 72mm outside Diameter, 17 mm width)
Belts B size belt (top width 21/32 inch, depth 5/16
inches)
Nuts Bolts Locally available nuts and bolts
Spring 0.078 inches of wire thickness
Plastic Stars Wheel locally available Star wheel for reaper of 1.5 inch
size ,made up of hard plastic.

Raw materials for Rotavator

Major raw materials for rotavator includes gear box upper, gear box side, blades, iron
sheet, pipe, and cast iron. Table 2 shows the materials required for rotavator.
Table 2: Raw Materials for Rotavator
Material Specification
Gear Box Upper Bearing number 6218 (90mm bore diameter ,160mm
outside Diameter, 30mm width), grari 24 Teeth, internal
hole 62 mm
Gear Box Side Grari of 18 Teeth and 19 Teeth
Blades 1070 number iron
Iron Sheet 0.160 inches (8 gauge) thickness
Pipe 0.128 inches (10 gauge) thickness, 1.5-2 inches diameter
Cast Iron 1060 number of soft pig iron.

Raw Materials for Zero Tillage

Raw materials for zero tillage includes angle, flat bar, iron plates, iron rods, steel
casting, steel corter, box, seed and fertilizer dropper, tyre and rim, gear, bearing,
plastic pipe and clamps, nut bolts. Table 3 shows the materials required for zero tillage.

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Table 3: Raw Materials for Zero Tillage

Material Specification
Angle 3 inch width and 0.125 (1.5 sootar) thickness
Flat Bar 3 inch width and 0.42 inche (5 sootar) thickness
Iron Plate 12-14 inches Diameter and 0.25 inch thicness (18 mm)
Iron Rod 3 inch width and 0.42 inche (5 sootar) thickness
Steel 4 mm in diameter steel
Casting
Steel Corter 0.42 inch (5 sootar) thickness and 6 inch diameter
Seed Box Locally available seed box
Seed and Locally available seed Dropper
Fertilizer
Dropper
Tyre and rim 165/70 R12 size tyre (165/70 inch width, 12 inch rim diameter)
Gear (Grari) 22 Teeth and 30 Teeth Grari
Roller Sizes 6202 (15mm bore diameter, 35mm outside Diameter, 11mm
Bearing Width), 6207 (35mm bore diameter, 72mm outside Diameter, 17
mm width)
Plastic pipe Locally available clamps
and clamps
Nuts Bolts Locally available nuts and bolts

Raw materials for Cultivator

Major raw materials for cultivator includes angle, pipe, flat bar, round rod, iron plate,
tyne, spring, nut bolts, paint and stickers. Table 4 shows the materials required for
cultivator.
Table 4: Raw Materials for Cultivator
Material Specification

Angle 3 inch width and 0.232 inches in thickness

Pipe 3 inch diameter, 0.265 inch thick
Flat Bar 2 inch width and 0.252 inch thick
Round Rod 0.14 inch diameter
Iron Plate 3 inch width and 0.276 inch of thickness
Tyne 0.252-0.232 inches (3-4 sootar)
Spring 0.252 inch of wire thickness and 21-24 curve
Nuts Bolts Locally Available Nuts and bolts

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Raw materials for Wheat Thresher

Major raw materials for wheat thresher includes iron sheet, angle, cast iron, bearing,
and tyre. Table 5 shows the materials required for wheat thresher.
Table 5: Raw Materials for Wheat Thresher
Material Specification
Iron Sheet MS sheet of 0.160 inches (8 gauge), 0.128 inches (10
gauge), 0.080(14 gauge) thickness
Angle 3-4 inch width and 0.3 inch thickness
Cast Iron 1060 number of soft pig iron.
Roller Bearing 6304 (20 mm bore diameter, 52 mm outside Diameter, 15
mm width), 6306 (30 mm bore diameter, 72 mm outside
Diameter, 19 mm width) and 6310 (45 mm bore diameter,
100 mm outside Diameter, 25 mm width)
Tyre 165/70 R12 size tyre (165 inch width, 12 inch rim diameter)

Raw Materials for Chisel Plough

Major raw materials for chisel plough includes tynes, iron sheet, and welding rod.
Table 6 shows the materials required for chisel plough.
Table 6: Raw Materials for Chisel Plough
Material Specification
Tynes (cor)5 85*25 mm width, 940 mm long
Iron Sheet 0.160 inch thick (8 gauge)
Welding rod Locally Available rods for Welding

Raw Materials for Silage Machine

Major raw material for silage machine includes iron sheet, channel, bearings, gear,
cutter blade, bracket and cross. Table 7 shows the materials required for silage
machine.
Table 7: Raw Materials for Silage Machine
Material Specification
Iron Sheet 0.160 inch (8 gauge), 0.128 inch (10 gauge), 0.080 inch (14
gauge) of sheet thicknes
Channel 3 inch width and 0.265 inch thickness
Bearings 7/50 R16 size tyre (7/50 inch width, 16 inch rim diameter)

5
Tynes, prongs or teeth are parallel or branching spikes forming parts of a tool or natural object.

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Belts Sizes 6202 (15mm bore diameter, 35mm outside Diameter,

11mm Width), 6207 (35mm bore diameter, 72mm outside
Diameter, 17 mm width)
Gear (Grari) Belt number C, 86 inch diameter
Cutter Blade grari 22 Teeth , grari 25 Teeth
Bracket Blade having 5.5 inches width
Cross 35 mm width, 45 mm Length

Raw Materials for Maize Sheller

Major raw material for maize sheller includes iron sheet, angle, tyre, rim, bearings,
cross, shaft, paint and stickers. Table 8 shows the materials required for maize sheller.
Table 8: Raw Materials for Maize Sheller
Material Specification
Iron Sheet 0.160 inch (8 gauge), 0.128 inch (10 gauge), 0.080 inch (14 gauge)
of sheet thickness
Angel 3 inch width and 0.276 inch thickness
Tyre and 7/50 R16 size tyre (7/50 inch width, 16 inch rim diameter)
Rim
Bearings 6207 (35 mm d, 72 mm D, 17 mm width)
Cross 35 mm d, 17 mm width
Shaft 0.276 inch thickness

Raw Materials for Disc Harrow

Major raw materials for disc harrow includes channel, angle, flat bar, iron plate, steel
casting, pipe, disc, round rod, bearing, nut bolts, tyre and rim. Table 9 shows the
materials required for disc harrow.
Table 9: Raw Materials for Disc Harrow
Material Specification
Channel 6 inch width 4 mm thickness
Angle 3 inch width 6.35 mm thickness
Flat Bar 1.5 inch of length, 0.62 inch of thickness
Iron Plate 0.25 inch of thickness
Steel Casting 4 mm in diameter steel is used for this.
Pipe 10 gauge

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Disc 22 inch 6 mm
Round Rod 12 mm diameter and 2.45 inches in length
Roller 7512( 60 mm bore diameter, 110 outside diameter ,29.75 mm
Bearing width)
Nuts Bolts 0.375 inches of thickness and length varies from 3-6 inches
Tyre & Rim Rubber tyre of 6.00-16 size ( 6 mm width and 16 inches of
diameter)

