Project Report on PVC Pipes

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Page 1: Project Report on PVC Pipes

Twister Plastic Pvt. Ltd.Fantastic 4 Group

Page 2: Project Report on PVC Pipes

Twister Plastic Pvt. Limited

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Twister Plastic Pvt. Limited

Feasibility report on

“Twister Plastic Pvt. Limited”

IUB

Submitted to:

Sir Adeel Akhtar

Submitted by:

Muhammad Aamir

14

Muhammad Umer Shehzad

41

Imran Ali 44

Umer Arshad

74M.COM (MOR) 4TH SEM “FINANCE”

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DECLARATION

We hereby declare that the work done in the feasibility report entitled “Twister Plastic Pvt.

Limited” has been written out by us under the supervision of Lecturer Sir Adeel Akhtar. We

also hereby declare that this report has not been submitted for any degree elsewhere.

“Fantastic 4 Group”

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ACKNOWLEDGMENT

Countless thanks to Almighty ALLAH, the Lord of the whole universe and the greatest force

behind success in our life.

We bow our head before ALLAH Almighty, who blessed us with potential and stamina

to complete our project report. First of all we would like to pay our special regards and thanks to

respected teacher Sir Adeel Akhtar who provide us guidance at each and every step in the

completion of this report. We are especially thankful to those personalities who help us for the

preparation of this report.

“Fantastic 4 Group”

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Contributing our efforts to the welfare of Islam & human beings.

“Fantastic 4 Group”

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Executive Summary

Project

This proposed project is undertaken to establish a PVC Pipes manufacturing unit at the site of

Small Industrial Area Bahawalpur. There is currently high demand for PVC Pipes in the market.

To fulfill the gap of supply and demand in the market we are going to set up a new PVC Pipes

manufacturing unit. The plant shall be furnished with latest foreign technology and machinery.

Annual capacity of plant will be 1,800 tones at 75% capacity first year and after that plant will

work on 80% capacity. Working of plant will be 300 days in a year and tripled shifts per day 8

hours each. Four types of basic products will be manufactured 3, 4, 6, 12 inches diameters

products.

UPVC Fittings UPVC Fittings ASTM D-2466 (Sch. 40 and 80)

UPVC Pipes as per (ASTM) UPVC pipes (ASTM D-1785 Sch. 40, 80 and D-2241 SDR

SERIES)

UPVC Pipes as per (BS-3505/PS-3051) UPVC Pressure Pipes (Class B, C, D & E)

CPVC Pipes For Hot water (ASTM F-441 Sch. 40 and 80)

UPVC Fittings UPVC Fittings ASTM D-2466 (Sch. 40 and 80)

CPVC Fittings CPVC Fittings

Well Casing Pipes Well Casing Pipes (PS 3505) (PS 3051) (Class B, C, D & E)

Location and Site

The location of unit is Bahawalpur. Site for the PVC Pipes manufacturing unit is the Small

Industrial Area Bahawalpur. All the physical facilities and plant installation will be at that site.

Sponsors

There are four sponsors of the project. Mr. Muhammad Aamir , Mr. M. Umer, Mr. Imran Ali

and Mr. Umer Arshad. They are only the sponsors of the PVC Pipes manufacturing unit.

Market and demand capacity

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The serving place and market for the project unit is Bahawalpur. It is selected because all the

cities are surrounding and it is in the center of these surrounding cities. The distribution will be

more convenience. And the capacity of the unit is 1,800 tones production in a year and it will

work on 75% capacity level at first year then in the coming years the capacity will be enhanced

to 80%.

Material and inputs

There are two major inputs which are used in the production of PVC Pipes. One is Raisin and

other is Engro chemical steplizer. These materials are in 25kg bags and really high cost

materials.

Project engineering

Different types of machineries are used in the production process. CMAT machine imported

from USA, Mixer machine, die machine, boiler and compressors are purchased from local

market.

Man power

Man power is very important factor. Man power of Twister Plastics Pvt. Ltd is 12 plant workers,

4 machine operators and helpers and 1 is the plant manager. All the workers are very skilled and

experienced.

Implementation Schedule

The projected was started from 1 June, 2012. Through the difference phases of project

development the project will be in the operation process on 1 Jan, 2013 INSHALLAH.

Cost of project

Total estimated cost of the project is Rs. 62 million in which Rs. 49.4 million is fixed cost

estimated and Rs. 12.6 million is the estimated variable cost of the project.

Financial Plan

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The financial plan is very important for the project decisions. It shows the debt and equity ratio

of the project. The financial plan of Twister Plastics Pvt. Ltd is very simple and straight forward

which is 80: 20 debt and equity ratio.

Financial assistance

Financial assistance is taken from MCB, HBl and NBP at the rate of 21% interest rate.

Operating result

Gross profit 63,826 74,068 74,746

Operating profit 40,096 46,953 47,019

Profit before workers fund 35,039 42,362 42,894

Net profit 26,275 32,040 32,348

There are certain selected operating results for the unit. (000)

2013 2014 2015

Financial position of business(000)

2013 2014 2015

Total Current

Assets 53,168 80,147 93,212

Total noncurrent

assets 54,269 59,073 63,877

Total current

liabilities 22,177 25,025 13,651

Total Long

Term Debt 27,940 24,835 21,730

Total Equity 57,320 89,360 121,708

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Sales Revenue 251,424 294,641 297,734

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Economic indicators

There will be employment to the community. The peoples will have benefits due to the

establishment of the unit. Living standard of peoples will be increased. Infrastructure

improvements and other social benefits. The unit will also participate in the national economy as

well.

