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PRE-FESIBILITY STUDY
(Sheep Fattening)

PAKISTAN AGRICULTURE RESEARCH COUNCIL ISLAMABAD
MINISTRY OF NATIONAL FOOD SECURITY AND RESEARCH
Government of Pakistan
www.parc.gov.pk
January 2014

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.................................................... CONTACTS-SUPPLIERS......... PURPOSE OF THE DOCUMENT..............................4 12..................... Project Cost………………………………………………………………………….....................3  Location…………………………………………………………………………………………............…....................4 11............. CRITICAL FACTORS. BRIEF DESCRIPTION OF PROJECT................................................................... BREED SELECTION............................................ Machinery and Equipment…….....................2  Selection of Suitable Breed………………………………………………………………………......................................... Space Requirement………………………………………………………………………............................................................... PRODUCTION PROCESS FLOW................................................................................................................ EXPERTS/CONSULTANTS……………………………………………6 15................………………………………………………………………………..............5 a........ OPERATIONAL CAPACITIES.......6 e................... ANNEXURES..............................….....................................1 2......................... KEY ASSUMPTIONS.......................................... EXECUTIVE SUMMARY.......................... INTRODUCTION TO SCHEME....................................................................………………………………………………………………………4 13........................................... DISCLAIMER.....................................................................5 c................. PROJECT ECONOMICS…….....2 5........................ PROJECT FINANCING……........... PROJECT COST SUMMARY....……5 b...........................................................…………………………………………………….............…9 ii ..... Revenue Generation………………………………………………………………………6 14.............4 9........3  Target Markets……………………………………………………………………………………3  Employment Generation…………………………………………………………………………3 6...... Human Resource Requirement……………………...........2 3.................................7 16................................ POTENTIAL TARGET MARKET.....CONTENTS 1....................................4 8....................................3 7.......................................................................6 d..........…………………………………...................................2 4............................................................................4 10......................................................................

1.LIST OF TABLES Table 1: Project Economics 4 Table 2: Project Financing 5 Table 3: Project Cost 5 Table 4: Space Requirement 5 Table 5: List of Machinery and Equipment 6 Table 6: Human Resource Requirement 6 Table 7: Revenue Generation 6 LIST OF ANNEXURES 14. Cash Flow Statement 8 iii . Income Statement 7 14.2.

Although. The prospective user of this memorandum is encouraged to contact qualified consultant/technical expert. The contained information may vary due to any change in any of the concerned factors. the material included in this document is based on data / information generated from experiments and field testing by a team of relevant scientists. especially designated focal person(s) of this enterprise for reaching to an informed decision.1. it is based upon certain assumptions which may differ from case to case. 1 . The PARC and its employees do not assume any liability for any financial or other loss resulting from this memorandum in consequence of undertaking this activity. however. DISCLAIMER This information memorandum is to introduce the subject matter and provide a general idea and information on the subject. and the actual results may differ accordingly from the presented information.

