Dadabhoy Institute of Higher

Education
North Nazimabad Karachi
Submitted To: Miss Nazneen Waseem
Submitted From: Zaheer Ahmed
Momin Hashmi

Class: MBA Fall 09

Department: Finance

Subject: Entrepreneurship

Presentation No: 3

Last date: 12, May, 2011

TABLE OF CONTENTS

 EXECUTIVE SUMMARY
 OUR VISION AND OBJECTIVES
 INDUSTRIAL ANALYSIS
 COMPITATIVE ANALYSIS
 INTRODUCTION OF THE PRODUCT
 HR PLANNING
 MARKETING PLANNING
 FINANCIAL PLANNING.
Executive Summery.
This whole project is concern for the development of the country for that reason we have
design the modern mobile housing schemes that will develop those areas of Pakistan who
are using mud houses, which creates lots of problem during the rains earthquakes, or are
much difficult to maintain, we are offering them a low budget mobile houses that are easy
to built and easy to maintain and if in future they need any changes they can easily do
that. Our mobile houses will change the old styles, this project will also decrease the cost
of raw material such as, iron, cement, bricks/blocks.
We will hire personnel and use our own machineries and units that will be purchase from
china. Initial investment will be provided by the owner of the company that might be
60% of the whole project and the rest of other will be arranging from the financial
institutions. We will hire the qualified staff from the different fields of expertise
Engineers, elicitations, carpenters, plumbers, marketing staffs, and financial staff.
Our vision and objectives
Our vision and our mission is to provide the low cost houses for every one, to achieve
these objectives we must first try to aware the people of those areas who are living in
the mud houses and to increase the living standard of ruler areas
INDUSTRY ANALYSIS.

Housing sector in Pakistan.

• The Housing Industry is the largest industry of Pakistan.

• Pakistan is one of the 20 countries of the world where Real Estate business is
on top of the list.
• According to unofficial figures, the turnover of just six housing projects in
Pakistan is equal to the annual budget of the country.
• Recently, for example, the CDA sold two big plots in Islamabad for Rs 12.96
billion at Rs 121.8 million per kanal.
• To judge the depth of this deal one has to look at the second largest bank of
Pakistan viz Habib Bank. It has 1,460 branches all over the country and is
operating in125 countries of the world.
• The bank earns Rs 5 billion profit every year. Last year when it was
privatized, it sold for Rs 22 billion only. Only two plots sold by the CDA
fetched 60 percent of that amount.
The housing and construction industry has enormous forward and backward
linkages and according to a modest estimate, 35-40 industries move in tandem
with this sector.
• Therefore, the industry has the greatest employment generation potential. It
can also create low-paid jobs of Chowkidars and ordinary construction
workers to medium-paid jobs of Masons, Carpenters, Electricians, Painters,
Plumber etc; and highly paid jobs for architects, engineers, designers,
decorators, contractors etc.
• It is also for this reason that the government has identified this sector as one of
the five major drivers of the growth as is reflected in the National Housing
Policy-2001 and the Prime Minister’s Initiatives under the “Housing for All”
program. According to 1998 census, Pakistan has over 19.3 million housing
 units while bout 24.8 million housing units are required for a population of
148.7 million people.
• Hence a shortfall of 5.5 million homes is estimated at the end of June 2004.
We need 570,000 units against the actual supply of 300,000 increasing annual
shortfall by 270,000 units.
• A number of measures have been taken by the government for reviving the
housing and construction sector, which has been declared a priority industry.
The government has also announced various incentives in the National
Housing Policy for providing affordable houses for the poor.
• A rapid growth in housing finance will significantly contribute to the
economy in the form of additional employment and support a variety of allied
industries.

ECONOMIC OVERVIEW OF CONSTRUCTION IN PAKISTAN.

Unfortunately construction sector is one of the most neglected sectors in Pakistan.