Terms and conditions

There may be some problems for the community. Pollution problem, sewerage problem and

other chemical usage and smell problem may arise. There will be some steps taken to control

these problems. Certain hurdles were also there during the project completion. In the data

gathering there was the big hurdle. There was no proper data or information available for the

project. To get relevant data process was time consuming. Much problem to find out the exact

fact and figures about the PVC Pipes. Target peoples were not much educated to get information

from them was big issue. The project development each phase is very time consuming and

required high skills.

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Table of Content:

Introduction to Project..............................................................................................................................12

Market and Demand Analysis of PVC Pipes...............................................................................................18

WHAT IS PVC?....................................................................................................................................18

Different Properties of PVC...................................................................................................................18

Products....................................................................................................................................................19

UPVC Fittings UPVC Fittings ASTM D-2466 (Sch. 40 and 80)..................................................................19

UPVC Pipes as per (ASTM) UPVC pipes (ASTM D-1785 Sch. 40, 80 and D-2241 SDR....................19

UPVC Pipes as per (BS-3505/PS-3051) UPVC Pressure Pipes (Class B, C, D & E)............................20

CPVC Pipes For Hot water (ASTM F-441 Sch. 40 and 80)...................................................................20

UPVC Fittings UPVC Fittings ASTM D-2466 (Sch. 40 and 80)...........................................................21

UPVC Pressure Fittings UPVC Pressure Fittings..................................................................................21

CPVC Fittings CPVC Fittings...............................................................................................................22

Well Casing Pipes Well Casing Pipes (PS 3505) (PS 3051) (Class B, C, D & E).................................22

Poly Vinyl Chloride Pipes.....................................................................................................................22

GLOBAL MARKET OF PVC...........................................................................................................................23

Market of Pipe Industry in Pakistan.......................................................................................................24

PVC Growth Potential in Pakistan.........................................................................................................24

Technical Analysis......................................................................................................................................27

Location of the Project..........................................................................................................................27

Manufacturing Process..........................................................................................................................27

Raw Material.........................................................................................................................................28

PRODUCTION CAPACITY.................................................................................................................29

Financial Analysis.......................................................................................................................................31

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ASSUMPTION UNDERLYING EARNING FORECAST...................................................................34

Assumptions:-........................................................................................................................................46

Economical Analysis..................................................................................................................................48

INITIAL IMPACT................................................................................................................................48

EMPLOYMENT OPPORTUNITIES............................................................................................................49

BENEFIT COST ANALYSIS...............................................................................................................49

Ecological Analysis.....................................................................................................................................51

LEAD FREE PVC PIPE........................................................................................................................51

Storage & Handling...............................................................................................................................52

Safety.....................................................................................................................................................53

Project Limitations................................................................................................................................54

Suggestions............................................................................................................................................55

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Introduction to Project

Project was started from 1 June, 2012. This proposed project is undertaken to establish a PVC

Pipes manufacturing unit at the site of Small Industrial Area Bahawalpur. There is currently high

demand for PVC Pipes in the market. To fulfill the gap of supply and demand in the market we

are going to set up a new PVC Pipes manufacturing unit. The plant shall be furnished with latest

foreign technology and machinery. Annual capacity of plant will be 1,800 tones at 75% capacity

first year and after that plant will work on 80% capacity. Working of plant will be 300 days in a

year and tripled shifts per day 8 hours each.

Total cost of project is estimated Rs. 62 million. The proposed project is financed by Debt and

Equity in the ratios of 80: 20 respectively. This total Cost of the project comprises of Fixed

Assets Rs. 49.4 million and Initial Net Working Capital of Rs. 12.6 million.

The project is financed by long term loan up to Rs. 12.4 million and the remaining cost of the

project will be financed by the sponsor's share capital of Rs. 49.6 million. There are four

sponsors of the proposed project Mr. Muhammad Aamir, Mr. M. Umer, Mr. Imran Ali and Mr.

Umer Arshad & loan is taken at 21% of interest rate.

The capacity of the unit is 1,800 tones production at 75% in first year and in the coming years it

will increase to 1,920 tones as 80% capacity. There is much gap is available in the market to

fulfill the gap unit will produce and sell certain level of production and try avail the opportunity

and get maximum benefits.

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Gantt chart is used to give the sequence of the activities with the time distribution of the project.

Project sanction 1month ……....

Start from 1 May 2011

Civil works 3 months ………………………….

Training 2months ...…………

Machine of site 15days ……

Installation and erection ……....

1month

Plant commissioning 1month ……

Commercial operation ……

15days

There are certain Government rules and policies about the PVC pipes. Some should be taken to

make society pollution free and make the environment pleasant. Government has restricted to use

the danger chemicals. Use the chemicals which are good for the safety of environment. Make

proper community safety system.

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The target markets of the PVC pipes unit are all the plastic and iron material retailers and

distributors. Retailers of Bahawalpur and all surrounding cities like Multan, Sahiwal,

Bahawalnagar, Rahim yar Khan, Chishtian, Lahore. These all cities are come in the target market

of the unit. It has a very big market and has more future demand potential. Company will use

there own distribution channels and local channels to make easy and convenience availability of

the PVC pipes.

There are certain promoters of the Twister Plastics. It will have marketing staff, selling staff,

advertisement strategies and local media channels for the promotion purpose. In the start

companies staff and management they promote the company through brushers, cards and

personal marketing.

The project is financed by the sponsors and financial institutions. The fund which is received

through both sources is allocated to the fixed assets and current assets of the company. Fixed

assets are 54,269 is allocated from total assets 107,437 and current assets are 53,168.

The corporate set up is the partnership. There is partnership deed between four members Mr.

