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					                                     Pre-Feasibility Study


                                      Plaster of Paris Plant




             Small and Medium Enterprise Development Authority
                                              Government of Pakistan
                                                    www.smeda.org.pk
                                                         HEAD OFFICE
                                            6th Floor, LDA Plaza, Egerton Road Lahore
                                      Tel: (042) 111-111-456, Fax: (042) 5896619, 5899756
                                                      Helpdesk@smeda.org.pk

      REGIONAL OFFICE                  REGIONAL OFFICE               REGIONAL OFFICE             REGIONAL OFFICE
          PUNJAB                            SINDH                         NWFP                     BALOCHISTAN
6th floor, LDA Plaza, Egerton road
                 Lahore.                  5TH Floor, Bahria                Ground Floor            Bungalow No. 15-A
        Tel: (042) 111-111-456       Complex II, M.T. Khan Road,        State Life Building     Chaman Housing Scheme
   Fax: (042) 5896619, 5899756                 Karachi.                The Mall, Peshawar.           Airport Road, Quetta.
       helpdesk@smeda.org.pk           Tel: (021) 111-111-456         Tel: (091) 9213046-47    Tel: (0812) 831623, 831702
                                         Fax: (021) 5610572             Fax: (091) 286908          Fax: (0812) 831922
                                     Helpdesk-khi@smeda.org.pk     helpdesk-pew@smeda.org.pk   helpdesk-qta@smeda.org.pk


                                                       April, 2009
Pre-feasibility Study                                               Plaster of Paris Plant



DISCLAIMER
The purpose and scope of this information memorandum is to introduce the subject matter

and provide a general idea and information on the said area. All the material included in

this document is based on data/information gathered from various sources and is based on

certain assumptions. 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 does not assume any liability for any financial or other loss resulting from this

memorandum in consequence of undertaking this activity. Therefore, the content of this

memorandum should not be relied upon for making any decision, investment or otherwise.

The prospective user of this memorandum is encouraged to carry out his/her own due

diligence and gather any information he/she considers necessary for making an informed

decision. The content of the information memorandum does not bind SMEDA in any legal

or other form.




DOCUMENT CONTROL
Document No.              PREF-15
Prepared by               SMEDA-Balochistan
Issue Date                Month/Year
Issued by                 SMEDA Balochistan




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BAL-PREF-15/April, 2009
Pre-feasibility Study                                                                               Plaster of Paris Plant


1       INTRODUCTION TO SMEDA
The Small and Medium Enterprise Development Authority (SMEDA) was established with
the objective to provide fresh impetus to the economy through the launch of an aggressive
SME support program.1i

Since its inception in October 1998, SMEDA had adopted a sector SME development
approach. A few priority sectors were selected on the criterion of SME presence. In depth
research was conducted and comprehensive development plans were formulated after
identification of impediments and retardants. The all-encompassing sector development
strategy involved recommending changes in the regulatory environment by taking into
consideration other important aspects including financial aspects, niche marketing,
technology up-gradation and human resource development.

SMEDA has so far successfully formulated strategies for sectors including, fruits and
vegetables, marble and granite, gems and jewelry, marine fisheries, leather and footwear,
textiles, surgical instruments, urban transport and dairy. Whereas the task of SME
development at a broader scale still requires more coverage and enhanced reach in terms of
SMEDA’s areas of operation.

Along with the sector focus a broad spectrum of business development services is also
offered to the SMEs by SMEDA. These services include identification of viable business
opportunities for potential SME investors. In order to facilitate these investors, SMEDA
provides business guidance through its help desk services as well as development of project
specific documents. These documents consist of information required to make well-
researched investment decisions. Pre-feasibility studies and business plan development are
some of the services provided to enhance the capacity of individual SMEs to exploit viable
business opportunities in a better way. This document is in the continuation of this effort to
enable potential investors to make well-informed investment decisions.




1
    For more information on services offered by SMEDA, please visit our website: www.smeda.org.pk

                                                               3


BAL-PREF-15/April, 2009
Pre-feasibility Study                                                       Plaster of Paris Plant


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, finance
and business management.

2      PROJECT PROFILE
The project is related to setting up a Plaster of Paris plant in Quetta, and other promising
areas of Balochistan. The document highlights all the marketing, management, and
financial aspects required for the establishment and successful running of the project.

    2. 1      Project Brief
The plant would process raw Gypsum acquired from NWFP and process it to produce
Plaster of Paris that is being utilized in the construction Industry for wall fillings (for paint),
roof designs, Ceiling & corner boarders, wall plaster, design making and other construction
etc. The project would not only focus the construction industry and demand for innovative
plaster of Paris designs & other utilities for housing & offices within Quetta city but can
also trigger other parts of the province. Once the plant starts, it could supply Plaster of Paris
and its products of various designs addressing to the customized consumer needs & choices,
hence prove its versatility & innovation.
The total project investment is Rs. 7.74 millions with a Project Internal Rate of Return
(IRR) of 26% against the Capital Cost (WACC) of 13%. The total project investment would
be paid back in approximately 4.49 years.


    2. 2      HISTORY

History seems to indicate that, despite the name, plaster of Paris was invented by the
Egyptians. It was used as an artistic decoration in many Egyptian tombs, and the Greeks
picked up the technique, using plaster in their own homes, temples, and works of art. Paris
became synonymous with this type of plaster in the 1600s, thanks to a large deposit of
gypsum that made it easy to produce plaster of Paris. The substance was also used
extensively in fireproofing; giving Parisian homes a distinctive appearance.

In the 1700's, Paris was already the "capital of plaster" ("Plaster of Paris") since all the
walls of wooden houses were covered with plaster, as a protection against fire. The King of
France had enforced this rule after the big London fire literally destroyed this city in 1666.
By the end of the 19th century, plaster was used in the construction industry in a very
massive way, in Paris and many other cities around Europe. During the 20th century,
plaster was found to be of great use outside of the construction industry. For example in the
ceramic industries (sanitary ware, tableware, giftware), in dentistry, in metal casting,
jewelry, in medical applications, in cosmetics, animal food, and many more application. It
looks like each decade brings new uses for this material.
                                                4


BAL-PREF-15/April, 2009
Pre-feasibility Study                                                    Plaster of Paris Plant


The first scientific study on plaster was realized in 1768 by a French scientist named
Lavoisier. In 1887, Le Chatelier, another prominent French scientist, was the first to study
the hydration mechanisms of plaster. And then, plaster gradually became a fascinating
research subject for scientists.


    2. 3       GYPSUM – Hydrated Calcium Sulphate CaSO4.2H2O 2
Gypsum (CaSO4.2H2O) is a met stable substance derived from the hydration of anhydrite,
which is a primary mineral. The essential ingredient in all the rock types is CaSO4. Hardness
of gypsum is 2, specific gravity 2.32 and porosity more than 20%. The solubility of gypsum is
slow. Various grades of gypsum and their uses as raw materials are as under: -

Gypsum / Anhydrite Occurrences

           The gypsum resources in Pakistan have existence in at least three interesting areas
           in terms of their size, resource, quality, reserves and exploitability.