Although the construction sector has only a 2.3 percent share in GDP, its share of the
employed labor force was disproportionately large at 6.1 percent in FY07. The
construction sector is estimated to have grown by 17.2 percent in 2006-07 as against
5.7 percent of last year.
• The higher demand for construction workers is also reflected in a continued
double-digit rise in their wages since FY05. Their wages increased by 11.1
percent in FY07.
• The housing and construction sector in Pakistan plays an important role in
developing aggregate economy and reducing unemployment.
• It provides substantial employment opportunities as it contributes through a
higher multiplier effect with a host of beneficial forward and backward linkage in
the economy.
• The sector through linkages affects about 40 building material industries, support
investment and growth climate and helps reduce poverty by generating income
opportunities for poor household. It provides jobs to about 5.5 per cent of the total
 employed labor force or to 2.43 million persons, (2.41 million male and 0.2
million female) during 2003-04 (Economic Survey 2004-05).
• Unfortunately the construction sector is one of the most neglected sectors in
Pakistan. It is at low ebb, which can be judged from the fact that per capita
consumption of cement in Pakistan is one of the lowest among the developing
countries i.e. 72 kgs.
• It has been stated by the experts that the construction makes a noticeable
contribution to the economic output of a country;
• it generates employment and incomes for the people and therefore the effects of
changes in the construction industry on the economy occur at all levels and in
virtually all aspects of life.
• This implies that construction has a strong linkage with many economic activities,
and whatever happens to the industry will directly and indirectly influence other
industries and ultimately, the wealth of a country. Hence, the construction
industry is regarded as an essential and highly visible contributor to the process of
growth.
• The growth in the construction sector has eased during the fiscal year 2006 as
against the growth recorded during the previous fiscal year. However, despite the
decline in growth rates the recorded level remains above the growth rate recorded
in last fifteen years.
• The strong growth probably reflects a number of developments, including the
impact of the boom in the real estate market, availability of housing finance,
higher development expenditures by the government and greater foreign direct
investment (FDI) in the sector. The reported growth of the construction sub-sector
is clearly reflected in the allied industry indicators.
Competitive analysis.
After analyzing the housing and construction industry in Pakistan we did a lot of
competitive analysis work.
Because above statistics describes the best picture that in housing and construction
industry Government of Pakistan is big competitor with high potential and available
resources.
Other private housing schemes are also potential competitors with great market share.
One of the potential competitors among them is Behria Housing scheme. In March
2005, Bahria Town entered into an agreement with two large consortiums of
Malaysia viz TAK and MAX Corp for the following projects worth $11 billion: Phase
7 & 8 of Bahria Town, Rawalpindi; Margalla City on 50,000 acres at Margalla Hills;
Bahria Golf City on Expressway; 300 flats in Rawalpindi; 38-storeyed Tower for
Bahria Town City Centre according to Dubai design; 60-storey building at Clifton,
Karachi.
Just one Housing Project, i.e. Bahria Town, has signed agreements involving $11
billion with Malaysian companies. Compare this with $2 billion offered to Pakistan
for providing facilities to the US for facilitating the Afghan war. Thus, I claim that in
developing just one sector of Islamabad, Pakistan can get rid of all its foreign loans.
By developing four sectors we can increase our foreign exchange reserves to match
those of India. But consider the plight of the high-potential industry. It is facing the
following major problems.
(1) A few politicians, retired army officers and bureaucrats in joint operation have
formed a land mafia. Whenever a housing scheme is announced they buy 50-100
kanals at the heart of the scheme. They have hired thugs and have support from the
local administration. They hijack the whole housing scheme or start blackmailing the
owners. As an example let me disclose that a former minister purchased 100 kanals in
one of schemes. He was followed by a politician from southern Punjab who also
occupied the land illegally. I am still in litigation with him.
(2) The local administration supports the land mafia fearing revenge in the event of
their coming to power. They also make money. In 1996, the deputy commissioner of
a big city demanded Rs 110 million from private schemes..
(3) Every government in the past has tried to destroy this industry. The owners are
forced to pay for election campaigns. They are blackmailed by withholding issuance
of NOCs for utility services like electricity, gas and telephone.
These problems and threats to housing schemes are opportunities for MOBILE
HOUSING to launch its schemes with less risk of facing above risks and providing
 the homes at lower cost, with higher quality and/or energy efficiency, and/or that are
safer.

Pakistan Mobile housing Product.

Steel Prefab Houses.
Wooden Houses.
Prefab building system with APIP structure material, surrounding border material,
preplace interior trim, using big rail shelf and box to integrate material for transportation,
assembly on the spot according to the drawings and IB.
House composition.
Three bedrooms, one living room, one kitchen, three bathrooms, one indoor corridor, one
outer balcony, two sets of stairs.
Main material:
1. Steel structure and keel frame
2. Composited board
3. Exterior wall cladding

Uses of Temporary Transitional Housing.

