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Managing DirectorSyed Abrar Zaidi
Senior R&D officerM. ALI HASSAN
Chief AccountantHassan Bashir
Syed Abrar Zaidi 35%M. Ali Hassan 35%Hassan Bashir 30%
To be a model utility, providing qualityServices by maintaining a high level of ethicalAnd professional standards and through theOptimum use of resources
To meet the energy requirements ofCustomers through reliable,
environmentFriendly and sustainable supply of
CNG,While conducting company business
Professionally, efficiently, ethically andWith responsibility to all our stake
holders,Community and the nation.
MAJOR ACTIVITIES OF THE PROJECT
1. Search and Purchase of suitable land2. License from OGRA3. NOC from TMA4. Agreement with SNGPL
6. Agreement with WAPDA7. Import of CNG Plant8. Construction of UNIT9. Installation of Plant10.Hiring Human Resource11.Start of Filling the Cartridges
No Human Resource * Persons Work Hrs. Salary/Month
1 Manager 1 8 10,000
2 Accountant 1 8 8,000
3 Cashier 1 8 6,000
4 Fillers 6 8 4,000
5 Supervisors 1 8 4,000
6 Machine operators 2 12 5,000
7 Car screen cleaner 2 8 3,000
8 Sweeper (On Contract) 2 8 2,000
9 Gunman 2 12 4,000
Human Resource
* Note: all employees are on the duty of 8 hours shift in a day, and there are three shifts in a single day.
CAPITAL CAPITAL BUDGETINGBUDGETING
The process of evaluating and selecting the long term investments that are consistent with the firms goal of maximizing owner’s wealth.
IMPLEMENTATIONOF
PROJECT MANAGEMENT
Activities Of The CNG Pump Launching Project
ACTIVITY DESCRIPTION Normal cost (Rs)
A Search and Purchase of suitable land 100 lac B License from OGRA 25 lac C NOC from TMA 10 lac D Agreement with SNGPL 50 lac E Agreement with WAPDA 5 lac F Import of CNG Plant 145 lac G Construction of Building 30 lac H Installation of Plant 5 lac I Hiring Human Resource 1 lac J Start of Filling the Cartridges
The Implementation Plan
Time duration Approximately two years
CostApproximately 40 Million Rupees
INSTALLED COST OF NEW CNG STATION
Purchase of land [Rs250000x40 Marla] 100,00,000
Building construction cost 30,00,000
Equipment cost 145,00,000
Installation cost 5,00,000
Installed cost of new asset 280,00,000
Agreement securities 90,00,000
Hiring of HR 1,00,000
Initial investment…………………………..……..……371,00,000
REVENUESREVENUES
Avg. No of Cars = 500 cars/day
Avg. CNG filled = 200Rs
Per day revenue = 100000
Total revenue = 36000000
Description Rs. Rs.
Revenues 36000000
Less: Operative Expenses-------------
Gas Bill 16,600,000
Utilities 900,000
Salaries to employees 960,000
Electricity bills 2,880,000
CITY CNG STATION
Projected Income Statement
For the end of 1st Year
Site Expanse 1,640,000
Repair & maintenance 100,000
Labor messing 160,000
Advertisement 150,000
Stationary 10,000
Total Expenses (23400000)
Profit 12600000
Operating cash flowsOperating cash flows
The incremental after tax cash inflows resulting from implementation of a project during its life
CITY CNG STATIONCITY CNG STATION
OPERATING CASH FLOWSOPERATING CASH FLOWS Year 1 2 3 4 5 6
Revenues 36000000 39600000 43560000 47916000 52707600 57978360
-Expenses (23400000) (25740000) (28314000) (31145400) (34259940) (37685934)
EBDT 12600000 13860000 15246000 16770600 18447660 20292426
-Depreciation
(5600000) (8960000) (5320000) (3360000) (3360000) (1400000)
NPBT 7000000 4900000 9926000 13410600 15087660 18892426
-Tax (20%) (1400000) (980000) (1985200) (2682120) (3017532) (3778485)
NPAT 5600000 3920000 7940800 10728480 12070128 15113941
+ Depreciation
5600000 8960000 5320000 3360000 3360000 1400000
Cash Flows 11200000 12880000 13260800 14088480 15430128 16513941
Payback periodPayback period
The amount of time required to recover its initial investment from cash inflows of a proposed project
CITY CNG STATION Payback Period
Year Cash Flows Balance Payback Period
0 (371,00,000) (371,00,000) 1 11200000 (25900000) 1
2 12880000 (13020000) 1
3 13260800 NIL .984 14088480
5 15430128
6 16513941
Payback
Period 2.98 Years
Payback Period = 2 Years , 11 Months and 23 days
Net present valueNet present value
A sophisticated capital budgeting technique found by subtracting a profits initial investment from the present value of its cash inflows
discounted at rate equal to the firms cash of capital
CITY CNG STATIONCITY CNG STATION
NPV (Net Present Value) & IRR (Internal Rate of Return) NPV (Net Present Value) & IRR (Internal Rate of Return) Years Cash
FlowsPVIF (10%)
NPV PVIF (20%)
NPV PVIF
(30%)
NPV
0 (371,00,000)
1.000 (371,00,000)
1.000 (371,00,000)
1.000 (371,00,000)
1 11200000 .909 10180800 .833 9329600 .769 8612800
2 12880000 .826 10638880 .694 8938720 ..592 7624960
3 13260800 .751 9958861 .579 6391706 .455 6033664
4 14088480 .683 9622432 .482 6790647 .350 4930968
5 15430128 .621 9582111 .402 6202911 .269 4150704
6 16513941 .564 9313863 .335 5532170 .207 3418386
NPV 22196946 6085754 (2328518)
Internal rate of return(IRR)Internal rate of return(IRR)
The discount rate that equate the NPV with zero
CITY CNG STATIONCITY CNG STATION INTERNAL RATE OF RETURN (IRR) INTERNAL RATE OF RETURN (IRR)
IRR = 20% + [20% / 20% -- 30% * 30% -- 20%]
IRR = 20% + [6085754/6085754 + 2328518 * 10%]
IRR = 20% + [6085754/8414272 * 10%]
IRR = 20% + [0.7232 *10%]
IRR = 20%+ 7.232
IRR = 27.232%