               1.       Salt Range of Punjab
               2.       Kohat Banu Region of NWFP
               3.       Suleman Range of D.G. Khan, Punjab
               4.       Balochistan

           Reserves:                    5-6 billion tons
           Average Production:          0.5 to 0.6 million metric tons per annum




2
            http://www.managementconsultants.pk/files/Ideas_New_Enterprise/Mineral-
Based%20Industries/Gypsum%20Mining,%20Production,%20Processing%20and%20Mark
eting.pdf
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BAL-PREF-15/April, 2009
Pre-feasibility Study                                                          Plaster of Paris Plant


Pakistan Gypsum Reserves / Resources3:


      Province                                                   Estimated Deposits
                                                                   (Million tons)
      Punjab
          - Rakhi-Munh                                                    27

          -Safed Koh-Rodo area (Central                                   15
           Suleiman Range)

          -Daudkhel – Mianwali area                                       53

         - Khewra                                                         25
      NWFP:

      Dera Ismail khan

           -Saiduwali                                                     20

           -Near Drazinda and Mughalkot                                   70

      Kohat                                                              4,914


      Balochistan

         -Near Spintangi                                                   5

         -Mawand – Khattan                                                20

         -Barkhan – Chamalang                                              7

Geological reports indicate potential reserves of Kohat to be 4,442 million tons above
surface and 472 million tons down to a dip depth of 30 meters over an area of 1,150 square
kms. It has been confirmed that the composition obtained at other sites in the Kohat area, in
terms of percentage of gypsum which vary from 88% to 98% designated as very high and
pure. It is well suited for plaster manufacturing.




  3
   Investment Oriented study on Minerals and Minerals based Industries April 2004 by Expert Advisory
  Cell.
                                                 6


BAL-PREF-15/April, 2009
Pre-feasibility Study                                                                    Plaster of Paris Plant


Occurrences of Gypsum in Balochistan4

Loralai and Sibi Districts:
Spintangi gypsum deposit (29° 55' N.; 68° 10' E.; topographic skeet 39 C / 1) – The gypsum
deposit is exposed in the northern slopes of Mian Zard ridge within 1.6 Km of Spintangi
railway station (Gauher, 1966, p. 23). It is on the Sibi-Khost branch line of the P.W.R., 68
Km from Sibi.
The gypsum is in the lower part of the Spintangi limestone near its contact with the
underlying Ghazij shale. It is in 2 to 3 layers, 5 to 20 feet thick, and inter-bedded with green
shale, white calcareous clay and limestone. Outcrops of gypsum can be traced for
approximately 14.5 Km along the strike. Analysis of seven samples showed the following
range in chemical composition: lime, 31.40 to 31.98 percent; S03, 46.02 to 46.72 percent;
and water 19.64 to 20.32 percent.
Reserves up to a depth of 10 feet along dip have been estimated. Along the strike, within a
distance of 5 Km from the Spintangj gorge, 130,000 tons are indicated to the north-west,
and 100,000 tons to the north-east; further north-west, 68,000 tons are estimated (Hunting
Survey, 1960, p. 445). Gauher (1966, p. 24) has estimated 400,000 tons of gypsum up to a
depth of 50 feet.
Bahlol gypsum deposit (topographic sheet 39' F / 12) – The Bahlol gypsum deposit is 5 Km
south of the vi1lage of Bahlol. The deposit has been previously referred to as the
Chamalang deposIt (Ahmad, 1969, p. 94). Access to the deposit is difficult. A poor road
extends up the Chamalang Rud (stream) to the village of Chamalang from the road between
Duki and Horsi Kili The remaining 24 Km are covered by a camel track along the
Chamalang Rud.
The gypsum occurs in beds, 3 to 8 feet thick and separated by shale and limestone.
Together, they form part of the lower sequence of the Spintangi limestone of Eocene age.
13 beds of gypsum are present in the area with a total thickness of 50 feet. Reserves in all
categories have been estimated at 7,000,000 tons (Gauher, 1966, p. 24).
An earlier survey (Hunting Survey, 1960, p. 446) reports the maximum thickness of the
gypsiferous assemblage to be approximately 27 feet. The deposit extends for at least 1.6
Km in the north-easterly strike direction. Reserves in only 3 gypsum beds up to a depth of
50 feet have been estimated at 440,000 tons (Hunting Survey, 1960, p. 446).
Barkhan gypsum deposit – The Barkhan gypsum deposit is located in Loralai district. It is
about 129 Km from the nearest railway station of Harnai on the Sibi-Khost P.W.R., branch
line. The deposit is believed to be fairly large (Gauher, 1966, in Ahmad, 1969, p. 94).
Khattan and Mawand deposits (Topographic sheet 39 C / 10) – These two gypsum deposits
are in the Mari Bugti Hills in Sibi district. At Khattan, the gypsum bed is approximately 8
feet thick, while at Mawand it attains a maximum thickness of 40 feet. Both deposits are in
the lower part of the Spintangi limestone of Eocene age.


4
    Geology of Mineral Deposits of Balochistan Vol.36 – Geological Survey of Pakistan.

                                                                    7


BAL-PREF-15/April, 2009
Pre-feasibility Study                                                  Plaster of Paris Plant


Mach deposit (Topographic sheet 34 O / 15, O / 6 and O / 10) – Small amounts of gypsum
are widely exposed in the lower Bolan Pass region, south-east of Mach, in the lower
members of the Spintangi limestone of Eocene age. A best showing is on the east side of
the limestone ridge, through which a railway tunnel passes, just west of Panir railway
station (Hunting Survey, 1960, p. 446).


Chaghi District
Gowalishtap deposit (topographic sheet 30 L / 11) – The Gowalishtap gypsum deposit is
about 1 Km north-west of the Gowalishtap Militia Post and 48 Km by road south of Nok
Kundi. Fairly pure, massive gypsum in a 4-foot thick bed occur in red shale of the Washap
formation of Eocene age. The beds dip north at 45 degrees. The gypsum is exposed for
about 1,000 feet along the strike. Other thinner beds of gypsum are also present in the area.
The reserves (If gypsum in the main bed up to a depth of 50 feet has been estimated at
13,000 tons (Hunting Survey, 1960, p. 446).
Koh – i – Sultan deposit (topographic sheet 30 K / 16) – A one foot thick vein of gypsum is
exposed for 20 feet on the upper slopes of Koh-I-Sultan, south of the Miri peak. The deposit
is the product of reaction of sulphuric acid with available lime.
Sanni deposit (topographic sheet 34 O / 8) – The gypsum deposit is 16 Km south-west of
Sanni (30 O / 12). The gypsum is in narrow veins, associated with sulphur and occur in
sandstone 'of the Sibi group. Above this vein-bearing sequence of beds, is a 3-4 feet thick
bed of gypsum which extends laterally for 100 feet.




