Environmentally Controlled Poultry House PDF

Pre-Feasibility Study
Environmentally Controlled
Poultry House
(30,000 Birds)
PRE-FEASIBILITY, CONTROLLED POULTRY HOUSE OF 30,000 BIRDS 2010
Table of Contents
EXECUTIVE SUMMARY ........................................................................................................................................................................................ 3
1. OVERVIEW OF THE POULTRY SECTOR ................................................................................................................................................ 4

1.1. Industry Dynamics................................................................................................................................................................................. 4
1.1.1. Segmentation ........................................................................................................................................................................................................... 5
1.2. Marketing Analysis ................................................................................................................................................................................ 5

1.3. Problems with Poultry in Pakistan ...................................................................................................................................................... 6
2. PRE-FEASIBILITY STUDY FOR ENVIRONMENTALLY CONTROLLED POULTRY HOUSE ....................................................... 8

2.1. Comparative Efficiency of ECH and COH ......................................................................................................................................... 8
2.2. Existing Marketing Practice & Pricing................................................................................................................................................. 9
2.3. Farm Management ............................................................................................................................................................................... 10
3. THE PROJECT .............................................................................................................................................................................................. 13

3.1. Project Brief ........................................................................................................................................................................................... 13
3.2. Proposed Capacity ............................................................................................................................................................................... 13
3.3. The Product ........................................................................................................................................................................................... 13
3.4. Product Assumptions .......................................................................................................................................................................... 14
3.5. Manpower Requirements .................................................................................................................................................................... 15
3.6. Farm Equipment................................................................................................................................................................................... 16
3.7. Land and Building ............................................................................................................................................................................... 17
3.7.1. Mode for Acquiring Land........................................................................................................................................................................................ 17
3.7.2. Preferred Locations – Sindh ................................................................................................................................................................................... 18
3.7.3. Infrastructure Requirement ................................................................................................................................................................................... 18
3.8. Working Capital ................................................................................................................................................................................... 18
4. THE FINANCIAL ANALYSIS ..................................................................................................................................................................... 19

4.1. Project Economics................................................................................................................................................................................. 19
4.2. Financing Option .................................................................................................................................................................................. 20
4.3. Projected Income Statement ................................................................................................................................................................ 21
4.4. Projected Cash Flow Statement .......................................................................................................................................................... 22
5.5. Projected Balance Sheet ....................................................................................................................................................................... 23
KEY ASSUMPTIONS.............................................................................................................................................................................................. 24
ANNEX A .................................................................................................................................................................................................................. 27
ANNEX B .................................................................................................................................................................................................................. 28
ANNEX C .................................................................................................................................................................................................................. 29
IMPORTANT CONTACTS .................................................................................................................................................................................... 30
2
Executive Summary
This Pre-feasibility study is conducted for establishment of Environmentally Controlled Poultry Farm in
Sindh. All the calculations have been based on a flock size of 30,000 birds, with raising 8 flocks per year.
The controlled poultry farm is a project of Livestock Sector, in which, the day old chicks (also known as
DOCs) are raised on high protein feed for a period of six weeks with a lag time of 10 – 15 days for the
cleaning and fumigation of the sheds and the farm. The purpose of the controlled poultry farm is to provide
all the facilities ranging from automatic operations of temperature control, feeding and nipple drinking
system for the broiler birds, monitored by the concerned & technical staff, all in-house. Broiler farming in
controlled environment is a profitable venture due to continuous increasing demand of the white meat in
the market. Poultry is an important sub – sector of agriculture and has contributed enormously to food
production by playing a vital role in the domestic economy. Poultry meat contributes 19% of the total meat
production in the country. There is a tremendous opportunity for Environmental Control Poultry Houses in
Pakistan. Currently there are 2,500 houses working in Pakistan, out of which 75% (1,875) are in Punjab and
remaining 25% (625) are in other provinces1.
The initial cost of the project is Rs. 29,596,720, including of an initial working capital of Rs. 5,774,720.
1. Projected Revenues for the project for year 1, year 2, year 3, year 4 and year 5 is Rs. 53,194,080, Rs.
58,513,488, Rs. 64,364,837, Rs. 70,801,320 and Rs. 77,881,453, respectively.
2. Gross profit / (loss) for year 1, year 2, year 3, year 4 and year 5 is Rs. 9,880,800, Rs. 11,556,336, Rs.
13,435,454, Rs. 15,540,431 & Rs. 17,895,872, respectively.
3. Payback period of the project is approximately 3.5 years.
4. The IRR of the project is 21.52%.
1
Source: Environmental Controlled Poultry Farm, SMEDA, April 2010
3
1. Overview of the Poultry Sector
Poultry is an important sub – sector of agriculture and has contributed enormously to food production by
playing a vital role in the domestic economy. It has great potential and can play a significant role in the
national economy by contributing towards food security of the country, reducing pressure on demand for
mutton and beef and earning of foreign exchange. Poultry industry can broadly be divided into three groups,
viz. hatchery, poultry farming and feed sectors. This sector generates employment and income for about 1.5
million people in Pakistan. Its contribution in agriculture growth is 4.81% and in Livestock growth is 9.84%,
whereas, the total poultry meat contributes to 23.8% of the total meat production in the country.
Pakistan, with a population of 170 Million people, has gone through a sizeable growth in the production of
poultry meat and eggs. Per capita availability went up from 23 in 1991 to 46 eggs in 2009 and poultry meat
availability increased from 1.48kg to 2.88 kg during the same period2. In our Country per capita consumption
of meat is only 7 KG and 60-65 eggs annually. Whereas developed world is consuming 41 KG meat and over
300 Eggs per capita per year. According to Industry sources there is capacity of 5,000 Environmental Control
Houses in Pakistan and currently only 2,500 houses are working.
1.1. Industry Dynamics
The generation line of broiler comes from pure line (Strains) that make the Great Grand Parents (GGP),
which are imported. These great grandparents produce grandparents which are available in Pakistan. These
grandparents produce parent stocks (Breeders) and parent stock end up in producing the final product
which is broiler. Pakistan’s poultry industry is importing 100,000 Grandparents (GP) chicks annually from
Australia, Holland, Germany and USA with the cost of US$100 per day-old female chick. The farmers get day
old broiler from hatcheries. These hatcheries maintain their breeder farms, or in some cases, purchase their
hatching eggs from breeder farms. These breeder farms depend on producers of parent stock.
Poultry feed mills are the major player in the poultry industry, which produce a specific formula feed mix.
Poultry feed consists of rich protein elements like soya bean meal, canola meal, rapeseed meal, sunflower
meal, feather meal and rich energy elements like grains, gluten, etc. When feed efficiency matters most you
can gain the right weight of your bird. The major component of cost of production of chicken meat accounts
for feed cost.
2
FAOSTAT (2009)
4
1.1.1. Segmentation3
Total Investment Rs. 200 Billion

