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Pre-Feasibility Study Prime Ministers Small Business Loan Scheme

(Broiler Farming-10,000 Birds)

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, Egerton Road, Lahore Tel 92 42 111 111 456, Fax 92 42 36304926-7 helpdesk@smeda.org.pk REGIONAL OFFICE PUNJAB 3rd Floor, Building No. 3, Aiwan e Iqbal, Egerton Road Lahore, Tel: (042) 111-111-456 Fax: (042)6304926-7 helpdesk.punjab@smeda.org.pk REGIONAL OFFICE SINDH 5TH Floor, Bahria Complex II, M.T. Khan Road, Karachi. Tel: (021) 111-111-456 Fax: (021) 5610572 helpdesk-khi@smeda.org.pk REGIONAL OFFICE KPK Ground Floor State Life Building The Mall, Peshawar. Tel: (091) 9213046-47 Fax: (091) 286908 helpdesk-pew@smeda.org.pk REGIONAL OFFICE BALOCHISTAN Bungalow No. 15-A Chaman Housing Scheme Airport Road, Quetta. Tel: (081) 831623, 831702 Fax: (081) 831922 helpdesk-qta@smeda.org.pk

September 2013

Pre-Feasibility Study

Broiler Farming

Table of Contents
1. DISCLAIMER .......................................................................................................................................... 3 2. PURPOSE OF THE DOCUMENT ......................................................................................................... 4 3. INTRODUCTION TO SMEDA .............................................................................................................. 4 4. INTRODUCTION TO SCHEME ........................................................................................................... 5 5. EXECUTIVE SUMMARY ...................................................................................................................... 5 6. BRIEF DESCRIPTION OF PROJECT & PRODUCT ........................................................................ 5 7. CRITICAL FACTORS ............................................................................................................................ 6 8. INSTALLED & OPERATIONAL CAPACITIES ................................................................................. 6 9. GEOGRAPHICAL POTENTIAL FOR INVESTMENT ..................................................................... 6 10. 11. 11.1 11.2 11.3 11.4 11.5 11.6 11.7 11.8 11.9 11.10 12. 13. 13.1 13.2 13.3 13.4 13.5 14. POTENTIAL TARGET MARKET ................................................................................................... 6 PROJECT COST SUMMARY .......................................................................................................... 7 PROJECT ECONOMICS................................................................................................................. 7 PROJECT FINANCING .................................................................................................................. 8 PROJECT COST .............................................................................................................................. 8 SPACE REQUIREMENT ................................................................................................................ 8 MACHINERY AND EQUIPMENT ................................................................................................ 9 OFFICE EQUIPMENT ...................................................................................................................10 RAW MATERIAL REQUIREMENTS...........................................................................................10 HUMAN RESOURCE REQUIREMENT .......................................................................................11 REVENUE GENERATION ............................................................................................................12 OTHER COSTS ..............................................................................................................................12 CONTACTS SUPPLIERS AND EXPERTS ................................................................................ 13 ANNEXURE ...................................................................................................................................... 15 INCOME STATEMENT ................................................................................................................15 BALANCE SHEET .........................................................................................................................16 CASH FLOW STATEMENT..........................................................................................................17 USEFUL PROJECT MANAGEMENT TIPS..................................................................................18 USEFUL LINKS .............................................................................................................................19 KEY ASSUMPTIONS ...................................................................................................................... 20

Pre-Feasibility Study

Broiler Farming

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 contact our website: www.smeda.org.pk

Pre-Feasibility Study

Broiler Farming

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, and production, marketing, finance and business management. The purpose of this document is to facilitate potential investors in Broiler Farm 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 successful 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 capacity building programs of different types in addition to business guidance through help desk services.

