Investment Analysis

Source of Funds

The funds of S&R Casing Company are provided by the business partners of the company. The total amounts
from different sources are as below:

Source of Funds Investment Amount (RM)

Type
Partners 200,000
Chan Su Ming Capital 200,000
Lim Beng Hooi Contribution
Felix Kok 200,000
Relative Loan Loan 100,000
Bank Loan Loan 250,000
Total 950,000

Break-Even Analysis
Marketing Expenses
Newspaper advertisement and online advertisement = RM 3, 600

Production Expenses
Depreciation(RM)
Facilities 12 17, 267
Equipment 12 2,576
Machineries 10 14, 448
Total 34,291

Purchasing Cost per Month

Materials Quantity Price Total
(RM)
Solar Panels 2000 1.00 2,000
10 meters Wires 30 2.00 60.00
8000mAh Li- 2000 18.00 36,000
polymer Battery
PET Plastic Bottle 1500 0.50 750
7" Miniwiz RE-Case 250 6 1500
4" Miniwiz RE-Case 250 3 750
Total 41,060
Price per Unit 21
Total unit Cost after Packaging 21.5
Total Unit Cost after GST (6%) 23
Personal Expenses
Gross Salaries = RM 46,500 each month

Financial and Administrative Expenses in Year 2016

Price (RM)
Licenses 25,000
Insurance 18,000
Legal and auditing 3,500
Telephone and Internet 4,200
expenses
Office Supplies 21,460
Electricity and water 33,000
Delivery Cost 24,000
Miscellaneous 14,640

Fixed and Variable Cost

Fixed Cost Variable Cost
Items Cost (RM) Items Cost (RM/unit)
Marketing 60,000 Materials 21
Depreciation 34,291 Packaging 0.5
Maintenance and repairs 24,000 Sales Tax 1.5
Gross salaries 558,000 Total 23
Licenses 25,000
Insurance 18,000
Legal 3,500
Office supplies 21,460
Electricity and water 33,000
Telephone and Internet 4,200
Bills
Delivery cost 12,000
Miscellaneous 14,640
Others 18,000
Total 826,091

Required Sales to Cover Fixed and Variable Costs

Total Cost = (Variable Cost Unit Sold) + Fixed Cost
= (26.5 Unit Sold) + 867, 591

Total Sales Revenue = Price sold per unit unit sold

Total Sales Revenue = RM 50x
 Fixed Cost
Break-Even Point =
Sales revenue per unitVariable cost per unit

826,091
= 13,324 units
8523

Establishment Cost in 2016

ITEMS QUANT. RM/UNIT TOTAL (RM)
LAND & BUILDING
Building 1,200,000.00
Land 1,700,000.00
SUBTOTAL 2,900,000.00
PLANT & MACHINERY
Machineries
170 Ton High Speed Thin Wall Plastic Injection Moulding
Machine 2 35,629.00 71,258.00
Plastic Case Injection Mould 2 10,605.80 21,211.60
Plastic Material Sorting Machine 1 57,004.35 57,004.35
Coordinate Measuring Machine (CMM) 2 14,000.00 28,000.00
Machinery Shipping Cost 6,600.00
SUBTOTAL 184,074.00
FURNITURE & FITTINGS
Facilities
Reconditioned Toyota 2.5 Tonnes Forklift 2 45,500.00 91,000.00
Delivery Van 1 50,000 50,000
SAKURA Hand Pallet Truck SA-PM30 2 690.00 1,380.00
Canteen Table 1 300.00 300.00
Canteen Chair 6 35.00 210.00
Cashier Counter 1 1000.00 1,000.00
SUBTOTAL 143,890.00
ITEMS QUANT. RM/UNIT TOTAL (RM)
Office Equip.
Steel Desk 6 900.00 5,400.00
Office Chair 12 70.00 840.00
Meeting Room Table 1 500.00 500.00
Meeting Room Chair 8 120.00 960.00
Cabinet 3 550.00 1,650.00
Projector 1 1000.00 1,000.00
Computer 5 2,000.00 10,000.00
 Cannon Printer-Scanner-Photocopier 1 300.00 300.00
Panasonic KPX-1121 Dot Matrix Printer 1 560.00 560.00
Telephone 5 50.00 250.00
SUBTOTAL 21,460.00
OTHERS
Business Registration 500.00
Business License 25,000.00
Logo Registration 400.00
Legal Fee 3,500.00
SUBTOTAL 29,400.00
GRAND TOTAL 3,278,824.00