Raw Materials for Rabi Drill

Major raw materials for rabi drill includes iron sheet, plastic stars and gear set. Table
10 shows materials required for rabi drill.
Table 10: Raw Materials for Rabi Drill
Material Specification
Iron Sheet 0.028 inches (22 gauge) thickness
Plastic Stars Manufacured from hard plastic usually (ABS type plastic)
Gear Set Seed (12 Teeth) and fertilizer (9 teeth, 110 teeth, 212 teeth)

Raw Materials for Ridger

Major raw material for ridger include iron sheet. Table 11 shows materials required for
ridger.
Table 11: Raw Materials for Ridger
Material Specification
Iron Sheet 0.160 inches (8 gauge), 0.128 inches (10 gauge),
0.080inches (14 gauge) thickness

Raw Materials for Border Disc

Major raw materials for border disc includes iron sheet and angle. Table 12 shows
materials required for border disc.
Table 12: Raw Materials for Border Disc
Material Specification
Iron Sheet MS sheet of 0.160 inches (8 gauge), 0.128 inches (10
gauge), 0.080 (14 gauge) thickness
Angle 3 inch width, 0.17 inch thickness and 3-4 ft length

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Raw Materials for Wheat Straw Chopper

Major raw materials for wheat straw chopper includes iron sheet, channel, flat bar,
angle, iron plate, round rod, steel casting, pipe, bearing, blade, fingers, and, gear,
chain, plastic bush, spring, bubble box, tyre, rim, hub, belts, and nut bolts. Table 13
shows the materials required for wheat straw chopper.
Table 13: Raw Materials for Wheat Straw Chopper
Material Specification
Iron Sheet MS sheet of 0.160 inches (8 gauge), 0.128 inches (10 gauge),
0.080(14 gauge) thickness
Channel 5.5 inch width 4 mm thickness
Flat Bar 3 inch width and 0.072 inche (20 gauge) thickness
Angle 3 inch width and 0.17 inch (2 sootar)
Iron Plate 12-14 inches Diameter and 0.25 inch thicness (18 mm)
Round rod 0.104 inch (12 gauge)
Steel 4 mm in diameter steel is used for this.
Casting
Pipe 0.128 inch (10 gauge) diameter
Roller 6308 (40 mm bore diameter, 90mm outside diameter, 23mm width)
Bearing
Blade Locally available Blade for chopper (length 2-3 cm and upto 5 mm
thickness)
Fingers Locally available Finger for chopper
Gear grari 20 Teeth
(Grari)
Chain Peer 60 Roller chain
Plastic 28 mm
Bush
Spring 0.252 inch of wire thickness and 21 curve
Bubble Locally made bubble box for wheat straw chopper
Box
Tyre,Rim, Rubber tyre of 6.00-16 size ( 6 mm width and 16 inches of rim
HUB diameter)
Belts Belt number C 86 inch diameter
Nuts & Locally available nuts and bolts
Bolts

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Raw Materials for Chaff Cutter

Major raw materials for chaff cutter includes cast iron, nut bolts, bearing. Table 14
shows the materials required for chaff cutter.
Table 14: Raw Material for Chaff Cutter
Material Specification
Cast Iron 1060 number of soft pig iron.
Nut Bolt Locally available Nut and bolt for Chauff Cutter
Roller Bearing 6205 (25mm bore diameter, 52mm outside Diameter, 15mm
width), 6206 (30mm bore diameter, 62mm outside Diameter,
16 mm width)

Raw Materials for Super Seeder

Major raw materials for super seeder includes iron sheet, steel casting, pipe, flat bar,
round rod, iron plate, forged iron, gear, chain gear, bearing, nut bolts, blade, cross,
box seed fertilizer, dropper seed fertilizer, chain, plastic pipe clamps, and discs. Table
15 shows the materials required for super seeder.
Table 15: Raw Materials for Super Seeder
Material Specification
Iron Sheet 0.144 inch thickness(9 gauge)
Steel Casting 4 mm in diameter steel is used for this.
Pipe 0.128 inch diameter (10 gauge)
Flat Bar 5 mm
Round Rod 0.104 inch diameter (12 gauge)
Iron Plate 0.144 inch thickness (9 gauge)
Forged Iron 1070 number hard pig iron
Gear (Grari) grari 22, grari 25
Chain Gear grari 30 (60 teeth)
Bearings & Sizes 6205 (25mm d, 35mm D, 15mm Width), 6207 (35mm d,
Seals 72mm D, 17 mm width)
Nuts Bolts 0.33 inch (4 sootar) thick
Blade locally available blade for super seed
Cross 0.25 inch
Box Seed locally available seed box
Fertilizer

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Dropper Seed locally available seed & fertilizer dropper

Fertilizer
Chain 60 number
Plastic Pipe Locally available clamps
Clamps
Discs 10, 11 inch

Cutting / Shearing
The first step in the production process is the fabrication of metal sheet, which involves
cutting steel into different sections and lengths, e.g., flats, angles, channels, squares,
pipes, plates, bars and rods. This is done by shearing machine which uses scissors
like angular shear action to cut the sheet according to the required measurements.
Shearing operations are performed by the action of two blades, one fixed in the shear
bed and the other moving vertically with little or no clearance. Shear action moves
progressively from one side of the material to the other.

Press Work
After cutting, press work is performed by power press or hydraulic press on the metal
sheet to produce the desired shapes. Press work includes the following processes:

Punching & Blanking Operation

When a force is applied by using the punch on to the sheet, the cutting action takes
place on the sheet producing a piece/blank and leaving a hole in the sheet. In punching
operation, the punch size is made equal to hole size and clearance is provided on the
die and also in the punching operation. The shear is provided only on the Punch.
Figure 25 shows punching and blanking operation.
Figure 25: Punching and Blanking Operation

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Deep Drawing Operation

It is a sheet metal forming process in which a sheet metal blank is radially drawn into
a forming die by the mechanical action of a punch. Deep drawing is mainly used for
cup-shaped components. Figure 26 shows deep drawing operation.
Figure 26: Deep Drawing Operation

Bending Operation
Bending Operation is performed to bend the sheet in required angles. There are three
types of bending operations:
 Edge Bending
 V Bending
 U Bending
Figure 27 shows edge bending, Figure 27 shows V bending and Figure 29 shows U
bending.
Figure 27: Edge Bending

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Figure 28: V bending

Figure 29: U bending

Turning and Drilling

Turning involves rotation of the work piece while the cutting tool moves in a linear
motion. This results in forming a cylindrical shape. A lathe machine is the preferred
machine for performing all turning operations. Like most machining operations, turning
is either done manually or automatically. Turning may be done on the external or the
internal surface of the part. Single point cutting tools, used in turning, come in various
shapes. They are placed at different angles for a variety of outcomes. Figure 30 shows
single point cutting tools.
Figure 30: Single Point Cutting Tool

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Drilling is done to create holes on the metal sheets and other components of the
product. The drill bit is pressed against the work piece and rotates at rates from
hundreds up to even thousands rotations per minute which makes holes. Figure 31
shows drilling process.
Figure 31: Drilling Process

Shaping
For production of products like wheat straw chopper and super seeder, shaper
machine is used to produce horizontal, vertical and flat surfaces.