Pre-Feasibility Study

Broiler Farming

4. INTRODUCTION TO SCHEME Prime Ministers Small Business Loans 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 through National Bank of Pakistan (NBP) and First Women Bank Ltd. (FWBL). Small business loans with tenure upto 7 years, and a debt: equity of 90 : 10 will be disbursed to SME beneficiaries across Pakistan, covering; Punjab, Sindh, Khyber Pakhtunkhwah, Balochistan, Gilgit Baltistan, Azad Jammu & Kashmir and Federally Administered Tribal Areas (FATA). 5. EXECUTIVE SUMMARY The broiler meat is a rich source of protein and its demand is growing with every passing year. In Broiler farming, DOCs (Day Old Chicks) of Broiler birds, purchased from a reputed company are raised on specially formulated feed for a period of about six weeks, with a turnover of six flocks per year. Both rural and semi-urban areas are suitable for this business. Poultry farm management as per husbandry practices is the key success factor in this business. After brooding and rearing period, birds are sold at farm gate on Live Body Weight basis to traders or transported to market. The farm gate price of live bird is determined on daily basis. A Broiler farm of 10,000 birds is suggested in this pre-feasibility study as a viable economic size to enter this business. The proposed business started in a rental shed requires total estimated investment of Rs. 2.04 million and three persons are employed. This project is proposed to be started on 90% debt and 10% equity basis. The projects IRR, NPV and payback period are 47%, 3.9 million and 2.48 years respectively. 6. BRIEF DESCRIPTION OF PROJECT & PRODUCT The broiler farm is a project of livestock sector, in which, the Day Old Chicks (DOCs) of broiler are raised on high protein and energy feed on floor in conventional open housing system for a period of six weeks (All in-All Out system). The purpose built farm is acquired on rental basis and advance rent for one year is paid. After six weeks, the finished broiler birds are sold on live body weight basis to traders, wholesale markets or sold directly to the shopkeepers in the urban markets. Broiler farming is a profitable venture depending on the demand of the meat in the market. Annually, six flocks of birds are raised on the farm. 5

Pre-Feasibility Study

Broiler Farming

7. CRITICAL FACTORS The farm supervisor should ensure timely feeding, watering and vaccination as per best husbandry practices to ensure birds health and disease-free environment. The entrepreneur should be well aware of the supply and demand of chicken in the market as the prices of chicken meat fluctuate tremendously during a year. Mortality losses should be kept below 8% by timely prophylactic measures (vaccination, medication, disinfection etc.). Diseases like New Castle Disease and Gamboro are extremely dangerous that can eradicate the entire flock.

8. INSTALLED & OPERATIONAL CAPACITIES In this pre-feasibility study, all the calculations have been based on a flock size of 10,000 birds. As six flocks are produced per year, hence total 60,000 birds are reared per annum. There will be a lag time of two weeks for cleaning and disinfection (e.g. fumigation) on the farm. 9. GEOGRAPHICAL POTENTIAL FOR INVESTMENT Rural and peri- urban areas around the major cities of the country are suitable for setting up a poultry farm. Setting up a farm at an isolated place will minimize the risk of disease. Proximity of the farm to the city enables the farmer to have a quick communication with the market for the purchase of Day Old Chicks, farm inputs (feed, etc.), and selling of grown-up birds. Sub-urban and rural areas around big cities e.g. Lahore, Rawalpindi, Faisalabad, Hyderabad, Karachi, Peshawar and Quetta and other similar major cities of the country are recommended for starting a broiler farm. 10. POTENTIAL TARGET MARKET The marketing of chickens follows the traditional channels of distribution. Generally, grown-up broiler birds are distributed in the market through market agents and intermediaries such as Arhti and wholesalers. In some cases, the middleman provides DOCs and other farm inputs (feed, vaccination, medication etc.) to the broiler farmers under a contract to buy back the mature birds from them. Birds are transported to the urban market and are sold to retailers or marketstreet poultry shops on Live Body Weight basis. There are few poultry meat processing plants that process raw poultry meat into dressed chicken, quality cuts or other forms and supply in the market. The integrated processing units 6

Pre-Feasibility Study

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distribute frozen and dressed chicken packed in whole or cut-ups to the consumer through retail shops under their brand names. The wholesale and retail price of poultry meat is determined daily on consumers demand and supply situation. 11. PROJECT COST SUMMARY A detailed financial model has been developed to analyze the commercial viability of Broiler Farm (10,000 birds) under the Prime Ministers Small Business Loan Scheme. 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 appendix 11.1 PROJECT ECONOMICS

