Professional Documents
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Pre-Feasibility Study
(Calf Fattening Farm)
Note: All SMEDA Services / information related to PM's Youth Business Loan are Free of Cost
December, 2013
Pre-Feasibility Study Calf Fattening Farm
Table of Contents
1. DISCLAIMER .......................................................................................................................................... 2
2. PURPOSE OF THE DOCUMENT ......................................................................................................... 3
3. INTRODUCTION TO SMEDA .............................................................................................................. 3
4. INTRODUCTION TO SCHEME ........................................................................................................... 4
5. EXECUTIVE SUMMARY ...................................................................................................................... 4
6. BRIEF DESCRITION OF PROJECT & PRODUCT ........................................................................... 4
7. CRITICAL FACTORS ............................................................................................................................ 5
8. INSTALLED AND OPERATIONAL CAPACITIES ........................................................................... 5
9. GEOGRAPHICAL POTENTIAL FOR INVESTMENT ..................................................................... 5
10. POTENTIAL TARGET MARKET / CITIES..................................................................................... 5
11. CALF FATTENING PROCESS .......................................................................................................... 6
12. PROJECT COST SUMMARY............................................................................................................. 7
12.2 PROJECT ECONOMICS ............................................................................................................................ 7
12.3 PROJECT FINANCING ............................................................................................................................. 8
12.4 PROJECT COST ...................................................................................................................................... 8
12.5 SPACE REQUIREMENT ........................................................................................................................... 8
12.6 MACHINERY, EQUIPMENT AND FURNITURE .......................................................................................... 9
12.7 RAW MATERIAL REQUIREMENTS .......................................................................................................... 9
12.8 HUMAN RESOURCE REQUIREMENT ....................................................................................................... 9
12.9 REVENUE GENERATION ...................................................................................................................... 10
12.10 OTHER COSTS ..................................................................................................................................... 10
13. CONTACTS OF SUPPLIERS AND CONSULTANTS ................................................................... 10
14. ANNEXURE ......................................................................................................................................... 12
14.1 PROFIT AND LOSS STATEMENT.................................................................................................. 12
14.2 BALANCE SHEET ............................................................................................................................ 13
14.3 CASH FLOW STATEMENT............................................................................................................. 14
14.4 USEFUL PROJECT MANAGEMENT TIPS..................................................................................... 15
14.5 USEFUL LINKS .................................................................................................................................... 16
15. KEY ASSUMPTIONS ......................................................................................................................... 18
Pre-Feasibility Study Calf Fattening Farm
1. DISCLAIMER
This information memorandum is to introduce the subject matter and provide a
general idea and information on the subject. 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
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Pre-Feasibility Study Calf Fattening Farm
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Pre-Feasibility Study Calf Fattening Farm
4. INTRODUCTION TO SCHEME
‘Prime Minister’s Youth Business Loans’ Programme, 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 by the National Bank of Pakistan (NBP) and the First Women Bank Ltd.
(FWBL).
Loans from Rs. 0.1 million to Rs. 2.0 million with tenure up to 8 years inclusive of
1 year grace period, and a debt: equity of 90: 10 will be disbursed to SME
beneficiaries across Pakistan, covering; Punjab, Sindh, Khyber Pakhtunkhwa,
Balochistan, Gilgit Baltistan, Azad Jammu & Kashmir and Federally Administered
Tribal Areas (FATA).
5. EXECUTIVE SUMMARY
In calf fattening business, calves are raised on nutritionally balanced feed to get
targeted weight gain in a specified time. These calves are grown in groups and
each batch stays on farm for a period of 120 days. The expected live body weight
gain ranges between 700 - 850 grams/day. Higher yields are achievable with
better farm management, and by selecting better quality breeds.
Calves are raised in rural and semi-urban areas and sold in urban markets
normally in livestock markets (Mandies). A farm of 180 calves per annum is
suggested in this pre-feasibility study; however, farm will start its production at
80% capacity in first year of production. An estimated investment of Rs 1.82
million is required, out of which capital investment is Rs. 0.25 million and working
capital is Rs. 1.57 million. The Internal Rate of Return (IRR), Net Present Value
(NPV) & payback period of the project are 51%, Rs.9.85 million and 3.14 years
respectively. The project is proposed to operate as a sole-proprietorship.