Grinding
Grinder is used to remove the extra material from the components produced in the
above processes using a grinding wheel. This process is necessary to make the rough
surfaces of the finished components smooth and to show high surface quality and
maintain high accuracy of shape and dimensions. Figure 32 shows grinding process.
Figure 32: Grinding Process

Assembling
Smaller parts like chains, blades, tynes, discs are brought together with the holders or
the main body and are permanently connected using heat and filler. The filler is

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connected to the point where it melts and pools between the two objects. This results
in a strong joint. Welding plant is used for this process. Other parts are connected
using general tool kit. Figure 33 shows assembling of implements.
Figure 33: Assembling

Product Testing
After assembling process, the product is passed through test runs to check its
performance in the field. If the product’s performance is not satisfactory the defect is
identified and removed before painting. Figure 34 shows product testing.
Figure 34: Product Testing

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Painting
The products satisfactorily passing the performance test are painted and the business
logo is fixed on the product. Spray paint is used to paint the implements. Painting job
is usually outsourced by majority of agricultural implements manufacturers. Figure 35
shows painting of implements.
Figure 35: Painting Process

5.3. Installed and Operational Capacities

The proposed manufacturing unit has a maximum annual capacity of manufacturing
492 products which includes 15% Reapers, 12% Cultivators, 3% Zero Tillage, 2%
Wheat Straw Choppers, 13% Rotavators, 4% Disc Harrows, 4% Border Discs, 4%
Chisel Ploughs, 8% Ridgers, 2% Wheat Threshers, 1% Maize Shellers, 2% Rabi Drills,
2% Silage Machines, 24% Chaff Cutters (Toka) and 1% Super Seeders. It translates
into 75 Reapers, 60 Cultivators, 14 Zero Tillages, 12 Wheat Straw Choppers, 65
Rotavators, 21 Disc Harrows, 21 Border Discs, 21 Chisel Ploughs, 41 Ridgers, 9
Wheat Threshers, 7 Maize Shellers, 10 Rabi Drills, 11 Silage Machines, 120 Chaff
Cutters (Toka) and 5 Super Seeders.
Initially, the project is estimated to manufacture agriculture implements at 60% of the
total production capacity, which is equal to 297 implements, including 45 Reapers, 36
Cultivators, 9 Zero Tillages, 7 Wheat Straw Choppers, 39 Rotavators, 13 Disc
Harrows, 13 Border Discs, 13 Chisel Ploughs, 25 Ridgers, 5 Wheat Threshers, 4
Maize Shellers, 6 Rabi Drills, 7 Silage Machines, 72 Chaff Cutters (Toka) and 3 Super
Seeders. Table 16 shows capacity calculations of Agriculture implement.
In the proposed business, labor will work in three teams. Each team has 2 skilled labor
and 1 unskilled labor.

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Table 16: Capacity Calculation

Division Available Skilled Annual Units
Total Available
Ratio of Man hours Labor Hours Production Produced
Products Skilled Man
Hours per Per Required @100% Capacity @ 60 %
Hours Annually
Product Product per unit Utilization Capacity
Formulas A B C=A*B D E=C*D F= E*60%
Reaper 20% 3,600 48 75 45
Cultivator 15% 2,700 45 60 36
Zero Tillage 4% 720 50 14 9
Wheat Straw Chopper 5% 900 75 12 7
Rotavator 9% 1,620 25 65 39
Disc Harrow 4% 720 35 21 13
Border Disc 4% 720 34 21 13
Chisel Plough 18,000 3% 540 26 21 13
Ridger 5% 900 22 41 25
Wheat Thresher 6% 1,080 120 9 5
Maize Sheller 3% 540 80 7 4
Rabi Drill 4% 720 75 10 6
Silage Machine 5% 900 80 11 7
Chaff Cutter (Toka) 10% 1,800 15 120 72
Super Seeder 3% 540 100 5 3
Total 100% 18,000 492 297

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6. CRITICAL FACTORS
The following factors should be carefully considered while making investment
decision:
 Good understanding of the industry
 Good knowledge of market demand
 Keeping organized business records
 Evaluating prospective customer base
 Availability of skilled workforce
 Knowing major competitors
 Knowledge about the modern machinery and equipment

7. GEOGRAPHICAL POTENTIAL FOR INVESTMENT

An Agriculture Implements Manufacturing Unit can be established in cities like
Faisalabad, Daska, Mian Channu, Okara, Multan, Hafizabad, Jahanian, etc. These
cities are well known for manufacturing of agriculture implements. Hence, there is an
easy availability of skilled labor and raw materials in these cities. Furthermore, sub-
urban areas of all major cities of Pakistan also have potential for this investment. The
selected city should preferably be located within the area where agricultural activity is
carried out round the year.

8. POTENTIAL TARGET CUSTOMERS

Currently, in the agriculture implements industry, two types of sales channels are used
for local sale by manufacturers. Majority of agriculture implements manufacturers only
sell their products directly to farmers; whereas, the remaining manufacturers sell their
products to both dealers/agents and farmers. Two major clusters of this industry,
Daska and Faisalabad, have an established dealer system and their dealers are
working all over the country. However, Mian Channu and Okara clusters mostly sell
directly to the farmers, whereas Faisalabad cluster sells implements to both dealers
and farmers. There are total of 63 agricultures implements manufacturing units in
Daska cluster, 32 units in Faisalabad, 40 in Mian Channu and Multan and 21 in Okara.
The agriculture implement units operate in three legal structures; sole proprietorship,
partnership and private limited company.

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9. PROJECT COST SUMMARY

A detailed financial model has been developed to analyze the commercial viability of
the proposed Agriculture Implements Manufacturing Unit. Various costs and revenue
related assumptions along with results of the analysis are outlined in this section.
The projected Income Statement, Cost of Goods Sold, Cash Flow Statement and
Balance Sheet are attached as Annexure.
9.1. Project Economics
All the figures in this financial model have been calculated after carefully taking into
account the relevant assumptions and target market.
9.2. Project Cost
Total cost of the project has been calculated to be PKR 16.31 million. The project will
be financed through 100% Equity. Table 17 provides the details of the costs calculated
for the proposed production unit.
Table 17: Project Cost
Description Amount (PKR)
Building / Infrastructure 336,250
Machinery & equipment 9,540,000
Lab Equipments 259,650
Furniture & fixtures 505,000
Office vehicles 1,750,000
Office equipment 1,257,500
Pre-operating costs 626,731
Advance Against Building Rent 750,000
Total Capital Cost 15,025,131
Working capital
Equipment spare part inventory 15,900
Raw material inventory 1,595,279
Upfront Building Rent 250,000
Cash 1,000,000
Total Working capital 2,861,179
Total Project Cost (PKR) 17,886,310
9.2.1 Land
The proposed Agriculture implements will be established on a rented land to avoid the
high cost. Suitable locations for setting up a facility like this can be easily found on