All the figures in this financial model have been calculated for a flock of 10,000 broiler birds raised for 6 week, 6 flocks per annum at rented purpose built conventional housing system. A target of 60,000 broiler birds would be produced in year one. The following table shows internal rates of return and payback period. Table 1 - Project Economics Description Internal Rate of Return (IRR) Payback Period (yrs) Net Present Value (NPV) Details 47% 2.84 3,889,756

Pre-Feasibility Study

Broiler Farming

11.2

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) 11.3 PROJECT COST Details Rs. 204,574 Rs. 1,841,164 8% 7

Following requirements have been identified for operations of the proposed business. Table 3: Capital Investment for the Project Capital Investment Machinery & Equipment Furniture & fixtures Office equipment Pre-Operating Cost Total Capital Costs Raw material inventory Upfront building rent Cash Initial Working Capital Total Project Cost 11.4 SPACE REQUIREMENT Amount (Rs.) 152,239 10,000 3,000 145,256 310, 495 1,395,200 240,044 100,000 1,735,244 2,045,738

The area has been calculated on the basis of space requirement for conventional broiler sheds, management building, feed store, room for workers and boundary walls. However, the units operating in the industry do not follow any set pattern. Following table shows calculations for project space requirement. The layout of open conventional shed should be north-south. The chicks should be kept in a clean, dry and well-ventilated shed as this provides fresh air and carries off humidity. The entire building including litter and all equipment should be properly fumigated.

Pre-Feasibility Study

Broiler Farming

Table 4: Space Requirement Space Requirement (in ft.) Management building Shed Space Feed Store Room for workers Pavement/ Boundry walls Total Area The rental cost is calculated at Rs. 20,000 per month. 11.5 MACHINERY AND EQUIPMENT Sq.ft 100 10,000 180 144 104 10,528

Following table provides list of machinery and equipment required for broiler farm in open shed conventional housing system. Table 5: List of Machinery and Equipment Description Brooder Chick guard Small waterers Small feeding trays Large automatic waterers Large round feeders Buckets Manual balance Exhaust fans DOC shifting Boxes Drum Heaters Miscellaneous Installation / Erection Total Machinery & Equipment Capacity Quantity Birds/unit 500 200 50 50 140 130 20 50 182 182 70 80 6 1 4 10 4 1 5% Cost Rs/unit 1,000 150 90 90 300 300 500 2,000 1,000 1,800 2,000 5,000 Total Rs. 20,000 7,500 16,364 16,364 21,000 24,000 3,000 2,000 4,000 18,000 8,000 5,000 7,011 152,239

Main equipments for broiler farm are feeders, drinkers and brooders. Small waterers and drinkers are required for DOCs till 7 days. After that, automatic/ round drinkers and feeders are required. The brooder is essential part of broiler farming, also known as, Artificial Mother as it provides necessary heat to DOCs

Pre-Feasibility Study

Broiler Farming

shortly after arrival till 7 days of age. These costs are based on the assumption that a setup will be required to smoothly run the broiler farms operations. 11.6 OFFICE EQUIPMENT These costs are based on the assumption that a setup will be required to ensure the smooth running of project. Table 6: Office Equipment Costs Quantity Telephones Furniture and Fixture Total 11.7 1 Cost (Rs.) 3,000 10,000 Amount (Rs.) 3,000 10,000 13,000

RAW MATERIAL REQUIREMENTS

As already mentioned, one flock of 10,000 broiler birds would be reared as per best farm management practices for a period of six weeks to attain FCR of 2.2. Following table shows raw material requirement to raise 10,000 broilers per flock. It is assumed that the capacity utilization at broiler farm in first year would be 85% i.e. 51,000 birds in 6 flocks per year or 8500 birds per flock. Table 7: Cost of Material Description Unit Rate Values (Rs. per (Rs./ year) Unit) 35 2,142,000 178.2 9,088,200 8 8,000 408,000 84,000

Day Old Chicks Total Feed required per birds @2.2 FCR Vaccination. Medication and Disinfection Litter (Saw dust or rice husk) cost per flock (Rs.)