Muhammad Aamir , Mr. M. Umer, Mr. Imran Ali and Mr. Umer Arshad. They invest with

equal proportion and also share the loss and profits with equal ratios. All the terms and

conditions are negotiated between them. They all equally participate in management. They all

are responsible for decisions of the company. They also are the management of Twister Plastics

Pvt. Limited.

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Market and Demand Analysis of PVC Pipes

WHAT IS PVC?Polyvinyl chloride, PVC – commonly known as vinyl – is 2nd most sought after thermoplastic. It

is a chlorinated hydrocarbon polymer - its basic building blocks are chlorine, carbon and

hydrogen. While most plastics are made mostly of petroleum, only 40 percent of the PVC

molecule comes from petroleum; 60 percent of it is chlorine, from salt, NaCl.

PVC is used for producing high quality leakage free pipelines for conveying water, sewerage or

effluent, insulating material for electric cables in construction industry, covering for floors, Door

& Window Profiles, Toys, Food packaging, Furniture, Automobile industry, Electronics,

Medical usage and shoe manufacturing industry.

Different Properties of PVC

Thermoplastic

Lightweight, toughness and durability

Low thermal conductivity

Good insulation properties

Variety of Colors

Corrosion and abrasion resistance

Weather ability

Fire retardant properties

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ProductsUPVC Fittings UPVC Fittings ASTM D-2466 (Sch. 40 and 80)

 

TWISTER UPVC Fittings available in sizes from ½” to 12”, produced in-house and

also arranged through imports are meant for connections in potable water supply, pressure

systems, sewerage, drainage, housing, industrial, chemical effluents and others. Colors: White

and Grey.

UPVC Pipes as per (ASTM) UPVC pipes (ASTM D-1785 Sch. 40, 80 and D-2241 SDR

SERIES)

TWISTER UPVC pipes according to ASTM D-1785 (SCH-40 & 80, and D-2241 SDR Series)

have excellent chemical resistance across their operating temperature range, with a broad band

of operating pressures. Due to their long term strength characteristics, high stiffness and cost

effectiveness TWISTER UPVC systems accounts for a large proportion of piping installation,

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such as for potable water supply / conveyance, pressure systems, sewerage, drainage, housing,

industrial and chemical effluents. TWISTER UPVC pipes are available in diameters from ½” to

24" in standard length of 6 meters in white colors.

UPVC Pipes as per (BS-3505/PS-3051) UPVC Pressure Pipes (Class B, C, D & E)

TWISTER PVC pressure pipes according to specification PS-3051 (BS-3505) are capable

of withstanding under extreme pressure. These pipes are meant for conveyance and

distribution of potable water, sewerage, irrigation, agriculture, under ground fire fighting

lines, industrial effluents and other applications. Pipes classified in Class B, C, D & E

according to their pressure rating and wall thickness are available in diameters from ½” to 24" in

standard lengths of 4 and 6 meters. Color: Grey & Blue.

CPVC Pipes For Hot water (ASTM F-441 Sch. 40 and 80)

Twister PVC pipes according to ASTM F-441 (SCH 40 & 80) produced from a specialized blend

of polymers with a higher class transition point. The Application of PVC pipes include

conveyance of hot water from geyser to end use, chemical, industrial and all kind of hot water

distribution for temperatures up to 93º C. The pipes range starts in diameters from ½” to 12" in

standard lengths of 6 meters. Color: Grey.

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UPVC Fittings UPVC Fittings ASTM D-2466 (Sch. 40 and 80)

 

TWISTER UPVC Fittings available in sizes from ½” to 12”, produced in-house and

also arranged through imports are meant for connections in potable water supply, pressure

systems, sewerage, drainage, housing, industrial, chemical effluents and others. Colors: White

and Grey.

UPVC Pressure Fittings UPVC Pressure Fittings

uPVC Pressure Fittings available in sizes from ½” to 24” (imported), for pressure applications in

Industries, chemical plants, R.O. plant, pressure water supply, and pump houses. Color: Grey.

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CPVC Fittings CPVC Fittings

 

TWISTER CPVC Fittings available in sizes from ½” to 8”, produced in-house and

arranged through imports are mainly meant for potable hot water distribution for temperatures up

to 93º C, besides there are several other chemical & industrial applications on elevated

temperatures within defined recommendation. Color: Grey.

Well Casing Pipes Well Casing Pipes (PS 3505) (PS 3051) (Class B, C, D & E)

TWISTER Well Casing / Steiner’s / Slotted or Perforated / Screen pipes, are produced

from UPVC pressure pipes according to PS-3051 (BS-3505), The applications of these pipes

include , wells, boring, canals, rivers, roadside drainage, playgrounds and others, Available

in Class B, C, D & E in pipe diameters from 3” to 24" in standard lengths of 4 and 6

meters. Color: Grey / Blue.

Poly Vinyl Chloride Pipes

PVC is a versatile material for piping and has replaced conventional pipes made from

conventional materials such as Galvanized Iron (GI), Cast Iron, Asbestos Cement and Concrete

Cement. Its compatibility with most fluids, lower cost of material handling and installation,

unique combination of properties and availability of highly reliable jointing system makes it an

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excellent competitor in the piping world, resulting in a product that is a viable competitor to

pipes made from other materials in dimensions up to 20 inches.

The PVC pipe manufacturing industry has presence in all major industrial cities of Pakistan (i.e.

Karachi, Multan, Burewala, Lahore, Sialkot, Narrowal, Faisalabad, Gujranwala, Gujarat, Jhelum,

Rawalpindi & Peshawar) which consists of around 400 manufacturing units and manufactures

72,000 metric tons annually (2011). These producers can be classified as part of organized and

unorganized sectors. The units can be classified as follows:

Large Units: 24-30 units

Medium Units: 100-125 units

Small Units: 250 units.