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BAL-PREF-15/April, 2009
Pre-feasibility Study                                                   Plaster of Paris Plant




    2. 4      Gypsum – Industrial Applications

Gypsum is chiefly utilized in the manufacture of ammonium sulphate fertilizer (NH4)2SO4,
plaster of Paris, distemper and cement. A considerable quantity of gypsum is used as
manure. It is a good soil conditioner and gives growth of peas, beans and alfalfa. Gypsum
and anhydrite can be a good source of sulphur. Anhydrite has been utilized in the UK and
West Germany for the extraction of sulphur. The use of gypsum for the manufacture of
gypsum-stucco for making tiles, roof planks and board products is fast increasing in USA.
Stucco is the industrial name for the product obtained from the calcination of gypsum to
hemi-hydrate stage.
Gypsum has the very useful property of becoming plastic like mass when heated up to
175ºC. At this temperature it loses about 3/4th of the water molecules. The product thus
obtained is known as Plaster of Paris. It can be mixed with water, spread and cast into
different forms and sizes. It can be mixed with expanded perlite and vermiculite and made
into wall plaster and castings.
For the manufacture of Plaster of Paris, selenite crystals of purity varying from 97 to 80%
are preferred. Three grades of Plaster of Paris are generally known and manufactured:

          Surgical
          Technical
          Commercial
For surgical grade the selenite should be of the highest purity. Other grades are used for
making dolls and castings in pottery industry. Sometimes pure white lumpy gypsum of
alabaster type is used for the Plaster of Paris manufacture. For the manufacture of distemper
also pure white lumpy gypsum of high purity is required. Gypsum of 75% purity and below
is used as manure or as sweet-lime. GYPSUM is used for plaster of Paris, Paints and
Cement. It is found in Jhelum, Mianwali, DG Khan, Kohat and Loralai.


    2. 5      Uses of gypsum:

     Drywall Plaster ingredient.

     Fertilizer and soil conditioner.

     In the late eighteenth and early nineteenth century, Nova Scotia gypsum, often referred
      to as plaster, was a highly sought fertilizer for wheat fields in the United States.

     A Binder in Fast-Dry tennis court clay.

     Plaster of Paris (surgical splints; casting moulds; modeling).

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BAL-PREF-15/April, 2009
Pre-feasibility Study                                                                          Plaster of Paris Plant


    A wood substitute in the ancient world; for example, when wood became scarce due to
     deforestation on Bronze Age Crete, gypsum was employed in building construction at
     locations where wood was previously used.

    A tofu (soy bean curd) coagulant, making it ultimately a major source of dietary
     calcium, especially in Asian cultures which traditionally use few dairy products.

    Adding hardness to water used for home brewing.

    Blackboard chalk.

    A component of Portland cement used to prevent flash setting of concrete.

    Soil/ water potential monitoring (soil moisture tension).

    A medicinal agent in traditional Chinese medicine called Shi GAO.

Pakistan’s total requirement of gypsum / anhydrite in Pakistan per annum is about 55.3
million tons as per following breakup5;

                                                                                                 (In million Tons)
Patch Salinity                                                                                      1.6
Secondary Stimulation                                                                               6.4
Salt affected Area                                                                                  10.3
Correction of Marginal Quality Tube-wells Water                                                     18.0
Canal Distribution Lining                                                                           18.0
Cement Industry, Plaster of Paris and others.                                                       1.0

Total                                                                                               55.3


The current production of gypsum / anhydrite (reported and un-reported) is less than one
(01) million (0.5-0.6 MMT) tons per year.




5
         http://www.pakistan.gov.pk/ministries/planninganddevelopment-ministry/usefull%20links/Studies%20for%20P&DD/Mineral-
Based%20Industries/Gypsum%20Mining,%20Production,%20Processing%20and%20Marketing.pdf

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BAL-PREF-15/April, 2009
Pre-feasibility Study                                                   Plaster of Paris Plant


3    MANUFACTURING GYPSUM PLASTER
Gypsum is mined from geological deposits produced by the gradual evaporation of lakes
containing the mineral. Historically, fibrous material has been used to reinforce plaster and
particularly to control shrinkage in lime plaster. Traditionally Oxe, horse and goat hair were
the standard materials; however, straw, hemp and jute have also been used. The earliest
lightweight support for plasters was interwoven hazel twigs, but by the fifteenth century
split timber laths were common. The modern equivalent is the use of galvanized and
stainless steel expanded metal.
To manufacture gypsum plaster, rock gypsum is mined, crushed and ground to a fine
powder. The natural mineral may be white or discolored pale pink, grey or brown due to
small quantities of impurities which do not affect the product. On heating to temperatures in
the range of 130 to 160 degrees centigrade, water is driven off the hydrated gypsum; the
quality of plaster produced is largely dependent on the extent of this dehydration process.
PLASTER OF PARIS is produced from Gypsum, which is a naturally occurring crystal of
calcium sulphate (CaSO4.2H2O).Gypsum is created from the evaporation of sea water that
is trapped in lagoons of subsoil and is usually found in mountains. The impure gypsum (that
it is found in the subsoil) can have different color variations, such as grey, brown or red.
The pure however plaster color is white. It can be quarried in different parts of the world in
slightly different forms. Plaster is made from gypsum by grinding it to powder and then
gently heating it to drive off some, or all, of the water of crystallization.

The chemical reaction is:
                        (CaSO4, 2 H2O) + Heat = (CaSO4, ½ H2O) + 1.5 H2O
        The endothermic property of this reaction is exploited by drywall to confer fire
resistance to residential and other structures. In a fire, the structure behind a sheet of
drywall will remain relatively cool as water is lost from the gypsum, thus preventing (or
substantially retarding) damage to the framing (through combustion of wood members or
loss of strength of steel at high temperatures) and consequent structural collapse.

        In contrast to most minerals, which when rehydrated simply form liquid or semi-
liquid pastes, or remain powdery, calcined gypsum has an unusual property: when mixed
with water at normal temperatures, it quickly reverts chemically to the preferred dihydrate
form, while physically "setting" to form a rigid and relatively strong gypsum crystal lattice:
                                CaSO4·½H2O + 1½ H2O              4·2H2O

        This reaction is exothermic and is responsible for the ease with which gypsum can
be cast into various shapes including sheets (for drywall), sticks (for blackboard chalk), and
molds (to immobilize broken bones, or for metal casting). Mixed with polymers, it has been
used as a bone repair cement. Small amounts of calcined gypsum are added to earth to
create strong structures directly from cast earth, an alternative to adobe (which loses its
strength when wet). The conditions of dehydration can be changed to adjust the porosity of
the hemihydrate, resulting in the so-called alpha and beta hemihydrates (which are more or
less chemically identical).

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BAL-PREF-15/April, 2009
Pre-feasibility Study                                                     Plaster of Paris Plant


The main constituents of undercoat and one-coat plasters are retarded hemi-hyrdrate gypsum,
with expanded perlite or exfoliated vermiculite for the lightweight products, together with
small quantities of limestone, anhydrite, clay and sand. For finish coat plasters, like undercoat
plasters, the main constituent is retarded hemi-hydrate gypsum, but with a small addition of
lime to accelerate the set. The lightweight products contain exfoliate vermiculite. Finish coats
on masonry substrates are usually 2mm in thickness, and board finish plaster is normally
applied to 2 to 3mm thickness.
Plaster bonds to the background by a combination of mechanical key and adhesion.
Background should be clean, dry and free from other contamination. Where possible, as in the
case of brickwork, a good mechanical key should be obtained by raking out the joints.