 Selection of Suitable Sheep Breed 2 . 4. covering. 0. 0. and business management. finance. Project Cost Estimate is Rs.0 Billion for the year 2013-14. Gilgit-Baltistan. best practices developed by existing enterprises by trial and error. BRIEF DESCRIPTION OF PROJECT The following parameters must be addressed as per pre-feasibility study. with an allocated budget of Rs. INTRODUCTION TO SCHEME Prime Minister’s Youth Business Loan Program. 5. production. through designated financial institutions. Apart from carefully studying the whole document. Balochistan. The project pre-feasibility may form the basis of an important investment decision and in order to serve this objective. 2. which form the basis of investment decisions. one must consider critical aspects provided later on. Given the cost assumptions.1 million to Rs. is designed to provide subsidized financing at 8% mark-up per annum for one hundred thousand (100. Sindh. IRR and payback are 15% and 7. with the intention of supporting potential investors in crucial investment decisions.66 Million with fixed investment of Rs. 0. The project is related to sheep fattening purposes. 5.0 million with tenure up to 8 years inclusive of 1 year grace period.07 Million. initially through National Bank of Pakistan (NBP) and First Women Bank Ltd. 3. Khyber Pakhtunkhwa. start-up. for young entrepreneurs. PURPOSE OF DOCUMENT The purpose of this document is to facilitate potential investors in Sheep Fattening by providing them with a general understanding of the business. Punjab.2. (FWBL).56 years for sheep. EXECUTIVE SUMMARY Sheep Fattening Farm is proposed to be located at any suitable areas of Pakistan. the document/study covers various aspects of project concept development. The need to come up with prefeasibility reports for undocumented or minimally documented sectors attains greater imminence as the research that precedes such reports reveal certain thumb rules.000) beneficiaries. Loans from Rs. and a debt: equity of 90: 10 will be disbursed to SME beneficiaries across Pakistan. certain industrial norms and well established research findings that become a guiding source regarding various aspects of business set-up and it’s successful management. the total capacity is 50 sheep. Azad Jammu & Kashmir and Federally Administered Tribal Areas (FATA).

6. Barkhan and Musakhel Districts. Loralai. The farm would focus on rearing of young stock for 3 . Quetta. In Punjab. Strict vaccination and deworming program for successful operation may be followed.  Employment Generation: The proposed project will provide direct employment to two individuals. the northern areas. in Baluchistant. Hashtnagri and Waziri sheep breeds . Zhob. In the concentrate. Multan. The farming should be done on scientific grounds taking care of Vaccination.  Location The farm can be established in sheep rearing areas of country where range grazing is available. Malakanad and Hazara divisions. CRITICAL FACTORS  Establishment of the farm in areas where cheap land is available. in KPK.  Targets Market In addition to major cities such as Lahore. Central Balochistan includes Sibi. in Sindh Dumbi. Fresh water will be available all the time. The limit of 50 sheep has been imposed on the farm because a very large flock would be difficult to manage. Kalat. Medicine etc. Cholistan) and also pothowar areas. Thali and Fateh Khani of Salt range sheep breeds. Baluchi sheep breed. In Balochistan the suitable areas to establish sheep farm are northern and central parts. Ziarat. New feeding techniques including concentrate feeding and preparation of urea molasses blocks etc should be used for better results. Balkhi.In Punjab Kajli. In KPK. OPERATIONAL CAPACITY The farm will start production with 50 sheep. Major production areas in Northern Balochistan include Killla Saifullah.  Good feeding and management practice will give the success in the business. Lohi. 7. Financial analysis shows the profitability of proposed business within first year of its operation. minerals may also be included.  Well-trained / experienced staff adding to the efficiency of the farm. Kachi and Kooka are most suitable breed. there is demand of Pakistani mutton in Middle East and Malaysia countries. Karachi. but it should not be far away    from the market. Hyderabad and Islamabad. Healthy and quality male stock should be selected for fattening. Mastung and Khuzdar Districts. the suitable areas to establish the sheep farming are Southern Punjab (Thal.

Table 1. The following table shows internal rates of return and payback period. During this age the daily weightgain capacity is also better particularly in sheep. Quetta. In addition to local markets there is an enormous export potential to Middle Eastern countries. PROJECT FINANCING Following table provides details of the equity required and variables related to bank loan. 10. BREED SELECTION The farmers should not only select good quality breed which can bring better results for fattening but also select most suitable animals from the selected breeds. PRODUCTION PROCESS FLOW Animals selected for fattening should be of about of age of 6 months.fattening and marketing. Table 2. Project Economics Description Internal Rate of Return (IRR) Payback Period (yrs) Net Present Value (NPV) Sheep 15% 7. Through better management.ft. POTENTIAL MARKETS Target market would be the areas where breeding is being undertaken as well as major cities like Karachi. 8. 11. the weight gain of these selected breeds would be higher. Lahore.704 13. 12. Sheep from aged less than 1 year of age will be purchased and resold in the market after a fattening period of 120 days. Rawalpindi. Various cost and revenue related assumptions along with results of the analysis are outlined in this section.00 sq. 9. Peshawar etc. Project Financing 4 . Islamabad. PROJECT ECONOMICS All the figures in this financial model have been calculated for 50 sheep for total area of around 21.56 311. that would be used for different functions of the farm. PROJECT COST SUMMARY A detailed financial model has been developed to analyze the commercial viability of Sheep Fattening Farm.

