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Pre-Feasibility Study

ABATTOIR
(Slaughterhouse)

Small and Medium Enterprise Development Authority


Government of Pakistan
www.smeda.org.pk
HEAD OFFICE 6th Floor LDA Plaza Egerton Road, Lahore Tel 111 111 456, Fax: 6304926-7 Website www.smeda.org.pk Helpdesk@smeda.org.pk
REGIONAL OFFICE PUNJAB REGIONAL OFFICE SINDH 5TH Floor, Bahria Complex II, M.T. Khan Road, Karachi. Tel: (021) 111-111-456 Fax: (021) 5610572 Helpdesk-khi@smeda.org.pk REGIONAL OFFICE NWFP Ground Floor State Life Building The Mall, Peshawar. Tel: (091) 9213046-47 Fax: (091) 286908 helpdesk-pew@smeda.org.pk REGIONAL OFFICE BALOCHISTAN Bungalow No. 15-A Chaman Housing Scheme Airport Road, Quetta. Tel: (081) 831623, 831702 Fax: (081) 831922 helpdesk-qta@smeda.org.pk

8th Floor LDA Plaza Egerton Road, Lahore Tel 111 111 456, Fax: 6304926-7 Website www.smeda.org.pk
helpdesk@smeda.org.pk

September, 2007

Pre-Feasibility Study

Abattoir (Slaughterhouse)

DISCLAIMER
The purpose and scope of this information memorandum is to introduce the subject matter and provide a general idea and information on the said area. All the material included in this document is based on data/information gathered from various sources and is based on certain assumptions. Although, due care and diligence has been taken to compile this document, the contained information may vary due to any change in any of the concerned factors, and the actual results may differ substantially from the presented information. SMEDA does not assume any liability for any financial or other loss resulting from this memorandum in consequence of undertaking this activity. Therefore, the content of this memorandum should not be relied upon for making any decision, investment or otherwise. The prospective user of this memorandum is encouraged to carry out his/her own due diligence and gather any information he/she considers necessary for making an informed decision. The content of the information memorandum does not bind SMEDA in any legal or other form.

DOCUMENT CONTROL
Document No. Revision Prepared by Approved by Issue Date Issued by PREF-35 2 SMEDA-Punjab
Provincial Chief Punjab

September, 2007 Library Officer

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INTRODUCTION ...........................................................................................5 1.1 2.1 2.2 THE CONCEPT OF SLAUGHTER IN ISLAM .....................................................5 PROJECT BRIEF ..........................................................................................6 PROJECT SCOPE .........................................................................................6 EXPORT OF MEAT ......................................................................................7 MEAT MARKETS ........................................................................................8 OPPORTUNITY RATIONALE .........................................................................8 PER CAPITA AVAILABILITY OF MEAT .........................................................9 PUBLIC SECTOR .........................................................................................9 PRIVATE SECTOR MODERN ABATTOIRS ....................................................10 PROJECT BRIEF ...........................................................................................6

CURRENT INDUSTRY STRUCTURE .........................................................6 3.1 3.2 3.3 3.4

THE CURRENT SLAUGHTERING PRACTICES.......................................9 4.1 4.2

5 6 7

MARKETING................................................................................................10 CAPACITY....................................................................................................11 6.1 7.1 7.2 7.3 7.4 PRODUCT MIX .........................................................................................12 SLAUGHTERHOUSE PREMISES...................................................................13 SITE SELECTION.......................................................................................13 LAND AND BUILDING ...............................................................................13 MATERIALS FOR CONSTRUCTION AND INSTALLATION ...............................14 LAIRAGE .................................................................................................14 SLAUGHTERING .......................................................................................14 BLEEDING ...............................................................................................15 SKINNING ................................................................................................15 EVISCERATING.........................................................................................15 POST-MORTEM INSPECTION ......................................................................15 RIGOR MORTIS PROCESS ..........................................................................15 PROCESS FLOW OF SLAUGHTERHOUSE......................................................16 FACILITIES, EQUIPMENTS AND TOOLS .........................................17 PREMISES AND SITE FOR SLAUGHTERHOUSE..................................13

