Pre-Feasibility Study

(Security Agency)

Small and Medium Enterprises Development Authority Ministry of Industries & Production
Government of Pakistan
www.smeda.org.pk
HEAD OFFICE
4th Floor, Building No. 3, Aiwan-e-Iqbal Complex, Egerton Road, Lahore Tel: (92 42) 111 111 456, Fax: (92 42) 36304926-7

[email protected]
REGIONAL OFFICE Punjab 3rd Floor, Building No. 3, Aiwan-e-Iqbal Complex, Egerton Road Lahore, Tel: (042) 111-111-456 Fax: (042) 36304926-7 [email protected] REGIONAL OFFICE Sindh 5TH Floor, Bahria Complex II, M.T. Khan Road, Karachi. Tel: (021) 111-111-456 Fax: (021) 35610572 [email protected] REGIONAL OFFICE Khyber Pakhtunkhwa Ground Floor State Life Building The Mall, Peshawar. Tel: (091) 111-111-456 Fax: (091) 5286908 [email protected] REGIONAL OFFICE Balochistan Bungalow No. 15-A Chaman Housing Scheme Airport Road, Quetta. Tel: (081) 2831623, 2831702 Fax: (081) 2831922 [email protected]

Note: All SMEDA Services / information related to PM's Youth Business Loan are Free of Cost December, 2013

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Security Agency

Table of Contents
1. DISCLAIMER .......................................................................................................................................... 2 2. PURPOSE OF THE DOCUMENT ......................................................................................................... 3 3. INTRODUCTION TO SMEDA .............................................................................................................. 3 4. INTRODUCTION TO SCHEME ........................................................................................................... 4 5. EXECUTIVE SUMMARY ...................................................................................................................... 4 6. BRIEF DESCRIPTION OF PROJECT AND SERVICE ..................................................................... 5 7. CRITICAL FACTORS ............................................................................................................................ 6 8. OPERATIONAL CAPACITIES ............................................................................................................. 6 9. GEOGRAPHICAL POTENTIAL FOR INVESTMENT ..................................................................... 6 10. 11. 12. 12.1 12.2 12.3 12.4 12.5 12.6 12.7 12.8 12.9 13. 14. 14.1 14.2 14.3 14.4 14.5 15. POTENTIAL TARGET MARKETS/CITIES ................................................................................. 6 SERVICE PROCESS FLOW ........................................................................................................... 7 PROJECT COST SUMMARY ......................................................................................................... 7 PROJECT ECONOMICS ................................................................................................................ 7 PROJECT FINANCING................................................................................................................... 8 PROJECT COST ........................................................................................................................... 8 SPACE REQUIREMENT................................................................................................................. 8 ARMS AND COMMUNICATIONS EQUIPMENT ................................................................................ 9 FURNITURE AND FIXTURES ....................................................................................................... 10 HUMAN RESOURCE REQUIREMENT .......................................................................................... 10 REVENUE GENERATION ............................................................................................................ 11 OTHER COSTS ........................................................................................................................... 12 CONTACT DETAILS OF SUPPLIERS & CONSULTANTS ..................................................... 14 ANNEXURE ..................................................................................................................................... 15 INCOME STATEMENT .................................................................................................................. 15 STATEMENT OF CASH FLOW....................................................................................................... 16 BALANCE SHEET ........................................................................................................................ 17 USEFUL PROJECT MANAGEMENT TIPS ..................................................................................... 18 USEFUL LINKS ........................................................................................................................... 20 KEY ASSUMPTIONS ..................................................................................................................... 21

