Business plan of

KAAN’s Dairy Farm (Pre-feasibility Report)

Submitted By:
Ahmad Raza (BC11-225)
Nasir Niraj (BC11-233)
S. Khurram Ali (BC11-246)
Azeem Rafique (BC11-249)
Submitted To:
Prof. Rai Imtiaz Hussain
Program:
B.Com 5
th
Semester
Section (D) Morning
Hailey College of Commerce,
University of the Punjab
Lahore







PREFACE
The purpose and scope of this information memorandum is to introduce the subject matter and
provide a general idea and information on the live stock in Pakistan. All the material included in
this document is based on data/information gathered from various sources and is based on
certain assumptions. 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.











Dedicated to


Dearest and nearest to our heart, those who provide assistance when we need and encourage
us when we lost our heart. So, dedicate this project to you.


“Dear parents
&
Respected Teachers”






ACKNOWLEDGEMENT


In originally under taking this project we have received valued assistance from many persons.
Above all we are thankful to ALLAH Almighty who showers His blessings upon us. We are
thankful to Mr. Rai Imtiaz Hussain who is actually teaching the course and helped us to
complete this project and to Ch Naveed Aslam Bloch, Hajji Muhammad Iqbal, Malik Ashfaq
Ahmad, Ch. Javed jutt, Sardar Zahid Hassan and to live stock department of Punjab Pakistan
who has provided us valuable information.



DISCLAIMER
The reason and range of this information note is to initiate the subject substance and give a
universal plan and information on the supposed area. All the material incorporated in this
article is based on facts/information collected from different sources and is based on
convinced assumptions. Although, due care and conscientiousness has been taken to
assemble this document, the contained information may differ due to any change in any of
the concerned factor, and the real results may differ significantly from the presented
information. WE do not presume any legal responsibility for any financial or other loss
resulting from this memo in result of undertaking this activity. The probable user of this
memo is encouraged to carry out extracarefulness and gather any information he/she feels
essential for making an informed conclusion.












FORWARDING

This project of live stock(Dairy Farming) from students of B.Com (Hons) Morning Ahmad Raza
(BC11-225), Nasir Meraj (BC11-233), Syed Khurram Ali Naqvi (BC11-246) and Azeem Rafique
(BC11-249) Hailey College of Commerce University of the Punjab Lahore is completed under my
supervision.












Dated---------------------------------- Signature of Supervisor--------------------------


1. COMPANY PROFILE
1.1. Name of Company--------------------------
1.2. Monogram------------------------------------
1.3. Slogan------------------------------------------
1.4. Status------------------------------------------
1.5. Industry---------------------------------------
1.6. Vision------------------------------------------
1.7. Mission----------------------------------------
1.8. Goals-------------------------------------------
1.9. Objectives-------------------------------------
2. Purpose OF Document
3. SWOT Analysis
3.1 Strength-------------------------------------------------
3.2 Weakness-----------------------------------------------
3.3 Opportunity--------------------------------------------
3.4 Threats--------------------------------------------------



4. Project profile------------------------------------
4.1 Project brief------------------------------------
4.2 Background-------------------------------------
4.3 Defining the Product---------------------------
4.4 Raw Material--------------------------------------
4.5 Raw Material Availability-----------------------
4.6 Proposed Live Stock----------------------------
4.7 Opportunity Rationale-------------------------------
4.8 Proposed Capacity-------------------------------------
4.9 Market Entry Timing---------------------------------
4.10Proposed Location-----------------------------------
4.11 Proposed Business legal status-------------------
4.12 Economic Size (Total project cost) --------------
4.13Production Process Flow--------------------------