No. of Hatcheries 400
No of Feed Mills 150
Grand Parents 200,000
Parents 6 Million
Broiler 600 Million
Poultry Meat 621,000 Metric Ton
1.2. Marketing Analysis
The total Poultry population in Pakistan is approximately 610 Million. The chart below illustrates the
increase in the number of poultry population over the years4.
PKR Million
Figure 1: Increase in the number of Poultry population in Pakistan (2000 - 2010)
Similarly, there has been a substantial increase in the Livestock products pertaining to Poultry i.e. Poultry
meat and and Eggs3.
3
Source: Environmental Controlled Poultry Farm, SMEDA, April 2010
4
Source: Economic Survey of Pakistan 2010 – 2011
5
Figure 2: Increase in the number of Poultry Eggs & Meat in Pakistan (2000 - 2010)
According to FAO, to produce chicken meat in 2008, 517 million birds were slaughtered and 601 million
tonne meat was acquired. In the same year world total chicken meat production was 52,887 million ton.
There are around 25,000 poultry farms are in the country5. The poultry production is concentrated around
the large urban centres in the provinces of Sindh especially in Karachi. In the provinces of Sindh, there are
farms in Mirpurkhas, Sukkar, Nawabshah as well as in small cities. Many big companies have established
their poultry farms in different parts of the country. To name a few such key players are K&N, Sabir, Hitech,
SB and Jadeed.
1.3. Problems with Poultry in Pakistan
A balanced diet is essential for good health, vigour and productive capacity of the people. Proteins play an
important role in the formation of balanced human diet. There are mainly two sources of proteins i.e.
animals and plants. The human diet in Pakistan is deficient in animal proteins, as approximately 66%
Pakistanis are deficient in proteins. The requirement of proteins is 102.7 g per person per day, while only
69.61 g per person per day is being used in the country.
The main sources of animal proteins in Pakistan are beef, mutton, milk, poultry meat and eggs. To overcome
the gap between supply and demand of proteins, poultry meat is contributing a dominant share which can
be enhanced by improving the profitability of producers and by decreasing prices at the retail level. The
profitability can be increased through better management practices and establishment of fully equipped
controlled poultry houses.
5
Source: Pakistan Poultry Association (www.ppapaknorthern.com)
6
Pakistan, being a tropical country, experience various temperatures throughout the year of which summer is
the most common. During this period the temperature reaches over 40°C in different parts of Pakistan. This
affects the efficiency of the poultry farms and the chickens. Hot and humid weather conditions coupled with
manual and poor management practices increases the mortality in flocks, depresses their growth and makes
poultry production an unmanageable and uneconomical pursuit. Chickens can tolerate high temperatures
but react negatively if they are too warm. The body temperature of an adult chicken is 105-107°F (40.6 to
41.7°C). The thermo-neutral zone is 65-75°F (18-24°C), which allows chickens to maintain their body
temperature. If the temperature is above this zone, heat must be lost in some way. Chickens have no sweat
glands. Since eating increases body temperature, chickens reduce their feed intake during hot weather, and
therefore gains will be less. Chickens begin panting at 85°F (29.4°C) to help dissipate heat, and drink more to
avoid dehydration. A combination of high temperature and high humidity is a problem, because panting
does not cool them under these conditions. During this period owner has to either continue his flock
compromising with poor performance in feed intake, growth rate, weight gain, FCR (Feed Conversion Ratio)
in broilers along with mortality or he has to totally close his business to avoid all these risks. This situation
creates severe shortage of poultry meat which is the cheapest and easily available source of animal protein.
The poultry industry also faces problems like the incidence of diseases, substandard and costly feed and
inefficient marketing system. In all stages of development, there is a need for improving the efficiency and
lowering the cost of distribution.
Losses occur in case of death of birds due to diseases and poor handling. Grading is largely ignored in egg
trade because of extra cost required for grading. Inadequate health facilities are one of the major
constraints in poultry production. It is due to viral, bacterial infection and parasitic infestation.
Environment controlled houses can overcome such critical situations, which counteracts the adverse effects
of heat stress providing tunnel ventilation and enhancing the wind chill effect. These houses when equipped
with highly mechanized system of automatic chain feeding and nipple drinking makes the environment quite
conducive for poultry production and reduces the risk of bacteria during different seasons.
7
2. Pre-Feasibility Study for Environmentally Controlled Poultry House
2.1. Comparative Efficiency of ECH and COH
The modern trend of environment control houses (ECH) in poultry production has brought a great revolution
in poultry industry of Pakistan in the recent years. This has solved a great hurdle of heat stress in the way
economical commercial poultry production. The ECH with evaporative cooling system, providing tunnel
ventilation, giving the wind chill effect has markedly improved the broiler production system. The
technology of ECH is rapidly becoming popular among broiler producers. A comparison is given below of ECH
and a traditional house which highlights significant advantages of an ECH are given below:
No Specification Control House Traditional House
1 Feed Conversion Ratio 1.9 – 2.3 2. 5
2 Feed wastage Nil 10 %
3 Feed distribution Automatic Laborious
4 Body Wt / bird 42 days 1.9 Kg 1.65 Kg
5 Humidity of shed Controlled High
6 Brooding Energy saving Energy wastage
7 Carbon mono oxide poisoning Nil Very high
8 Ammonia poisoning Nil Very high
9 Mortality 5–8% 10 – 30 %
10 Electricity Required No required
11 Rodent Control Successful Failed
12 Wild protection No risks High risky
13 Bio-security measure Very easy Very difficult
14 Noise stress Nil Very high
15 Environmental Stress Nil Very high
16 Mortality due to heat stress Nil 20-100 %
17 Over head / bird Rs.10.00 Rs.8.00
8
18 Dosage of vaccine & medicine Accurate Wastage
19 Medication & vaccination application Appropriate Difficult
20 Litter humidity Under control Not control able
21 Flock Sizing One size Multiple size
22 Shed temperature Automatic Big variation
23 Expenditure of maintenance energy Accurate Wastage
24 Poultry environment (neighboring) Health Contaminated
25 Fly control Successful Not possible
26 Feed and water intake Recordable No recordable
27 Light intensity Controlled Not control able
28 Feed storage environment Appropriate Humid
29 Flock monitoring Computerized Error
All these significant features in ECH have reduced the cost of production of broiler to Rs. 7 to 8 Per Bird as
compared to COH.
2.2. Existing Marketing Practice & Pricing
The Broilers are distributed in the market through Middleman and Whole seller. Broilers are transported to
the urban market and are sold on live-weight basis. The current pricing of the broilers and other poultry
products are mentioned below6:
Product PKR Rs.