OPERATIONAL PROCESSES ....................................................................14 8.1 8.2 8.3 8.4 8.5 8.6 8.7 8.8

9 10

HUMAN RESOURCE REQUIREMENTS ..................................................17 10.1 WATER AND DRAINAGE ...........................................................................17 10.2 LIGHTING AND VENTILATION ...................................................................18 10.3 EQUIPMENT .............................................................................................18 10.4 SLAUGHTERING TOOLS ............................................................................20 10.4.1 Skinning Knife.................................................................................21 10.4.2 Meat Saw ........................................................................................21 10.4.3 Meat Chop: .....................................................................................21
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10.4.4 Spreader: ........................................................................................21 10.4.5 Grinding and Honing Stones:..........................................................21 10.4.6 Steel:...............................................................................................21 10.4.7 Meat Tree/Hooks: ...........................................................................21 10.5 VAN ........................................................................................................22 10.6 RAW MATERIAL ......................................................................................22 11 11.1 11.2 11.3 12 12.1 13 REGULATIONS.......................................................................................23 REGISTRATION ........................................................................................23 TAXATION ...............................................................................................23 LAWS ......................................................................................................23 PROJECT ECONOMICS ........................................................................24 PROJECT COST .........................................................................................24 FINANCIAL ANALYSIS.........................................................................25

13.1 PROJECTED BALANCE SHEET ...................................................................25 13.2 PROJECTED PROFIT &LOSS STATEMENT ...................................................26 PROJECTED CASH FLOW STATEMENT ...................................................................27 14 KEY ASSUMPTIONS ..............................................................................28 TABLE 14-1 OPERATING ASSUMPTIONS ................................................................28 TABLE 14-2 COST ASSUMPTIONS..........................................................................28 TABLE 14-3 SALES ASSUMPTIONS ........................................................................28 15 ANNEXURE .............................................................................................30

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INTRODUCTION
I find not in the message received by me by inspiration any (meat) forbidden to be eaten by one who wishes to eat it, unless it be dead meat, or blood poured forth, or the flesh of swine, for it is an abomination or, what is impious, (meat) on which a name has been invoked, other than God's. But (even so), if a person is forced by necessity, without willful disobedience, or transgressing due limits, thy lord is oft forgiving, most merciful. (Al- Anam 145)

1.1 The Concept of Slaughter in Islam

The Quran has numerous injunctions, instructing its followers to choose and consume good and wholesome foodstuffs. Islam places a very strong emphasis on cleanliness and hygiene in every sphere of life. As such, before performing our daily prayers, ablution, as means of cleaning ourselves, is compulsory, and must be performed in the correct manner. The concept of cleanliness is also extended to matters, especially in context of food and drink. Islam has introduced the concept of slaughter, whereby a naturally Halal animal would have to be properly slaughtered prior to consumption. The act of slaughtering is to ensure the quality of meat and to avoid any microbial contamination. For example, a dead but unslaughtered animal is normally associated with disease. Therefore, slaughtering is mandatory to ensure the complete drainage of blood from the animal's body, thus minimizing the chance of microbial infection. This is compatible with the overall concept of cleanliness that is always emphasized in Islam. To determine the Halal/Haram status of foodstuffs and other materials, Islam has laid general guidelines on this matter, namely: All the raw materials and ingredients used must be Halal. Naturally Halal animals, such as cattle, goats etc. must be slaughtered according to Islamic rites, the rituals specified. The act must be performed by a mentally sound Muslim, to sever the blood and respiratory channels of the animal, using a very sharp cutting tool such as a knife. The Halal ingredient must not be mixed, or even come into contact with Haram materials, during storage, transport, cooking, serving, etc.

The production of Halal food is not only beneficial to Muslims, but also to nonmuslim food producers, by means of an increased market acceptance of their products.