Running Cost in 2016

Projected Annual Budget (Running Cost)
MONTHLY ANNUAL
ITEMS QUANTITY TOTAL TOTAL
(RM/UNIT) (RM) (RM)
Supplies
Solar Panels 2300 1.00 2,300.00 27,600.00
PET Plastic Bottles 1800 0.50 900.00 10,800.00
7" Miniwiz RE-Case 250 18.00 4,500.00 54,000.00
4" Miniwiz RE-Case 250 15.00 3,750.00 45,000.00
10 meters Wires 30 2.00 60.00 720.00
8000mAh Li-polymer Battery 2300 18.00 41,000.00 496,800.00
SUBTOTAL 607,320.00
Wages
Operations manager 1 8,000.00 8,000.00 96,000.00
Quality control, safety and environmental manager 1 5,000.00 5,000.00 60,000.00
Accountant 1 3,500.00 3,500.00 42,000.00
Customer service officer 1 4,000.00 4,000.00 48,000.00
Marketing officer 1 5,000.00 5,000.00 60,000.00
Supervisor 2 8,000.00 8,000.00 96,000.00
Equipment operators 5 1,800.00 9,000.00 108,000.00
Professional staff 1 4,000.00 4,000.00 48,000.00
SUBTOTAL 46,500.00 558,000.00
Marketing
Newspapers advertisement 300.00 3,600.00
Yell.com Online Advertising 0.00 0.00
SUBTOTAL 3,600.00
Equipment and Machinery
Maintenance 2,000 24,000
Utilities
Electricity 2,500.00 30,000.00
Water 250.00 3,000.00
Telephone and internet 350.00 4,200.00
SUBTOTAL 3,100.00 37,200.00
Miscellaneous
Drinking water 36 20.00 720.00 8,640.00
Office stationery 300.00 3,600.00
Delivery 2000.00 24,000.00
SUBTOTAL 3020.00 36,240.00
Other charges
Insurance 1,500.00 18,000.00
SUBTOTAL 18,000.00

GRAND TOTAL 1,284,360

Years
Items
2016 2017 2018
Supplies 607,320 705,120 841,440
Wages 558,000 558,000 601,200
Marketing 3,600 3,600 3,600
Equipment and Machinery 24,000 24,000 24,000
Utilities 37,200 38,200 41,000
Miscellaneous 36,240 36,240 36,240
Other Charges 18,000 18,000 18,000
Total expenses 1,284,360 1,383,160 1,565,480

Total Gross Salaries per Year

Position Salary No. of Personnel Total Salary per Year (RM)
per 2016 2017 2018 2016 2017 2018
Month
Operations manager 8,000.00 1 1 1 96,000.00 96,000.00 96,000.00
Quality control, safety and 60,000.00 60,000.00
environmental manager 5,000.00 1 1 1 60,000.00
Accountant 3,500.00 1 1 1 42,000.00 42,000.00 42,000.00
Customer service officer 4,000.00 1 1 1 48,000.00 48,000.00 48,000.00
Marketing officer 5,000.00 1 1 1 60,000.00 60,000.00 60,000.00
Supervisor 4,000.00 2 2 2 96,000.00 96,000.00 96,000.00
Equipment operators 1,800.00 5 5 7 108,000.00 108,000.00 151,200.00
Professional staff 4,000.00 1 1 1 48,000.00 48,000.00 48,000.00
Total 13 13 15 558,000.00 558,000.00 601,200.00
Depreciation
12% depreciation on facilities = RM 143,890 12% RM 17, 267
12% depreciation on equipment = RM 21,460 12% RM 2,576
10% depreciation on machineries = RM 177, 473.95 10% RM 14, 448

Year Depreciation (RM) Total (RM)

Facilities Equipment Machineries
2016 17, 267 2,576 14, 448 34,291
2017 17, 267 2,576 14, 448 34,291
2018 17, 267 2,576 14, 448 34,291

Sales
Average cost per unit = RM85
Years Annual Sales Total Supplies Sales (RM)
2016 24,000 2,040,000
2017 24,600 2,091,000
2018 25,100 2,133,500

Sales Tax
GST per annual sales = 6%
Contribution per unit = RM 85 - RM 23
= RM 62
Years Sales per Contribution per Annual GST (6%)
Unit Unit(RM) Profit (RM)
2016 24,000 62 1,488,000 89,280
2017 24,600 62 1,525,200 91,512
2018 25,100 62 1,556,200 93,372