Schools.
Headquarters.
Houses.
These are easy and quick to install and dismount, especially suitable for emergency
projects or reconstruction after disaster. High quality materials and reasonable design
make the house available for using repeatedly.
Marketing Plan Outline

The Challenge

The challenge in the initial stage is to capture market share and to survive in the housing
and construction industry to gain the competitor advantage

Situation Analysis

Company Analysis

• Goals:

To provide the shelter everyone.

• Focus

Our focused groups are average income population, rural areas, population of
natural disaster effected areas.

• Strengths

We are providing the luxurious, safest, cheaper homes with increased living
standard.

• Weaknesses

Less awareness about that product

Customer Analysis

• Number: . According to population census, Pakistan has over 19.3 million

housing units while bout 24.8 million housing units are required for a population
of 148.7 million people.

• Type: average income population, rural areas, population of natural disaster

effected areas.

• Value drivers

• customer base for particular products: domestic residence

Competitor Analysis

• Market position
 . According to 1998 census, Pakistan has over 19.3 million housing units
while bout 24.8 million housing units are required for a population of 148.7
million people.
Hence a shortfall of 5.5 million homes is estimated at the end of June 2004. We
need 570,000 units against the actual supply of 300,000 increasing annual
shortfall by 270,000 units.
As it is the growing industry because population is growing in Pakistan and
population is shifting from rural to urban areas so there is opportunities for new
housing in market.
Organizational Structure
As we first identify that this business can be stat a single person who have 60%
investment, so that is why the ownership belongs to the sole person who launch this
business. Our shareholder in this case are our suppliers because they can directly involves
to our business in case we need any credit they will help us to provide us the credit, this
thing will safe us from the bank intrest, because on the initial level we need some
financial add which will help us to survive. We will use centralize authority structure in
the organization but we will appreciate our employees to give us the plans. We will hire
the qualified and export team so that we can easily solve the problems and save the time.
Every individual of the team will play his or her role for achieving the company goals
and objectives, and we will try to solve the basic problems of the employees, and also we
will discus our future planes and new project planning with our low and high level
personnel, by this way we will increase the motivation of our employees and efficiency
of the team members. In different scenario we will use different techniques like bottom
up techniques and top-down techniques.
We will mostly recruit the following employees for our business.
1. Manager
2. Engineers
3. Architecture
4. Accountant.
5. Delivery men
6. Technicians.
 Strengths

Short fall in housing in Pakistan and problems and threats to competitors are our
strengths.

Weaknesses.

Less awareness about mobile housing is weakness.

Market shares

Opportunities and need of low cost housing will increase our market share as it
grows.

Macro-environmental analysis.

PEST analysis :

• Political and legal environment.

Political environment in Pakistan is less encouraging towards housing and

construction industry.

But legally any steps towards increasing the contribution of that industry are
encouraged.

• Economic environment.

• The housing and construction sector in Pakistan plays an important role in

developing aggregate economy and reducing unemployment.
• It provides substantial employment opportunities as it contributes through a
higher multiplier effect with a host of beneficial forward and backward linkage in
the economy.

Unfortunately construction sector is one of the most neglected sectors in Pakistan.

Although the construction sector has only a 2.3 percent share in GDP, its share of the
employed labor force was disproportionately large at 6.1 percent in FY07. The
construction sector is estimated to have grown by 17.2 percent in 2006-07 as against
5.7 percent of last year.
Social environment.

Society is in developing stage and our society is shifting from rural to urban areas so
need of new housing with luxuries at lowest cost is increasing.

Technological environment.

With the passage of time new technologies are being brought in Pakistan and new
technologies are welcomed in the environment of Pakistan.

Selected Marketing Strategy

Discuss why the strategy was selected, then the marketing mix decisions (4 P's) of
product, price, place (distribution), and promotion.

Product

The product decisions should consider the product's advantages and how they will be
leveraged. Product decisions should include:

• Brand name .

Pakistan mobile homes.

• Quality.

These are easy and quick to install and dismount, especially suitable for emergency
projects or reconstruction after disaster. High quality materials and reasonable design
make the house available for using repeatedly.

• Scope of product line to change the living standard

Price

Discuss pricing strategy, expected volume, and decisions for the following pricing
variables:

• List price 600,000

• Payment terms and financing options credit should be allowed for those who have
their own land

Distribution
we will distribute our goods and services from the main headquarter

Promotion

• Advertising, including media, newspaper, signboards.