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rent. Therefore, no land cost has been added to the project cost. Total space
requirement for the proposed unit has been estimated as 6,725 sq. feet (29.89 Marla).
The breakup of the space requirement is provided in Table 18.
Table 18: Breakup of Space Requirement
Break-up of Land Area Number % Break-up Area (Sq. Ft.)
Owners' Office 1 2% 110
Admin Area 1 7% 441
Production Area 1 68% 4,550
Raw Material Store Area 1 6% 400
Finished Good Store Area 1 13% 900
Washroom 4 5% 324
Total 100% 6,725

9.2.2 Building and Renovation Cost

There will be no construction cost of building since the unit will be started on a rented
building. However, there will be a renovation cost, required to make the building usable
for the business. The proposed project requires electricity load of around 60.83 KW
for which an electricity connection under the Industrial three phase will be required.
Building rent of PKR 250,000 per month has been included in the operating cost.
Building renovation cost is shown in Table 19.
Table 19: Renovation Cost
Unit Cost Total Cost
Cost Item Area (Sq. ft.)
(PKR) (PKR)
Renovation 6.750 50 336,250

9.2.3 Machinery & Equipment

Table 20 provides details of Machinery and equipment required for the project.
Table 20: Machinery & Equipment
Unit Cost Total Cost
Cost Item No.
(PKR) (PKR)
Power Press 1 600,000 600,000
Hydraulic Press 1 1,200,000 1,200,000
Shearing Machine 1 1,000,000 1,000,000
Small Hand Grinder 2 8,000 16,000
Large Hand Grinder 1 17,000 17,000

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Lathe Machine (10 Ft) 1 1,500,000 1,500,000

Lathe Machine (6.5 Ft) 1 750,000 750,000
Milling Machine 1 1,150,000 1,150,000
Digital Welding Plant 2 125,000 250,000
CO2 Welding Plant 1 189,000 189,000
Vertical Drilling Machine (Large) 2 350,000 700,000
Vertical Drilling Machine (Medium) 1 290,000 290,000
Vertical Drilling Machine (Small) 2 89,000 178,000
Generator (60 Kva) 1 1,700,000 1,700,000
Total 9,540,000

9.2.4 Lab Equipment

Table 21 provides details of Lab equipment required for the project.
Table 21: Lab Equipment Cost
Cost Item No. Unit Cost (PKR) Total Cost (PKR)
Portable Hardness Tester 1 150,000 150,000
Vernier Caliper and Scale 4 9,000 36,000
Height Gauge 1 45,000 45,000
Thread Gauge 2 12,000 24,000
Thickness Gauge 2 1,500 3,000
Measuring Tape 3 550 1,650
Total 259,650

9.2.5 Furniture & Fixtures

Table 22 provides details of the furniture and fixture requirement of the project.
Table 22: Furniture & Fixtures
Unit Cost
Cost Item No. Total Cost (PKR)
(PKR)
Executive Table 1 60,000 60,000
Office Table 6 30,000 180,000
Executive Chairs 1 30,000 30,000
Office Chair 10 14,000 140,000

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Staff Plastic Chair(s) 10 2,000 20,000

Staff Table 5 6,000 30,000
Sofa Sets 1 45,000 45,000
Total 505,000

9.2.6 Office Equipment

Details of office equipment required for the project are provided in Table 23.
Table 23: Office Equipment
Cost Item No. Unit Cost(PKR) Total Cost (PKR)
Air Conditioner (1 Ton Inverter ) 2 185,000 370,000
Laptop 1 150,000 150,000
Desktop Computer 4 50,000 200,000
Printer 1 50,000 50,000
LED/LCD 32 1 60,000 60,000
Water Dispenser 2 25,000 50,000
Ceiling Fan 17 8,000 136,000
Exhaust Fan 11 7,500 82,500
Pedestal Fan 7 12,000 84,000
Wi-Fi Router and Connection 1 10,000 10,000
CCTV Camera System 8 2,500 65,000
Total 1,257,500

9.2.7 Office Vehicles

Details of office vehicles required for the project are provided in Table 24.
Table 24: Office Vehicles
Cost Item Units Unit Cost (PKR) Total Cost (PKR)
Carry Van (Used) 1 1,500,000 1,500,000
Motorcycle 1 175,000 175,000
Registration / Transfer Fee 75,000
Total 1,750,000

9.2.8 Pre-Operating Cost

Details of pre-operating cost for the project are provided in Table 25.

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Table 25: Pre-Operating Cost

Cost Item Number of Months Total Cost (PKR)
Administration expense 1 355,000
Utilities expense 1 271,731
Total 626,731

9.2.9 Security against Building

Details of security against building for the project are provided in Table 26.
Table 26: Security against Building
Unit Cost /
Cost Item Months Total Cost (PKR)
Month (PKR)
Security against Building 3 250,000 750,000

9.3. Financial Feasibility Analysis

The financial feasibility analysis given in Table 27 provides the information regarding
projected IRR, NPV and payback period of the study based on 100% equity.
Table 27: Financial Feasibility Analysis
Description Project
IRR 26%
NPV (PKR) 718,143
Payback Period (years) 4.85
Projection Years 10
Discount Rate used for NPV 25%

9.4. Financial Feasibility Debt Financing

Table 28 provides the information regarding projected IRR, NPV and payback period
of the study based on combination of equity (50%) and debt (50%) financing for the
proposed project.
Table 28: Financial Feasibility Debt Financing
Description Project
IRR 20%
Payback Period (years) 5.88
Projection Years 10

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9.5. Breakeven Analysis

Breakeven analysis is provided in Table 29.
Table 29: Breakeven Analysis

Particulars Amount First Year (PKR) Ratio

Sales (PKR) – A 57,903,050 100%
Variable Cost (PKR) – B 47,479,402 82%
Contribution (PKR) (A-B) = C 10,423,648 18%
Fixed Cost (PKR) – D 10,878,162 19%
Break Even Revenue (PKR) (D/CM) =E 60,427,858
Breakeven No. of Services 310
Breakeven Capacity 63%

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9.6. Revenue Generation

Based on the 60% capacity utilization of the unit, sales revenues during the first year
of operations is estimated in Table 30.
Table 30: Revenue Generation