6. BRIEF DESCRITION OF PROJECT & PRODUCT
Calf fattening venture suggested in this study is based on raising 180 calves per
year at the farm premises. The calves, preferably males, between 9-12 months of
age, are fed on nutritionally balanced concentrate ration or Total Mixed Ration
(TMR) as major source of energy and protein for a period of 120 days to get
higher body weight gain. Live weight of these calves is around 100 kg. If these
calves are fed properly on formulated fattening feed, an additional weight up to
96-100 kg can be achieved. The daily weight gain varies between 700 to 850
grams depending on the quality of feed given to them. The subject business can
be set-up at any appropriate location with easy availability of fodder and water.
There is a year-round market, however, the demand increases before occasions
like Eid-ul-Fitr and Eid-ul-Azha. On these occasions, well fed animals are sold at
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Pre-Feasibility Study Calf Fattening Farm
a premium price higher than usual weight based price. The proposed legal
structure of the business entity is sole proprietorship.
7. CRITICAL FACTORS
• Background knowledge and related experience of the entrepreneur in calf
fattening farm operations.
• Application of good husbandry practices such as timely feeding, watering
and vaccination to ensure animal’s health and disease-free environment.
• Awareness about the supply and demand of calves in the market both for
beef purpose and sacrificial purpose.
• Efficient marketing of the project and bulk supply to wholesalers.
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Pre-Feasibility Study Calf Fattening Farm
• Contractors
• Slaughter house owners
11. CALF FATTENING PROCESS
• Selection of animals based on breed and age: There is no beef breed
developed in country. It is recommended that calves (preferably male) of local
cattle breeds such as Sahiwal, Cholistani and Red Sindhi may be selected,
however, calves of Tharparkar, Rojhan, Dhanni, Lohani, Bhagnari may also
be considered for fattening purpose. For sacrificial purpose, the cross bred
calves of Brahaman, Angus and Charolais etc. are also considered. The
Sahiwal and Cholistani male calves are raised for good meat production and
dressing percentage i.e. 55%. After fattening, the fat to muscle composition is
also acceptable. The carcass weight is desirable by meat traders and
exporters.
• Selection of animals with excellent body score and health conditions: initial
live body weight should be around 100 kgs at 9-12 months of age. Little
emaciated animals may also be accepted for fattening as research shows that
these animals respond efficiently in terms of feed efficiency.
• Housing: A good housing leads to good management practices and ultimately
optimum production. Generally, housing should be:
Less expensive
Well ventilated, comfortable and dry with hygienic environment
Easy drainage and removal of dung urine and waste material
Protective from extreme environmental conditions
Maximum sun exposure: axis of length to be east to west
Availability of feed and water for 24 hours
Planed so that future expansion may be possible when required
• Feeding: Adequate weight gain through the use of balanced feed purchased
from well reputed companies or formulated accordingly. Animal should be fed
Total Mixed Ration (TMR) @ 3-3.5 % of live body weight. Additionally, urea
molasses blocks and salt blocks can help in better daily weight gains. Green
fodder is offered at 5% of body weight (wet basis) to every animal.
• Watering: Daily supply of clean drinking water in clean troughs i.e. 15 to 20
liters of water consumption/animal/day maintains the production capacity of
the animal. Due to TMR and salt offered, animal tends to consume more
water.
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Pre-Feasibility Study Calf Fattening Farm
• Record keeping for each batch: The animals should be ear-tagged on arrival
at the farm. The information to be recorded includes breed of animal, initial
live weight of animal, age of animals, date of purchase etc. The records for
regular weight gain, medication and de-worming etc. are also important.
• Culling: Selection of good productive animals and regular culling of
uneconomical animal.
• Regular technical assistance from the livestock professionals and experts.