GLOBAL MARKET OF PVCVinyl’s low cost, versatility, unique set of properties and performance makes it the material of

choice for dozens of industries such as health care, communications, aerospace, automotive,

retailing, textiles and construction. In the product form it can be as rigid as a pipe or as pliable as

a plastic wrap. Over the past few years the market for PVC is on a steady rise. The major driver

for the growth is the increased penetration of PVC in insulation cables and pipes.

However, the building and construction industries are the basic marketplaces for pipe and the

pipe industry usually finds itself firmly ensconced among those boom and bust industries which

ride the coattails of our nation's economic fortunes. Another factor of growth in PVC pipes is

innovations in pipe resins, pipe structures and pipe processing technology.

In the global market PVC pipes and fittings constitute the largest volume application at 36% of

the marketplace. Worldwide demand for these pipes is forecasted to increase more than four

percent per year through 2007.

In the European pipe market, plastic pipes rank first among other materials and globally plastic

pipes are used at about 54% of the total pipes used. Polyvinyl chloride (PVC) takes the lion's

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share at around 62% of the global market. Polyethylene (PE) has 33.5%, while polypropylene

(PP) takes about 4.5%. In Europe, 1.5 million tons of PVC was used in 2002 to make pipes.

Similarly in case of USA pipe demand is projected to grow 2.5% annually to 15.5 billion feet in

2007.

Market of Pipe Industry in PakistanThere are different types of materials used for piping in Pakistan such as Asbestos Cement (AC),

Mild Steel (MS), Galvanized Iron (GI), Poly Vinyl Chloride (PVC), Cast Iron (CI), Reinforced

Concrete Cement (RCC) and Ductile Iron (DI). Majority of piping applications used in Pakistan

range from 0.5” to 60” die sizes.

Cluster Development Program PVC Pipes, Lahore Cluster Diagnostic Study 11

Sector wise alternatives to PVC are depicted in the table below:

Water HDPE, Concrete, Copper, PEX Sewer Concrete, HDPE

Conduit & Ducting HDPE, Steel, Aluminum

Drain Waste and Vent (DVM) Cast Iron, Copper, ABS, PEX

Agriculture & Drainage HDPE, Concrete

PVC Growth Potential in Pakistan At present only the most basic PVC applications are being made in Pakistan and that also

of low quality. Reasons being:

Lack of exposure in international markets

Lack of information about PVC processing and its versatility

If Pakistan’s per capita consumption (presently around 0.5 kg/person) becomes at par

with world average PVC per capital consumption of around 4.5 kg/person, and then

Pakistan would need 585,000 tons of PVC per annum at present population level.

The number of jobs created by setting up the integrated facilities to produce PVC and by

setting up PVC processing units will be more than 50,000.

The incremental impact of producing and processing PVC on GDP can amount to a

staggering figure of $ 1 billion.

Import substitution $345 Millions

Export (25% of domestic production) $187 Millions

Domestic sales $561 Millions

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Energy saving in processing PVC pipes only $48 Millions

In 2011

Current Demand =93,671 Thousand kilogram’s (kg)

Determine the Projected Demand

Demand is projected for the PVC Pipes.

Demand is projected in tonesYear Demand

2013 88,097

2014 89,483

2015 91,356

Determine the projected supply

Supply side is covered for the PVC Pipes. Almost, 400 units supply the PVC Pipes in the market.

Supply is projected in tones.Year Supply2013 73,8002014 76,4002015 81,264

Demand and Supply gap

Gap is the difference between demand and supply.

Gap = Demand --- Supply

Gap is determined in tonesYear Projected Demand Projected Supply Gap Gap in % 2013 88,097 73,800 14,297 16.2

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2014 89,483 76,400 13,083 14.62015 91,356 81,264 10,092 11

Note: As the gap is +ve for the PVC Pipes, Market have potential. On that base decision will be made to establish a new unit to fulfill the gap and the unit or project will successful in the future.

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Technical Analysis

Location of the Project

The project is proposed to set up at Small Industrial Area Bahawalpur. The site enjoys the

following advantages:-

- Easy availability of raw material

- Access to the main road, Sources of Power, water, fuel etc.

- Availability of transport & communication like telephone, telex, Internet etc.

- Availability of skilled and Un-Skilled manpower

- Free from other environmental hazards like water logging, floods, salinity etc.

Manufacturing Process

Raw Material

The manufacturing process comprises of the following main steps:

a) Material handling and Storage

b) Mechanical Pretreatment

i) Mixing of materials

ii) Compression

iii) Die meters and product shaping

c) Mechanical Pressing

d) Finish good handling

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Mixing of Materials

Compression

Die Meters Setting and Product Shaping

Finish GoodRaw Material

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A) Raw material handling and storage

The material for the pipes is received from suppliers and stored material up to the requirements

of the unit.

B) MECHANICAL PRETREATMENT

Material is mixed with the chemicals and makes a mixer. Then that mixer is inserted in the

machines which give the final shapes to the products. Four types of product developed and these

are different in their die meters.

C) MECHANICAL PRESSING

At this stage the mechanical compression is done. Then through the further manufacturing

process products are developed in the final shapes. The prices of the material are high. Material

is used according to the requirements.

D) Finish good handling

Finish goods are handled. Final goods are stored and sell at the market prices.

MATERIAL AVAILABILITY

The material is easily available. To see the conditions of Pakistan the availability of material may

be a problem. Although the material for pipe manufacturing is very high cost but the availability

in the market is easy. Chemical received from Engro chemicals and raisin received from other

suppliers.

PRODUCTION CAPACITY

The Plant is capable of 140 bags of raw material usage per day. It is based on 300 working days

per annum and tripled shift per day of eight hours. To fulfill the capacity level foreign

technology and machinery will be adopted. Plant will be capable to produce 2400 tons of output

if work at 100% capacity. In the start plant will work on 75% capacity and production capacity

will be 1800 tones.