Price Per
Number of Total Revenue
Particulars Unit
Units (A)* (PKR) (A*B)
(PKR)(B)
Reaper 43 181,900 7,821,700
Cultivator 34 139,100 4,729,400
Zero Tillage 9 251,450 2,263,050
Wheat Straw Chopper 7 957,650 6,703,550
Rotavator 37 299,600 11,085,200
Disc Harrow 12 401,250 4,815,000
Border Disc 12 53,500 642,000
Chisel Plough 12 192,600 2,311,200
Ridger 24 139,100 3,338,400
Wheat Thresher 5 759,700 3,798,500
Maize Sheller 4 299,600 1,198,400
Rabi Drill 6 149,800 898,800
Silage Machine 7 353,100 2,471,700
Chaff Cutter (Toka) 69 58,850 4,060,650
Super Seeder 3 588,500 1,765,500
Total 284 57,903,050
* 15 days finished goods inventory is considered

9.7. Variable Cost Estimate

Variable costs of the project have been provided in detail in Table 31.
Table 31: Variable Cost Estimate

Variable Cost Cost (PKR)

Material Cost 38,286,699
Direct Labor 6,000,000
Direct Electricity Cost 1,860,086
Fuel Cost-Generator 372,017
Machinery Maintenance – Cost 190,800

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Communications expense (phone, fax, mail, internet, etc.) 408,000

Office vehicles running expense 157,800
Office expenses (stationery, entertainment, janitorial services,
etc.) 204,000
Total Variable Cost 47,479,402

9.7.1. Raw Material Cost of Reaper

Table 32: Raw material cost of Reaper

Cost per Total

Unit of Consumption
Particulars KG/No. Cost
Measurement per Unit
(PKR) (PKR)

Iron Sheet Kg 100 295 29,500

Iron Rod Kg 60 254 15,240
Flat Bar Kg 10 248 2,480
Steel Casting Kg 50 295 14,750
Angle Kg 20 248 4,960
Iron Plates Kg 40 295 11,800
Pipe Kg 10 295 2,950
Gear (Grari) No 9 649 5,841
Chain No 2 4,720 9,440
Blade No 31 59 1,829
V Shaped Fingers No 16 366 5,856
Bearings No 32 189 6,048
Belts No 2 354 708
Nuts Bolts No 15 389 5,835
Spring No 14 41 574
Plastic Stars No
7
Wheel 336 2,352
Sticker No 1 1,180 1,180
Paint Coat No 2 2,360 4,720

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Sub Total 126,063

Wastage 1% 1,261
Total Cost 127,324

9.7.2. Raw Material of Rotavator

Table 33: Raw material cost of Rotavator

Cost per Total

Unit of Consumption
Particulars KG/No. Cost
Measurement per Unit
(PKR) (PKR)
Gear Box Upper No. 1 29,500 29,500
Gear Box Side No. 1 11,800 11,800
Blades No. 48 295 14,160
Iron Sheet KG 160 295 47,200
Pipe KG 30 295 8,850
Cast Iron KG 110 307 33,770
Paint Coat No. 1 2,950 2,950
Sticker set No. 1 1,180 1,180
Sub Total 149,410
Wastage 1% 1,494
Total Cost 150,904

9.7.3. Raw Material of Rabi Drill

Table 34: Raw material cost of Rabi Drill

Cost per
Unit of Consumption Total Cost
Particulars KG/No.
Measurement per Unit (PKR)
(PKR)
Iron Sheet Kg 220 295 64,900
Plastic Stars No 9 236 2,124
Gear Set No 1 23,600 23,600
Paint Coat No 1 2,360 2,360
Sticker Set No 1 1,180 1180

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Sub Total 94,164

Wastage 1% 941.64
Total Cost 95,106

9.7.4. Raw Material of Ridger

Table 35: Raw material cost of Ridger

Cost per Total

Unit of Consumption
Particulars KG/No. Cost
Measurement per Unit
(PKR) (PKR)
Iron Sheet Kg 350 295 103,250
Paint Coat No 1 1,180 1,180
Sticker set No 1 590 590
Sub Total 105,020
Wastage 1% 1,050.20
Total Cost 106,070

9.7.5. Raw Material of Zero Tillage

Table 36: Raw material cost of Zero Tillage

Cost per Total

Unit of Consumption
Particulars KG/No. Cost
Measurement per Unit
(PKR) (PKR)
Angle Kg 80 248 19,840
Flat Bar Kg 100 248 24,800
Iron Plate Kg 40 295 11,800
Iron Rod Kg 30 254 7,620
Steel Casting Kg 50 295 14,750
Steel Corter No 15 319 4,785
Seed Box No 1 23,600 23,600
Seed and
No 30
fertilizer Dropper 979 29,370
Tyre and rim No 1 11,800 11,800
Gear (Grari) No 11 1,770 19,470

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Roller Bearing No 12 295 3,540

Plastic pipe and No
30
clamps 153 4,590
Nuts Bolts No 15 389 5,835
Paint Coat No 2 1,770 3,540
Sticker set No 1 1,180 1,180
Sub Total 186,520
Wastage 1% 1,865.20
Total Cost 188,385

9.7.6. Raw Material of Border Disc

Table 37: Raw material cost of Border Disc

Cost per Total

Unit of Consumption
Particulars KG/No. Cost
Measurement per Unit
(PKR) (PKR)
Iron Sheet Kg 35 295 10,325
Angle Kg 35 295 10,325
Paint Coat No 1 1,180 1,180
Sticker set No 1 354 354
Sub Total 22,184
Wastage 1% 221.84
Total Cost 22,406

9.7.7. Raw Material of Wheat Straw Chopper

Table 38: Raw material cost of Wheat Straw Chopper

Cost
Total
Unit of Consumption per
Particulars Cost
Measurement per Unit KG/No.
(PKR)
(PKR)
Iron Sheet Kg 600 295 177,000
Channel Kg 80 295 23,600
Flat Bar Kg 300 248 74,400

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Angle Kg 300 248 74,400

Iron Plate Kg 50 295 14,750
Round rod Kg 300 254 76,200
Steel Casting Kg 300 295 88,500
Pipe Kg 60 295 17,700
Roller Bearing No 34 2,065 70,210
Blade No 325 53 17,225
Fingers No 15 389 5,835
Gear Grari No 2 47,200 94,400
Chain& Grari No 3 1,180 3,540
Plastic Bush No 20 59 1,180
Spring No 70 41 2,870
Bubble Box No 1 17,700 17,700
Tyre,Rim ,HUB No 6 10,030 60,180
Belts No 9 767 6,903
Nuts Bolts No 30 767 23,010
Sticker No 1 1,180 1,180
Paint Coat No 2 8,850 17,700
Sub Total 868,483
Wastage 1% 8,684.83
Total Cost 877,168

9.7.8. Raw Material of Cultivator

Table 39: Raw material cost of Cultivator

Cost per
Unit of Consumption Total Cost
Particulars KG/No.
Measurement per Unit (PKR)
(PKR)
Angle Kg 50 248 12,400
Pipe Kg 10 295 2,950
Flat Bar Kg 60 248 14,880

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Pre-Feasibility Study Agricultural Implements Manufacturing Unit

Round Rod Kg 10 248 2,480

Iron Plate Kg 20 354 7,080
Tyne No 9 1,298 11,682
Spring No 29 1,003 29,087
Nuts Bolts No 6 389 2,334
Paint Coat No 1 2,360 2,360
Sticker set No 1 1,180 1,180
Sub Total 86,433
Wastage 1% 864.33
Total Cost 87,297