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1. DISCLAIMER
This information memorandum is to introduce the subject matter and provide a general idea and information on the said matter. Although, the material included in this document is based on data / information gathered from various reliable sources; however, it is based upon certain assumptions which may differ from case to case. The information has been provided on as is where is basis without any warranties or assertions as to the correctness or soundness thereof. Although, due care and diligence has been taken to compile this document, the contained information may vary due to any change in any of the concerned factors, and the actual results may differ substantially from the presented information. SMEDA, its employees or agents do not assume any liability for any financial or other loss resulting from this memorandum in consequence of undertaking this activity. The contained information does not preclude any further professional advice. The prospective user of this memorandum is encouraged to carry out additional diligence and gather any information which is necessary for making an informed decision including taking professional advice from a qualified consultant / technical expert before taking any decision to act upon the information. For more information on services offered by SMEDA, please visit our website: www.smeda.org.pk

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2. PURPOSE OF THE DOCUMENT

The objective of the pre-feasibility study is primarily to facilitate potential entrepreneurs in project identification for investment. The project pre-feasibility may form the basis of an important investment decision and in order to serve this objective, the document/study covers various aspects of project concept development, start-up, production, marketing, finance and business management. The purpose of this document is to facilitate potential investors in setting up a Security Agency by providing them with a general understanding of the business with the intention of supporting potential investors in crucial investment decisions. The need to come up with pre-feasibility reports for undocumented or minimally documented sectors attains greater imminence as the research that precedes such reports reveal certain thumb rules; best practices developed by existing enterprises by trial and error, and certain industrial norms that become a guiding source regarding various aspects of business set-up and its successful management. Apart from carefully studying the whole document, one must consider critical aspects provided later on, which form basis of any investment decision.

3. INTRODUCTION TO SMEDA
The Small and Medium Enterprises Development Authority (SMEDA) was established in October 1998 with an objective to provide fresh impetus to the economy through development of Small and Medium Enterprises (SMEs). With a mission "to assist in employment generation and value addition to the national income, through development of the SME sector, by helping increase the number, scale and competitiveness of SMEs" , SMEDA has carried out sectoral research to identify policy, access to finance, business development services, strategic initiatives and institutional collaboration and networking initiatives. Preparation and dissemination of prefeasibility studies in key areas of investment has been a 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

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capacity building programs of different types in addition to business guidance through help desk services.

4. INTRODUCTION TO SCHEME
Prime Ministers Youth Business Loan scheme, for young entrepreneurs, with an allocated budget of Rs. 5.0 Billion for the year 2013-14, is designed to provide subsidised financing at 8% mark-up per annum for one hundred thousand (100,000) beneficiaries, through designated financial institutions, initially by National Bank of Pakistan (NBP) and First Women Bank Ltd. (FWBL). Small business loans up to Rs. 2 million with tenure up to 8 years, inclusive of 01 year grace period and a debt: equity of 90 : 10 will be disbursed to SME beneficiaries across Pakistan, covering; Punjab, Sindh, Khyber Pakhtunkhwah, Balochistan, GilgitBaltistan, Azad Jammu & Kashmir and Federally Administered Tribal Areas (FATA).

5. EXECUTIVE SUMMARY
Over the last two decades law and order situation of the country, particularly of the metropolitan cities like Karachi and Lahore, has become complex. Karachi, the economic hub of Pakistan, has been facing severe security problems. The growing sense of insecurity among households and businesses has created a demand for private security services. Currently, more than 800 private security companies / agencies are operating throughout the country. The demand for security services is still on the rise and the sector is currently growing at 5 - 6% per annum. Location for a proposed Security Agency business largely depends on the type of security services it will provide to the client. The Security Agency is proposed to be established as a Private Limited Company or as a Single Member Company under the Companies Ordinance 1984. The office is proposed to be located near a business and / or financial hub of a major city like Karachi, Hyderabad, Larkana, Sukkur, Multan, Lahore, Gujranwala, Faisalabad, Sialkot, Gujrat, Rawalpindi, Islamabad, Quetta, Hub, Lasbela or Peshawar etc. The proposed agency will provide general and executive security guard services to the corporate / business sector during the initial phase of operations. All guards are proposed to be armed guards. 66 personnel would be required to manage the operations of the security agency including 58 armed guards.