Chicken Meat per KG 170 – 200
Chicken (Live) 120 – 145
Eggs per Dozen 55 – 75
Day Old Chick Broiler 50 – 65
Day Old Chick Layer 60 – 70
6
Source: Pakistan Poultry Association (www.ppapaknorthern.com). There is an increase of 25% from what is mentioned on the PPA Website as
those rates are pertaining to the Punjab Province whereas in Sindh the rates are high.
9
During the years 2008-09 and 2009-10 sharp fluctuations occurred in the prices of day old chicks. The data
made available by Poultry Research Institute shows price of day old broiler and layer chick was Rs 11 and Rs
35.5 respectively in January 2008. The lowest price during the period for broiler and layer day old chick was
Rs. 6 and Rs. 28 respectively and the highest price was Rs 71.9 and Rs 39 in October 2009. On the basis of
information provided by Poultry Research Institute and by leading companies of poultry industry to the CCP
the cost of production of day old broiler chick was around Rs 18 per chick. The chick was being sold below
cost during almost all months of the year 2008 and since January 2009 the prices rapidly increased and
touched the figure of Rs 71.9, leading towards proportional increase in the prices of poultry meat, since the
price of day old broiler chick are directly related to price of poultry meat. The current price of DOC’s range
from Rs. 50 – Rs. 65 whereas DOC layer costs Rs. 60 – Rs. 70.
The prices of poultry feed also showed a consistent increase during the years of 2008 to 2010. The average
price of a bag of 50 kg poultry feed had been Rs. 955 during year 2008, which rose to Rs. 1,450 in 2010. One
of the factors of increase in the prices of day old chicks and poultry meat is the increase in prices of feed that
is one of the basic inputs in poultry industry.
2.3. Farm Management
Farm input required for a broiler farm includes farm equipment (Automatic feeding system, water nipple
system, exhaust fans, cooling pads, diesel heaters, control panels and other consumable items (feed,
vaccines, medicines, rice husk, water, electricity etc.). The figure below illustrates what the farm will look
like once constructed and ready for flock raising.
10
Below are features of the Environmentally Controlled Poultry House:
Day Old Chicks
The Chicks should be uniform size, alert and bright eyed. The shank or leg covering (skin) of health chicks
appears bright and shiny.
Brooding
Proper brooding temperature is required to keep the chicks in comfort. Diesel heaters supply heat at the
stage of brooding in the Poultry Farm. In the first week 32 ‘C is quite comfortable. As chicks grow, the
temperature may be reduced at the rate of 2 ’C per week until 24 ‘C reached in last week.
Feeding
Broilers re usually feed with following two types of broiler starter. It is feed to the broiler up to 5 weeks of
age. Secondly, is the Broiler Finisher which is feed to the Broiler of more than 5 weeks and continued till the
age of marketing.
Housing
The Broiler control house size 400 feet long and 50 feet side is enough for 30,000 birds.
Feeders
The pan feeders of automatic feeding system are for 65-70 birds. Therefore, 465 feeders in a house are
enough for 30,000.
Lighting
The control house broiler grows on artificial light (not the sunlight). One house 20,000 sq feet requires 100
energy saver of 9 watts each i.e. 900 watts.
Automatic feeding system
The nipple is enough for 12-15 birds. In 30,000 broilers house total nipples required are 2500 there are
automatic water system, whenever bird touches the nipple water flows out and when bird will away no
water is there.
Litter
Litter is spread on the floor. Rice husk is usually for the making the litter. It should be dry and free of mould.
Caked or mould material should be removed and refilled with fresh materials. Extensively wet and dusty
litter should be also not be used. Using new litter for each flock is good for raising disease free broiler.
11
Vaccination
Vaccination can be provided through spray and drinking water.
Disinfection
It is essential to check all equipment and walls of the broiler house carefully that they are clean and washed
with detergents, disinfectants. The house should be fumigated before the birds.
12
3. The Project
3.1. Project Brief
The Broiler Control House is a project of Livestock sector, in which day old chicks (DCO’s) are raised on high
protein feed for a period of six weeks.
This pre-feasibility highlights the capacity and efficiency of Broiler Control House which covers all the
required facilities for the fast growing broilers. Annually eight flocks of birds will be raised on the same
premises of the farm.
3.2. Proposed Capacity
A Broiler farm of about 30,000 birds is considered to be economically viable size, which will justify the fixed
and operational costs. In this pre-feasibility study, all calculations have been based on a flock size of 30,000
birds with raising seven flocks per year. An additional lag time of 10 days will be included for the cleaning
and disinfection of the farm/house.
3.3. The Product
The proposed project should generate revenues from sale of chicken after they have been raised for 6-7
weeks in the Environmentally Controlled Poultry Shed. Assumptions used for the product mix are as follows:
Product Average Weight Price