9.7.9. Raw Material of Disc Harrow

Table 40: Raw material cost of Disc Harrow

Cost per Total

Unit of Consumption
Particulars KG/No. Cost
Measurement per Unit
(PKR) (PKR)
Channel Kg 200 295 59,000
Angle Kg 100 248 24,800
Flat Bar Kg 60 248 14,880
Plate Kg 150 295 44,250
Steel Casting Kg 90 295 26,550
Pipe Kg 30 295 8,850
Disc No 18 5,310 95,580
Round Rod Kg 160 254 40,640
Roller Bearing No 12 779 9,348
Nuts Bolts No 10 354 3,540
Tyre& Rim No 2 9,440 18,880
Sticker No 1 590 590
Paint Coat No 2 2,360 4,720
Sub Total 351,628

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Wastage 1% 3,516.28
Total Cost 355,144

9.7.10. Raw Material of Wheat Thresher

Table 41: Raw material cost of Wheat Thresher

Particulars Unit of Consumption Cost per Total

Measurement per Unit KG/No. Cost
(PKR) (PKR)
Iron Sheet Kg 600 295 177,000
Angle Kg 700 266 186,200
Cast Iron Kg 700 236 165,200
Roller Bearing No 17 1,416 24,072
Tyre No 2 11,800 23,600
Paint Coat No 1 11,800 11,800
Sticker set No 1 708 708
Sub Total 588,580
Wastage 1% 5,886
Total Cost 594,466

9.7.11. Raw Material of Chaff Cutter

Table 42: Raw material cost of Chaff Cutter

Cost per Total

Unit of Consumption
Particulars KG/No. Cost
Measurement per Unit
(PKR) (PKR)
Cast Iron KG 100 124 12,400
Nut Bolt No. 1 295 295
Bearing No. 2 236 472
Silicon KG 0.4 767 307
Paint Coat No. 1 2,360 2,360
Sticker set No. 1 826 826
Sub Total 16,660

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Wastage 1% 166.60
Total Cost 16,826

9.7.12. Raw Material of Chisel Plough

Table 43: Raw material cost of Chisel Plough

Cost per Total

Unit of Consumption
Particulars KG/No. Cost
Measurement per Unit
(PKR) (PKR)
Tynes No. 3 17,700 53,100

Iron Sheet KG 80 295 23,600

Welding rod No. - 6,000
Paint Coat No. 1 3,540 3,540
Sticker set No. 1 1,180 1,180
Sub Total 87,420
Wastage 1% 874.20
Total Cost 88,294

9.7.13. Raw Material of Super Seeder

Table 44: Raw material cost of Super Seeder

Cost per Total

Unit of Consumption
Particulars KG/No. Cost
Measurement per Unit
(PKR) (PKR)
Iron Sheet KG 140 295 41,300
Steel Casting KG 80 295 23,600
Pipe KG 120 295 35,400
Flat Bar KG 50 248 12,400
Round Rod KG 40 295 11,800
Iron Plate KG 150 295 44,250
Forged Iron KG 50 354 17,700
Gear (Grari) no. 5 6,372 31,860
Chain Gear No. 9 1,947 17,523

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Bearing & No. 26

Seals 1,180 30,680
Nuts Bolts NO. 20 472 9,440
Blade No. 48 1180 56,640
Cross No. 1 14,160 14,160
Box Seed no. 1
Fertilizer 21,240 21,240
Dropper Seed No. 20
Fertilizer 708 14,160
Chain No. 3 2,360 7,080
Plastic Pipe No. 40
Clamps 148 5,920
Discs No. 1 2,360 2,360
Sticker No. 1 1,534 1,534
Paint Coat No 1 5,900 5,900
Sub Total 404,947
Wastage 2% 8,099
Total Cost 413,046

9.7.14. Raw Material of Silage Machine

Table 45: Raw material cost of Silage

Cost per Total

Unit of Consumption
Particulars KG/No. Cost
Measurement per Unit
(PKR) (PKR)
Iron Sheet KG 80 295 23,600
Channel KG 5 295 1,475
Bearings No. 8 1,416 11,328
Belts No. 4 17,700 70,800
Gear (Grari) No. 4 23,600 94,400
Cutter Blade No. 12 354 4,248
Bracket No. 1 14,160 14,160
Cross No. 4 3,540 14,160

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Paint Coat No. 1 7,080 7,080

Sticker set No. 1 1,180 1,180
Sub Total 242,431
Wastage 1% 2,424.31
Total Cost 244,855

9.7.15. Raw Material of Maize Sheller

Table 46: Raw material cost of Maize Shelter

Cost per Total

Unit of Consumption
Particulars KG/No. Cost
Measurement per Unit
(PKR) (PKR)
Iron Sheet KG 150 295 44,250
Angel KG 100 236 23,600
Tyre and Rim No 2 15,340 30,680
Bearings No 15 1,416 21,240
Cross No 1 5,900 5,900
Shaft KG 4 5,900 23,600
Paint Coat No. 1 5,900 5,900
Sticker Set No 1 1,180 1,180
Sub Total 156,350
Wastage 1% 1,564
Total Cost 157,914

9.8. Fixed Cost Estimate

Table 47 provides details of fixed cost for the project.
Table 47: Fixed Cost Estimate
Fixed Cost Cost (PKR)
Management Staff 4,080,000
Administration benefits expense 403,200
Building rental expense 3,000,000
Indirect Electricity 1,400,688

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Pre-Feasibility Study Agricultural Implements Manufacturing Unit

Promotional expense 289,515

Depreciation expense 1,579,413
Amortization of pre-operating costs 125,346
Total Cost (PKR) 10,878,162

9.9. Human Resource Requirement

For the 1st year of operations, the center shall require the workforce at a salary cost.
Table 48 provides details of human resources.
Table 48: Human Resource
No of Average Monthly
Designation
Persons Salary (PKR)
Production Incharge 1 80,000
Procurement Officer 1 55,000
Admin and Accounts Officer 1 50,000
Quality Controller 1 60,000
Labour – Skilled 6 45,000
Labour –UnSkilled 3 30,000
Marketing Officers 1 60,000
Stores Incharge 1 40,000
Security Guard 2 35,000
Driver 1 35,000
Sweepers 1 30,000
Total 19

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10. CONTACT DETAILS

Details of some supplier of iron and steel alloy are provided in Table 49.
Table 49: Contact Details
Nature
Name of
of Address Contact Email Website
Supplier
Supplier