5. Current Dairy Farms-------------------------------------
6. Marketing------------------------------------------------
6.1 Marketing Mix----------------------------------------
6.2 Marketing Strategies--------------------------------
6.3 Target Customer-------------------------------------
7. Farm Management-------------------------------------
7.1 Site Selection-----------------------------------------
7.2 Structural Design of Land-----------------------
7.3 Soil Sampling---------------------------------------
7.4 Pond--------------------------------------------------
7.5 Fertilizers--------------------------------------------
7.6 Animal Growth--------------------------------------
8. Machinery and Equipment--------------------------
9. Human Resource Requirement---------------------
10.Land and Building--------------------------------




11. Projected Financial Statements:
11.1 Projected Income Statement
11.2 Projected Cost of Goods Sold Statement
11.3 Projected Balance Sheet












Executive Summary















1. COMPANY PROFILE
Name of Business KAAN’s Dairy Farm
Monogram


Slogan Doodh to phir doodh hai naa

Status Partnership
Industry Dairy Farming



Vision
Our vision is to provide first class milk with ideal purity , vitamins and protein ,
supported by healthy animals , which boost the quality of life in Pakistan.


Mission
We committed to provided that the best milk to people throughout
their life. With our distinctive experience of probable consumers’ needs and creating
solution, we devote to your welfare and improve your importance of life. As consumers
prolong to make choices about milk which they use.









Goals& Objectives
Goals:
 Guarantee the stable enhancement and implementation of milk health initiatives.
 The upgrading of existing operations, including the area of cattleprocessing, market for
the cattleand dairy products.
 Sustainable landscape management.
 Protection and development of animals and plants.
 Preserving high professional level of workers in Dairy Farming industry.
 Promotion of milk and by products.
Objectives:
 Lactation period
 Milk Composition
 Breeding stock development.
2. Purpose of Document:
The purpose of the pre-feasibility study is chiefly to smooth the progress of probable
entrepreneurs to smooth the progress of investment and provide an indication about
dairy and cattle farming. The project pre-feasibility may figure the basis of a vital
investment decision and in order to hand out this objective, the document covers
different aspects of dairy and cattle concept expansion, start-up, production, finance
and dealing management. The document also provide vital information, brief on
government policy andinternational situation, which have some manner on the project
itself.This particular pre-feasibility is about “cattle farm” which comes under “Livestock
and Agriculture” sector. Before studying the entire document one must deem

followingsignificant aspects, which form the foundation of any investment choice.


3. SWOT Analysis
Internal Factors:
3.1 Strengths
 Intense production.
 Favorable propagation backgrounds.
 Relatively inexpensive farmland.
 High household consumption
 Excellent milk quality.
 Main source of food, i.e. Milk& Meat
 Sufficient human resource service sector.
 Low cost living set.
 Full family participation, dutiful& Hardworking Sector.
3.2 Weakness:
 High starting costs.
 Low levels of feed production.
 Poor organization level in fairly a few cases.
 Lack of education and inventiveness in farmer.
 Unorganized sector, unconscious of basic farm management practices.
 No or low use of research work and rare breed record keeping.


External factors:
3.3 Opportunities:
 Govt. of Pakistan & Sate Bank of Pakistan precedence sector.
 Dairy products requirements are much higher than availability.
 Commercially feasiblesegment with great credit likely and
inclusioncapability.
 Vast range of area of business, more needs and scope of improvement.
 Value added dairy products are in demand.
 Cooperatives can play a big responsibility for expansion in dairy sector
like India.
3.4 Threats:
 High danger of sickness in livestock.
 Inequality between prices of inputs & outputs.
 Growing trend of cost of manufacture with higher rate of interest as
contrast to profit ratio.
 Rising level of deficiency.






