BANKABLE PROJECT REPORT

ON
NABARB - Poultry Broiler Farming

SUBJECT-NEW ENTERPRISE MANAGEMENT

PREPARED BY:
FALGUNI .M. ACHARYA (01)

GUIDED BY:

PROF. NARESH SHAH

PROF. MANSI R. RATHOD

CENTRE FOR MANAGEMENT STUDIES

DHARMSINH DESAI UNIVERSITY
NADIAD

1. Introduction 
2. Scope for broiler farming and its national importance

India has made considerable progress in broiler production in the last three decades.
The broiler production has sky rocketed at an annual growth rate of about 10% and
stands at about 2.3 million metric tons of chicken meat (FAO 2005).The population
of broiler poultry as per 2004-05 census is 199.73 million. 

Today India is the fifth largest producer of broiler meat in the world. Despite this
achievement the annual per capita consumption in India is only 1600 grams of
poultry meat as against the world average of 5.9 kg of meat.
 Recommended per capita consumption of chicken meat by National Institute of
Nutrition is 11 Kg. 

Owing to the considerable growth in broiler industry, high quality chicks,

equipment, vaccines and medicines, technically and professionally competent
guidance are available to the farmers. The management practices have improved
and disease and mortality incidences are reduced to a great extent. 

Many institutions are providing training to entrepreneurs. Increasing assistance

from the Central/ State governments and poultry corporations is being given to
create infrastructure facilities so that new entrepreneurs are attracted to take up this
business. Broiler farming has been given considerable importance in the national
policy and has a good scope for further development in the years to come.

3. Integration in Broiler Farming: 

There is a growing trend of integration in broiler farming. In the early nineties, contract
farming for broilers was introduced and in 1995 it spread all over Tamilnadu. Between
1995 and 2000, it spread to Karnataka. It gathered momentum and spread its wings to
Maharashtra, Andhra Pradesh in the years 2001 & 2002 and after that, it gained inroads
into West Bengal and Gujarat. 

The spread is due to built in strengths in integration system. Integrators will take care of
all aspects of production, right from raising of grandparent and parent flocks, production
of day old chicks for rearing, manufacturing and supply of concentrate feed, providing
veterinary services and wholesale marketing of birds. 
 Under integration all the previous profit centres of the broiler industry viz. chick selling,
feed selling, hatching, medicine supply, transportation have become cost centres for the
integrators who work as a single entity and distribute the benefits among the farmer,
consumer and the integration company themselves. Under contract farming, poultry
farmers invest only for poultry sheds / equipment on their existing land. The Integrator
supplies chicks, feed, medicines, provides technical guidance and takes entire production
after 5-6 weeks.

The contract farmers are paid growing charges as per agreed rates. This has eliminated the
middlemen. Farmer is benefiting from the lesser investment and production cost and also
higher productivity which is achieved as a result of integration.However, the farmer may
be at a disadvantage if the number of batches supplied in the year by the integrator is less.

4. Financial assistance available from Banks/NABARD for broiler farming

For poultry farming schemes with very large outlays detailed project reports are required
to be prepared. The items of finance would include construction of broiler sheds and
purchase of equipment, cost of one day old chicks, feed, medicine and labour cost for the
first cycle. 

Cost towards land development, fencing, water and electricity, essential servant’s quarters,
godowns, transport vehicles, broiler dressing, processing and cold storage facilities can
also be considered for providing loan. Cost of land is usually not considered for loan. 

5. Scheme formulation for bank loan

5.1 A scheme can be prepared by the promoter after consulting local technical persons of
State Veterinary / Animal Husbandry department, Poultry Corporation or private commercial
broiler hatcheries. If possible, they should also visit the progressive broiler farmers in the area
and discuss the profitability of farming. 

A good practical training and experience on a broiler farm will be highly desirable, before
starting a broiler farm. As broilers have to be sold within 35 to 40 days of age, regular and
constant demand for broiler meat and nearness of the farm to the market should be ensured.

5.2 The scheme should include information on land, water and electricity facility, marketing
aspects, training facilities, expertise of entrepreneurs and the type of assistance available from
State government, Poultry Corporations, local hatcheries. It will also include data on
proposed capacity of the farm, total cost of the project, margin money to be provided by
beneficiary and requirement of bank loan, estimated annual expenditure, income and profit
and the repayment of loan and interest. 

A format developed for project report preparation for a commercial broiler farm is
given in Annexure -I 

6. Appraisal of the project

The bank officers can also assist in preparation of the scheme or filling in the prescribed
application form. The scheme so formulated should be submitted to the nearest branch of the
bank.
The bank will then examine the scheme for technical feasibility and economic viability.