DOCs Bird Per Bird Per Flock

The equipment and walls of the broiler shed should be checked for cleanliness, disinfection and spraying before the arrival of birds. Disinfectants can be prepared with Phenol, Potassium Permanganate, Carbolic Acid and Formalin. A solution of Sodium Hydroxide/Caustic Soda with warm water can also be used to clean the house. To sanitize the broiler house from germs and insects, it is fumigated with Formaldehyde Gas, produced by putting Formalin on Potassium Permanganate. The rooms should be vacant and sealed for 30 minutes after the fumigation so that the gas infiltrates in every corner of the room. 10

Pre-Feasibility Study

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Litter is spread on the floor to prevent the direct contact with the floor. Rice-husk and sawdust are generally used for making the litter. It should be dry and free of moulds. Caked or moldy material should be removed and refilled with fresh materials. Extensively wet and dusty litter should also not be used. Using new litter for each flock is good for raising disease-free broiler. Broilers are usually fed with the following two types of ration: Broiler Starter (Mash or Crumb form) fed up to four weeks of age. Broiler finisher (Mash or Crumb form): fed from five to six week

Feeding three or four times each day will stimulate feed intake and prevents wastage. There are many feed mills that prepare formulated Broiler Starter and Broiler Finisher feed. These feed mixtures can be obtained in prepared form (Mash or crumb form) from poultry feed mills. Vaccination can be provided to chicks through eye drop, drinking water or subcutaneous injections can also be mixed in the water and also through eye drops. Average vaccination and medication price per bird mostly varies between Rs 8-10. The feasibility has taken cost of vaccination at Rs.8 per bird. Following is a typical Vaccination Schedule for Broilers1. Table 8: Vaccination Schedule for Broiler Birds Age in Days 1 day 5 days 8 days 17-18 days 21-22 days 25-26 days 11.8 Disease Infectious Bronchitis Disease (IBD) Newcastle Disease (ND) Infectious Bursal Disease (IBD) Hydro Pericardium Disease Infectious Bursal Disease (IBD) IBD+ND Vaccination IB-Vaccine ND-Vaccine (Lasota) IBD Vaccine (Gamboro) HPS- Hydro Vaccine IBD Vaccine (Gamboro) IBD+ND Vaccines Procedure Aerial spray or eye drops Eye drops Eye drops Sub-cut injection In drinking water In drinking water

HUMAN RESOURCE REQUIREMENT Table 9: Human Resource Requirement

Description

No. of Employees

Salary per month

As per recommended by Poultry Research Institute (PRI), Rawalpindi

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Owner / Farm Manager Farm Labor Total Staff

1 2 3

30,000 24,000 54,000

The table above provides details of human resource required to run such a business. Semi skilled workers are needed to look after the general poultry husbandry operations such as feeding, watering, vaccination and cleaning operations at the farm. A single person can handle 5,000 birds easily. Two people will be hired to manage the operations of a broiler farm of 10,000 birds. One attendant is given a monthly salary of Rs 12,000. In addition, owner would act as farm manager to be hired at a monthly salary of Rs. 30,000. Salaries of all employees are estimated to increase at 10% annually. 11.9 REVENUE GENERATION

Table 10: Revenue Generation Description Unit Sale First Year Price Productio Rs. n Broiler Birds of 1.8 kgs. Live Broiler Bird 145 51,000 Body Weight after 6 weeks Other revenues(litter, empty Per Bird 8 51,000 feed bags etc) Total Revenue 11.10 OTHER COSTS

First Year Revenue Rs. 13,311, 000 408,000 13,719,000

An essential cost to be borne by the farmer is electricity expense. The variable electricity expense is estimated to be Rs. 2,25 per bird for broiler shed. The fixed electricity cost for rest of the area is estimated to be Rs. 800 per month for rest of the area. Mostly, 24 hours light is provided during brooding and early growing period. Initially, for first fifteen days, light intensity should be 40-60 watts per 200 sq. ft of space which can be replaced by 15 watts bulb in the start of third week.