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Total cost estimates are Rs. 2.19 million, with a fixed investment of Rs. 1.40 million and an initial working capital requirement of Rs. 0.79 million. Given the cost assumptions IRR and payback are 52% and 2.16 years respectively.

6. BRIEF DESCRIPTION OF PROJECT AND SERVICE

This pre-feasibility gives insights into various aspects of how to set-up a security agency and outlines the basic process involved in running the enterprise as a profitable business. The document is designed to provide relevant details to facilitate the entrepreneur in making a decision by providing various technical, legal and business details. Security Agencies offer various services such as security guard services, executive escort services, security / burglar alarm, vehicle tracking, armored car services and cash-in-transit services, etc. The proposed Security Agency is envisaged to provide only general and executive security guard services to the corporate / business sector through armed personnel deployments. Security management staff including Manager (operations) and Shift Supervisors would facilitate and manage security services while the prospective entrepreneur will undertake the recruitment, training, business promotion and management activities. The Security Agency is proposed to be established as a Private Limited Company or as a Single Member Company under the Companies Ordinance 1984. Technology: The proposed Agency will deploy latest communication technology and technology based security solutions to provide services to Businesses and Corporate Clients. Location: The office is proposed to be established at a rented premise near a business and/or financial hub in a major city like Karachi, Hyderabad, Lahore, Gujranwala, Faisalabad, Sialkot, Gujrat, Multan, Rawalpindi, Islamabad, Quetta or Peshawar etc. Services: The Agency is proposed to provide general and executive security guard services by deploying armed guards. The set-up would have a capacity to deploy up to 100 armed guards. Target Market: Karachi, Hyderabad, Larkana, Sukkur, Multan, Lahore, Gujranwala, Faisalabad, Sialkot, Gujrat, Rawalpindi, Islamabad, Quetta, Hub, Lasbela or Peshawar etc. are major target markets for the services.

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Employment Generation: The proposed project will provide direct employment to 66 people. Financial analysis shows the agency shall be profitable from the very first year of operations.

7. CRITICAL FACTORS
Following guidelines can assist the prospective entrepreneur in running the agency successfully: Build contacts/linkages in the corporate sector Recruit trained and experienced resources Provide adequate training Provide reasonable pay compensation Offer professional working environment

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

9. GEOGRAPHICAL POTENTIAL FOR INVESTMENT

Location for a security agency office largely depends on the type of security services provided to the client. For the success of the project, it is important to find a location in or near a business and / or financial hub of a major city like Karachi, Hyderabad, Larkana, Sukkur, Multan, Lahore, Gujranwala, Faisalabad, Sialkot, Gujrat, Rawalpindi, Islamabad, Quetta, Hub, Lasbela or Peshawar etc. Establishing the office in large cities would have an advantage of being close to large corporate clients, financial institutions and multinational clients.

10. POTENTIAL TARGET MARKETS/CITIES

The market for security services is growing at an average of 5 6% annually and relies heavily on corporate clients that require specialized quality security services. Multinationals, local conglomerates, manufacturing companies, business and trade hubs, financial institutions and telecom sector companies etc., are all based in urban areas and even more concentrated in large

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metropolitan cities of the country. The proposed security agency may be established in any of the major cities of the country.

11. SERVICE PROCESS FLOW

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

Agreement
Client Coordination Location survey

Temporary Deployment of Personnel

Yes Service Evaluation Permanent deployment of personnel/ supervisor

No

12. PROJECT COST SUMMARY

A detailed financial model has been developed to analyze the commercial viability of this project. Various cost and revenue related assumptions along with results of the analysis are outlined in this section. The projected Income Statement, Cash Flow Statement and Balance Sheet are attached as appendices. 12.1 Project Economics The following table shows internal rate of return and payback period for the proposed private security agency.
Table 1 - Project Economics Description Internal Rate of Return (IRR) Payback Period (yrs) Net Present Value (NPV) Details 52% 2 .16 years Rs 3,905,633

Returns on the project and its profitability are highly dependent on the quality / experience and training of human resource and security guards, linkages with the corporate sector and marketing efficiency.