A. Technical feasibility - this would briefly include:

(a) Suitability of climate and potentiality of the area 

(b) Technical norms including schedule for replacement of flocks

(c) Infrastructure and other facilities available for supply of inputs, veterinary aid, marketing
etc., and training/experience of the beneficiary

B. Financial viability - this would briefly include:

(a) Unit cost and loan requirement

(b) Input cost for chicks, feed, veterinary aid, labour and other overheads

(c) Output cost i.e. sale of broilers, manure and other miscellaneous items.

(d) Calculation of annual gross surplus (income-expenditure)

(e) Cash flow analysis

(f) Repayment schedule i.e. repayment of principal loan amount and interest

Other documents such as loan application form, security aspects, margin money requirements
etc. are also examined. A field visit to scheme area is undertaken for conducting techno -
economic feasibility study for appraisal of the scheme

7. Sanction of Bank loan and its disbursement

After ensuring technical feasibility and financial viability, the scheme is sanctioned by the
bank. The loan is disbursed in kind in 2 or 3 stages, against the creation of specific assets,
construction of sheds, purchase of equipment and machinery, recurring cost on purchase of
chicks, feeds, medicines, etc. The end use of the loan is verified and constant follow up is
done by the bank.

8. Lending terms - General:

8.1 Outlay :

Outlay of the project depends on the local conditions, unit size and the components included
in the project. Prevailing market prices may be considered to arrive at the outlay. 

8.2 Margin Money :

Margin depends on the category of the borrowers and range from 5 to 25%.

8.3 Interest Rate:

Banks are free to decide the interest rates within overall RBI guidelines. However, for
working out financial viability and bankability of model project, we have assumed rate of
interest as 12% p.a.

8.4 Security:

Security will be as per NABARD / RBI guidelines issued from time to time.

8.5 Repayment of loan:

The loan repayment is determined, on the basis of gross surplus generated in the scheme.
Usually the repayment period of loan for broiler farming is 6 to 8 years. 

8.6 Insurance:

The birds and other assets (poultry shed, equipment) may be insured. Wherever necessary
Risk/Mortality fund may be considered in lieu of poultry insurance.
Annexure I

Format for preparation of Project report Poultry -  Commercial Broiler Farm

1. GENERAL 

i) Nature and objectives of the proposed scheme 

ii) Details of proposed investments 

iii) Specification of the project area 

iv) Name of the financing bank branch 

v) Status of beneficiary: (Individual)/Partnership/ Company/Corporation/ Co-operative

Society/Others

vi) Borrowers profile

 
(a) Capability 

(b) Experience 

(c) Financial soundness 

(d) Technical/Other special qualifications 

(e) Technical/Managerial Staff  and adequacy thereof 

2. TECHNICAL ASPECTS:
a) Location, Land and Land Development:

i) Location details of the project

ii) Total area of land and it's cost

iii) Site map

iv) Particulars of land development, fencing, gates etc.

b) Civil Structures:

Detailed cost estimates along with measurements of various civil structures

- Broiler Sheds

- Store room

- Dressing room

- Office room

- Quarters for staff

- Others

c) Equipment/Plant and machinery:

(i) Feeders

(ii) Waterers

(iii) Generator

(iv) Feed grinder and mixer

(v) Debeaker

(vi) Vaccinator

(vii) Fridge/Deep Freezer

(viii) Dressing equipment if necessary

(ix) Truck/van/jeep (Price quotations for the above equipment)

d) Housing:

i) Type of housing - Deep Litter/Slat/Environment controlled)

ii) Area required (sft./bird)

e) Birds:

i) Proposed strain

ii) No. of birds to be purchased

iii) Source of purchase

iv) Cost of birds (  per bird)

v) Vaccination of purchased birds

vi) Proposed programme of replacement

f) Production parameters:

i) Average body weight (kg.)

ii) Feed efficiency (kg. of feed/ kg body weight gain)

iii) Mortality (%)

g) Flock Projection Chart:

h) Feeding:

i) Source of availability - Purchased or own feed manufacturing

ii) If purchased

a) Place of purchase
b) Brand

c) Cost ( /kg)

- Starter

- Finisher

iii) If manufactured on farm

a) Capacity of feed grinder and mixer

b) Source of raw materials

c) Feed formula

d) Cost of production ( /kg)

- Starter

- Finisher

iv) Requirement (kg/bird)

- Starter
- Finisher

i) Veterinary aid:

i) Source

ii) Location

iii) Distance (km.)

iv) Availability of labour and other staff

v) Type of facilities available

vi) If own arrangements are made

a) Employed a veterinary doctor/stock man /consultant

b) Periodicity of visit

c) Amount paid (Rs.)

vii) Expenditure per bird per cycle (Rs.)

j) Electricity

i) Source SEB / Other

ii) Approval from electricity board

iii) Connected load

iv) Problems of power failure

v) Arrangements for generator

k) Water

i) Source

ii) Quality of water

iii) Availability of sufficient quantity for drinking and cleaning

iv) If investment has to be made, type of structure, design and cost

l) Marketing of broilers

i) Source of sale

ii) Place of disposal

iii) Distance (km)

iv) Basis of payment (number or weight)

v) Price realised - (Rs. per kg live weight or live bird)

 vi) Periodicity of payment

m) Marketing of other products

i) Manure - Qty./bird, price per unit (Rs./Q)

ii) Empty gunny bags - Number and cost/bag

n) Beneficiary's experience

o) Comments on technical feasibility

p) Government restrictions, if any

3. FINANCIAL ASPECTS :
 
i) Project Cost
 

Sr. No. Item Physical Unit and Specification Cost  (Rs.)