Space Requirement Details of the area required are given below: Table 4 Space requirement Description Space per animal sq Total space sq ft ft Shed for 50 kids 12 600 (covered) Open paddock for 50 24 1200 kids Isolation Pen for 5 12 60 kids (covered) Stores for ration & 240 machinery (12x20) Total Cost per sq ft Total cost (Rs.636 8% 8 1 a. 73.Description Total Equity (@ 10%) Bank Loan (@ 90%) Markup to the Borrower (%age/annum) Tenure of the Loan (Years) Grace Period (Year) Sheep Rs. Project cost Following requirements have been identified for operations of the proposed business. Project cost Project Investment Amount (Rs. Table 5.) 300 180000 50 60000 300 18000 300 72000 330000 c.848 Rs. Table 3. 664.) Building Machinery & Equipment Total Capital Cost 330000 90000 420000 b. List of Machinery and Equipment Farm supplies Unit Cost (Rs) Total Cost (Rs) Feeding mangers 5 Chaff cutter Water pump Other farm 5 3000 50000 15000 50000 20000 20000 5000 . Machinery and Equipment Following table provides list of machinery and equipment required for Sheep Fattening Farm working for Livestock sector.

000 e. FatehUllah Khan Animal Sciences Institute (ASI). Human resource requirement The table above provides details of human resource required for sheep fattening farm. Revenue Generation Table 7 Revenue Generation Product Sale of Live Sheeps Total Sales Revenue Sales Price (Rs.com.equipment Total cost 90000 d. of Employees Worker Salary per month 1 10. EXPERTS / CONSULTANTS Dr. M. NARC Email: drmfatahullah@gmail. CONTACTS – SUPPLIERS. Phone: 051-8443944 6 First Year Sales Revenue (Rs) 900000 900000 ./Unit) 400 kg Average weight per kg live weight 45 First Year Production 50 14. Table 6 Human resource requirement Description No.