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12.2 Project Financing Following table provides details of the equity required and variables related to bank loan:
Table 2 - Project Financing

Description Total Equity (10%) Bank Loan (90 %.) Markup to the Borrower (%age/annum) Tenure of the Loan (Years) Grace period (year) 12.3 Project Cost

Details Rs. 219,190 Rs.1,972,710 08% 08 01

Following requirements have been identified for operations of the proposed business:
Table 3: Capital Investment for the Project

Capital Investment Office Renovation Cost Furniture & fixtures Weapons, Communication & Office Equipment Advance Rent Preliminary Expenses/ Licensing Costs Total Capital Costs Initial Working Capital Total Project Cost 12.4 Space Requirement

Amount (Rs.) 100,000 156,000 568,500 216,000 363,000 1,403,500 788,400 2,191,900

The office space required to operate the proposed security agency is estimated to be around 800 sqft. The allocation of space between different sections of the office is as follows:
Table 4: Space Requirement

Space Requirement (in ft.) Office Accounts and Administration Operations hall

Area (sq ft.) 120 120 120

Cost / sq ft. (Rs.) 125 125 125

Renovation Costs (Rs.) 15,000 15,000 15,000

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Reception Guard waiting area Store & armory Washroom/record room / others Total Area

40 120 120 160 800

125 125 125 125

5,000 15,000 15,000 20,000 100,000

The premises renovation cost of Rs. 100,000/- would be depreciated at the rate of 10% per annum using diminishing balance method. 12.5 Arms and Communications Equipment Following arms and equipment will be required for the field operations of the security agency:
Table 5: List of Weapons and Communication, Office & Other Equipment

Description Metal Detector Repeater (Durra Made) Pistol (0.30 Caliber) Radio Communication System (base) Hand/Portable Communications Units Computers Printers Fax machine Consumer electronic items (water cooler, AC, electric kettle etc.) Total

Quantity 6 15 14 1 5 2 1 1

Cost Rs/unit 4,000 7,500 7,500 40,000 15,000 26,000 35,000 25,000

Total (Rs.) 24,000 112,500 105,000 40,000 75,000 52,000 35,000 25,000 100,000 568,500

Communications equipment and local weapons are easily available in the market and an entrepreneur has the choice to select from international brands such as Winchester, Berretta, SIG Sauer, Glock etc., Chinese weapons or Local Darra Made weapons and communication equipment made by Motorolla, Kenwood and ICom are also available in the local market and are used by most companies.

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12.6 Furniture and Fixtures A total of Rs. 156,000/- is required for purchase of office furniture and fixture for the proposed Security Agency. The following table gives an estimated breakup:
Table 6: Furniture and Fixtures Costs Description Chairs Sofa Set Office Tables Office Chairs Cupboard / Shelves Total Quantity 10 02 03 05 Lump sum Cost /Unit (Rs.) Amount (Rs.) 2,700 27,000 20,000 40,000 8,000 24,000 5,000 25,000 40,000 40,000 156,000

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

Owner / Director: Due to sensitivity of the business, Agency Director has critical responsibilities. He would be required to directly interact with management staff and closely monitor the Agencys day to day activities.