• Public relations

• Promotional programs
Financial planning
For starting up this business in Pakistan, first we have to estimate the requirement of our
investment. With the help of industry analysis and from market survey, we find that Rs.
500,000,000. Then we find out that we have only 60% of the total investment to invest
for this business. If Rs. 500,000,000 investment is required for the business and we have
only 60% (300,000,000) of total investment; its means that will are lacking remaining
40% (200,000,000). So we have to arrange the 40% from any where. It’s a huge amount
and we can not get that much amount by borrowing from relatives and friends. Therefore
we have to take long term loan from bank. Bank will grant that amount but bank want
some assurance for the repayment or recovery of funds, that’s why we have to take long
term loan against our assets.

So we have 60% for our own investment (owner’s equity), from which we will buy a
building of Rs. 20,000,000 for office as well as for wear housing and we will buy
vehicles for Rs. 20,000,000 for the sake of supply of Mobile home and for office use. We
will buy supplies for office; the cost of those supplies will be 10,000,000. 10% of our
initial investment will be use the above mention Assets.

According to the market demand first we will import 100 units of mobile homes from
china which are more then the demand, because will have to maintain some investor with
us. the price of each mobile home will be 500,000. The cost of per mobile house will be
400,000 with all duties.

The forecasted balance sheet, cash inflows and some other calculations are given below
which will help you to under stand the financial plan of our business.

Pakistan Mobile Homes

Forecasted Balance sheet
 As on . . . . . . . . . . . .
Assets Amount Liabilities + Owner’s Amount
Equity
Cash 50,000,000 Mortgage loan 200,000,000
A/R 400,000,000
Inventory 20,000,000 Capital 300,000,000
Building 20,000,000
Vehicles 20,000,000
Supplies 100,000
Furniture 900,000
Equipment 6,500,000
Prepaid insurance 2,500,000
500,000,000 500,000,000

According to the market demand we realize that in the first month we will be able to sale
50 units of mobile homes. We can generate revenue of (600000*50) =30,000,000. The
cost will be (400,000*50) = 20,000,000.
The estimated life of the building is 20 years and the rate of depreciation for the building
will be 2.5% on straight line method.
The estimated life of the furniture is 5 years and the rate of depreciation for the furniture
will be 15% on straight line method.
The estimated life of the vehicles is 15 years and the rate of depreciation for the building
will be 10% on straight line method.
The estimated life of the equipment is 10 years and the rate of depreciation for the
building will be 10% on straight line method.

The salaries of our all employees could be amounted as 686,000 per month and we have
total numbers of employees are 43.
The tax rate that we will have to pay in Pakistan will be 12%
We consider that.
Calculating the projected cash flows with the help of the Pro Forma income
statement.
Month 1 Month 2 Month 3
Sales 30,000,000 30,000,000 48,000,000
Total costs 20,000,000 20,000,000 32,000,000
Gross profit 10,000,000 10,000,000 16,000,000
Deprecation (273,800) (273,800) (273,800)
Employee salaries (686,000) (686,000) (686,000)
Operational Exp (200,000) (200,000) (350,000)
POL (250,000) (250,000) (500,000)
Insurance Exp (1,250,000) (1,250,000) (2,000,000)
Advertisement Exp (2,000,000) (2,000,000) (3,000,000)
Interest expense 15 % (125,000) (125,000) (125,000)
Total Exp (4,784,800) (4,784,800) (6,934,800)
EBT 5,215,200 5,215,200 9,065,200
Tax (625,824) (625,824) (1,087,824)
Net profit 4,589,376 4,589,376 7,977,376
+Deprecation 273,800 273,800 273,800
Cash Flows 4,863,176 4,863,176 8,251,176

Calculating NPV Analysis to check whether to invest or not

NPV= -500,000,000 + 4,863,176 + 4,863,176 + 8,251,176
(1.0125)1 (1.0125)2 (1.0125)3
Npv= -500,000,000 + 4,803,136 + 4,743,838 + 7,949,334
=17,496,308

= -482,503,692
Gross profit percentage = gross profit/sales *100

Net profit percentage = net profit/sales *100

Expenses to sale = expenses/sales *100

Current ratio = current assets/ current liabilities

Quick ratio = current assets – inventory/ current liabilities

Debt to equity ratio = long term debt/owners equity *100