Chicken 1.90 Kg 228
Hence, the cost of Price per Kg is 228/1.9 = Rs. 120. 7
7
This price is taken as the current average market rate (2010). Source: Pakistan Poultry Association (www.ppapaknorthern.com)
13
3.4. Product Assumptions8
Number of Flocks per year 8
Number of Birds per Flock 30,600
Time required per Flock (Days) 35
Lag time required per Flock (Days) 10
Total Annual Production Capacity 244,800
Shed Space Required per Bird (Sq.ft) 0.65
Mortality Rate 5%
Average Rate per bird 1.9 Kg
Broiler Sale price per Kg (Live) Rs. 120
Sale price growth rate 10%
Cost of 50 Kg Feed bag Rs. 1,600
Cost of Feed per Kg bag Rs. 32
8
Analysis attached in Annexure A
14
3.5. Manpower Requirements
Skilled and Semi skilled workers are needed to manage the operation of a broiler farm of 30,000 birds. These
workers will look after the feeding, vaccination and cleaning operations at the farm. The personal needed for
the farm is as under:
Description Required Personal Salary Per Month Salary for the Year
Supervisor 1 24,000 288,000
Doctor 1 12,000 144,000
Housemen 3 6,500 234,000
Electrician 1 10,000 120,000
Watchmen 2 7,500 180,000
Cleaner 3 6,000 216,000
Total 11 98,500 1,182,000
15
3.6. Farm Equipment
In order to make sure the birds are being fed properly and in a timely manner the following farm
equipments and technology have been identified. This technology for feeding, drinking and handling of birds
is most suitable for a high tech. Controlled poultry house. A full illustration is provided in Annexure C
Description Amount PKR

Flux Pan feeding, Tope screw nipple drinking 2,300,000
system with BD sile (one house)9
Exhaust fan with 1 NP Motor type EOS50 1.06 Alu 780,000

(13 required at Rs. 60,000 each)
Evaporative cooling pads (91 required at Rs. 6,000 546,000
each)
Heater type combi term 140E (1 required) 420,000
Minimum ventilation system (1 required) 680,000
Electrical control panel (1 required) 250,000
Generator 50 – KVA (Perkins 1104A-44TG1) 950,000
Cost of Uniforms, shoes, bio-security equipments 750,000
& other miscellaneous expenses10
Installation cost 250,000
Total 6,926,000
9
Rates have been taken from Cumberland Poultry Services: http://www.cumberlandpoultry.com/
10
Equipments (Drinkers & Feeders for chicks) and trays, heaters, fire extinguishers etc.
16
3.7. Land and Building
Description Area (Sq.ft.) Cost Total