MWP Iron Alloy Office # +92 (333) info@mw https://www.m

Business 25, 44 85 888 pbnp.com wpbnp.com/#
and Mumtaz
Presentati Market,
ons Pvt Ltd City
Saddar
Road,
Rawalpindi
Mughal Steel Alloy 41 Peco 042- fahadhaf https://www.m
steels Road 35960841- eez@mu ughalsteel.co
Badami 3 ghalsteel. m/?v=null
Bagh, com
Lahore,
Pakistan
ARSALAN Steel S-36-R, 03324375 arsalance arsalance@ho
CHAUDHA Tools 67/3, 857 @hotmail tmail.com
RY Ghalib .com
ENTERPR Street,
ISES Railway
Road,
Lahore
Prime Bearings Shop (92 21) primebea primebearing
Bearing No.28,Aziz 32736871, ring@hot @hotmail.com
Centre Mansion,N mail.com
oman
Street,Plaz
a Quarters
Karachi
Internation Steel 101 +92 (21) [email protected] [email protected].
al Steels Beaumont 111 019 om.pk pk
Limited Plaza, 10 019
Beaumont
Road,
Karachi-
75530
A.K Steel Eminabad +92 55 info@akg info@akgroup.
STEEL & plates Road G.T. 3409692 roup.com com.pk
RE- Road .pk

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ROLLING Gujranwal
MILLS a
A.N Iron and 9-KM G.T. + 92 42 info@anp [email protected]
INDUSTRI steel pipes Road, 37963771 ipe.com.p om.pk
ES Ferozewal k
(PRIVATE) a,
LIMITED Shahdara
Lahore
54950,
Pakistan

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11. USEFUL LINKS

Table 50: Useful Links
Name of Organization Website/ E-mail Address
Small and Medium Enterprises Development www.smeda.org.pk
Authority (SMEDA)
National Business Development Program (NBDP) www.nbdp.org.pk
Government of Pakistan www.pakistan.gov.pk
Ministry of National Health Services Regulations
www.nhsrc.gov.pk
and Coordination
Ministry of Federal Education and Professional
www.mofept.gov.pk
Training
Government of Punjab www.punjab.gov.pk
Government of Sindh sindh.gov.pk/
Government of Balochistan balochistan.gov.pk/
Government of KPK kp.gov.pk/
Government of Gilgit Baltistan gilgitbaltistan.gov.pk/
Government of Azad Jammu & Kashmir ajk.gov.pk/
Trade Development Authority of Pakistan www.tdap.gov.pk
Securities and Exchange Commission of Pakistan www.secp.gov.pk
State Bank of Pakistan www.sbp.gov.pk
Federal Board of Revenue www.fbr.gov.pk
Federation of Pakistan Chambers of Commerce
www.fpcci.com.pk
and Industry (FPCCI)
Pakistan Stock Exchange (PSX) www.psx.com.pk
Pakistan Agricultural Machinery and Implements
[email protected]
Manufacturer Association

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12. ANNEXURES
12.1. Income Statement
Calculations SMEDA
Income Statement

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Revenue 57,903,050 72,155,985 84,764,009 100,717,302 117,744,679 137,032,498 160,080,909 185,440,796 204,627,095 225,089,804

Cost of sales
Material Cost 38,286,699 47,834,504 56,207,262 67,093,722 78,674,882 91,689,430 107,622,258 124,734,125 137,912,342 152,117,313
Direct Labor 6,000,000 6,582,000 7,220,454 7,920,838 8,689,159 9,532,008 10,456,613 11,470,904 12,583,582 13,804,189
Fuel Cost-Generator 372,017 444,530 528,033 624,022 734,182 860,416 1,004,864 1,169,941 1,290,445 1,423,361
Machinery Maintenance - Cost 190,800 210,452 232,129 256,038 282,410 311,498 343,583 378,972 418,006 461,061
Direct Electricity Cost 1,860,086 2,015,093 2,170,100 2,325,108 2,480,115 2,635,122 2,790,129 2,945,136 2,945,136 2,945,136
Total cost of sales 46,709,602 57,086,579 66,357,978 78,219,727 90,860,748 105,028,474 122,217,446 140,699,078 155,149,510 170,751,059
Gross Profit 11,193,448 15,069,406 18,406,031 22,497,575 26,883,931 32,004,025 37,863,463 44,741,718 49,477,585 54,338,745
19% 21% 22% 22% 23% 23% 24% 24% 24% 24%
General administration & selling expenses
Management Staff 4,080,000 4,475,760 4,909,909 5,386,170 5,908,628 6,481,765 7,110,497 7,800,215 8,556,836 9,386,849
Administration benefits expense 403,200 442,310 485,215 532,280 583,912 640,551 702,684 770,845 845,617 927,642
Building rental expense 3,000,000 3,300,000 3,630,000 3,993,000 4,392,300 4,831,530 5,314,683 5,846,151 6,430,766 7,073,843
Indirect Electricity 1,400,688 1,511,342 1,630,738 1,759,566 1,898,572 2,048,559 2,210,395 2,385,017 2,573,433 2,776,734
Communications expense (phone, fax, mail, internet, etc.) 408,000 447,576 490,991 538,617 590,863 648,177 711,050 780,021 855,684 938,685
Office vehicles running expense 157,800 174,053 191,981 211,755 233,566 257,623 284,158 313,426 345,709 381,317
Office expenses (stationery, entertainment, janitorial services, etc.) 204,000 223,788 245,495 269,308 295,431 324,088 355,525 390,011 427,842 469,342
Promotional expense 289,515 360,780 423,820 503,587 588,723 685,162 800,405 927,204 1,023,135 1,125,449
Depreciation expense 1,579,413 1,579,413 1,579,413 1,579,413 1,608,164 1,608,164 1,432,539 2,128,501 2,169,986 2,169,986
Amortization of pre-operating costs 125,346 125,346 125,346 125,346 125,346 - - - - -
Subtotal 11,647,962 12,640,368 13,712,907 14,899,042 16,225,505 17,525,619 18,921,935 21,341,391 23,229,008 25,249,847
Operating Income (454,513) 2,429,038 4,693,124 7,598,533 10,658,426 14,478,405 18,941,528 23,400,327 26,248,577 29,088,898

Revenue from Scrap 310,403 370,184 437,553 516,085 605,947 705,255 822,069 955,192 1,050,711 1,155,782
Gain / (loss) on sale of office equipment - - - - - - 314,375 - -
Gain / (loss) on sale of office vehicles - - - - - - 437,500 - -
Earnings Before Interest & Taxes (144,111) 2,799,222 5,130,677 8,114,618 11,264,373 15,183,661 20,515,472 24,355,519 27,299,287 30,244,680

Earnings Before Tax (144,111) 2,799,222 5,130,677 8,114,618 11,264,373 15,183,661 20,515,472 24,355,519 27,299,287 30,244,680

Tax - 414,805 1,160,736 2,205,116 3,307,530 4,679,281 6,545,414 7,889,431 8,919,750 9,950,637
NET PROFIT/(LOSS) AFTER TAX (144,111) 2,384,416 3,969,941 5,909,502 7,956,843 10,504,380 13,970,057 16,466,088 18,379,538 20,294,043