    3. 1       PLASTER PRODUCTION PROCESS:

    When heating and calcining the dehydrate gypsum and chemical gypsum (ardealite,
desulphurization plaster, fluorgypsum), the dehydrate gypsum is decomposed, we get the
semi-hydrated gypsum, i.e., plaster of Paris. According to the temperature and pressure
during decomposition, the products include high intensity gypsum and plaster of Paris. The
plaster breaking system, calcined system and grinding aging system are the main parts.

The whole process is as following:
     Extraction
           Gypsum is extracted from open air or underground mines, using specific drilling
           machinery and non-polluting explosives. Rock size may reach up to 50 cm in
           diameter.




     Crushing
           Primary crushing aimed at reducing rocks to a size of less than 10cm, subsequently
           easier to handle, is carries out in the quarry or at the entrance to the plaster
           manufacturing station.




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BAL-PREF-15/April, 2009
Pre-feasibility Study                                                    Plaster of Paris Plant




   Storage
         Rock that has undergone primary crushing is stored to ensure production continuity,
         and optimal homogeneity between rock extraction batches.

   Calcinations
         Calcium sulphate hemihydrate (CaSO4.1/2H2O) or the plaster is obtained through
         the partial or total dehydration of gypsum at a temperature ranging from 120 to 400
         degrees centigrade. The structure and properties of the final product are directly
         dependent on the chosen calcinations conditions (temperature, pressure, rapidity).

   Grinding
         Following the calcinations process, the plaster is ground to obtain a powder. Particle
         size distribution is an important factor in the product properties.

   Packaging
         The packaging item chosen for the product should gives optimal protection and
         guarantees the product quality all the way to end-user.




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BAL-PREF-15/April, 2009
Pre-feasibility Study                                                  Plaster of Paris Plant


  3. 2        PROCESS FLOW
Steps involved in processing Gypsum to plaster of Paris are given in fig: 01 below;



                                    EXTRACTION




                                      CRUSHING




                                       STORAGE




                                    CALCINATION




                                       GRINDING




                                        PACKING



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BAL-PREF-15/April, 2009
Pre-feasibility Study                                                                       Plaster of Paris Plant


    3. 3       Opportunity Rationale
Pakistan has large deposits of high quality gypsum (estimated at 5 to 6 billion tons)
available in all the provinces of the country. Large gypsum / anhydrite deposits in terms
of their size, reserves, their quality of easy exploitage occur in and around Kohat
(NWFP) and Daudkhel (Punjab). These deposits are well connected with the existing
infrastructure and utilities.
According to one estimate, the requirement for the reclamation / amelioration of various
categories of soil is around 50 million tons per annum. Current production of gypsum in
the country ranges between 0.5 to 0.6 million tons per annum. Mining of gypsum is
being done by the private sector. 6 Pakistan, with a population of more than 160 million
people, has very small gypsum plaster industry for construction purposes while it is
abundantly used all over the world.
Gypsum plaster and its products are energy saving, fire resistant, good insulating, cost
effective and possess excellent thermal, acoustical and aesthetic properties. Hence, use
of gypsum plaster makes a strong case for its manufacturing. In addition to Pakistan’s
own requirements, gypsum plaster can also be exported to Dubai, Saudi Arabia,
Afghanistan and other GCC countries that are facing an unprecedented construction
boom.
Currently there are only three Plaster of Paris plants established in Quetta out of which
only two are operational. According to the survey and meetings with a plant owner it
was identified that there is great demand of plaster of Paris in Quetta and different parts
of Balochistan especially in summer seasons when construction is at peak. This shows
a clear gap between the supply and demand of Plaster therefore, creates room for
investment in this potential area.

    3. 4       Proposed Business Legal Status
The business can be started as sole proprietorship or partnership because of great potential
involved. Furthermore, comparatively fewer complications are involved in forming,
administering and running the sole proprietorship or partnership businesses.
    3. 5       Proposed Product
The plant will process raw Gypsum and process it to produce Plaster of Paris, which can
then be utilized in the local market.

    3. 6       Production Capacity
The unit would have the capacity to process around 1872 ton (1872000 Kg) of Gypsum and
would produce around 1310.4 tons (1310400 Kg) of Plaster of Paris at the rate of 70%
capacity in year one. This production is based on single shift bases.

6
 Pre-feasibility study for Gypsum Mining, production, Processing and Marketing (2006) conducted by Employment & Research
Section, Planning & Development Division, Government of Pakistan, Islamabad

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BAL-PREF-15/April, 2009
Pre-feasibility Study                                                     Plaster of Paris Plant


  3. 7        Project Investment
The total project investment is Rs. 7.74 millions which includes Capital Cost of Rs.
6.97million and working capital of Rs. 0.77 million. It is assumed that the project would be
partially equity financed (69%) and partially debt financed (31%).
  3. 8        Recommended Project Parameters
Table: 01
                           Human                                            Proposed
         Capacity         Resource      Technology/Machinery                Location
     1872 ton
                             08                Local Made                      Quetta
(1872000 Kg) / year
                                    Financial Summary
                                                                         Cost Of Capital
  Total Cost        IRR     NPV             Pay Back Period                 (WACC)
  Rs. 7.74 M        26%    7.26 M              4.49 Years                       13%



  3. 9        Suitable Location
It is suitable to establish the Plaster of Paris plant in Quetta. However such a plant could be
established in other parts of the country provided the following main conditions are fulfilled
such as: raw material and man power availability, accessibility to markets and reasonable
trend of using Plaster of Paris in construction industry. The facility should easily be
accessible to the target customers.

  3. 10       Environmental consideration

Air quality, water quality, noise pollution and disposal of waste appear to be adequate and fall
within the required standards and specifications.




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BAL-PREF-15/April, 2009
Pre-feasibility Study                                                        Plaster of Paris Plant


    3. 11     Key Success Factors/Practical Tips for Success
     Large deposits of superior quality Gypsum in the country with ample production.
     Significant number of mines.
     Availability of hard working & low-cost labor.
     Increasing inland trends towards use of Plaster of Paris and its made-ups.
     Rehabilitation in Afghanistan.
     Improved technological changes available.
     Easy availability of local made machinery and spare parts for its maintenance.
     Ample opportunity for exports.

    3. 12     Strategic Recommendations
     Emphasizing on excellent services to its customers such as standardized products and
      timely order fulfillment.
     New machinery should be purchased in order to increase the efficiency and lower the
      maintenance cost. Refurbished standardized machinery is also recommended.
     Adapt to the rapid, social, economic and technological changes.
     Hiring of well-trained / experienced staff will add in the efficiency of the facility.
     Use of Fine quality Gypsum (certified through well reputed Laboratory) to get superior
      quality end product.



4      CURRENT INDUSTRY STRUCTURE

    4. 1      History / Background of Product


History seems to indicate that, despite the name, plaster of Paris was invented by the
Egyptians. It was used as an artistic decoration in many Egyptian tombs, and the Greeks
picked up the technique, using plaster in their own homes, temples, and works of art. Paris
became synonymous with this type of plaster in the 1600s, thanks to a large deposit of
gypsum that made it easy to produce plaster of Paris. The substance was also used
extensively in fireproofing; giving Parisian homes a distinctive appearance.