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PROJECT BRIEF

2.1 Project Brief The pre feasibility is about setting up a facility where farm animals are killed and processed into meat products. The animals that will commonly slaughter for food are cattle (beef & veal), sheep (lamb & mutton).This slaughter house will be set on modern standards and promise to provide highly hygienic meat products for local sales as well as for export purpose. Total project cost is worked out to be 97.374 million, which includes the capital cost of Rs.84.023 million and contingencies and working capital of Rs.13.351 million. 2.2 Project Scope The subject feasibility study provides information about the investment opportunity in an abattoir (Slaughterhouse). The abattoir will provide slaughtering and allied services to the local traders, and butchers. However, some of its capacity will be utilized for slaughtering animals for own supply of meat in the local as well as in the international market, hence contributing towards earning foreign exchange for the country. The proposed project will also have the potential for further development of animal by-products processing industry. The slaughterhouse will be technically equipped for slaughtering cattle; sheep, goats etc. will also have the potential for further operations such as by-product processing/utilization, meat preservation, meat processing butchering and development of meat market.

CURRENT INDUSTRY STRUCTURE

There is a huge shortage of slaughter animals for meat supply. The animal growth cycle needs a certain period to fill the gap made by slaughtered animals but rapid increase in daily use, change in consumption patterns, use of more meat in food table and economic up lift has increased the demand by many folds resulting in slaughtering of premature animals, poor carcass quality and quantity wise and increase in price. If this practice continued, there would be a huge gap between supply and demand, forcing the import of meat at large scale. At present small ruminant are mainly coming from the range/rain fed areas where feed resources are not sufficient to bear the animal production requirements. So, most of the cases range areas are either over crowded or with out grazing systems, resulting in poor nutrients supply to animals and damage to rangelands themselves. The disappearance of desirable fodder species and propagation of unwanted plants make this situation worsened for future also. The 3 slaughterhouses present in Lahore (Kot Kumboh, Shahdrah and Baghbanpura) are meeting the only 75% of daily requirements and rest of meat is slaughtered at different areas illegally. Now it is need of time that if public sector can not meet the changing trade scenario and export standards (as evident from many reports), the private sector should be developed for this purpose. The loans to set modern abattoir
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with hygienic production facilities should be granted on easy terms. Furthermore, the Sanitary and phytosanitary (SPS, 1994) Agreement also demands under the Uruguay Agreement, to define rules for setting national standards and regulations relating to sanitary and phytosanitary measures to protect human or animal health from specific risks, including risks arising from animal diseases and food safety. Under this act more stress was given on animal health than food safety. 3.1 Export of Meat The export of meat from Pakistan is relatively a new segment of countrys trade, as the real commercial level export started in not before than. Thus, the export of meat and meat preparation is not so high; but the export growth rate is quite encouraging. Pakistan owns a large inventory of livestock, which determines a large size of meat exports in future. So, meat export is bound to be a good contributor to Pakistans foreign exchange in the years ahead. In year 2000-01, the export of beef was 715 metric tons (value 1.1 Million US $) whereas 3303 metric tons of mutton (value 5.8 million US $). Despite an increase in meat production, the prices have moved upward abnormally. The recent increase in meat prices is attributed to the export of live animals or meat to the Middle East and Afghanistan. The country, though rich in livestock, rarely got a chance to export meat or meat products to earn foreign exchange. It was offered an opportunity when various Middle East states stopped importing meat from European countries due to the incidence of the mad cow disease. Meat export from Lahore started in the beginning of the year 2000 when carcasses of goats and large animals were airlifted. The meat was processed under a special arrangement between the exporters and the Metropolitan Corporation of Lahore, which runs four abattoirs in the city. The exports of livestock such as cow, buffalo, sheep and goat are finding their way to the Gulf States, Iran and Afghanistan where there is a shortage of good quality meat, hence fetches a high price. Table 3-1: Export of Goat/Sheep Meat from Pakistan to other countries (000, Kg)1 Countries. Saudi Arabia United Arab Emirates Oman Bahrain Qatar Kuwait 2004 2,821 820 294 178 387 246 2005 2,915 847 461 235 389 546 2006 2,983 1,158 540 211 505 883