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Financial Analysis

In the financial analysis certain type of statements developed for the proposed project. There is

detail annexure is given.

Annexure I Twister Plastics Pvt. Limited (Proposed) SME's Bahawalpur Estimated Cost of Land

Rs. In (000)Sr. no. Description Area in marlas unit cost Total cost

1 Land 140 80,000 11,2002 Site development expenses 140 1,000 1403 Registration and legal expenses 140 3,125 4374 Stamp Duty 140 6,250 875

Total cost of land 12,652

Annexure II

Twister Plastics Pvt. Limited (Proposed) SME's Bahawalpur Estimated Cost of Civil works

Rs. In (000)

Sr. no. Description

Type of building

unit of construction

covered area

rate per unit Total cost

1 Machinery rooms Rcc Square feet 13,613 550 7,4872 Office rooms Rb Square feet 2,722 650 1,7693 Store room Rb Square feet 12,251 550 6,7384 Ware house Rb Square feet 8,167 500 4,0845 Bath rooms Rb Square feet 816 500 4086 Boundary walls Rb Square feet 3,750 80 3007 Guard room Rb Square feet 544 500 2728 Contingencies 1,000 Total cost of civil 22,058

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works

Annexure III

Rs. In (000)Sr. no. Description Qty unit cost Total cost

1 CMAT 1 1,00,00,000 10,0002 Mixer 1 15,00,000 1,5003 Die 1 500,000 5004 Boiler and compresor 1 12,00,000 1,2005 Motor pump 2 25,000 506 Generator 1 12,00,000 1,2007 Installation of machinary 2508 Transpotation cost 1,3209 Insurance cost 660

Total cost of machinary 16,680

Estimated Cost of Machinary Twister Plastics Pvt. Limited (Proposed) SME's Bahawalpur

Annexure IvTwister Plastics Pvt. Limited (Proposed) SME's Bahawalpur

Rs. In (000)Sr. no. Total cost

1 5,8272 22,0583 16,6804 2,6005 8006 3007 1,200

49,465Add 12,625

62,090

Estimated Cost of Project

LandBuildingMachinaryVehicles

Pre operating expensesEstimated total fixed costInitial net working capitalTotal estimated cost of project

Description

Furniture and fixturesOffi ce equipment

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Annexure vTwister Plastics Pvt. Limited (Proposed) SME's Bahawalpur

Rs. In (000)Amount

9,000700

5,0002,7001,000

18,400

5,77512,625

Estimated Net initial working capital

DescriptionCurrent assetsCashA/R

Net initial working capitalLoan 75% of inventoriesCurrent liabilities

Inventory Raw material Finish goodsPrepayments Total current assets

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ASSUMPTION UNDERLYING EARNING FORECAST

PRODUCTION AND SALES

1. The proposed PVC unit is based on modern technology and raw material consumption

will 140 bags per day.

2. Operating efficiency of the project is assumed at 75% for the first year and 80% for the

second 80% for third and subsequent years.

3. In line with recent experience of other units based on the most modern pipes

machinery, 100% of the production would be sold locally in local market of

Bahawalpur and other surrounding cities.

4. Year-end Inventory is assumed at 10% of the production of that particular year.

5. Selling Prices are assumed in accordance with the current prevailing rates in the local

market. These selling prices are based on average of last five years.

Based over these assumptions, following is the year-wise detail of production, Sales and Sales

Revenue of the proposed project:

Annexure viTwister Plastics Pvt. Limited (Proposed) SME's Bahawalpur

Estimated Income statement

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Rs. In (000)Description 2013 2014 2015

Sales revenue 251,424 294,641 297,734Cost of sales Raw material 184,961 197,292 197,292Labor 6,077 6,685 7,353Overheads 12,200 12,740 13,258Depreciation 5,204 5,204 5,204Total cost of manufacturing 208,442 221,921 223,107Inventory adjustment -less 20,844 1,348 119Cost of sales 187,598 220,573 222,988Gross profit 63,826 74,068 74,746Operating expenses General and administrative expenses 6,130 6,490 6,886Selling expenses 17,600 20,625 20,841Total operating expenses 23,730 27,115 27,727Operating profit 40,096 46,953 47,019Interest expenses 4,657 4,191 3,725Amortization of pre-production exp. 400 400 400Profit before workers fund 35,039 42,362 42,894Workers fund 8,764 10,322 10,546Net profit 26,275 32,040 32,348

Annexure vi ATwister Plastics Pvt. Limited (Proposed) SME's Bahawalpur Assumption underlying earnings forecast

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Production at 100% capacityPVC Pipes manufacturing

140 bags of raw material / dayNo of vessals

% output

Quantity in ''tones''

3'' PVC Pipes 4 30 7204'' pipes 4 20 4806'' pipes 4 30 72012'' pipes 4 15 360wastage 4 5 120Total 2,400

Annexure VI A Cost of Production Raw Material

Years 2013 2014 2015Capacity utilized 75% 80% 80%

Required raw material:

DescriptionQuantity in

''tones'' 140 bags of raw material / day 1,800 1,920 1,920Total quantity consumed 1,800 1,920 1,920 Cost of raw material

Description Rs in ''000'' Raw material @ 102,756 per tone 184,961 197,292 197,292Total cost 184,961 197,292 197,292

Annexure VI ALabor cost

Plant laborNo. of Employees Salary/Month/Worker

Annual salary ''000''