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12.2. Balance Sheet

Calculations SMEDA
Balance Sheet

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 1,000,000 423,168 2,332,826 3,845,757 4,872,533 5,944,256 6,483,070 11,283,646 24,707,957 39,951,037 51,623,417
Accounts receivable 1,586,385 1,781,631 2,149,589 2,540,840 2,992,630 3,490,098 4,070,047 4,733,174 5,343,396 5,886,533
Raw material inventory 1,595,279 2,198,394 2,849,261 3,751,433 4,852,068 6,237,141 8,075,026 10,322,922 12,589,138 15,316,058 -
Equipment spare part inventory 15,900 19,221 23,236 28,090 33,958 41,051 49,626 59,993 72,525 87,674 -
Finished Goods inventory - 2,146,695 2,893,835 3,710,295 4,823,998 6,180,771 7,880,411 10,114,643 12,843,521 15,621,358 18,963,011
Pre-paid building rent 250,000 275,000 302,500 332,750 366,025 402,628 442,890 487,179 535,897 589,487 -
Total Current Assets 2,861,179 6,648,864 10,183,289 13,817,914 17,489,422 21,798,477 26,421,122 36,338,430 55,482,213 76,909,010 76,472,960

Fixed assets
Building/Infrastructure 336,250 302,625 269,000 235,375 201,750 168,125 134,500 100,875 67,250 33,625 -
Machinery & equipment 9,540,000 8,586,000 7,632,000 6,678,000 5,724,000 4,770,000 3,816,000 2,862,000 1,908,000 954,000 23,859,092
Tools and Equipment 259,650 194,738 129,825 64,913 374,654 280,991 187,327 93,664 540,596 405,447 270,298
Furniture & fixtures 505,000 429,250 353,500 277,750 202,000 126,250 50,500 959,324 815,425 671,527 527,628
Office vehicles 1,750,000 1,487,500 1,225,000 962,500 700,000 437,500 175,000 3,633,280 3,088,288 2,543,296 1,998,304
Office equipment 1,257,500 1,068,875 880,250 691,625 503,000 314,375 125,750 2,388,811 2,030,490 1,672,168 1,313,846
Advance Against Building Rent 750,000 750,000 750,000 750,000 750,000 750,000 750,000 750,000 750,000 750,000 750,000
Total Fixed Assets 14,398,400 12,818,988 11,239,575 9,660,163 8,455,404 6,847,241 5,239,077 10,787,954 9,200,049 7,030,063 28,719,169

Intangible assets
Pre-operation costs 626,731 501,385 376,039 250,692 125,346 - - - - - -
Total Intangible Assets 626,731 501,385 376,039 250,692 125,346 - - - - - -
TOTAL ASSETS 17,886,310 19,969,236 21,798,903 23,728,769 26,070,172 28,645,718 31,660,199 47,126,384 64,682,262 83,939,073 105,192,129

Liabilities & Shareholders' Equity

Current liabilities
Accounts payable 2,227,036 2,792,440 3,297,412 3,956,587 4,667,349 5,475,669 6,473,451 7,563,241 8,440,514 9,399,528
Total Current Liabilities - 2,227,036 2,792,440 3,297,412 3,956,587 4,667,349 5,475,669 6,473,451 7,563,241 8,440,514 9,399,528

Other liabilities
Total Long Term Liabilities - - - - - - - - - - -

Shareholders' equity
Paid-up capital 17,886,310 17,886,310 17,886,310 17,886,310 17,886,310 17,886,310 17,886,310 18,384,656 18,384,656 18,384,656 18,384,656
Retained earnings (144,111) 1,120,153 2,545,047 4,227,275 6,092,059 8,298,219 22,268,277 38,734,365 57,113,902 77,407,945
Total Equity 17,886,310 17,742,199 19,006,463 20,431,357 22,113,585 23,978,369 26,184,530 40,652,933 57,119,021 75,498,559 95,792,601
TOTAL CAPITAL AND LIABILITIES 17,886,310 19,969,236 21,798,903 23,728,769 26,070,172 28,645,718 31,660,199 47,126,384 64,682,262 83,939,073 105,192,129

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Pre-Feasibility Study Agricultural Implements Manufacturing Unit

12.3. Cash Flow Statement

Calculations SMEDA
Cash Flow Statement

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 (144,111) 2,384,416 3,969,941 5,909,502 7,956,843 10,504,380 13,970,057 16,466,088 18,379,538 20,294,043
Add: depreciation expense 1,579,413 1,579,413 1,579,413 1,579,413 1,608,164 1,608,164 1,432,539 2,128,501 2,169,986 2,169,986
amortization of pre-operating costs 125,346 125,346 125,346 125,346 125,346 - - - - -
Pre-paid building rent (250,000) (25,000) (27,500) (30,250) (33,275) (36,603) (40,263) (44,289) (48,718) (53,590) 589,487
Cash provided by operations (1,861,179) (576,832) 3,029,811 4,057,978 5,628,704 7,163,783 8,837,033 11,283,646 13,964,907 15,243,079 35,531,472

Financing activities
Issuance of shares 17,886,310 - - - - - - 498,346 - - -
Cash provided by / (used for) financing activities 17,886,310 - - - - - - 498,346 - - -

Investing activities
Capital expenditure (15,025,131) - - - (374,654) - - (6,981,416) (540,596) - (23,859,092)
Cash (used for) / provided by investing activities (15,025,131) - - - (374,654) - - (6,981,416) (540,596) - (23,859,092)

NET CASH 1,000,000 (576,832) 3,029,811 4,057,978 5,254,050 7,163,783 8,837,033 4,800,577 13,424,311 15,243,079 11,672,380

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Pre-Feasibility Study Agricultural Implements Manufacturing Unit

13. KEY ASSUMPTIONS

13.1. Operating Cost Assumptions
Table 51: Operating Cost Assumptions
Description Details
Building rent growth rate 10%
Furniture and fixture depreciation 15%
Vehicle depreciation 15%
Office equipment depreciation 15%
Inflation rate 10.3%
Wage growth rate 9.7%
Electricity price growth rate 7.9%
Office equipment price growth rate 9.6%
Office vehicle price growth rate 11%

13.2. Revenue Assumptions

Table 52: Revenue Assumptions
Description Details
Sale price growth rate 10%
Initial capacity utilization 60%
Capacity growth rate 5%
Maximum capacity utilization 95%

13.3. Financial Assumptions

Table 53: Financial Assumptions
Description Details
Project life (Years) 10
Debt: Equity 0:100
Discount Rate used for NPV 25%

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Pre-Feasibility Study Agricultural Implements Manufacturing Unit

13.4. Debt related Assumptions

Table 54: Debt Related Assumptions
Description Details
Project life (Years) 10
Debt: Equity 50:50
Discount Rate used for NPV 22%
Debt Tenure 5 years
Grace Period 1 Year
Interest Rate 26.05%

13.5. Cash Flow Assumptions

Table 55: Cash Flow Assumptions
Description Days
Accounts Receivable Cycle 10
Accounts Payable Cycle 20

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 Small and Medium Enterprises Development Authority
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REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE

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