Land 1 Acre 1,000,000 1,000,000
Description Area (Sq.ft.) Cost (Rs. / Sq.ft.) Total

Shed Space (400x50’) 20,000 600 12,000,000
Feed Store (30x30’) 1,000 800 800,00

Room for Guards & Workers 1,200 1,000 1,200,000
Office Block11 1,200 1,100 1,320,000
Store Room 250 800 200,000
Generator Room 200 400 80,000
Water Container 1,000 Gallon 20,000
Boundary Wall (6 Feet High) 500,000
Total 16,640,000
3.7.1. Mode for Acquiring Land
It is assumed that the land available will be on a lease (on a subsidised rate) in the locations mentioned
below.
11
Includes changing room
17
3.7.2. Preferred Locations – Sindh
Suburban and rural areas around the major cities of the country are the suitable areas 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 mature birds. Hence, areas like Gharo, Dhabeji, Bhambhore,
Karachi and Hyderabad are identified as a prime location for this project.
3.7.3. Infrastructure Requirement
Poultry's farming needs to be handled tactically, right from the selection of the site to the final stage when
the birds are sold. The farm should be located at a place where transportation of birds and feed can be
handled easily. The entrepreneur should make sure that the following things are available at the farm site
before setting up the farm: Electricity connection & drinking quality water.
3.8. Working Capital
Description Rate in Rs. Total Amount

Cost of Day Old Chicks 52 1,591,200
(Broilers 30,600)
Feed for 1st flock of birds 110 per bird for 35 3,305,020
days to gain on
average 1.9 Kg - 2
Kg weight
Salaries (For one month) 98,500
Cash 878,500
Total 5,774,720
18
4. The Financial Analysis
4.1. Project Economics
Capital Investment Amount in PKR
Land 1,000,000
Building/Infrastructure 15,640,000
Machinery & Equipment 6,926,000
Furniture & fixtures 250,000
Total Capital Costs 23,816,000
Working Capital Amount in PKR
Inventory & Expenses** 4,896,220
Cash in Hand 878,500
Total Working Capital 5,774,720
**Inventory & Expenses include salary for one month, raw material i.e. fodder, one flock of birds, utilities, transport and fuel expenses
Total Investment PKR 29,590,720
An Environmentally Controlled Poultry House with a population of 30,000 birds established in a purpose-
built controlled shed needs a capital investment estimated at Rs. 23,816,000 for construction and purchasing
machinery & equipment. In addition to this, a sum of Rs. 5,774,720 is required as initial working capital,
which should be used for purchasing day old chicks and other inputs like feed, vaccines, etc and one month’s
salary of the staff. The total project cost is estimated at Rs. 29,590,720.
19
4.2. Financing Option
Looking at the current market trends lending of up to 50% could be available on these projects. A list of
financial institutions willing to facilitate such projects in given in Annexure B. The bank will charge a rate of
at least 20% on financing per annum plus this need to be backed by 200% collateral .
Initial Financing Amount in PKR
Debt 50% 14,795,360
Equity 50% 14,795,360
4.2.1. Debt Assumptions
Debt Tenure 5 Years
Interest Rate on Long Term Debt 20%
Debt Payments Quarterly
20
4.3. Projected Income Statement
Statement Summaries EC Poultry House - SBI

Projected Income Statement
Year 1 Year 2 Year 3 Year 4 Year 5
Revenue from Sales (Birds &

53,194,080 58,513,488 64,364,837 70,801,320 77,881,453
Empty Feed Bags)
Cost of DOCs (12,093,120) (12,697,776) (13,332,665) (13,999,298) (14,699,263)
Cost of Feed per annum (26,440,160) (29,084,176) (31,992,594) (35,191,853) (38,711,038)

Cost of other goods
(vaccination, electricity, diesel, (4,780,000) (5,175,200) (5,604,124) (6,069,739) (6,575,279)
spray etc)
Gross Profit 9,880,800 11,556,336 13,435,454 15,540,431 17,895,872
General administration &

selling expenses
Administration expense (1,182,000) (1,300,200) (1,430,220) (1,573,242) (1,730,566)
Communications expense
(50,000) (55,000) (60,500) (66,550) (73,205)
(phone, fax, mail, internet, etc.)
Office expenses (stationary,
entertainment, janitorial (45,000) (49,500) (54,450) (59,895) (65,885)
services, etc.)
Professional fees (legal, audit,
(45,000) (49,500) (54,450) (59,895) (65,885)
consultants, etc.)
Depreciation expense (2,986,700) (2,986,700) (2,986,700) (2,986,700) (2,986,700)
Sub Total (4,308,700) (4,440,900) (4,586,320) (4,746,282) (4,922,240)
Operating Profit 5,572,100 7,115,436 8,849,134 10,794,149 12,973,632
Less Financial Charges 2,809,907 2,391,408 1,880,884 1,258,133 498,515
Net Profit Before Tax 2,762,193 4,724,028 6,968,250 9,536,016 12,475,117
Provision For Income Tax 966,767 1,653,410 2,438,888 3,337,606 4,366,291