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Plant manager 1 60,000 720Machine operators 2 30,000 720Helper 2 20,000 480Plant labor 12 16,000 2,304Pean and sweeper 4 10,000 480Guard 2 10,000 240Store keeper 1 20,000 120Total 5,064Fringe benefits on basic salary 20% 1,013Total labor cost 6,077

Year wise wages of labor Rs in ''000''Description 2012 2013 2014Total cost of labor 6,077 6,685 7,353

Annexure VI A Manufacturing overhead cost

Description Rs in ''000''Fixed costElectricity expense 800 Insurance expense 1,500 Machinery and Building maintenance 1,800 Total fixed cost 4,100 Variable overheadsElectricity expense 9,000 Machinery and Building maintenance 1,800 Total variable over heads 10,800

Year ending manufacturing overheads as per different capacities

Description 2,013 2014 2015 75% 80% 80% Rs in ''000''

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Fixed cost 4,100 4,100 4,100Variable cost 8,100 8,640 9,158Total overhead cost 12,200 12,740 13,258

Annexure VI A Year ending 30th DecemberCapacity utilized 2011 2014 2015 75% 80% 80% Quantity in tones

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Production of 3'' PVC Pipes a) No of units manufactured 540 576 576 Add: Opening inventory … 54 58 Total units available for sale 540 630 634 Less: Closing inventory 10% of production 54 58 58 Units sold 486 572 576 Production of 4'' PVC Pipes b) No of units manufactured 360 384 384 Add: Opening inventory … 36 38 Total units available for sale 360 420 422 Less: Closing inventory 10% of production 36 38 38 Units sold 324 382 384 Production of 6'' PVC Pipes c) No of units manufactured 540 576 576 Add: Opening inventory … 54 58 Total units available for sale 540 630 634 Less: Closing inventory 10% of production 54 58 58 Units sold 486 572 576 Production of 12'' PVC Pipes d) No of units manufactured 270 288 288 Add: Opening inventory … 27 29 Total units available for sale 270 315 317 Less: Closing inventory 10% of production 27 29 29 Units sold 243 286 288 Sales Revenue Rs in ''000''

DescriptionUnit price 75% 80% 80%

a) 3'' pipes 202,500 98,415 114,817 116,458b) 4'' Pipes 116,000 37,584 44,312 44,544c) 6'' pipes 170,000 82,620 97,240 97,920d) 12'' pipes 135,000 32,805 38,272 38,812Total sales 251,424 294,641 297,734

Annexure VI ASelling expensses Selling expensses are assumed to be 7% of sales revenue Description 2013 2014 2015

Rs in

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''000''Selling expneses 23,270 27,148 27,535

Annexure VI AAdministrative and general expenses

Designation No of

Employees Salary / Month

Annual salary in '000'

Managing director 1 120,000 1,440Accountant 1 40,000 480Clerk 2 25,000 600Gowdon keeper 2 20,000 480total 3,000Fringe benefits 20% of basic salary 600Total salary 3,600

General expenses

DescriptionYear expensis in '000'

Traveling expenses 300 Printing and stationary 180 Telephone, telex and postage 180 Rent and taxes 1,200 Entertainment 200 Legal and audit 170 Miscelllaneous 300 Total 2530 Assumption:

Administration salaries will increase @ 10% every year

Depriciation Rs in ''000'''15% of building 3,30910% of Machinary 1,6686% vehicles 1567% of furniture and fixtures 565% of office equipments 15

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total 5,204

Annexure VII

Twister Plastics Pvt. Limited (Proposed) SME's Bahawalpur Estimated Cash Flow Statement

Rs. In (000)

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Operating years

years ending Dec. 31 2012 2013 2014 2015

SOURCES OF FUNDS:

Operating Profits 0 40,096 46,953 47,019

Depreciation 0 5,204 5,204 5,204

Total Funds from Operation 0 45,300 52,157 52,223

Other Sources:

Long Term Loan 31,045 0 0 0

short term Bank Borrowings 0 0 0 0

Paid-Up Capital 31,045 0 0 0Total Sources of Funds 62,090 45,300 52,157 52,223

APPLICATION OF FUNDS: 

Investment in Fixed Assets 48,265 0 0 0

Financial Charges during Construction 0 0 0 0

Pre-Production Expenses 1,200 0 0 0Repayment of: Long Term Loan 0 0 3,105 3,105 Financial Charges On:

Long Term Loan 0 4,657 4,191 3,725

short term Bank Borrowings 0 0 0 0

PAYMENT OF:

Taxes   0 0 0 0

Dividends   0 0 0 0

Worker's Fund 0 0 8,764 10,322Short Term Investment 3,000 10,000 30,000 32,000

Increase in Current Assets (Other than Cash) 6,000 25,624 2,156 218

Total Application of Funds 58,465 40,281 48,216 49,370

Cash Surplus/(Deficit) 3,625 5,019 3,942 2,853

Cash at the Beginning of the Year 0 3,625 8,625 12,567

Cash at the end of the year 3,625 8,644 12,567 15,420

Annexure VIIITwister Plastics Pvt. Limited (Proposed) SME's Bahawalpur

Estimated Balance sheet

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Rs. In (000)

End of Construction Operating years

years ending Dec. 31 2012 2013 2014 2015ASSETS:  