Source: UN comtrade

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3.2 Meat Markets Currently, meat sector in Pakistan is working on an informal basis from animal raising to meat selling. Animal traders purchase animals from the rural areas and sell them to the animal markets in the urban areas. Butchers purchase these animals from animal markets and slaughter them in the slaughterhouses. Butchers act as meat traders and dominate the meat market both in rural and urban areas. The animals sold in these markets are generally diseased and culled animals. Butchers/traders prefer to buy these cheap animals. Pakistan is one of the cheapest beef producers in the world as the live weight value per kilogram is lowest in the world because of the cheap raw materials available. 3.3 Opportunity Rationale Pakistan is situated along both sides of the historic Indus River, following its course from the mountain valleys of the Himalayas down to the Arabian Sea. It shares borders with India, China, Afghanistan and Iran. Its 796,095 square kilometer territory includes a wide variety of landscapes, from arid deserts to lush green valleys to stark mountain peaks. The estimated human population is 153. 96 million with annual growth rate of 2.9 %. Of the total population, 65.9 % live in rural areas. Punjab is the most populated of the 4 provinces, having 56% of the countrys population while Sindh (23%), NWFP (16%) and Balochistan (5%) provinces share the rest. Agriculture is the mainstay of Pakistans economy. Livestock sector contributes almost 50 percent to the value addition in the agriculture sector, and almost 11 % to Pakistans GDP, which is higher than the contribution made by the crop sector (47.4% in agriculture and 10.3 % in GDP). The role of livestock sector in the rural economy of Pakistan is very critical. The livestock population and production for the last five years are given in Tables Table 3-2 Population of livestock (million nos) Species 2001-02 2002-03 2003-04 2004-05 2005-06 (E) Percentage slaughtered/ year 25.5 10.0 28.4 25.5 61.9 0.7 15.4 41.5 41.8 Data Not available

Cattle Buffalo Sheep Goats Camel


* E= Estimated

22.8 24.0 24.4 50.9 0.8

23.3 24.8 24.6 52.8 0.8

23.8 25.5 24.7 54.7 0.7

24.2 26.3 24.9 55.6 0.7

*Source = Economic Survey of Pakistan, 2005-06 Table 2: Production of Livestock Products:


Products (000, tons) 2003-04 2004-05 2004-05 (E)

Beef Mutton
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1087.0 720.0
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1115.0 739.0

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3.4 Per Capita Availability of Meat Per capita availability of meat is 12 kg, most of which is from buffalo and cattle. It may, however, be mentioned that population statistics and statistics on the availability of products from various sources differ drastically. To meat the domestic demand of meat, the rate of growth must be at least 5-7 % per annum. The demand of livestock food products is growing fast because Pakistan's human population is increasing at the rate of 2.9 per cent annually. If population pressure continues to grow and livestock production stays at the same level, then food deficit may become larger. According to one recent survey, in coming years, milk, red meat and poultry meat deficit will be 9.72, 0.17 and 0.14 million tonnes if our livestock production stays at the same level. Therefore there is need of establishment of slaughterhouse facilities of a sufficiently high standard but still simple would improve the situation. Therefore, this prefeasibility study has been made of a medium size slaughterhouse equipped with medium level semi mechanized technology. By providing value added services, the slaughterhouse can utilize the abundant and unexplored resources of Pakistan.

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4. 1

THE CURRENT SLAUGHTERING PRACTICES


Public Sector

For carrying out study of present slaughtering practices Lahore market has been selected. In Lahore, there are four slaughterhouses owned and managed by Municipal Corporation Lahore (MCL) at Kot Kamboh, Baghbanpura and Shahdara with Slaughtering capacity for 6,700 small and 610 large animals. This capacity is sufficient for meeting only 75% meat requirement of the city. The remaining 25% is being supplied from outside the city, and by illegal slaughtering.