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12. CONTACTS SUPPLIERS AND EXPERTS Poultry Feed Suppliers Supreme Feeds (Pvt.) Ltd. Head Office: 176-Shadman 1 Lahore. Phone: +92-42-37522104-7 Fax: +92-42-37573106 National Feeds Ltd. 171 Shadman II Lahore. Phone: +92-42 37551405-8 Fax: +92-42- 37573045 Asia Feed (Pvt.) Ltd. 359 Shamsabad Colony, Humayun Road Multan. Phone: +92-61-6224414 Fax: +92-61-6224414 Fast Poultry Feeds 12-KM Near Nai Sabzi Mandi Jhang Road, Faisalabad. Phone: +92-41-2577171-2 Fax: +92-41-2517474 Rustum Feeds Flat No.6, 1st Floor, United Center Shamsabad, Murree Road, Rawalpindi Phone: +92-51-4455362 Fax: +92-51-4847382 Ghazi Brothers Ghazi House, D-35, KDA Scheme, No. 1, Miran Muhammad Shah Road, Karachi Phone: +92-21-111250365 Machinery & Equipment Suppliers Biovet (Pvt.) Ltd. 97-A, Jail Road Lahore Phone : +92-42-37534508 Fax : +92-42-37534510 www.biovet.com.pk Consultants Prof. Dr. M. Akram Uni. Of Veterinary and Animal Sciences (UVAS), Out Fall Road, Lahore Mobile: +92-300-4238270 DOC Suppliers Big Bird Poultry Breeders (Pvt.) Ltd. 2-A,Ahmed Block, New Garden Town Lahore Phone : +92-42-35835373-4 Fax : +92-42-35835371 Hi-Tech Poultry Breeders (Pvt.) Ltd. 1-A, Shadman Chowk Jail Road, Lahore Phone : +92-42-37564503 Fax : +92-42-37564508 Islamabad Poultry Breeding Co. D-98, Satellite Town, Murree Road Rawalpindi. Phone : +92-51-4427139 Fax : +92-51-4421203 Jadeed Farms (Pvt.) Ltd. 6, Allied Commercial Plaza, Murree Road, Chandni Chowk Rawalpindi. Phone: +92-51-4851280-84 Fax: +92-51-4851255 Sadiq Poultry Pvt Ltd SB Plaza, 48-C, Satellite Town, Chandni Chowk, Rawalpindi Ph: 051-111-505-050 Fax : +92-51-4511191

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Eastern Veterinary Services 4- C Chubirji Center, Near Venus Cinema, Multan Road, Lahore. Phone : +92-42-37417649-50

Dr. Abdul Rehman Director, Poultry Research Institute, Shamsabad, Murree Road, Rawalpindi Phone: +92-51-9290163-5 Dr. Fawwad Facultay of Animal Husbandry, University of Agriculture, Faisalabad Ph: +92-41-9920161-70

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13. ANNEXURE 13.1 INCOME STATEMENT


Broiler Farm
Year 1 Revenue Cost of goods sold Gross Profit General administration & selling expenses Utilities expense Professional fees (legal, audit, etc.) Depreciation expense Amortization expense Mortality Subtotal Operating Income Earnings Before Interest & Taxes Interest expense Earnings Before Tax Tax NET PROFIT/(LOSS) AFTER TAX 13,719,000 12,124,950 1,594,050 Year 2 15,935,400 13,959,330 1,976,070 Year 3 18,457,170 16,039,337 2,417,834 Year 4 21,323,460 18,395,751 2,927,709 Year 5 23,407,806 20,235,326 3,172,480 Year 6 25,700,587 22,258,859 3,441,728 Year 7 28,222,645 24,484,745 3,737,901 Year 8 30,996,910 26,933,219 4,063,691 Year 9 34,048,601 29,626,541 4,422,060 Rs. in actuals Year 10 37,405,461 32,589,195 4,816,266

Statement Summaries
Income Statement

9,665 16,524 29,051 484,998 1,151,081 442,969 442,969 141,250 301,718 301,718

10,631 16,524 29,051 558,373 1,286,508 689,562 689,562 124,367 565,195 565,195

11,694 16,524 29,051 641,573 1,437,964 979,870 979,870 106,092 873,778 873,778

12,864 16,524 29,051 735,830 1,607,302 1,320,407 1,320,407 86,311 1,234,096 1,234,096

14,150 16,524 29,051 809,413 1,763,474 1,409,005 1,409,005 64,899 1,344,107 1,344,107