CURRENT ASSETS:   Cash and Bank Balance 3,625 8,644 12,567 15,420Short Term Investment 3,000 10,000 30,000 32,000Accounts Receivable 0 700 1,700 9,794Inventories:   Raw material 5,000 11,980 12,688 12,688Finished Goods 0 20,844 22,192 22,310Advances, Deposits and Prepayments 1,000 1,000 1,000 1,000Total Current Assets 12,625 53,168 80,147 93,212FIXED ASSETS:   Fixed Assets at Cost 48,265 48,265 48,265 48,265Accumulated Depreciation on Fixed Assets 0 5,204 10,408 15,612Fixed Assets Net 48,265 53,469 58,673 63,877Intangibles 1,200 800 400 0Total Assets 62,090 107,437 139,220 157,089LIABILITIES AND EQUITY: CURRENT LIABILITIES: Short Term loans 0 10,308 11,598 0interest payable 0 0 0 0Worker's Fund Payable     8,764 10,322 10,546Current Maturity of Log Term Debt   0 3,105 3,105 3,105Total Current Liabilities   0 22,177 25,025 13,651LONG TERM DEBTS: total Long Term Debt 31,045 27,940 24,835 21,730EQUITY:     Paid-Up-capital 31,045 31,045 31,045 31,045Retained Earnings 0 26,275 58,315 90,663Total Equity 31,045 57,320 89,360 121,708Total Liabilities and Equity 62,090 107,437 139,220 157,089

Annexure IXBreak even analysis

at 75% capacity

Variable cost

fixed cost

total cost

Raw material 184,961 0 184,961Labor 6,077 0 6,077Overheads 8,100 4,100 12,200

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Depreciation expenses 0 5,204 5,204Administrative & General Expenses 0 6,130 6,130Selling Expenses 17,600 0 17,600Interest / Mark-Up Expenses 0 4,657 4,657Amortization of Pre-Production Expenses 0 400 400Total: 216,738 20,491 237,229

20,491Break even point = ----------------------------------------- *75%

251,424 -- 216,73844.30%Break even point

Annexure IXTwister Plastics Pvt. Limited (Proposed) SME's Bahawalpur

Break Even Analysis

cash break even at 85% capacity Variable cost

fixed cost

total cost

Raw material 197,292 0 197,292Labor 7,353 0 7,353Overheads 9,158 4,100 13,258Administrative & General Expenses 0 6,886 6,886Selling Expenses 0 20,841 20,841Interest / Mark-Up Expenses 0 3,725 3,725workers fund   0 10,546 10,546Debt payment 0 3,105 3,105Total: 213,803 49,203 263,006

49,203 = ----------------------------------------- *80%

297,734 -- 213,803

46.90%

Break even point

Break even point

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Capital Operating Worker's Net Cash Net Cash InflowOutlay Profit Fund Return (Outflow)

0 55,465 - - - - - -55,4651 30,231 40,096 5,204 8,764 0 36,536 6,3052 18,216 46,953 5,204 10,322 0 41,835 23,6193 17,370 47,019 5,204 10,546 0 41,677 24,3074 0 47,019 5,204 10,546 0 41,677 41,6775 - 47,019 5,204 10,546 0 41,677 41,6776 1,500 47,019 5,204 10,546 0 41,677 40,1777 - 47,019 5,204 10,546 16,413 25,264 25,2648 - 47,019 5,204 10,546 16,413 25,264 25,2649 - 47,019 5,204 10,546 16,413 25,264 25,264

10 - 47,019 5,204 10,546 16,413 25,264 25,26411 1,500 60,345 2,755 4,828 24,983 33,289 31,78912 - 60,345 2,755 4,828 24,983 33,289 33,28913 - 60,345 2,755 4,828 24,983 33,289 33,28914 - 60,345 2,755 4,828 24,983 33,289 99,43215 -41,310 60,345 2,755 9,656 49,965 3,479 44,789

IFRR 42%

Annexure-XI

Calculation of Internal Financial Rate of Return

Years Depreciation Taxes

Twister Plastics Pvt. Limited (Proposed) SME's Bahawalpur

Rs in ''000''

Assumptions:-Calculation of IFRR for the project has been carried out under the following

assumptions:-

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1. The economic life of the project would be 15 years

2. The entire capital outlay would be incurred one year prior to the

Commencement of commercial operations;

3. Motor Vehicles and operating equipment would be replaced after

Every five years;

4. Salvage value at the end of the life of the project represents

Recovery of working capital, book value of buildings, office

Furniture and fixtures and original value of land.

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Economical Analysis

Economic evaluation is considered prominent yardstick to measure the viability of a project. This

analysis is directed towards determining whether the project is likely to contribute significantly

to the development of the economy as a whole and the contribution of the project would be great

enough to justify the use of available resources. This aspect is reviewed under the following:-

INITIAL IMPACT

In order to pursue a theory of balanced growth of the economy the current government is putting

an emphasis on industrialization of our inherently agrarian economy. Industrialization of

substantial dynamic benefits is important for changing the traditional structure of our less

developed economy, while providing employment for a rapidly increasing labor force, and

saving scarce foreign exchange by import substitution and creating export potentials.

A capital expenditure creates incomes for people engaged in the fabrication of capital goods,

who in turns spend their incomes on consumer goods. An initial original capital investment

creates a wave of income and spending which has multiplied effect on the national income,

increasing it by several times, the original investment. The initial original capital investment of

Rs. 62 million in local currency would have a healthy impact on the GNP of the country, the

extent of which depends on the degree of multiplied effect.

It may have major contribution to the society benefits. There will be employment, infrastructure

improvements and that will be a factor to improve the living standards of the peoples.

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EMPLOYMENT OPPORTUNITIESThe project would create employment opportunities for the following staff:

Detail Total Nos.

Skilled Labor 15

Factory Administrative Staff 14

Marketing Staff 02

BENEFIT COST ANALYSIS

The benefit/Cost ratio of the project is worked out in times which are considered satisfactory.

The NPV of the expected benefit and costs has been taken into account for the calculation of this

ratio.

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Ecological Analysis

It is the analysis how the project is beneficial for the environment and what will be the problems

due to the implementation of the plant. The project may be more beneficial for the society and

environment because there will be improvements in the environment with respect to

infrastructure, employment to society, improvements in the living standards, development

structures, better education system, health system and other facilities.