Net Profit/Loss After Taxes 1,795,425 3,070,618 4,529,363 6,198,411 8,108,826
4.4. Projected Cash Flow Statement
Calculations Poultry - SBI

Cash Flow Statement
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Operating activities
Net profit - 1,795,425 3,070,618 4,529,363 6,198,411 8,108,826
Add: Depreciation expense - 2,986,700 2,986,700 2,986,700 2,986,700 2,986,700

Amortization expense - Pre-
operating cost - - - - -
Inventory (4,896,220) (524,538) (576,926) (634,618) (698,080) (767,889)

Cash provided by
operations (4,896,220) 4,257,587 5,480,392 6,881,445 8,487,031 10,327,637
Financing activities
Change in long term debt 14,795,360 (1,913,931) (2,333,831) (2,845,852) (3,470,207) (4,231,539)
Change in short term debt
Issuance of shares 14,795,360 - - - - -

Cash provided by / (used
for) financing activities 29,590,720 (1,913,931) (2,333,831) (2,845,852) (3,470,207) (4,231,539)
Investing activities
Capital expenditure (23,816,000)

Cash (used for) / provided
by investing activities (23,816,000)
Net Cash 878,500 2,343,656 3,146,562 4,035,592 5,016,824 6,096,098
Cash balance brought
forward 878,500 878,500 3,222,156 6,368,718 10,404,310 15,421,134
Cash available for
appropriation 3,222,156 6,368,718 10,404,310 15,421,134 21,517,231
Dividend 0 0 0 0 0 0
Cash carried forward 878,500 3,222,156 6,368,718 10,404,310 15,421,134 21,517,231
22
5.5. Projected Balance Sheet
Projected Balance Sheet

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Current Asset
Cash & Bank 878,500 3,222,156 6,368,718 10,404,310 15,421,134 21,517,231
Inventory 4,896,220 5,420,758 5,997,684 6,632,302 7,330,382 8,098,271
Total Current Assets 5,774,720 8,642,914 12,366,402 17,036,612 22,751,516 29,615,502
Fixed Asset
Land 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000
Furniture 250,000 212,500 175,000 137,500 100,000 62,500
Building/Infrastructure 15,640,000 14,076,000 12,512,000 10,948,000 9,384,000 7,820,000
Machinery &
6,926,000 5,540,800 4,155,600 2,770,400 1,385,200 -
Equipment
Pre-operating cost
Total Fixed Assets 23,816,000 20,829,300 17,842,600 14,855,900 11,869,200 8,882,500
Total Assets 29,590,720 29,472,214 30,209,002 31,892,512 34,620,716 38,498,002
Liabilities &
Shareholders' Equity
Current liabilities - 1,913,931 2,333,831 2,845,852 3,470,207 4,231,539
Accounts payable - - - - - -
Total Current Liabilities - 1,913,931 2,333,831 2,845,852 3,470,207 4,231,539
Long Term Debt 14,795,360 12,881,429 10,547,598 7,701,746 4,231,539 -
Shareholders' Equity
Paid-up capital 14,795,360 14,795,360 16,590,785 19,661,403 24,190,766 30,389,176
Retained Earnings 1,795,425 3,070,618 4,529,363 6,198,411 8,108,826
Total Equity 14,795,360 16,590,785 19,661,403 24,190,766 30,389,176 38,498,002
TOTAL CAPITAL AND
29,590,720 29,472,214 30,209,002 31,892,512 34,620,716 38,498,002
LIABILITIES
23
Key Assumptions
Net Bird Calculation – Flocks/Year
Total birds per flock 30,600
No. of birds per flock 30,000
Excessive birds @ 2% of Birds 600
Mortality in Birds @ 5% of 30,600 = 1,538
Net birds after Mortality per flock 29,070
Net birds after Mortality for the 232,560

year
Net Bird Calculation – Cost of Feed
Description No. of Birds Amount in PKR

Total Mortal Birds 1,530
During first two weeks Mortal birds @ 50% of 765 33,660
Total Mortality
During 3rd and 4th weeks Mortal birds @ 30% 459 36,720
of Total Mortality
During 5th and 6th weeks Mortal birds @ 20% 306 37,000
of Total Mortality
Cost of Feed Consumed by Mortal Birds Per 1,530 107,320
Flock
Cost of Feed Consumed by Remaining Birds 29,070 3,197,700
Total Cost of Feed Consumed by the Birds Per 3,305,020
Flock
Total Cost of Feed Consumed by the Birds Per 26,440,160
Year
24
Expenses Assumption – Project Income Statement
Communication expense 4% of administration expense
Office expenses (Misc.) 4% of administration expense
Professional fees (legal, audit, consultants, etc.) 0.08% of revenue
Depreciation Assumptions
Depreciation Method Straight Line Method
Building depreciation rate 10%
Machinery & Equipment depreciation rate 10%
Office Equipment depreciation rate 10%
Furniture & Fixtures depreciation rate 15%
Cost of Goods Assumptions
DOC (Day Old Chicks) (Rs.) 52
Feed Conversion Ratio (FCR) i.e. Feed required 1.90

to gain 1 Kg weight (Kgs.)
Vaccination. Medication and Disinfection Cost 6

per Bird (Rs.)
Feed Price per Bag (50 Kgs) 1,445
Cost of Feed per Kg – Rs. 32
Price of Empty Feed Bags – Rs. 6
25
Growth Rate of Goods
Sales Growth Rate 10%
CGS Growth Rate (DOC, Vaccine & Medication, 5%