7 698097.9 171679.882 71561.89 1109041 252151 355307.72 13046.37 44377.6 30558.8 264677 599972.792 57292.28 1172427 290854 373070.276 218303.2 520931.1 9307.26 37743.9 -44815.1 1174424 1174424 -41681.9 8442.689 15315.2 664854.3 186029.3 14349. expense (phone.38 45185.603 16885.7 223526.733 17729.) Office expenses (stationary.25 35574 890275 128986 292312.7 574326.882 70616.2 370.8 6615 13230 42000 9716.5 8040.5 209989.12 34323.24 80536.469 52083.15.5 -16180 -41681.3 -41681. ANNEXURES 15.6 129083 80906.88 45185.882 72554.1 864649.65 13046.07 151859.8 496125 72600 5402. fax.3 7239.8 87846 5955.981 43044.12 55164.4 218303 381668.95 7657.72 186029.4 940222 155483 306937.88 13483.882 69716.66 1311306 379698 6000 12000 42000 9716.038 14586.2 116923 6894.9 128615.8 -57861.7057 7293.12 50503.7 -57861.5 309774 864649.38 42000 0 64973.4 633195.95 80906.91 309774.3 599972.508 69323.6 6253. etc.2 6945.7 6566.7057 370.7 5223.882 73595.99 1049392 216833 338373.08 129082.5 309774.8 0 264676.4 171679 209989.15 42000 0 66121.37 57424.78 47348.51 1239756 333271 391703.95 209989.2 370.) Depreciation expense Amortization expense Subtotal Operating Income Earnings Before Interest & Taxes Interest expense Earnings Before Tax NET PROFIT/(LOSS) AFTER TAX Balance brought forward Total profit available for appropriation Balance carried forward Year 1 882000 Year 2 948150 Year 3 1019261 Year 4 1095706 Year 5 1177884 Year 6 1266225 Year 7 1361192 Year 8 1463281 Year 9 1573027 Year 10 1691005 252500 450000 60000 4900 29400 798800 83200 265125 472500 66000 5145 32340 843210 104940 278368.7 141476.9 599972.7 603043 106293.3 -41681 6300 12600 42000 9716.88 57424.7 151859.13 82929.7057 80906.41 80536.12 13483.3 8864.75 13891.81 223526.1 Income Statement Revenue Cost of Goods Sold Feed & Vaccination Cost Cost of Calves Direct Labor Repair & Maintenance Utilities Total Cost of Sales Gross Profit Travelling & Comm.9 7601.363 39131.08 42000 9716.3 864649.88 34323.5 0 309774.8 -44815.532 63021.54 993193 184691 322279.7 22777.2 -44815.9 381668.47 42000 0 68594.5 381668.46 -41681.8 264676.6 111094.969 18615.8 546977.26 82929.94 42000 0 69923.3 79860 5672.5 42000 9716.21 42000 0 67327.3 7 .6 -16180.7 96630. etc.3 -57861.2 264676.574 16081.99 111094.

293.213 563.000 42.444 99.153 137.186 80.174) (235.461) 3.100 34.548 (29.633) (167) (185) (203) (224) (247) (273) (301) (331) (365) 3.636 73.078 664.915 (52.721 - - - - - 39.303 264.536 129.621 (59.293 59.874 137.278 258.696 135.533) - (109.153 395.677 309.721 - - - - - 39.170) 2.567) - (93.384 (43.751) - (101.638 (47.100 25.717 - - - - - (1.111) 3.721) - - - - 39.110) (67.755 (26.848 - (73.087) - - - 738.931 (234.621 11.960) - (119.002) 39.293 1.087) - - (468.000 42.000 42.547 (21.874 97.717 9.371 1.935 (35.078 34.721 59.000 42.2 CASHFLOW STATEMENT Operating activities Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Net profit Add: depreciation expense amortization expense Equipment inventory Raw material inventory Accounts payable Cash provided by operations Financing activities .15.679 218.806) - (79.293.089) 3.484 - (71.443 38.105) (134.717 9.153 395.100 8 .083 171.717 9.733 (32.100 59.Change in long term debt Issuance of shares Cash provided by / (used for) financing activities Investing activities Capital expenditure Cash (used for) / provided by investing activities NET CASH Cash balance brought forward Cash available for appropriation Cash carried forward - (41.110 67.444) (99.696) (135.584) - - - - - - - - - - (468.167) - (24.000 42.371 34.141 898.180) 13.000 42.522) 3.184) 2.047 45.365 258.717 9.458) 2.681) (16.151 (39.874 137.384) 4.906 216.000 42.874 39.774 - 42.164) (38.141 898.105 173.000 - 9.032) (119.000 42.932) - (86.800) 25.293 395.584) 34.000 42.

16. Key Assumptions Particulars Sales Price Growth Rate Capacity Utilization Growth Rate Increase in Cost of Raw Materials Increase in Staff Salaries Increase in Utilities (Electricity / Water / Gas) Debt / Equity Ratio Depreciation Plant Building Machinery Office Furniture & Equipment Loan Period Loan Installments Financial Charges (Loan Rate) Assumption 5 % per year 5 % per year 10 % per year 10 % per year 10 % per year 90 : 10 10 % per annum 10 % per annum 10 % per annum 8 Years (inclusive of 1 year grace period) Quarterly 9 .