15,565 16,524 890,354 1,906,213 1,535,515 1,535,515 41,722 1,493,793 1,493,793

17,121 16,524 979,390 2,095,182 1,642,719 1,642,719 16,634 1,626,084 1,626,084

18,833 16,524 1,077,329 2,303,048 1,760,643 1,760,643 1,760,643 1,760,643

20,717 16,524 1,185,062 2,531,700 1,890,359 1,890,359 1,890,359 1,890,359

22,788 16,524 1,303,568 2,783,218 2,033,048 2,033,048 2,033,048 2,033,048

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13.2

BALANCE SHEET
Broiler Farm
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Rs. in actuals Year 10

Statement Summaries
Balance Sheet

Assets Current assets Cash & Bank Accounts receivable Raw material inventory Pre-paid building rent Total Current Assets Fixed assets Machinery & equipment Furniture & fixtures Office equipment Total Fixed Assets Intangible assets Pre-operation costs Total Intangible Assets TOTAL ASSETS Liabilities & Shareholders' Equity Current liabilities Accounts payable Total Current Liabilities Other liabilities Long term debt Total Long Term Liabilities Shareholders' equity Paid-up capital Retained earnings Total Equity TOTAL CAPITAL AND LIABILITIES

422,998 1,292,242 20,004 1,735,244

1,308,872 1,638,047 22,004 2,968,923

1,443,527 2,072,102 24,204 3,539,833

1,786,917 2,616,222 26,625 4,429,764

2,487,888 3,165,628 29,287 5,682,804

3,128,986 3,830,410 32,216 6,991,613

3,753,685 4,634,797 35,438 8,423,919

4,346,250 5,608,104 38,981 9,993,335

5,232,476 6,785,806 42,880 12,061,161

6,040,425 8,210,825 47,168 14,298,418

15,907,700 15,907,700

152,239 10,000 3,000 165,239

137,015 9,000 2,700 148,715

121,791 8,000 2,400 132,191

106,567 7,000 2,100 115,667

91,343 6,000 1,800 99,143

76,119 5,000 1,500 82,619

60,895 4,000 1,200 66,095

45,672 3,000 900 49,572

30,448 2,000 600 33,048

15,224 1,000 300 16,524

(0) (0)

145,256 145,256 2,045,738

116,205 116,205 3,233,842

87,154 87,154 3,759,178

58,102 58,102 4,603,533

29,051 29,051 5,810,999

7,074,232

8,490,015

10,042,907

12,094,209

14,314,942

15,907,700

1,091,198 1,091,198

1,273,034 1,273,034

1,483,583 1,483,583

1,716,704 1,716,704

1,916,995 1,916,995

2,143,325 2,143,325

2,399,562 2,399,562

2,690,221 2,690,221

3,020,594 3,020,594

2,580,305 2,580,305

1,841,164 1,841,164

1,636,352 1,636,352

1,414,656 1,414,656

1,174,685 1,174,685

914,933 914,933

633,769 633,769

329,428 329,428

204,574 204,574 2,045,738

204,574 301,718 506,292 3,233,842

204,574 866,914 1,071,488 3,759,178

204,574 1,740,692 1,945,265 4,603,533

204,574 2,974,788 3,179,362 5,810,999

204,574 4,318,894 4,523,468 7,074,232

204,574 5,812,687 6,017,261 8,490,015

204,574 7,438,771 7,643,345 10,042,907

204,574 9,199,414 9,403,988 12,094,209

204,574 11,089,773 11,294,347 14,314,942

204,574 13,122,821 13,327,395 15,907,700

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13.3

CASH FLOW STATEMENT


Broiler Farm
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Rs. in actuals Year 10

Statement Summaries
Cash Flow Statement

Operating activities Net profit Add: depreciation expense amortization expense Accounts receivable Raw material inventory Pre-paid building rent Accounts payable Cash provided by operations Financing activities Change in long term debt Issuance of shares Cash provided by / (used for) financing act Investing activities Capital expenditure Cash (used for) / provided by investing acti NET CASH

(1,292,242) (20,004) (1,312,246)