Speciality Services

As per customer requirement a complete inventory of UPVC and CPVC valves and fittings in all

configurations is readily available, making Twister a one-source supplier for virtually any piping

systems application.

LEAD FREE PVC PIPE

Too much lead in the body can seriously injure the brain, nervous system, the kidneys and red

blood cells. The symptoms of higher levels of lead in the body is manifested by and can cause

mental retardation, fits (convulsions), falling out (unconsciousness, coma), and even death. 

In the years past, that kind of effect was called lead poisoning. Exposures high enough to cause

coma and death are very uncommon today, but they haven't disappeared totally. As we keep

using more lead there will be more exposure to lead in the environment.

Lead accumulates in our bodies, and especially in children's bodies. Exposure to small amounts

of lead over time can mean a long-term accumulation of lead in a child, raising the child's risk of

bad health effects. Pregnant women who have lead stored in their bones may release some of that

bone lead into their K blood, where it can reach the womb and fetus during pregnancy. That kind

of transfer potential makes us think about lead exposures in today's children and what that may

mean for the children.

Twister UPVC Pipe has very impressive performance record in commercial housing, multi-

storey buildings & public health projects for hot & cold water including high-pressure

requirements. By launching Twister “Jadeed” (the Lead Free Pipe) we insure that public health is

our first priority and our social responsibility.

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There may be some problems to the society due to the implementation of unit. Pollution

problems, chemicals, sewerages, water and smell problems. These problems may arise but before

that there will proper arrangements to remain safe from these problems. There will be proper

arrangements and implementations of society safety systems. All the government rules will be

followed and there will be no objection or issue to any person in the society.

Storage & Handling

Twister piping products are inspected, handled and loaded with great care at the factory using

methods that have been developed specifically for plastic pipe to ensure that damage is

minimized and overall quality is maintained during shipping. It is the carrier’s responsibility to

deliver the shipment in good condition. It is the receiver’s responsibility to ensure that there has

been no loss or damage, and that the products are unloaded and stored properly after receipt.

Reasonable care and common sense should be used when handling and storing Twister

thermoplastic piping products.

Thermoplastic pipe and fittings may be stored indoors or outside in yards. If stored outdoors,

pipe and fittings should be protected from direct exposure to sunlight, and pipe should be

properly supported in storage to prevent sagging or bending. Pipe should be stored at the job site

on level ground in the unit packages (skids) provided by the factory. Caution must be exercised

to avoid compression, damage or deformation.

Thermoplastic pipe must not be stored in tightly enclosed areas subject to elevated temperatures

or close to heat producing sources such as heaters, boilers, steam lines, engine exhaust etc.

Exposure to excessive temperatures will result in distortion and deformation of the product.

When stored outdoors Twister thermoplastic pipe must be covered with a non-transparent

material. This covering must provide adequate air circulation above and around the pipe as

required to prevent excessive heat absorption that can result in discoloration and deformation of

the product. PVC piping products in storage should not be exposed to temperatures above 150°F.

CPVC piping products in storage should not be exposed to temperatures above 210°F.

Although Twister products are tough and corrosion resistant, they should not be dropped, have

objects dropped on them, nor subjected to external loads. Thermoplastics can be damaged by

abrasion and gouging. Pipe must not be dragged across the ground or over obstacles. Impacts

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such as dropping from sizable heights and/or rough handling should be avoided, particularly in

cold weather. The product shall be inspected for any scratches, splits or gouges that may have

occurred from improper handling or storage. If found, these sections must be cut out and

discarded.

Safety

Thermoplastic piping is a general term applied to a variety of different plastics. A user of plastic piping

should select the kind of plastic best suited for his use.

Special care must be used to apply proper engineering, design and installation procedures.

Twister recommends against the use of its thermoplastic piping systems for transport or storage of

compressed air or gases. Trapped air must be removed from liquid piping systems so that no air remains

locked in the system when pressure is applied to the liquid. Excessive surge pressure must be avoided.

Surge pressure can develop if liquid movement through the pipe is near maximum velocities and valves

are closed abruptly. Maximum velocity is generally considered to be five feet per second.

Failures can occur at the joints connecting the pipe and the fittings. For example, threaded joints have a

diminished wall thickness because of the cut of the thread into the wall. Also, improperly cemented

joints will leave the strength of the joint impaired.

Temperature extremes, both hot and cold or changes in temperature can result in failures of plastic pipe

in the following cases:

(1) Breakage or other damage on the job site in cold weather can be caused by impact with tools,

vehicles or rocks.

(2) Heat of solution of chemicals or heat from other sources can cause failure because the piping

systems will be distorted. 

(3) Wide variations in temperature when the pipe is restrained as in concrete or is otherwise anchored

can lead to cracking and breakage.

(4) Freezing of pipe contents when the line is full can lead to breakage.

(5) When heat is introduced by a pump especially when on recirculation, the pipe or joints can fail.

(6) Expansion and contraction can cause leakage or breaks at joints. 

there are the safety requirements and work done by the company.

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Project Limitations

Time availability

Less educated target peoples

Not proper coordination by the respondents

Lack of secondary information

No proper information about the pvc pipes

Short of time

There is no reliable information availability

Lack of information gathering sources

High complexity of the project

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Suggestions

Project scope is good

A unique type of project

There should be proper information sources

For the project time duration should be high

There should be cooperation by the respondents

Well educated peoples should be there in the market

For the project high level of technical and intellectual skills needed

Try to get more reliable information

Information searching level should be high

Try to use your skills and abilities to accomplish the project

There should be proper coordination and cooperation between the group members and all

relevant peoples.

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