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  4. 2        The Present Scenario

        Pakistan, with a population of more than 160 million people, has no gypsum plaster
industry for construction purposes. According to the available literature, gypsum plaster
and its products are energy saving, fire resistant, good insulating, cost effective and possess
excellent thermal, acoustical and aesthetic properties. Cement prices in the country have
now escalated, falling beyond the purchasing power of the common man. In addition, the
current production of cement is not sufficient to meet the reconstruction demands in the
earthquake hit areas and the huge demand generated by the starting of a number of mega
projects in the public sector including the construction of dams and other infrastructure
projects. Also the housing demand, which had been suppressed in the past, has now started
to pick up putting further price pressure on cement. The increased energy cost and the
worldwide construction boom means an increase in international cement prices, thus ruling
out large-scale imports of cement. Hence, use of gypsum makes a strong case for its
manufacturing. In addition to Pakistan’s own requirements, gypsum plaster can also be
exported to Dubai, Saudi Arabia, Afghanistan and other GCC countries that are facing an
unprecedented construction boom.

PLASTER OF PARIS INDUSTRY IN QUETTA, BALOCHISTAN
There are only three (03) small Plaster of Paris plants in Quetta whereas, only two are
operational. Therefore, it is very feasible time to invest in the project since demand of the
product is increasing as the construction industry in Balochistan is also at its boom.


  4. 3        Problems faced by the sector

 Inconsistent supply of Utilities and their high cost
In the prevailing circumstances the industry is unable to produce consistent & quality
produce due to problems in provision of utilities such as power load shedding, low gas
pressure and increasing cost of utilities for industrial usage etc. Lack of appropriate
technology is also causing non standardized production.


 Lack of skilled Human Resource
Another factor involved is the lack of skilled manpower, which has not been provided with
required training on Plaster of Paris making. Proper training for standardized production is
needed in order to produce quality products that can be accepted in the local as well as
international markets.




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Pre-feasibility Study                                                 Plaster of Paris Plant


  4. 4        WORLD RESOURCES

Gypsum is spread all over the world. It is extensively mined in Europe, the UK, Russia, the
USA, Canada and African and Asian countries. In Asia, India is the largest producing
country and possesses extensive reserves which are available for export to Srilanka, Japan
and other far-east countries. At present Japan is getting supplies of gypsum from Canada.

USA
In the USA, gypsum is mined in many states, the important producing states being
California, Iowa, Michigan, Texas and New York. It is found to occur in horizons from
Silurian to Pliocene age.

Canada
Canadian deposits are found in British Columbia, Manitoba, New Brunswick,
Newfoundland, Nova Scotia and Ontario. The important producing centres are Windemere,
British Columbia; Gypsumville and Amarnath, Manitoba; Havelock and Hillsborough, New
Brunswick; Flat Bay Station, Newfoundland; Millers Creek, Wentworth, Makay Settlement
and Nappan Little Narrows (Cape Breton Island), Cheverie, Milford and Walton in Nova
Scotia and Hagersville, Caledonia in Ontario. At Milford, a gypsum bed, of some 135
metres thickness, underlain by dolomite is found. Finely crystalline to selenitic type
gypsum is found. Gypsum is worked by quarrying except at Hillsborough, New Brunswick
where underground operation is resorted.

Cyprus
Abundant reserves of gypsum are found in Cyprus. It occurs in two well-defined groups of
deposits, one in a narrow arcuate zone which is remarkably parallel to the trend of the
Kyrenia range, in the north of the island; this includes the important Lupatza gypsum
outcrop and the other occurs on the periphery of the Troodos igneous massif. Both these
deposits are of upper Miocene age.

Jap an
The production comes principally from the northern area of Honshu. There are about 30
mines with an average annual production of 0.8 million tons. Domestic production is
mainly utilized in the manufacture of cement. Japan imports over a lakh tonnes of
uncalcined gypsum per year, mainly from the USA, Mexico and Australia.

Pakistan
In Pakistan beds of gypsum along with anhydrite, occur in saline series of salt range. The
important deposits are located in Punjab at Rakhi-Munh, Safed Koh-Rodo area (Central
Suleiman Range), Daud Khel, Khewra gorge and other areas like Dandot, Chanuwla,
Makrach, , Mari Hill and Kalabagh Hill are also well know for Gypsum.. In NWFP at
Saiduwali, Near Drazinda and Mughalkot and Kohat. In Balochistan at Near Spintangi ,
Mawand – Khattan and Barkhan – Chamalang.
The Gypsum deposits of Kohat are not only huge in quantity but are superior in quality as
well and most suitable for the manufacture of Plaster of Paris.


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Pre-feasibility Study                                                     Plaster of Paris Plant


5        MARKET INFORMATION
Utilization of Plaster of Paris

              a. Use in Architecture:
Plaster may also be used to create complex detailing for use in room interiors. These may
be geometric (simulating wood or stone) or naturalistic (simulating leaves, vines, and
flowers). These are also often used to simulate wood or stone detailing found in more
substantial buildings.




    b.    Use in Arts:

         Many of the greatest paintings in Europe, like Michelangelo's Sistine Chapel ceiling
are executed in Fresco meaning they are painted on a thin layer of wet plaster, called
intonaco (in fact the general term for plaster in Italian); the pigments sink into this layer so
that the plaster itself becomes the medium holding them, which accounts for the excellent
durability of fresco. Additional work may be added a secco on top of the dry plaster, though
this is generally less durable.




        Plaster may be cast directly into a damp clay mold. In creating this moldmolds
(molds designed for making multiple copies) or waste molds (for single use) would be made
of plaster. This "negative" image, if properly designed, may be used to produce clay
productions, which when fired in a kiln become terra cotta building decorations, or these
may be used to create cast concrete sculptures. If a plaster positive was desired this would
be constructed or cast to form a durable image artwork. As a model for stonecutters this
would be sufficient. If intended for producing a bronze casting the plaster positive could be
further worked to produce smooth surfaces. An advantage of this plaster image is that it is
relatively cheap; should a patron approve of the durable image and be willing to bear
further expense, subsequent molds could be made for the creation of a wax image to be
used in lost wax casting, a far more expensive process. In lieu of producing a bronze image


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BAL-PREF-15/April, 2009
Pre-feasibility Study                                                     Plaster of Paris Plant


suitable for outdoor use the plaster image may be painted to resemble a metal image; such
sculptures are suitable only for presentation in a weather-protected environment.

        Plaster expands while hardening, and then contracts slightly just before hardening
completely. This makes plaster excellent for use in molds, and it is often used as an artistic
material for casting. Plaster is also commonly spread over an armature (form), usually made
of wire, mesh or other materials
         Plaster is often used in faux finishing to create textures for wall and furniture
surfaces, as in Venetian Plaster and also in stenciling for raised details. For these processes,
artists use limestone based plasters or new user friendly acrylic based plaster.

  c.       Medical Use:

        Plaster is widely used as a support for broken bones; a bandage impregnated with
plaster is moistened and then wrapped around the damaged limb, setting into a close-fitting
yet easily removed tube, known as an orthopedic cast; however, this is slowly being
replaced by a fiberglass variety.