Litter & Spray)
Cost of Feed Growth Rate 5%
Salaries Growth Rate 10%
Electricity & Diesel Growth Rate 10%
26
Annex A
The product assumptions are based on real time data derived from useful resources and poultry associations in Pakistan. A
breakdown of the assumptions is explained below:
Number of Flocks per year
A flock will contain 30,600 birds i.e. Day Old Chicks, which will be raised 8 times in an year with a raising period of 35 days (45 days
including lag time)
Number of birds per flock
It is estimated that a flock will contain 30,600 birds as it will be viable to raise them in the ECH proposed location/area
Time required per flock
35 days is approximately estimated to raise the birds i.e. one flock (30,000 birds)
Lag time required per Flock (Days)
10 days are required to clean, paint & fumigate the farm/shed before the next lot is brought in. With the help of new technology
and machinery the lag time has been brought down to 10 days from 15 days, as conducted in previous studies.
Total Annual Production Capacity
Total birds produced in an year will be 30,600 x 8 (flocks per year) = 244,800 – morality rate of 5% = 232,560
Shed Space Required per Bird (Sq.ft)
Recent survey has indicated that these days Day Old Chicks requires very little space. But as they grow and after 5 weeks of
feeding the total space required by a bird would be 0.65 sq. ft. Hence, this figure is taken initially and the construction and area
will be build up according to these details.
Sale price growth rate
Keeping in view the past trends it would be viable to say that there will be a 10% increase in the sale price of the chicken. This
increase keeps in view different factors like quality of chicken, bird weight, other economic factors like inflation, taxes etc.
Production capacity utilization
The plant/shed would be used to its fullest capacity throughout the year apart from the days when it be closed down for cleaning
i.e. Lag Time.
27
Annex B
Name of Financial Institutions
ZTBL Khushali Bank Ltd
Habib Bank Limited Rozgar Microfinance Bank ltd
Bank Al-Falah Limited Tameer Microfinance bank ltd
Askari Bank Limited Kashf Bank Limited
United Bank Limited Muslim Commercial Bank
28
Annex C
FRONT SIDE
INSIDE CONTROL ROOM
29
IMPORTANT CONTACTS
SINDH BOARD OF INVESTMENT MINISTRY OF FOOD, AGRICULTURE & LIVESTOCK

Government of Sindh B Block, Pak Secretariat, Islamabad , Pakistan
st
Block B, 1 Floor, FTC Building Tel: +92-51-9203307, 9210351
Shahra-e-Faisal
Fax: +92-51-9210616
Karachi, Pakistan
Tel: 021 – 99207512 – 4
Fax: 021 - 99207515
Email: info@sbi.gos.pk
Website: http://www.sbi.gos.pk
TRADE DEVELOPMENT AUTHORITY OF PAKISTAN SMEDA

(TDAP) 5 TH Floor, Bahria Complex II, M.T. Khan Road, Karachi -
5th Floor, Block "A", Finance & Trade Centre, Pakistan
Shahra-e-Faisal, Karachi - Pakistan Tel: (021) 111-111-456
Tel: (92-21) 9206462 Fax: (021) 5610572
Fax: (92-21) 9206461 Email: helpdesk.sindh@smeda.org.pk
K&N LIVESTOCK & FISHERIES DEPARTMENT - SINDH

160 Banglore Town, Barrack Number 90, Sindh Sectt.
Shara-e-Faisal, Karachi-75350, Pakistan No. 48, Opp. Sindh Assembly Building
Tel: 021 - 34533623 - 34541419 Karachi – Pakistan
Tel: 021 – 99203291
SUPREME FEEDS (PVT.) LTD. BIG BIRD POULTRY BREEDERS (PVT.) LTD.
Head Office: 176-Shadman 1 Lahore. 2-A,Ahmed Block, New Garden Town
Phone: +92-42-37522104-7 Lahore
Fax: +92-42-37573106 Phone: +92-42-35835373-4
Fax: +92-42-35835371
NATIONAL FEEDS LTD. HI-TECH POULTRY BREEDERS (PVT.) LTD.
171 Shadman – II Lahore. 1-A, Shadman Chowk Jail Road, Lahore
Phone: +92-42 37551405-8 Phone: +92-42-37564503
Fax: +92-42- 37573045 Fax: +92-42-37564508
ASIA FEED (PVT.) LTD. ISLAMABAD POULTRY BREEDING CO.
359 Shamsabad Colony, Humayun Road D-98, Satellite Town, Murree Road
Multan. Rawalpindi.
Phone: +92-61-6224414 Phone: +92-51-4427139
Fax: +92-61-6224414 Fax: +92-51-4421203
FAST POULTRY FEEDS JADEED FARMS (PVT.) LTD.
12-KM Near Nai Sabzi Mandi Jhang 6,Allied Commercial Plaza, Murree
Road, Faisalabad. Road, Chandni Chowk Rawalpindi.
Phone: +92-41-2577171-2 Phone: +92-51-4851280-84
Fax: +92-41-2517474 Fax: +92-51-4851255
30
SB POULTRIES RUSTUM FEEDS