301,718 16,524 29,051 (345,805) (2,000) 1,091,198 1,090,687

565,195 16,524 29,051 (434,055) (2,200) 181,836 356,351

873,778 16,524 29,051 (544,120) (2,420) 210,549 583,361

1,234,096 16,524 29,051 (549,407) (2,662) 233,121 960,723

1,344,107 16,524 29,051 (664,782) (2,929) 200,291 922,262

1,493,793 16,524 (804,386) (3,222) 226,331 929,039

1,760,643 1,626,084 16,524 16,524 (973,307) (1,177,702) (3,898) (3,544) 290,660 256,236 886,226 921,993

1,890,359 16,524 (1,425,019) (4,288) 330,373 807,949

2,033,048 16,524 8,210,825 47,168 (440,289) 9,867,275

1,841,164 204,574 2,045,738

(204,813) (204,813)

(221,696) (221,696)

(239,971) (239,971)

(259,752) (259,752)

(281,164) (281,164)

(304,341) (304,341)

(329,428) (329,428)

(310,495) (310,495) 422,998

885,874

134,655

343,390

700,971

641,098

624,698

592,565

886,226

807,949

9,867,275

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13.4

USEFUL PROJECT MANAGEMENT TIPS

Technology List of Machinery & Equipment Required spare parts & consumables: Suppliers credit agreements and availability as per schedule of maintenance be ensured before start of operations Energy Requirement: Should not be overestimated or installed in excess and alternate source of energy for critical operations be arranged in advance Machinery Suppliers: Should be asked for training and after sales services under the contract with the machinery suppliers Quality Assurance Equipment & Standards: Whatever means required products quality standards need to be defined on the packaging and a system to check them instituted, this improves credibility

Marketing Product Development & Packaging: Expert's help may be engaged for product/service and packaging design & development Ads & P.O.S. Promotion: Business promotion and dissemination through banners and launch events is highly recommended. Product broachers from good quality service providers Sales & Distribution Network: are required with. Expert's advise and distribution agreements

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 promotional tool. Product cost estimates should be carefully documented before price setting. Government controlled prices shall be displayed.

Human Resources List of Human Resource Adequacy & Competencies: Skilled and experienced staff should be considered an investment even to the extent of offering share in business profit. 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 of best practices is route to success. 18

Pre-Feasibility Study

Broiler Farming

Least cost options for Training and Skill Development (T&SD) may be linked with compensation benefits and awards. 13.5 USEFUL LINKS

Prime Ministers Office, www.pmo.gov.pk Small and Medium Enterprise Development Authority, 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 Jamu Kashmir, www.ajk.gov.pk Trade Development Authority of Pakistan (TDAP), www.tdap.gov.pk Security 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 First Women Bank Limited (FWBL), www.fwbl.com.pk Pakistan Institute of Fashion Design (PIFD), www.pifd.edu.pk Pakistan Fashion Design Council (PFDC), www.pfdc.org Pakistan Poultry Association Poultry Research Institute

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Pre-Feasibility Study

Broiler Farming

14. KEY ASSUMPTIONS Table -1: Production Assumptions Production Capacity Utilization Capacity Utilization Growth Rate Maximum Capacity Utilization Number of Birds per Flock Number of Flocks per Year Mortality Rate Annual Production (birds) Time required per Flock (days) Lag time between the Flock (weeks) Average weight per bird (kg) Table 2: Revenue Assumptions Sales price( in Rs/kg Live Body Weight) Sales price growth rate Table 3: Expense Assumptions DOC (Day Old Chicks) in Rs. Feed Conversion Ratio Average Feed Requirement/bird/day (kg) Cost of feed (in Rs/kg) Feed Cost per bird (Rs.) Cost of feed bag (Rs. per 50 Kgs Bag) Vaccination Cost per bird in Rs. Litter Cost per flock Table 5: Financial Assumptions Project life (Years) Debt Equity Interest rate on long-term debt Interest rate on short term debt Debt tenure (Years) Debt payments per year 10 90%-10% 8% 8% 7 12 35 2.20 0.09 45 178.2 2,250 8 6,000 145 7% 85% 5% 100% 10,000 6 8% 60,000 42 2 1.8

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