        Plaster is also used within radiotherapy when making immobilization casts for
patients. Plaster bandages are used when constructing an impression of the patients head
and neck, and liquid plaster is used to fill the impression and produce a plaster bust.
Perspex is then vacuum formed over this bust creating an immobilization shell.

        In dentistry, plaster is used for mounting casts or models of oral tissues. These
diagnostic and working models are usually made from dental stone, a stronger, harder and
denser derivative of plaster which is manufactured from gypsum under pressure. Plaster is
also used to invest or flask wax dentures, the wax being subsequently removed and replaced
with the final denture base material which is cured in the plaster mold.

  d.       Passive Fire Protection:

       Plasters have been in use in passive fire protection, as fireproofing products, for
many decades. The finished plaster releases water vapor when exposed to flame, acting to
slow the spread of the fire, for as much as an hour or two depending on thickness. It also
provides some insulation to retard heat flow into structural steel elements that would
otherwise lose their strength and collapse in a fire. Modern plasters fall into the following
categories:
          fibrous (including mineral wood and glass fiber)
          cement mixtures either with mineral wool or with vermiculite

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Pre-feasibility Study                                                   Plaster of Paris Plant


Gypsum plasters, leavened with polystyrene beads, as well as chemical expansion agents to
decrease the density of the finished product.

The majority of plasters in current use within construction are based on retarded hemi-hydrate
gypsum. The addition of different quantities of a retarding agent, usually keratin, is used to
adjust the setting time for different products.
Market for Plaster of Paris is growing rapidly. New houses in cities are now invariably built
with false ceilings, and interiors are plastered with gypsum based plasters.


  5. 1        Target Customers

The target customers for Plaster of Paris include individuals, retailers and wholesalers of
Paints & Hardware, construction companies, Medical & Pharmaceutical companies etc.
Use of gypsum plaster makes a strong case for its manufacturing. In addition to
Pakistan’s own requirements, gypsum plaster can also be exported to Dubai, Saudi
Arabia, Afghanistan and other GCC countries that are facing an unprecedented
construction boom.

  5. 2        Market Potential
There is demand for Plaster of Paris and its products is growing in Quetta due to increasing
trends of its utilization in construction industry / Architectural Plaster Work and in the
medical related industry of the province / country. The increase in demand of Plaster of
Paris can be best tapped for economic benefits due to its affordable price, easy availability,
cheap raw material and labor etc.

As the demand–supply gap of gypsum anhydrite is enormous, it is, therefore, imperative
that a coordinated effort be made to mine and produce gypsum/anhydrite in the country to
serve the above agro based and industrial needs of the country with the subsequent result of
achieving job creation and prosperity in agricultural and industrial sectors of Pakistan.
  5. 3        Market Entry Timing
Construction process is not affected by weather however, in winter the below freezing
temperatures often slows down the production of Plaster of Paris plant. Also in few areas of
the province the extreme cold weather slowing down or sometimes even halts construction.
However, the production process can be a round the year process.
It is proposed that the project is started in summer so that it can achieve the required
capacity in year one.




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Pre-feasibility Study                                                  Plaster of Paris Plant


6    BASIC REQUIREMENT FOR PLASTER OF PARIS PLANT
Following are the basic requirements for Plaster of Paris Plant.

Table 7-1         Machinery and Equipment Requirement

                                                                                    Total
          Description                   Origin           Qty       Price/Unit
                                                                                    Price
Hammer Crusher                          local             1           475,000        475,000
Roller Dryer with Blowers               local             2           310,000        620,000
Grinding Machine                        local             2           100,000        200,000
Weighing Machine                        local             1             5,500          5,500
Welding Plant                           local             1             6,500          6,500
Generator (25KVA)                       local             1           450,000        450,000
Electric Panel / Change over            local             1            50,000         50,000
Safety Switch Board                     local             1             5,000          5,000
Transformer (25 KVA)                    local             1           100,000        100,000
 Hand Trolleys                          local             4             1,600          6,400
 Misc. Tools                            local             1            10,000         10,000
Installation Cost                                                                    100,000
Total                                                                              2,028,400


Table 7-2         Office Equipment

Description                       Qty      Cost/Unit      Total Amount (PKR)
Telephone with Connection          1         1,500                      1,500
Total                                                                   1,500


Table 7-3         Furniture and Fixtures
Description                                                Total Amount (PKR)
Furniture                                                                8,000
Office Electric Wiring and Lighting                                     10,000
Total                                                                   18,000




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Pre-feasibility Study                                                     Plaster of Paris Plant


    6. 1      Machine Maintenance
All the spare parts and mechanical expertise is available in Quetta, Karachi, Lahore,
Faisalabad, Gujranwala, Rawalpindi and Peshawar.


7      HUMAN RESOURCE REQUIREMENT
The total human resource required for this project with their proposed / estimated monthly
salaries is shown in the below table 8-1;

Table 8-1         Human Resource Requirement Details
Positions                         Number     Salary / Month    Total Monthly Salary
                                                                       (Rs.)
Supervisor                          1               12,000            12,000
Machine Operator                     2              10,000              20,000
Mechanic / Electrician               1               8,000              8,000
Labor                                3               6,000              18,000
Guard                                1               6,000              6,000
Total                               08                                  64,000




8      BUILDING REQUIREMENT
Building is proposed to be constructed for the project as per descriptions given in the table
below:

Table 9-1         Building and Boundary Wall Construction Cost
Description             Area in Sq.ft      Cost/Sq.ft         Amount
Office (10΄x12΄),           236              1100             259,600
Control Room
(8΄x10΄)     and
Generator room
(6΄x6΄)
Machinery                   4800              600             2,880,000
Sheds (60΄x80΄)
Boundary Wall               600               550             330,000
Total                                                         3,469,600




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  8. 1        Recommended Mode
It is recommended that the Plaster of Paris plant be established in an area which is easily
approachable to buyers. For differential marketing onsite supply to the under construction
buildings / houses should be provided.

  8. 2        Utilities and Infrastructure Requirement

Availability of all utilities is a must for the Plaster of Paris Plant to operate.