Project Profile:
4.1 Project Brief:
The project is about establishing a dairy farm in the potential areas of Pakistan, which provide
desire suitable environment. The project would serve as facility to utilize the everyday
resources in the farm of feed for dairy farm that usually ends up as a cultural waste. On the
other hand it would generate employment for local inhabitants and moreover would possibly
cause cash inflow as well.
The proposed project is primarily focused on local customers and national markets due to the
prevailing high demand and taste preferences. The main features of the project would include
naturally grown animals in clean environment keeping in view the quality standards and
principles. This prefeasibility study explores the viability of setting up dairy farm based on
economic and technology trends and available local strengths, weaknesses, opportunities and
threats.
4.2 Background:
Defining the Product:
Cattle are a high protein, low fattening food that provides high variety of health payback. The
white fleshed cattle is lower in fat than any other source of protein and enrich in omega 3 fatty
acids. Cattle meat is medically suggested as a diet for person body, it produced necessary
nutrients in major amount which is obligatory for healthy body. Moreover cattle areshort in
bad fats normally found in red meat, called omega 6 fatty acids that construct it even more
positive product as compare to red meat.



4.3 Raw Material:
The main raw materials used for dairy farming are Green Founder, silage, etc in addition
wandda is use to improve the milkvalue and improve productivity for better growth.
Maze is used 250 days in a year and all agriculture green fodders are used as raw material. The
price of these fodders is normally 150pkr to 200pkr per 40kg.
In August the price of these raw materials turn out to be high i-e up to 350pkr due to shortfall
in maze.
Globally some non-natural feeds such as Australian silage are used for feed purpose but these
are very expensive and are not suggested as economical in Pakistan. However, it is the choice
of entrepreneur or feed professional to use or make a decision the amount of daily feed
requirement.





4.4 Availability of Raw Material:
Raw material is effortlessly available from any fertile land.
4.5 Proposed CattleFarm:
Globally the one and only common technique isexperiencedfor cattlefarming.
4.6 Opportunity Rationale:

Livestock production is an essential part of Pakistan's agriculture sector and plays a
criticalrole in national economy. At present, livestock is contributing about 52.2% to
the agricultural sector and 11 per cent to the GDP. Pakistan is geographically
situated close to the Middle East and South-East Asia.Both of these regions are
lacking in livestock goods and depend upon import from other countries.The
livestock business in most of the developed world is extremely subsidized.With
reduction of subsidies in the wake of WTO, the local livestock sector should have
better opportunities to compete.Livestock registered a strong growth of 4.30
percent over the last year’s remarkable growth of 7.5 percent due to raise in the
livestock and rooster products. The role of livestock in rural economy may be
assessed by the fact that 30 to 35 million of the total rural inhabitants is engaged in
livestock farming, having 2 to 3 cattle/buffalo and 5 to 6sheep/goats per family
deriving 30 to 40 per cent of income from it.

4.7 Proposed Capacity:
The project will start operation with 170 cows of different ages,for the first 4 year cycle with
survival rate of 80%. The proposed capacity of the farm is 4 acres that comprises of 1 pond,
round about 25000 square feet covered area remaining area will open15 partitions for green
foonder and 5 for banula, office building, guard room and open space.

4.8 Market Entry Timing:
For the dairy farming business 365 days are the marketing entry time due to short fall in this
business in Pakistan. Milk shortfall is 30% to 40%. Maximum output and profit will be in the
months of September to April. In rest of the year this potential will reduce to 50%.
4.9Proposed Location:
The proposed location for the establishment of the dairy farm will primarily be the areas that
provide suitable environment and particularly water temperature range 5-30 degree
centigrade. Our business is located in Depalpur, Okara. It is based on input cost matters
normally.
4.10Proposed Business Status:
The proposed legal structure of the business entity is partnership.








4.11Economic Size (Total Project Cost):
The total investment required for this project isRs.50 million.

Table 1: Capital Investment
Description Amount (Rs)
Machinery and Equipment 13800000
Cows 15750000
Land and Building 9800000+6000000
Total Capital Costs 45350000












5. Current CattleFarm:
Total area covered by the Dairy Farms across the province Punjab Pakistan is about 10,500
hectare. There are 7 million farming families and near about 67milloin cattle and buffalo’s in
Pakistan.More than half of them are in Punjab. According FAO (Food and Agriculture
Organization) report a number of 13000 Cattle Farms have established across Pakistan,
employing around 50000 people either directly or indirectly.