1  Capital Costs    

2  Total Capital Costs(A)    

3  Recurring Costs    
4  Total Recurring Costs (B)    

5  Total Project Cost (A+B)    

ii) Down payment/margin/subsidy (Indicate source & extent of subsidy)

iii) Financial viability ( comment on the cash flow projection on a farm model / unit and
enclose the same ) Particulars :

a) Internal Rate of Return (IRR):

b) Benefit Cost Ratio (BCR) :

c) Net Present Worth (NPW) :

iv) Financial position of the borrowers (to be furnished in case of corporate

bodies/partnership firms)

a) Profitability ratio

i) Gross Profit ratio

ii) Net Profit ratio

b) Debt equity ratio

c)Whether Income tax & other tax obligations are paid upto date

d) Whether audit is upto date (enclose copies of audited financial statements for the last three
years)

v) Lending Terms :

a) Rate of interest

b) Grace period

c) Repayment period

d) Nature of Security
e) Availability of Government guarantee wherever necessary

4. INFRASTRUCTURE FACILITIES:

a) Availability of technical staff with bank/implementing authority for monitoring

b) Details of

i) technical guidance

ii) training facilities

iii) Government support/ extension support

c) Tie-up arrangements with marketing agencies for loan recovery :

d) Insurance : Type of policy, Periodicity, Rate of premium

Annexure II

ECONOMICS OF A COMMERCIAL BROILER UNIT

 
A. Project Cost
 

Capital Cost

Construction of shed 120000

Cost of equipment 16000

Total 136000

Recurring Expenditure
Cost of day old chicks 21000

Cost of feed 57222

Medicines, labour, miscellaneous charges 8670

Insurance of birds 525

Insurance of sheds and equipment 687

Total 88104

Grand Total (A+B) 224104

or say 224000

Margin (15%) 33600

Bank Loan 190400

 
Techno Economic parameters

Number of birds 1000

Batch strength 1000

Birds purchased per batch 1050

Birds considered for recurring expenditure 1020

Birds considered for selling 1000

Floor space per bird ( s.ft) 1

Cost of construction of shed (Rs. per sft) 120

Cost of equipment (Rs. per bird) 16

Cost of day old chick (Rs. per bird) 20

Feed requirement per bird ( Kg) 3.3

Cost of feed (average price Rs. per kg) 17

Medicines, vaccines, labour and misc. charges 8.50

Insurance per bird (Rs. per bird) 0.50

Insurance of sheds and equipment (Rs. per Rs.1,000/-) 5.05

Live weight of bird (Kg per bird) 1.6

Sale price (Rs. per kg) 60

Value of manure per bird sold (Rs. per bird) 0.50

Sale price of gunny bags (Rs. per bag) 10

Margin (%) 15

Interest on bank loan (% p.a) 12

Rearing period 6 weeks

Cleaning period of shed 2 weeks

Flock Chart  

Years 1 2-8

No. of batches 7 7

Rearing weeks 40 42

Batches sold 6 7
 

D. Calculation of NPV, BCR & IRR

Years 1 2-7 8

Capital Cost 136000   

Recurring Cost 590642 612606 612606

Total Costs 726642 612606 612606

Income 581992 678642 678642

Residual value of shed 72000

Total Benefit 581992 678642 750642

Net Benefit -144650 66036 138036

Disc cost at 15% DF 2848122   

Disc benefit at 15% DF 2984778   

NPW at 15% DF 136656   

BC Ratio 1.05     

IRR 43.77%   

 
E. Repayment Schedule
 

Year Loan Gross surplus Interest Principal Total repayment Net surplus

1 190400 79454 22848 24824 47672 31782

2 165576 66036 19869 19753 39622 26414

3 145823 66036 17499 22123 39622 26414

4 123700 66036 14844 24778 39622 26414

5 98922 66036 11871 27751 39622 26414

6 71171 66036 8541 31081 39622 26414

7 40090 66036 4811 40090 44901 21135

 
 REFERENCES

https://www.nabard.org/english/Home.aspx

http://www.livestrong.com/article/4690644-nabard.org/

http://eductionportal.com/articl/poultryboiler_farming.html/

http://www.google.co.in/