SB PLAZA 48-C Satellite Town, Murree Flat No.6, 1st Floor, United Centre
Road, Chandni Chowk, Rawalpindi. Shamsabad, Murree Road, Rawalpindi
Phone: +92-51-4457561 Phone: +92-51-4455362
Fax : +92-51-4511191 Fax: +92-51-4847382
PAKISTAN POULTRY ASSOCIATION NOTHERN Golden Birds Poultry Agency
ZONE(NWFP PUNJAB& AJK) S/No. 230 Kh. Shahbuddin Mkt. Sdr, Karachi
HOUSE# 24, BLOCK R JOHAR TOWN, LAHORE Tel: 021 - 32253309
PAKISTAN
Tel: +92-42-7550132-7572764, +92-333 4888555
Ghazi Brothers Dastagir Poultry

D-35, KDA Scheme No. 1, Miran Muhammad Shah Nadim Centre,BS-38,Block-7,Opp.Dastagir Post Office, F.B
Road, Karachi Area, Karachi
Tel: 021 - 34543579, 34543785 Tel: 021 - 36333283, 0300-2945245
M.R. Poultry Service Bismillah Chicken Centre
Shop No. 57, Goal Mkt., Nr. Jama Masjid, Garden West, Near Macca Masjid, Chandni Chowk,
Nazimabad No. 3, Karachi Karachi, Pakistan
Tel: 021 - 36610436, 36681537 Tel: 0333-3002843
Amir Poultry Farm Data Poultry Farm

Shop No. 41, Gole Mkt., Nazimabad No. 3, Karachi, Shop No. 43, Main Gole Mkt., Nazimabad No. 3, Karachi,
Pakistan Pakistan
Tel: 0333-2275130, 6614501 Tel: 6681019, 6614511
31

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Pre-Feasibility Study

1. OVERVIEW OF THE POULTRY SECTOR ................................................................................................................................................ 4

1.2. Marketing Analysis ................................................................................................................................................................................ 5

2. PRE-FEASIBILITY STUDY FOR ENVIRONMENTALLY CONTROLLED POULTRY HOUSE ....................................................... 8

3. THE PROJECT .............................................................................................................................................................................................. 13

3.7.2. Preferred Locations – Sindh ................................................................................................................................................................................... 18

3.7.3. Infrastructure Requirement ................................................................................................................................................................................... 18

3.8. Working Capital ................................................................................................................................................................................... 18

4. THE FINANCIAL ANALYSIS ..................................................................................................................................................................... 19

IMPORTANT CONTACTS .................................................................................................................................................................................... 30

3. Payback period of the project is approximately 3.5 years.

4. The IRR of the project is 21.52%.

1. Overview of the Poultry Sector

1.1. Industry Dynamics

Total Investment Rs. 200 Billion

1.2. Marketing Analysis

Figure 1: Increase in the number of Poultry population in Pakistan (2000 - 2010)

1.3. Problems with Poultry in Pakistan

2. Pre-Feasibility Study for Environmentally Controlled Poultry House

2.1. Comparative Efficiency of ECH and COH

No Specification Control House Traditional House

1 Feed Conversion Ratio 1.9 – 2.3 2. 5

2 Feed wastage Nil 10 %

3 Feed distribution Automatic Laborious

4 Body Wt / bird 42 days 1.9 Kg 1.65 Kg

5 Humidity of shed Controlled High

6 Brooding Energy saving Energy wastage

7 Carbon mono oxide poisoning Nil Very high

8 Ammonia poisoning Nil Very high

10 Electricity Required No required

11 Rodent Control Successful Failed

12 Wild protection No risks High risky

13 Bio-security measure Very easy Very difficult

14 Noise stress Nil Very high

15 Environmental Stress Nil Very high

16 Mortality due to heat stress Nil 20-100 %

17 Over head / bird Rs.10.00 Rs.8.00

18 Dosage of vaccine & medicine Accurate Wastage

19 Medication & vaccination application Appropriate Difficult

20 Litter humidity Under control Not control able

21 Flock Sizing One size Multiple size

22 Shed temperature Automatic Big variation

23 Expenditure of maintenance energy Accurate Wastage

24 Poultry environment (neighboring) Health Contaminated

25 Fly control Successful Not possible

26 Feed and water intake Recordable No recordable

27 Light intensity Controlled Not control able

28 Feed storage environment Appropriate Humid

29 Flock monitoring Computerized Error

2.2. Existing Marketing Practice & Pricing

Product PKR Rs.

2.3. Farm Management

Below are features of the Environmentally Controlled Poultry House:

Day Old Chicks

Automatic feeding system

Vaccination can be provided through spray and drinking water.

3.1. Project Brief

3.2. Proposed Capacity

3.3. The Product

Product Average Weight Price

Hence, the cost of Price per Kg is 228/1.9 = Rs. 120. 7

3.4. Product Assumptions8

Number of Flocks per year 8