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9     PROJECT ECONOMICS
    9.1 Project Cost

Description                                            Amount in (Rs.)
Land                                                       1,400,000
Building/Infrastructure                                    3,469,600
Machinery and Equipment                                    2,028,400
Furniture & fixtures                                           18,000
Office equipment                                                1,500
Pre-operating costs                                            59,399
Total Capital Costs                                        6,976,899
Equipment spare part inventory                                 12,012
Raw Material inventory                                       352,853
Upfront Insurance Payment                                    101,420
Cash                                                         300,000
Total Working Capital                                        766,285
Total Investment                                           7,743,184


    9.2 Project Returns
 Description                                 Equity             Project
 IRR                                           28%                 26%
 MIRR                                          20%                 17%
 Payback Period (yrs)                          4.75                4.49
 Net Present Value (NPV)                4.96 million        7.26 million


    9.3 Project Financing
Description                           Percentage         Amount in Rs
Debt Financing                           31%                 2,434,938
Equity Financing                         69%                 5,308,246
Total                                                        7,743,184




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10 FINANCIAL ANALYSIS
  10. 1        Project Cost

  Statement Summaries                                                                                         SMEDA
  Initial Investment

                              Capital Investment                                             Rs. in actuals
                              Land                                                               1,400,000
                              Building/Infrastructure                                            3,469,600
                              Machinery & equipment                                              2,028,400
                              Furniture & fixtures                                                  18,000
                              Office equipment                                                        1,500
                              Pre-operating costs                                                   59,399
                              Total Capital Costs                                                6,976,899

                              Working Capital                                                Rs. in actuals
                              Equipment spare part inventory                                        12,012
                              Raw material inventory                                               352,853
                              Upfront insurance payment                                            101,420
                              Cash                                                                 300,000
                              Total Working Capital                                                766,285

                              Total Investment                                                   7,743,184

                              Initial Financing                                              Rs. in actuals
                              Debt                                                               2,434,938
                              Equity                                                             5,308,246
                              * Provisioning for the first year installments




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  10. 2            Projected Income Statement

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

  Revenue                                          7,687,680   10,053,888   12,003,284        13,496,403        14,369,210   15,231,362   16,145,244   17,113,959   18,140,796     19,229,244
   Cost of goods sold                              5,659,148    7,318,272    8,660,436         9,701,365        10,328,748   10,948,473   11,605,381   12,301,704   13,039,807     13,822,195
  Gross Profit                                     2,028,532    2,735,616    3,342,848         3,795,038         4,040,462    4,282,889    4,539,863    4,812,254    5,100,990      5,407,049

  General administration & selling expenses
   Administration expense                            216,000      228,960      242,698           257,259           272,695      289,057      306,400      324,784      344,271        364,927
   Utilities expense                                  15,600       16,536       17,528            18,580            19,695       20,876       22,129       23,457       24,864         26,356
   Travelling & Comm. expense (phone, fax, etc.)      64,800       68,688       72,809            77,178            81,809       86,717       91,920       97,435      103,281        109,478
   Office expenses (stationary, etc.)                 12,960       13,738       14,562            15,436            16,362       17,343       18,384       19,487       20,656         21,896
   Promotional expense                                46,126       60,323       72,020            80,978            86,215       91,388       96,871      102,684      108,845        115,375
   Insurance expense                                 101,420       91,278       81,136            70,994            60,852       50,710       40,568       30,426       20,284         10,142
   Professional fees (legal, audit, etc.)             53,814       70,377       84,023            94,475           100,584      106,620      113,017      119,798      126,986        134,605
   Depreciation expense                              378,270      378,270      378,270           378,270           378,270      378,270      378,270      378,270      378,270        378,270
   Amortization expense                               11,880       11,880       11,880            11,880            11,880          -            -            -            -              -
  Subtotal                                           900,870      940,050      974,925         1,005,050         1,028,361    1,040,981    1,067,559    1,096,341    1,127,457      1,161,049
  Operating Income                                 1,127,662    1,795,566    2,367,923         2,789,988         3,012,100    3,241,908    3,472,303    3,715,914    3,973,532      4,246,000

  Other income                                         6,933       20,702       64,413           122,748           194,863      291,398      412,305      543,788      686,478        873,302
  Earnings Before Interest & Taxes                 1,134,596    1,816,268    2,432,336         2,912,736         3,206,963    3,533,306    3,884,608    4,259,702    4,660,011      5,119,301

  Interest expense                                  438,289       377,026      304,735           219,433           118,775          -            -            -            -              -
  Earnings Before Tax                               696,307     1,439,242    2,127,600         2,693,303         3,088,187    3,533,306    3,884,608    4,259,702    4,660,011      5,119,301

  Tax                                               153,187       316,633      468,072           592,527           679,401      777,327      854,614      937,134    1,025,202      1,126,246
  NET PROFIT/(LOSS) AFTER TAX                       543,119     1,122,609    1,659,528         2,100,777         2,408,786    2,755,979    3,029,995    3,322,568    3,634,808      3,993,055

  Balance brought forward                                         543,119    1,665,728         3,325,256         5,426,033    7,834,819   10,590,798   13,620,792   16,943,360     20,578,168
  Total profit available for appropriation          543,119     1,665,728    3,325,256         5,426,033         7,834,819   10,590,798   13,620,792   16,943,360   20,578,168     24,571,223
  Balance carried forward                           543,119     1,665,728    3,325,256         5,426,033         7,834,819   10,590,798   13,620,792   16,943,360   20,578,168     24,571,223




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  10. 3             Projected Balance Sheet

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

  Assets
  Current assets
   Cash & Bank                                         300,000            46,662                 988,418        2,232,212          3,905,180            5,837,948    8,731,953   11,883,302   15,306,107   19,017,812      24,647,277
   Accounts receivable                                     -             631,864                 729,106          906,459          1,047,932            1,145,162    1,216,462    1,289,450    1,366,817    1,448,826       1,535,755
   Finished goods inventory                                -             514,468                 616,276          728,448            812,009              860,729      912,373      967,115    1,025,142    1,086,651       1,151,850
   Equipment spare part inventory                       12,012            16,495                  20,678           24,412             27,290               30,374       33,807       37,627       41,878       46,611             -
   Raw material inventory                              352,853           489,145                 619,027          737,791            832,634              935,548    1,051,181    1,181,108    1,327,092    1,491,121             -
   Pre-paid insurance                                  101,420            91,278                  81,136           70,994             60,852               50,710       40,568       30,426       20,284       10,142             -
  Total Current Assets                                 766,284         1,789,912               3,054,640        4,700,316          6,685,897            8,860,471   11,986,344   15,389,026   19,087,321   23,101,162      27,334,882

  Fixed assets
   Land                                              1,400,000         1,400,000               1,400,000        1,400,000          1,400,000            1,400,000    1,400,000    1,400,000    1,400,000    1,400,000       1,400,000
   Building/Infrastructure                           3,469,600         3,296,120               3,122,640        2,949,160          2,775,680            2,602,200    2,428,720    2,255,240    2,081,760    1,908,280       1,734,800
   Machinery & equipment                             2,028,400         1,825,560               1,622,720        1,419,880          1,217,040            1,014,200      811,360      608,520      405,680      202,840             -
   Furniture & fixtures                                 18,000            16,200                  14,400           12,600             10,800                9,000        7,200        5,400        3,600        1,800             -
   Office equipment                                      1,500             1,350                   1,200            1,050                900                  750          600          450          300          150             -
  Total Fixed Assets                                 6,917,500         6,539,230               6,160,960        5,782,690          5,404,420            5,026,150    4,647,880    4,269,610    3,891,340    3,513,070       3,134,800

  Intangible assets
    Pre-operation costs                                 59,399            47,519                  35,639           23,760          11,880                     -            -            -            -            -               -
  Total Intangible Assets                               59,399            47,519                  35,639           23,760          11,880                     -            -            -            -            -               -
  TOTAL ASSETS                                       7,743,184         8,376,661               9,251,239       10,506,766      12,102,197              13,886,621   16,634,224   19,658,636   22,978,661   26,614,232      30,469,682