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

Service

Guards

General Security 52 Service Executive Security 06 Services Total Sales Revenue

Sales are expected to grow by 10% every year. The prices used to calculate the gross revenue earned are based on the billing rate at which the Agency will charge the customer. The service charges are estimated at 1.5 x guard salary and 1.65 x guard salary for general and executive security services respectively. Guard salaries are also estimated to increase at the rate of 10% per annum. It is

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assumed that any expiring security contract will either be extended or be replaced by a new one. 12.9 Other Costs Arms and Equipment Maintenance: All arms and equipment require regular maintenance which costs around 1% to 5% of the arms/equipment costs depending upon the usage. The maintenance cost for arms and equipment is assumed at 2% of total cost, included in the operating cost estimates. Rent and Deposits: The proposed premises will be acquired on a rental basis with 3 months security deposit and 3 months advance rent after which, rent will be payable on a monthly basis. The monthly rent is estimated at approximately Rs. 45/ sq. ft. amounting to Rs. 36,000 per month for the proposed security company office (800 sq. ft.). Rent is assumed to increase by 10% per annum. Utilities Requirements: The following table presents break-up of utilities on a monthly basis: Description Monthly Charges (Rs.) 18,000 400 6,000 24,400

Electricity Water Telephone Total

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

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Guard Uniforms: Uniforms for guards would include shirt, trousers, belt, cap, boots and socks (two uniforms per guard) and would be purchased annually. The cost of uniforms for 63 personnel is estimated at Rs. 151,200 (Rs. 1200/uniform). The cost of uniforms is estimated to increase by 10% per year. Preliminary & Licensing Expenses: The provision for preliminary expenses is assumed to be Rs. 20,000. The cost of license to operate and licenses for weapons and communications equipment is assumed to be Rs. 343,000. These pre-operating expenses will be amortized equally over a 5 year period. Miscellaneous & Maintenance Expenses: Rs. 25,500 / month (850 per day) is assumed to be incurred for miscellaneous and arms maintenance expenses, which are expected to increase at the rate of 10% per annum for the projected period. Office Expenses: Monthly office expenses for the security company are estimated to be Rs. 21,000 (700 per day). These expenses are estimated to increase at the rate of 10% per annum for the projected period. Taxation: The business is assumed to be run as a Single Member Company; therefore, tax rates applicable on the income of a non-salaried individual taxpayer are used for income tax calculation of the business. Cost of Capital: The cost of capital is explained in the following table: Particulars Required return on equity Cost of finance Weighted average cost of capital Rate 20.0 % 08.0 % 09.2 %

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

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13. CONTACT DETAILS OF SUPPLIERS & CONSULTANTS

Various security companies operating in Karachi and other cities may be contacted for consultancy / guidance.

Aamir Aziz, Security Consultant Muhafiz Security (Pvt.) Ltd.

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

A-1/3,West Land Trade Centre, 3rd Lahore Floor, Block 7&8,K.C.S.H.,Shaheed-e- Tel: 042 - 37231167 Millat Road, Karachi Tel: (92 - 21) 34550910, 34556331 Fax: (92 - 21) 34556331

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14. ANNEXURE
14.1 Income Statement
PRIVATE SECURITY AGENCY

Projected Income Statement (Rs.)

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9

Year 10

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

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

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

13,194,324 65,972 13,128,352 10,346,952 2,781,400

14,513,756 72,569 14,441,188 11,381,647 3,059,540

15,965,132 79,826 15,885,306 12,519,812 3,365,494

17,561,645 87,808 17,473,837 13,771,793 3,702,044

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

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

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

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

336,000 292,800 432,000 52,000 306,000 252,000 72,600 82,450 1,825,850 472,828 157,817 315,011 315,011 26,251

369,600 322,080 475,200 57,200 336,600 277,200 72,600 74,205 1,984,685 543,861 149,900 393,961 393,961 32,830

406,560 354,288 522,720 62,920 370,260 304,920 72,600 66,785 2,161,053 620,348 131,718 488,630 8,863 479,767 39,981

447,216 389,717 574,992 69,212 407,286 335,412 72,600 60,106 2,356,541 703,000 112,026 590,973 19,097 571,876 47,656

491,938 428,688 632,491 76,133 448,015 368,953 72,600 54,095 2,572,914 792,581 90,701 701,880 30,188 671,692 55,974