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Pre-Feasibility Study Calf Fattening Farm
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Pre-Feasibility Study Calf Fattening Farm
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Pre-Feasibility Study Calf Fattening Farm
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Pre-Feasibility Study Calf Fattening Farm
Ph: 0853-610921
Big Feed (PVT) Ltd. Dr. Tanveer Ahmad
2-A, Ahmad Block, New Garden Town, Pir Mehr Ali Shah Arid Agriculture
Lahore University, Rawalpindi.
Ph: 042-35835374-35835373 Ph: 051-9290115
Anmol Vanda Livestock and Dairy Development
c/o Livestock and Dairy Development Department, Govt. of Punjab,
Department, Govt. of Punjab, 16-Cooper 16-Cooper Road, Lahore.
Road, Lahore Toll free: 0800-78685, 0800-78686
Free Landline: 0800-78685, 0800-78686
Livestock Mandies
The animals may be procured from local calf breeders and livestock mandies
scheduled in different districts such as Pattoki, Okara, Bahawalnagar, Lodhran,
Vehari, Khanewal, Arifwala, Pakpattan etc. as per scheduled by Livestock and Dairy
Development Department, Govt. of The Punjab Lahore. Free Landline: 0800-78685,
0800-78686
Meat Contractors/ Processors
Mr. Muhammad Younus Qureshi Punjab Agriculture and Meat Company
Chairman (PAMCO)
Red Cow Meat Products of Pakistan 5/8 Shaheen Complex, Egerton Road
125/ 13-B-1, Township, Lahore Lahore
Ph: 042-35112603 Ph: 042-36370661
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Pre-Feasibility Study Calf Fattening Farm
14. ANNEXURE
14.1 PROFIT AND LOSS STATEMENT
Income Statement
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Revenue 5,055,050 6,066,060 7,357,042 8,375,051 9,212,556 10,133,812 11,147,193 12,261,913 13,488,104 14,836,914
Cost of Sales
Feed & Vaccination Cost 2,006,271 2,311,392 2,672,817 2,903,223 3,048,456 3,200,843 3,360,921 3,528,886 3,705,312 3,890,614
Cost of Calves 2,088,000 2,405,550 2,781,608 3,021,401 3,172,471 3,331,095 3,497,650 3,672,532 3,856,159 4,048,967
Direct Labor 240,000 264,000 290,400 319,440 351,384 386,522 425,175 467,692 514,461 565,907
Transportation / Freight 60,000 63,000 66,150 69,458 72,930 76,577 80,406 84,426 88,647 93,080
Repair & Maintenance 14,896 17,063 19,753 21,464 22,538 23,664 24,848 26,090 27,394 28,764
Utilities 35,750 42,900 52,030 59,230 65,152 71,668 78,834 86,718 95,390 104,929
Total cost of sales 4,444,917 5,103,904 5,882,757 6,394,215 6,732,932 7,090,369 7,467,833 7,866,344 8,287,364 8,732,261
Gross Profit 610,133 962,156 1,474,285 1,980,836 2,479,625 3,043,443 3,679,360 4,395,568 5,200,740 6,104,654
Interest expense on long term debt (Project Loan) 135,711 124,245 109,174 92,853 75,177 56,034 35,302 12,850 - -
Interest expense on long term debt (Working Capital Loan) - - - - - - - - - -
Subtotal 135,711 124,245 109,174 92,853 75,177 56,034 35,302 12,850 - -
Earnings Before Tax 196,813 535,924 1,036,323 1,529,730 2,013,799 2,573,222 3,190,711 3,886,314 4,656,992 5,508,849
Tax - 13,592 77,948 153,446 250,260 365,805 520,177 694,078 919,597 1,175,154
NET PROFIT/(LOSS) AFTER TAX 196,813 522,331 958,374 1,376,284 1,763,540 2,207,417 2,670,533 3,192,236 3,737,395 4,333,695
Balance brought forward 196,813 719,144 1,677,518 3,053,802 4,817,342 7,024,759 9,695,293 12,887,528 16,624,923
Total profit available for appropriation 196,813 719,144 1,677,518 3,053,802 4,817,342 7,024,759 9,695,293 12,887,528 16,624,923 20,958,618