Delivery Cost
Years Sales Delivery Cost Total (RM)
per Unit (RM)
2016 24,000 1 24,000
2017 24,600 1 24,600
2018 25,100 1 25,100
Sales Forecast
Year
Product Name 2016 2017 2018
(Units) (Units) (Units)
Iphone Case 3,000 3,600 4,100
Ipad Case 3,000 3,600 4,100
Samsung Case 5,400 6,000 6,500
Samsung Tablet Case 3,000 3,600 4,100
Xiaomi Case 4,200 4,800 5,300
Sony Case 3,000 3,600 4,100
HTC Case 2,400 3,000 3,500
Blackberry Case 1,800 2,400 2,900
Windows Phone Case 1,800 2,400 2,900
Total 27,600 28,200 28,700

Income Forecast
Average Year
Product Name Price per 2016 2017 2018
Unit (RM) (RM) (RM) (RM)
Iphone Case 80 240,000 288,000 328,000
Ipad Case 130 390,000 468,000 533,000
Samsung Case 80 432,000 480,000 520,000
Samsung Tablet Case 130 390,000 468,000 533,000
Xiaomi Case 80 336,000 384,000 424,000
Sony Case 80 240,000 288,000 328,000
HTC Case 80 192,000 240,000 280,000
Blackberry Case 80 144,000 192,000 232,000
Total 2,508,000 3,000,000 3,410,000

Profit Forecast
Income Forecast Establishment Cost Running Cost Profit/Loss
Year
(RM) (RM) (RM) (RM)
2016 2,508,000 3,278,824 1,284,360 (2,055,184)
2017 3,000,000 - 1,383,160 1,616,840
2018 3,410,000 - 1,522,280 1,887,720
Project Viability
Net Cash Flows Cumulative Net Cash
Year Description
(RM) Flows (RM)
Immediate Establishment cost (3,278,824) (3,278,824)
2016 Net profit before depreciation 1,257,931 (2,020,893)
2017 Net profit before depreciation 1,651,131 (369,762)
2018 Net profit before depreciation 1,922,011 1,552,249

Income Running Net Profit Depreciation Net Profit Before

Years Forecast Cost (RM) (RM) (RM) Depreciation
(RM) (RM)
2016 2,508,000 1,284,360 (2,055,184) 34,291 (2,020,893)
2017 3,000,000 1,383,160 1,616,840 34,291 1,651,131
2018 3,410,000 1,522,280 1,887,720 34,291 1,922,011
Net Profit = Income Forecast - Running Cost
Net Profit before Depreciation = Net Profit + Depreciation

Net Present Value (NPV)

Year Discount Factor (5%) Net Cash Flow (RM) Present Value
Immediate 1 (3,278,824) (3,278,824)
2016 0.952 1,257,931 1,197,550
2017 0.907 1,651,131 1,497,576
2018 0.864 1,922,011 1,660,618
Net Present Value (NPV) 1,076,920

Internal Rate of Return (IRR)

Year Discount Factor (10%) Net Cash Flow (RM) Present Value
Immediate 1 (3,278,824) (3,278,824)
2016 0.909 1,257,931 1,143,459
2017 0.826 1,651,131 1,363,834
2018 0.751 1,922,011 1,443,430
Net Present Value (NPV) 671,900
Internal Rate of Return (IRR) 18.29%

Establishment cost can be recovered after S&R Casing Sdn. Bhd. operates for approximate three years. By the
beginning of year 2018, profit can be made since it has positive cumulative net cash. In addition, this project also
has a positive NPV that will increase the wealth of shareholder. The IRR value was also acceptable. Hence, it is
feasible to run this business plan.
Payback Period
2016 2017 2018
Actual Cash Flow (3,278,824) 1,257,931 1,651,131 1,922,011
Cumulative Cash (3,278,824) (2,020,893) (369,762) 1,552,249
Flow
Cash Payback = 2.7 years

Financial Statement and Projections

Income Statement of S&R Casing Company for the Year 2016, 2017 and 2018
2016 2017 2018
(RM) (RM) (RM)
Sales 2,508,000.00 3,000,000.00 3,410,000.00
Cost of sales (607,320.00) (705,120.00) (841,440.00)
Gross Profit 1,900,680.00 2,294,880.00 2,568,560.00