541,131 471,557 695,740 83,747 492,816 405,849 48,686 2,739,526 962,518 67,605 894,913 56,737 838,176 69,848

595,244 518,713 765,314 92,121 542,098 446,433 43,817 3,003,741 1,068,507 42,592 1,025,915 76,387 949,528 79,127

654,769 570,584 841,846 101,333 596,307 491,077 39,436 3,295,352 1,184,121 15,503 1,168,618 97,793 1,070,825 89,235

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

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

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14.2 Statement of Cash Flow

PRIVATE SECURITY AGENCY Projected Statement of Cash Flows (Rs.) Cash Flow From Operating Activities Net Profit Add: Depreciation Expense Amortization Expense (Increase) / Decrease in Receivables Net Cash Flow From Operations Cash Flow From Financing Activities Receipt of Long Term Debt Repayment of Long Term Debt Owner's Equity Net Cash Flow From Financing Activities Cash Flow From Investing Activities Arms and Communication Eq. Purchase Renovation Preoperating Costs Furniture Preliminary Expenses Advance Rent (568,500) (100,000) (343,000) (156,000) (20,000) (216,000) (1,403,500) NET CASH FLOW Cash at the Beginning of the Period Cash at the End of the Period 788,400 788,400 242,886 788,400 1,031,286 298,983 1,031,286 1,330,270 356,915 1,330,270 1,687,185 420,155 1,687,185 2,107,340 489,886 2,107,340 2,597,226 552,241 2,597,226 3,149,467 630,385 3,149,467 3,779,852 716,554 3,779,852 4,496,406 1,182,579 4,496,406 5,678,985 1,292,022 5,678,985 6,971,008 1,972,710 219,190 2,191,900 (219,065) (237,247) (256,939) (278,264) (301,360) (326,373) (353,462) (219,065) (237,247) (256,939) (278,264) (301,360) (326,373) (353,462) 315,011 82,450 72,600 (227,175) 242,886 393,961 74,205 72,600 (22,718) 518,048 479,767 66,785 72,600 (24,989) 594,162 571,876 60,106 72,600 (27,488) 677,094 671,692 54,095 72,600 (30,237) 768,151 838,176 48,686 (33,261) 853,601 949,528 43,817 (36,587) 956,758 1,070,825 1,191,357 35,492 39,436 (40,245) (44,270) 1,070,015 1,182,579 1,308,777 31,943 (48,697) 1,292,022 Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

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14.3 Balance Sheet

PRIVATE SECURITY AGENCY

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

Year 0

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9

Year 10

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

1,031,286 227,175 216,000 290,400 1,764,861

1,330,270 249,893 216,000 217,800 2,013,962

1,687,185 274,882 216,000 145,200 2,323,266

2,107,340 302,370 216,000 72,600 2,698,310

2,597,226 332,607 216,000 3,145,833

3,149,467 365,868 216,000 3,731,335

3,779,852 402,454 216,000 4,398,307

4,496,406 442,700 216,000 5,155,106

5,678,985 486,970 216,000 6,381,955

6,971,008 535,667 216,000 7,722,674

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

511,650 140,400 90,000 742,050 2,506,911 534,201 1,972,710 2,506,911

460,485 126,360 81,000 667,845 2,681,807 928,162 1,753,645 2,681,807

414,437 113,724 72,900 601,061 2,924,327 1,407,929 1,516,398 2,924,327

372,993 102,352 65,610 540,954 3,239,264 1,979,805 1,259,459 3,239,264

335,694 92,116 59,049 486,859 3,632,692 2,651,497 981,195 3,632,692

302,124 82,905 53,144 438,173 4,169,508 3,489,673 679,835 4,169,508

271,912 74,614 47,830 394,356 4,792,663 4,439,201 353,462 4,792,663

244,721 67,153 43,047 354,920 5,510,026 5,510,026 (0) 5,510,026

220,249 60,438 38,742 319,428 6,701,383 6,701,383 6,701,383

198,224 54,394 34,868 287,485 8,010,160 8,010,160 8,010,160

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14.4 Useful Project Management Tips Technology List of Arms & Equipment
Description Metal Detector Repeater (Durra Made) Pistol (0.30 Caliber) Radio Communication System (base) Hand/Portable Radio Communications Units Quantity 6 15 14 1 5