6. Marketing:
The marketing of Cattle follows traditional channel of distribution.
6.1 Marketing Mix:
Product: milk and meet.
Price:We decide price by demand and supply.
Place: Sale point at Dairy Farm.
Promotion:Visiting cards, wall chalking.
6.2 Marketing Strategies:
Our purpose is to give best satisfaction to the customer of target market by providing the good
quality product. To attract customer we set as low price as possible. We are following Focus
marketing strategy.



6.3 Target Market:
 Nestle.
Farm Management:
7.1 Site selection:
Special deliberation should be given to the place of proposed facility. It should be located in an
area that is neither subject to flooding nor close to to rivers. The location should have sufficient
water supply and green founder round the year, easy road access even during the rainy season
and away from high populated area and close to agricultural activities.

7.2 Structural Design of the land:
The site of proposed Dairy Farming should be fertile enough too produced healthy, full of
nutrition and able of producing enough fodder for the cattle. The quality of water must be good
enough to that should not harm the health of animals i.e. that should not be salted or
contaminated.
7.3 Soil Sampling:
Soil samples should be taken in account of the proposed site for analysis. The sample should be
collected from the surface, middle and depth. The required lab tests are pH, soil composition
(The ratio of sand to silt to clay), total dissolved salts, calcium and magnesium etc. Clay is most
desirable for water retention.



7.4 Pond:
Preferably a rectangular shaped pond is desirable. It should be constructed by excavation 2 to 3
feet soil and elevating for 4 to 5 feet from ground level.


7.5 Fertilizers:

Nitrogen and Phosphorus are main Nutrients required to stimulate productivity of the animals
because these are use in the enlargement of green founder i.e maiz,bajra, jawaar etc. In
Pakistan, there are many sources of getting green founder.



7.6 Animal Growth:
Growth is defined as heaviness gain during a specific period of time. Cattle are cold blooded
animals and their growth rate is governed by temperature and climate. Approximately
temperature 25 to 30 degree centigrade.

7.7 Rules of Animal Feeding:
 A regular feeding schedule must be followed, because irregular feeding will have little
measurable effect on growth. The cattle should be fed on daily basis during the warm
months.
 The quantity given must be calculated by the farmer based on the actual sample weight
data collected at the end of each month.
 Cattle must be fed at the same time each day and at the same place in the dairy. The
animals will quickly become a accustomed to being fed, and will often move to the
feeding.

Ration for Dairy Animals



The ration is stipend of nutritionally balanced feed in 24 hours. It includes dry matter and
focus to increase animal output. Wheat straws also used as dry fiber along with green
silage. About 1 kg of concentrate is required for the production of 3liters of milk. These feed
ingredients when mixed according to feed principle will provide ample energy according to
energy and protein requirements of animal in production.
7.8 FARM OUTPUT
Lactation Period

The lactation period is the time during which the animals yield milk. These animals are called
wet animals. Generally the lactation period of cows is 280 days and that of buffaloes is 305
days. Thecalving interval (The interval between two calvings) in a buffalo is about 18-20
months, while cow has15-16 months. The standard milk yield of buffaloes is estimated at 1500
to 2300 liters per lactation.

Milk Composition:
Buffalo milk contains less water, more total solids, more fat, a little more lactose, and more
protein than cow's milk. It seems thicker than cow's milk because it generally contains more
than 16% total solids compared with 12-14% for cow's milk. The butterfat content is usually 6-
8%. Cow's milk butterfat content is usually between 3% and 5%. Since of its high butterfat
content, buffalo milk has significantly higher energy value than cow's milk. Phospholipids are
lower but cholesterol and saturated greasy acids are higher in buffalo milk. Studies have shown
that this does not adversely affect the digestibility. Because of the high fat content, the
buffalo's total fat yield per lactation compares favorably with that of improved breeds of dairy
cattle. Normally the protein in buffalo's milk contains more casein and slightly more albumin
and globulin than cow's milk. The mineral content of buffalo milk is nearly the same as that of
cow's milk except for phosphorus, which occurs in roughly twice the amount in buffalo milk.