Dividend - - - - - - - - - -
Balance carried forward 196,813 719,144 1,677,518 3,053,802 4,817,342 7,024,759 9,695,293 12,887,528 16,624,923 20,958,618
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Pre-Feasibility Study Calf Fattening Farm
Assets
Current assets
Cash & Bank 179,077 354,495 422,871 1,050,301 2,189,075 3,763,727 5,841,380 8,488,063 11,777,210 16,096,142 25,637,819
Equipment spare part inventory 4,965 5,972 7,259 8,283 9,131 10,067 11,099 12,237 13,491 14,874 -
Raw material inventory 1,364,757 1,650,930 2,004,501 2,286,164 2,520,525 2,778,864 3,063,714 3,377,706 3,723,912 4,105,632 -
Total Current Assets 1,568,864 2,033,468 2,458,910 3,371,454 4,748,109 6,584,973 8,951,739 11,917,108 15,557,624 20,263,960 25,637,819
Fixed assets
Land - - - - - - - - - - -
Building/Infrastructure - - - - - - - - - - -
Machinery & equipment 172,500 155,250 138,000 120,750 103,500 86,250 69,000 51,750 34,500 17,250 -
Furniture & fixtures 15,000 13,500 12,000 10,500 9,000 7,500 6,000 4,500 3,000 1,500 -
Total Fixed Assets 187,500 168,750 150,000 131,250 112,500 93,750 75,000 56,250 37,500 18,750 -
Intangible assets
Pre-operation costs 60,395 48,316 36,237 24,158 12,079 - - - - - -
Total Intangible Assets 60,395 48,316 36,237 24,158 12,079 - - - - - -
TOTAL ASSETS 1,816,759 2,250,534 2,645,147 3,526,862 4,872,688 6,678,723 9,026,739 11,973,358 15,595,124 20,282,710 25,637,819
Other liabilities
Long term debt 1,635,083 1,635,083 1,453,511 1,256,868 1,043,905 813,265 563,482 292,967 - - -
Total Long Term Liabilities 1,635,083 1,635,083 1,467,103 1,348,409 1,288,891 1,308,511 1,424,533 1,674,196 2,075,307 2,994,904 4,170,059
Shareholders' equity
Paid-up capital 181,676 181,676 181,676 181,676 181,676 181,676 181,676 181,676 181,676 181,676 181,676
Retained earnings - 196,813 719,144 1,677,518 3,053,802 4,817,342 7,024,759 9,695,293 12,887,528 16,624,923 20,958,618
Total Equity 181,676 378,489 900,820 1,859,194 3,235,478 4,999,018 7,206,435 9,876,969 13,069,204 16,806,599 21,140,294
TOTAL CAPITAL AND LIABILITIES 1,816,759 2,250,534 2,645,147 3,526,862 4,872,688 6,678,723 9,026,739 11,973,358 15,595,124 20,282,710 25,637,819
Note: Total assets value will differ from project cost due to first installment of leases paid at the start of year 0
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Operating activities
Net profit - 196,813 522,331 958,374 1,376,284 1,763,540 2,207,417 2,670,533 3,192,236 3,737,395 4,333,695
Add: depreciation expense - 18,750 18,750 18,750 18,750 18,750 18,750 18,750 18,750 18,750 18,750
amortization expense - 12,079 12,079 12,079 12,079 12,079 - - - - -
Deferred income tax - - 13,592 77,948 153,446 250,260 365,805 520,177 694,078 919,597 1,175,154
Accounts receivable - - - - - - - - - - -
Finished good inventory - - - - - - - - - - -
Equipment inventory (4,965) (1,007) (1,287) (1,023) (849) (936) (1,032) (1,138) (1,254) (1,383) 14,874
Raw material inventory (1,364,757) (286,173) (353,571) (281,663) (234,361) (258,339) (284,850) (313,993) (346,206) (381,720) 4,105,632
Accounts payable - 236,962 40,261 42,035 29,060 22,876 24,576 26,422 28,420 30,594 (153,741)
Other liabilities - - - - - - - - - - -
Cash provided by operations (1,389,787) 175,418 249,949 824,072 1,351,738 1,805,292 2,327,436 2,917,198 3,582,113 4,318,933 9,541,676