Required Spare Parts & Consumables: Suppliers credit agreements and availability as per schedule of maintenance be ensured before start of operations. Energy Requirement: The energy requirements should be properly assessed and alternate source of energy for critical operations must be arranged in advance. Machinery Suppliers: Training and After Sales Services should be sought from suppliers. Quality Assurance Equipment & Standards: Product quality standards must be defined and a system of check should be instituted. This improves credibility.

Marketing Service & Packaging: Expert help may be engaged for design & development of Services. Ads & P.O.S. Promotion: Business promotion and dissemination through banners and launch events is recommended. Product Brochures should be developed from quality service providers. Sales & Distribution Network: Expert advice and distribution agreements are required. Price - Bulk Discounts, Cost plus Introductory Discounts: Price should never be allowed to compromise quality. Price during introductory phase may be lower and used as a promotional tool. Service cost estimates should be carefully documented before price setting.

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Human Resources List of Human Resource Description Owner Manager / Director Manager Operations Shift Supervisor Deployment Supervisor Accountant Special Guards General Guards Office boy Total Staff No. of Employees 1 1 2 2 1 6 52 1 66

Adequacy & Competencies: Recruitment of skilled and experienced staff should be undertaken. Performance Based Remuneration: Attempt to manage human resource cost should be focused through performance measurement and performance based compensation. Training & Skill Development: Encouraging training and skill of self & employees through experts and exposure to best practices is a route to success. Least cost options for Training and Skill Development (T&SD) may be linked with compensation benefits and awards.

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14.5 Useful Links Prime Ministers Office www.pmo.gov.pk Small & Medium Enterprises Development Authority (SMEDA) www.smeda.org.pk National Bank of Pakistan (NBP) www.nbp.com.pk First Women Bank Limited (FWBL) www.fwbl.com.pk Government of Pakistan www.pakistan.gov.pk Ministry of Industries & Production www.moip.gov.pk Ministry of Education, Training & Standards in Higher Education http://moptt.gov.pk Government of Punjab www.punjab.gov.pk Government of Sindh www.sindh.gov.pk Government of Khyber Pakhtunkhwa www.khyberpakhtunkhwa.gov.pk Government of Balochistan www.balochistan.gov.pk Government of Gilgit Baltistan www.gilgitbaltistan.gov.pk Government of Azad Jammu & Kashmir www.ajk.gov.pk Trade Development Authority of Pakistan (TDAP) www.tdap.gov.pk
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Securities & Exchange Commission of Pakistan (SECP) www.secp.gov.pk Federation of Pakistan Chambers of Commerce and Industry (FPCCI) www.fpcci.com.pk State Bank of Pakistan (SBP) www.sbp.org.pk

15. KEY ASSUMPTIONS

Particulars Sales Increase Increase in Staff Salaries Increase in Utilities (Electricity / Water / Gas) Increase in Rent Increase in Incidental Expenses Increase in Office Expenses Debt / Equity Ratio Depreciation o Renovation o Arms and Equipment o Office Furniture &Fixtures Bad debts Loan Period Loan Grace Period Loan Installments Financial Charges (Loan Rate) Tax Rate Assumption 10 % per year 10 % per year 10 % per year 10 % per year 10 % per year 10 % per year 90 : 10 10 % per annum (Diminishing Balance) 10 % per annum (Diminishing Balance) 10 % per annum (Diminishing Balance) 0.5 % of Sales/Services 8 Years 1 Year Monthly 08 % per annum Tax rates for OMC

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