Buffalo milk tends to be lower in salt. Buffalo milk lacks the yellow color carotene, ancestor for
vitamin A, and its whiteness is frequently used to differentiate it from cow's milk in the market.
Despite the absence of carotene, the vitamin A content in buffalo milk is almost as high as that
of cow's milk. Apparently the buffalo converts the carotene in its diet directly to vitamin A.
The two milks are similar in B complex vitamins and vitamin C, but buffalo milk tends to be
lower in riboflavin.









Breeding Stock Development
The proposed farmer will raise breeding stock, both future breeding bull and future dairy
animals at his own farm by selecting good off springs of high producers. The first generation
(F1) will be capable of giving milk after 2 years in case of cows and 3 years in case of buffaloes.
Increase in Milk Yield
The milk yield will be improved as a result of appropriate breeding systems discussed earlier.
Low yielding animals are sold in the market. On an average, cows are productive for 7 to 8 years
while buffaloes are productive for 8 to 9 years.
Evening Milk
Milk can be stored in a milk chiller / freezer on 14.5% Total Solids at the farm if milk collection is
not possible in the evening.






Male Calves
3 months old male calves will be sold at the farm sooner after birth for Rs.7000 per animal.
They can also be reared in separately for beef production.

















Machinery and Equipment:
Table 2: Equipment details











Description No Total Price (PKR)
Tube well 1 700,000
Machinery and equipment - 13030000
Water Pump 4 60000
Collection equipment 1 150,000
Telephone set 1 10,000
Generator 2 770000
Office Equipment - 200,000
Total 12
31220000

7. Human Resource Requirement:
Table 3: Human Resource Requirement Details
Description No. of
Employees
Salary Per Month
(Rs)
Annual Salary
(Rs)
Manager 1 20,000 240,000
Milking Man 4 32000 384,000
Labour @ Rs. 8,000/ person 15 120000 1440,000
Guard 1 8000 252,000
Doctor 1 25000 300,000
Chiller man 1 90000 108,000
Office Man 1 8000 96,000
Electrician 1 8000 96,000
Driver 3 27000 324,000
Total 28 338000 3240000









11. Projected Financial Statements
11.1. Projected Income Statement
For the Year Ended Dec. 31
St
_______
Sales (45000 lit. * 53) 23,850,000
Gross profit 23,850,000
General administration and selling expense
Admin exp 675,000
Office exp 100,000
Depreciation 3,433,000
Cultivation exp. 225,000
Salaries 3,240,000 7673000 7,673,000
Operating income 16,177,000
Interest exp. 1,500,000
Net Income 14,677,000









11.3. Projected Balance Sheet
As on Dec 31st ________
1
st
Year 2
nd
Year 3
rd
Year
Current assets
Cash in hand 15775000 15775000 15775000
Cash at bank 995000 6244700 3625530
Total current assets 16770000 22019700 19400530
Fixed assets
Land 6000000 6000000 6000000
Building 8820000 7938000 7144200
Shed (25000 feet) 360000 3240000 2916000
Animals 7000000+8750000 7000000+8750000 7000000+8750000
Machinery and equipment 12420000 11178000 10060200
Milking Equipment 135000 121500 109350
Airing Cooling system 5472000 4924800 4432220
Intangible Assets 450000 405000 364500
Total assets 66,177,000 66,177,000 66,177,000
Liabilities and equity
Long term debt
Loan 10000000 10000000 10000000
Interest Payable 1500000 1500000 1500000
Paid up capital 40000000 40000000 40000000

+profits/losses 14,677,000 14,677,000 14,677,000
Total 66,177,000 66,177,000 66,177,000