Financing activities
Change in long term debt 1,635,083 - (181,572) (196,643) (212,964) (230,640) (249,783) (270,515) (292,967) - -
Issuance of shares 181,676 - - - - - - - - - -
Purchase of (treasury) shares - - - - - - - - - - -
Cash provided by / (used for) financing act 1,816,759 - (181,572) (196,643) (212,964) (230,640) (249,783) (270,515) (292,967) - -
Investing activities
Capital expenditure (247,895) - - - - - - - - - -
Acquisitions - - - - - - - - - - -
Cash (used for) / provided by investing acti (247,895) - - - - - - - - - -
NET CASH 179,077 175,418 68,376 627,430 1,138,774 1,574,652 2,077,653 2,646,684 3,289,146 4,318,933 9,541,676
Cash balance brought forward 179,077 354,495 422,871 1,050,301 2,189,075 3,763,727 5,841,380 8,488,063 11,777,210 16,096,142
Cash available for appropriation 179,077 354,495 422,871 1,050,301 2,189,075 3,763,727 5,841,380 8,488,063 11,777,210 16,096,142 25,637,819
Dividend - - - - - - - - - - -
Cash carried forward 179,077 354,495 422,871 1,050,301 2,189,075 3,763,727 5,841,380 8,488,063 11,777,210 16,096,142 25,637,819
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• Training & Skill Development: Encouraging training and skill of self & employees
through experts and exposure of best practices is route to success. Least cost options
for Training and Skill Development (T&SD) may be linked with compensation benefits
and awards.
14.5 Useful Links
• Prime Minister’s Office, www.pmo.gov.pk
• Government of Pakistan, www.pakistan.gov.pk
• Ministry of Industries & Production, www.moip.gov.pk
• Small & Medium Enterprises Development Authority, www.smeda.org.pk
• National Bank of Pakistan (NBP), www.nbp.com.pk
• First Women Bank Limited (FWBL), www.fwbl.com.pk
• Ministry of National Food Security & Research, www.mnfsr.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 Jammu & Kashmir, www.ajk.gov.pk
• Trade Development Authority of Pakistan (TDAP), www.tdap.gov.pk
• Securities & Exchange Commission of Pakistan (SECP), www.secp.gov.pk
• Federation of Pakistan Chambers of Commerce and Industry (FPCCI)
• Punjab Board of Investment & Trade (PBIT), 23-Aikman Road, GOR-I, Lahore
Tel. 042-99205201, www.pbit.gop.pk
• Sindh Board of Investment (SBI), 1st Floor, Tower B, Finance & Trade Center, Shahra-e-
Faisal, Karachi, Tel. 021-99207512-4, www.sbi.gos.pk
• All Pakistan Meat Exporters and Processors Association, Lahore, www.apmepa.com
• Punjab Agriculture and Meat Company (PAMCO), Lahore, www.pamco.bz
• Pakistan Agricultural Research Council (PARC), Islamabad, Tel. 051-9203966
www.parc.gov.pk
• National Agricultural Research Centre (NARC), Islamabad, Tel. 051-9255061,
www.parc.gov.pk
• National Veterinary Laboratory, NARC, Islamabad, Tel. 051-9255108
• Balochistan Agricultural Research Centre (BARC), Quetta, Tel: 081-9213286-7,
www.parc.gov.pk
• Southern-zone Agricultural Research Centre (SARC), Karachi, Tel: 021-99261661,
99261561, www.parc.gov.pk
• Arid Zone Research Institute (AZRI), Bahawalpur, Tel: 0622-876833, www.parc.gov.pk
• Punjab Livestock & Dairy Development Board (PLDDB), 11- Shami Road, Lahore Cantt.
Tel. 042-36676821, www.plddb.pk
• University of Agriculture, Faisalabad, www.uaf.edu.pk
• Lasbela University of Agriculture, Water & Marine Sciences, Lasbela, www.luawms.edu.pk
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