  Liabilities & Shareholders' Equity
  Current liabilities
   Accounts payable                                          -           277,521                 361,167          431,070           484,930              520,432      556,681      595,724      637,805      683,193          590,213
  Total Current Liabilities                                  -           277,521                 361,167          431,070           484,930              520,432      556,681      595,724      637,805      683,193          590,213

  Other liabilities
   Deferred tax                                            -             153,187                 223,124          223,124           223,124              223,124      178,499      133,874       89,250       44,625                   (0)
   Long term debt                                    2,434,938         2,094,587               1,692,974        1,219,070           659,864                  -            -            -            -            -                 -
  Total Long Term Liabilities                        2,434,938         2,247,775               1,916,098        1,442,194           882,988              223,124      178,499      133,874       89,250       44,625                   (0)

  Shareholders' equity
   Paid-up capital                                   5,308,246         5,308,246               5,308,246        5,308,246       5,308,246               5,308,246    5,308,246    5,308,246    5,308,246    5,308,246       5,308,246
   Retained earnings                                       -             543,119               1,665,728        3,325,256       5,426,033               7,834,819   10,590,798   13,620,792   16,943,360   20,578,168      24,571,223
  Total Equity                                       5,308,246         5,851,365               6,973,974        8,633,502      10,734,279              13,143,065   15,899,044   18,929,038   22,251,606   25,886,414      29,879,469
  TOTAL CAPITAL AND LIABILITIES                      7,743,184         8,376,661               9,251,239       10,506,766      12,102,197              13,886,621   16,634,224   19,658,636   22,978,661   26,614,232      30,469,682

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




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  10. 4            Projected Cash Flow Statement
                                                           -               -             -             -                  -                 -             -              -              0              (0)                 0

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

  Operating activities
   Net profit                                            -         543,119     1,122,609     1,659,528          2,100,777         2,408,786     2,755,979      3,029,995      3,322,568      3,634,808          3,993,055
   Add: depreciation expense                             -         378,270       378,270       378,270            378,270           378,270       378,270        378,270        378,270        378,270            378,270
         amortization expense                            -          11,880        11,880        11,880             11,880            11,880           -              -              -              -                  -
   Deferred income tax                                   -         153,187        69,937           -                  -                 -         (44,625)       (44,625)       (44,625)       (44,625)           (44,625)
   Accounts receivable                                   -        (631,864)      (97,241)     (177,354)          (141,473)          (97,230)      (71,300)       (72,988)       (77,367)       (82,009)           (86,930)
   Finished good inventory                               -        (514,468)     (101,808)     (112,172)           (83,561)          (48,721)      (51,644)       (54,742)       (58,027)       (61,509)           (65,199)
   Equipment inventory                               (12,012)       (4,483)       (4,183)       (3,735)            (2,878)           (3,084)       (3,432)        (3,820)        (4,252)        (4,732)            46,611
   Raw material inventory                           (352,853)     (136,293)     (129,882)     (118,764)           (94,843)         (102,914)     (115,634)      (129,926)      (145,985)      (164,029)         1,491,121
   Advance insurance premium                        (101,420)       10,142        10,142        10,142             10,142            10,142        10,142         10,142         10,142         10,142             10,142
   Accounts payable                                      -         277,521        83,646        69,902             53,861            35,502        36,249         39,043         42,081         45,388            (92,981)
  Cash provided by operations                       (466,285)       87,012     1,343,370     1,717,697          2,232,174         2,592,632     2,894,005      3,151,349      3,422,806      3,711,705          5,629,465

  Financing activities
    Change in long term debt                        2,434,938     (340,350)    (401,613)     (473,904)          (559,207)         (659,864)           -              -              -              -                   -
    Issuance of shares                              5,308,246          -            -             -                  -                 -              -              -              -              -                   -
  Cash provided by / (used for) financing activities7,743,184     (340,350)    (401,613)     (473,904)          (559,207)         (659,864)           -              -              -              -                   -

  Investing activities
    Capital expenditure                             (6,976,899)        -             -             -                  -                 -             -              -              -              -                   -
  Cash (used for) / provided by investing activities(6,976,899)        -             -             -                  -                 -             -              -              -              -                   -

  NET CASH                                           300,000      (253,338)     941,756      1,243,794          1,672,968         1,932,768     2,894,005      3,151,349      3,422,806      3,711,705          5,629,465

  Cash balance brought forward                                    300,000        46,662        988,418          2,232,212         3,905,180     5,837,948      8,731,953     11,883,302     15,306,107         19,017,812
  Cash available for appropriation                   300,000       46,662       988,418      2,232,212          3,905,180         5,837,948     8,731,953     11,883,302     15,306,107     19,017,812         24,647,277
  Cash carried forward                               300,000       46,662       988,418      2,232,212          3,905,180         5,837,948     8,731,953     11,883,302     15,306,107     19,017,812         24,647,277




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11 KEY ASSUMPTIONS
Table 12-1        Cost of Goods Sold per Unit of Production
COGS 1                                                                             Rs. 1.95
COGS 2                                                                              Rs. 0.4
COGS growth rate                                                                        6%

COGS – 1 includes cost of raw material which is acquired in tons but calculated in KGs.
The COGS – 2 includes cost of 25Kg empty bags required to pack 25 Kg packing of Plaster
of Paris.

Table 12-2         Revenue Assumptions
Sale price per Kg in year 1                                                   Rs. 6.4 / Kg
Sale price growth rate                                                                 6%


Table 12-3        Production Related Assumptions
Production capacity per year                                  1,310.4 Tons (1,310,400 Kgs).
Production capacity utilization in first year                                         70%
Production capacity utilization growth rate                                           10%
Maximum production capacity utilization                                               95%


Table 12-4        Economic Related Assumptions
Inflation rate                                                                           6%
Wage growth rate                                                                         6%
Electricity Growth Rate                                                                  6%
Water Price Growth Rate                                                                  6%


Table 12-5        Financing Assumptions
Interest rate on long term debt                                                         18%
Debt                                                                                    31%
Equity                                                                                  69%
Tax rate (15% sales tax + 7% income tax)                                                22%
Required rate of return on equity                                                       16%
WACC                                                                                    13%



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Table 12-6        Expense Assumptions
Communication Expense                                                            30 %
Promotional Expense                                                            0.6 %
Professional Fee (Legal, Audit etc)                                            0.7 %
Office Expense (Stationary, Entertainment, Janitorial   6% of administration expense
Services)
Pre-Operational Expense                                                   Rs. 59,399


Table 12-7        Depreciation Rates
Furniture & fixtures                                                             10%
Machinery                                                                        10%
Office equipment                                                                 10%


Table 12-8        Cash Flow Assumptions
Accounts Receivables Cycle (In Days)                                              30
Accounts Payable Cycle (In Days)                                                30
Cash in Hand                                                           Rs. 300,000



Table 12-9        Direct Operating Costs
Maintenance Cost / year                                                      48,048
Direct Electricity Cost / year                                              240,240
Direct Gas Cost / year                                                    2,042,040
Direct Labor Cost / year                                                    506,000




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