Expenses
Establishment Costs (3,278,824.00) 0.00 0.00
Marketing (3,600.00) (3,600.00) (3,600.00)
Depreciation (34,291.00) (34,291.00) (34,291.00)
Maintenance (24,000.00) (24,000.00) (24,000.00)
Gross salaries (558,000.00) (558,000.00) (601,200.00)
Licenses 0.00 (25,000.00) (25,000.00)
Insurance (18,000.00) (18,000.00) (18,000.00)
Legal and auditing 0.00 (3,500.00) (3,500.00)
Telephone and internet (4,200.00) (4,200.00) (4,200.00)
Office supplies (12,240.00) (12,240.00) (12,240.00)
Electricity and water (33,000.00) (34,000.00) (36,800.00)
Delivery cost (24,000.00) (24,600.00) (25,100.00)
Interest expenses (5%) (21,875.00) (21,875.00) (21,875.00)
Net profit before tax (2,111,350.00) 1,531,574.00 1,758,754.00
Income tax (89,280.00) (91,512.00) (93,372.00)
Retained profit for the year (2,200,630.00) 1,440,062.00 1,665,382.00
Retained profit brought forward 0.00 (2,200,630.00) (760,568.00)
Retained Profit Carried Forward (2,200,630.00) (760,568.00) 904,814.00
Balance Sheet of S&R Casing Company for the Year 2016, 2017 and 2018
2016 2017 2018
(RM) (RM) (RM)
Assets
Current Assets
Cash at bank 50,000.00 1,450,000.00 2,700,000.00
Inventory(Supplies) 607,320.00 705,120.00 841,440.00
Trade debtors 10,000.00 30,000.00 40,000.00

Non-current Assets
Land purchased 1,700,000.00 1,700,000.00 1,700,000.00
Construction 1,200,000.00 1,200,000.00 1,200,000.00
Machinery 177,473.95 163,025.95 148,577.95
Depreciation (Machinery) (14,448.00) (14,448.00) (14,448.00)
Facilities 143,890.00 126,623.00 109,356.00
Depreciation (Facilities) (17,267.00) (17,267.00) (17,267.00)
Equipment 21,460.00 18,884.00 16,308.00
Depreciation (Equipment) (2,576.00) (2,576.00) (2,576.00)
Total Assets 3,875,852.95 5,359,361.95 6,721,390.95

Liabilities
Current Liabilities
Trade creditors 1,000,000.95 2,350,000.95 3,300,000.95
Tax payable 89,280.00 91,512.00 93,372.00
Bank Overdraft 3,800,000.00 300,000.00 200,000.00
Accruals 147,922.00 158,150.00 463,014.00

Non-current Liabilities
Loan 350,000.00 328,125.00 306,250.00
Total Liabilities 5,387,202.95 3,227,787.95 4,362,636.95

Owner's Equity
Capital 600,000.00 600,000.00 600,000.00
Retained profit (2,111,350.00) 1,531,574.00 1,758,754.00
Total Owner's Equity (1,511,350.00) 2,131,574.00 2,358,754.00

Total Liabilities + Owner's Equity 3,875,852.95 5,359,361.95 6,721,390.95

Cash Flow Statement of S&R Casing Company for the Year 2016, 2017 and 2018
2016 2017 2018
(RM) (RM) (RM)
Calculate cash receipts from customers:
Opening balance of account receivable 0.00 10,000.00 30,000.00
plus sales for the period 2,508,000.00 3,000,000.00 3,410,000.00
gives amount expected to receive for the period 2,508,000.00 3,010,000.00 3,440,000.00
less closing balance of account receivable (10,000.00) (30,000.00) (40,000.00)
equals cash received from customers 2,498,000.00 2,980,000.00 3,400,000.00

Calculate cash paid to suppliers and employees:

Opening balance of account payable 0.00 1,000,000.95 2,350,000.95
plus purchase of inventory for the period 1,214,640.00 1,410,240.00 1,682,880.00
gives amount expected to pay for the period 1,214,640.00 2,410,240.95 4,032,880.95
less closing balance of account payable (1,000,000.95) (2,350,000.95) (3,300,000.95)
equals cash paid to account payable 214,639.05 60,240.00 732,880.00

Calculate purchase of inventory for the period:

Opening inventory 0.00 607,320.00 705,120.00
plus new acquisition 1,214,640.00 1,410,240.00 1,682,880.00
equals amount available for sale 1,214,640.00 2,017,560.00 2,388,000.00
less closing inventory (607,320.00) (705,120.00) (841,440.00)
equals the cost of sales 607,320.00 705,120.00 841,440.00

Calculating interest paid relating to interest payable:

Opening balance of interest payable 0.00 0.00 0.00
plus interest expense for the period 21,875.00 21,875.00 21,875.00
gives amount expected for the period 21,875.00 21,875.00 21,875.00
less closing balance of interest payable 0.00 0.00 0.00
equals the interest paid 21,875.00 21,875.00 21,875.00

Calculate income tax paid:

Opening balance of income tax paid 0.00 89,280.00 91,512.00
plus income tax expense for the period 89,280.00 91,512.00 93,372.00
gives amount expected for the period 89,280.00 180,792.00 184,884.00
less closing balance of income tax paid (89,280.00) (91,512.00) (93,372.00)
equals the income tax paid 0.00 89,280.00 91,512.00
Opening balance of machineries 0.00 177,473.95 163,025.95
plus new acquisitions 191,921.95 0.00 0.00
less depreciation of machineries (14,448.00) (14,448.00) (14,448.00)
equals the closing balance of machineries 177,473.95 163,025.95 148,577.95

Opening balance of facilities 0.00 143,890.00 139,146.00

plus new acquisitions 148,634.00 0.00 0.00
less depreciation of facilities (4,744.00) (4,744.00) (4,744.00)
equals the closing balance of facilities 143,890.00 139,146.00 134,402.00

Opening balance of equipment 0.00 21,460.00 17,800.00

plus new acquisitions 25,120.00 0.00 0.00
less depreciation of equipment (3,660.00) (3,660.00) (3,660.00)
equals the closing balance of equipment 21,460.00 17,800.00 14,140.00

Cash flows from operating activities:

Cash receipts from customers 2,498,000.00 2,980,000.00 3,400,000.00
Cash paid to suppliers and employees (214,639.05) (60,240.00) (732,880.00)
Other expenses (excluding depreciation) (4,068,196.00) (819,472.00) (865,972.00)
Interest paid (21,875.00) (21,875.00) (21,875.00)
Income tax paid 0.00 (89,280.00) (91,512.00)

Cash flows from investing activities:

purchases of machineries (191,921.95) 0.00 0.00
purchases of facilities (148,634.00) 0.00 0.00
purchases of equipment (25,120.00) 0.00 0.00

Cash flows from financing activities:

Proceeds from issues of share capital 600,000.00 0.00 0.00
Proceeds of long-term borrowings 6,400,000.00 0.00 0.00
Repayment of long-term borrowings (266,666.67) (266,666.67) (266,666.67)

Net increase in cash for the year 4,560,947.33 1,722,466.33 1,421,094.33

Cash at the beginning of financial year 0.00 4,560,947.33 6,283,413.67
Cast at the end of the financial year 4,560,947.33 6,283,413.67 7,704,508.00
Recommendation
Since the solar casing is still new to be use in Malaysia, attention to quality for the current uniqueness casing is
important to gain a competitive advantage. After the introduction stage, S&R Casing Sdn. Bhd. will be
producing solar casing for a variety type of netbook and laptop. Some type of plastic can be self-produce by
S&R Casing to reduce the dependency on the supplier. As a result, the pricing of solar casing can be further
reduced to compete with other type of casing in the market. Besides, environmental and quality issues are also
need to be considered to gain the trust from customer. Registration for ISO certificates such as environmental
and quality management will be applied to enhance the existing product line.

Conclusion
Based on the income statement above, it shows that our business is very potential in current market. As from the
payback period calculated under project viability, our total establishment can be regained within 3 years which is
approximately until March 2018. Since our product is unique and innovative, it will be able to attract the attention
from customers to try something new and increase the annual sales. In order to maintain the sales annually, our
company will make use of price strategy attract more customers. Since our product involved the electronic
components, we will ensured the products produced are perfectly safe to use and with quality guaranteed. Lastly,
S&R Casing Company goal is to produce environmentally friendly products to reduce carbon footprint in earth.
 MME40001 Engineering Management II
Research Group 12
Title: Sustainable and Renewable Casing Company
Lecturer : Introduction:
Piraiarasi Chelladorai The general meeting was held on 1st of May 2015 by Chan Su Ming at 8.00a.m. in
Chan Su Mings House
Confirmation of Minutes:
Minutes of meeting was proposed by Lim Beng Hooi.
Tutor: Piraiarasi Meeting Content:
Chelladorai This meeting identified all fixed costs and confirmed all suppliers offered price and
our products prices. Then, we discussed about the source of funds, that we able to
get from loan and relative, and each one of us will contribute RM 200,000 as our
Chairperson: initial capital.
Chan Su Ming
At the end of the meeting, we distributed the workload as below: -
Lim Beng Hooi Establishment costs, Sales forecast,
Income forecast, Profit forecast and
Vice Chairperson: Project viability
Lim Beng Hooi Chan Su Ming Source of funds, Break-even analysis,
NPV, IRR, Payback Period,
Recommendations and Conclusion
Felix Running costs, Income statement,
Secretary: Felix Kok Balance Sheet and Cash flow statement

Closing
This meeting is ended at 9:30a.m.

Recorded by: Confirmed by:

CHAN SU MING
FELIX KOK
Chairperson
Secretary