Indeed the present premises are fairly old structures, had been built several years ago, and at when a time municipal engineering and public health requirements were less stringent and different from those prevailing now. These slaughterhouses handle the bulk of public slaughters, and as such, they are not slaughterhouse but can be referred to as slaughter slabs merely a place for slaughter with no proper
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arrangement of hygiene and sanitation. These premises merely make facilities available for use by butchers and traders (not licensed) for the slaughter of livestock at fee of Rs. 10 per small animal and Rs.20 per large animal. No storage facility and sufficient quality control measures are available there. Most of the times, Meat gets rotten especially in summer season. This problem is intensified while the meat is sold through the butchers shops to final customers. All the meat is not sold to customers in daytime, and not all the unsold meat is frozen to keep it in hygienic condition. The primitive conventional fashion slaughtering results in wastage and damage to by-products. There is also lack of essential allied facilities. The prevailing conditions are discouraging for the export of meat and meat by-products. 4. 2 Private Sector Modern Abattoirs

There is only one modern abattoir working in private sector in the whole province of Punjab. It is semi mechanized and has minimum required facilities for export of meat in Middle East countries. It is located near Mureedka on Mureedka Shiekhupura road currently this slaughterhouse can process 500 small animals per day. Another slaughterhouse is situated at Kot -Lakhpat, which has only a chiller and no slaughtering and de-skinning facilities. These slaughterhouses have insufficient capacity to fulfill the local and international demand for meat.

MARKETING

The proposed slaughterhouse will identify and develop such services and products that will help to cater the unfulfilled market for quality meat and its by-products in an effective and efficient manner on the following grounds: The slaughterhouse, duly equipped with modern facilities and hygienic standards, can carve a niche in the existing market through properly defined segments and create a competitive strength over municipality-owned and managed slaughterhouses. This unique marketing position can be attained through formulation an adequate marketing mix. The slaughterhouse can achieve differential competitive advantage by. Physical differentiation through distinguishing own product in quality and appearance. Psychological differentiation through labeling, stamping, packing advertisement, salesmanship and sales promotion. Differentiation through its distinctive environment of pleasant surroundings, personal attention and improved services. Differentiation through physical distribution capabilities by making meat readily available at customers doorstep. Differentiation through pricing and terms of sales and services. Direct sale of meat in local preferably in Lahore (Small Animal)

The following type of services will be offered:-

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And direct sale in international markets preferably UK(Large Animal) Slaughtering services to local butchers and traders (Slaughtering and chilling services to exporters, to fill the gap of capacity.

The financial model of this business plan depicts the picture of product mix of the above options. The prices of services have been taken at current/prevailing market and there is a margin to decrease prices of services offered. The decision of selecting the distribution channel will be based on the identification of target market. For local market, the slaughterhouse can target the needs of health conscious people through departmental stores, chain stores, other retail outlets, but in the initial stage, opening of own retail outlet is not recommended, because it will require investment and specialized skills of retailing business. It is planned to distribute 30 refrigerators to major departmental stores of Lahore filled with product free of cost, and a margin of 5% will be offered to shop keepers on selling each product Foreign contracts can be obtained with the assistance of Export Promotion Bureau (EPB). The management of EPB is already working on it to facilitate the export of meat. The slaughterhouse can also serve the existing meat exporters.

CAPACITY

The capacity of the proposed slaughterhouse is 900 small (goats) and 300 large (cattle) animals per day. The capacity utilization varies depending on the staff efficiency and availability of animals. Table 6-1Slaughter House Capacity Percentage Share 75% 25% 100% Days 360 360 Per day Capacity 900 300 Annual No 324,000 108,000 432,000

Small Animals Large Animals Total Capacity

Abattoirs capacity will be divided in 1) for own supply of meat, and 2) for slaughtering and chilling meat services to local trader on fifty percent basis. Table 6-2 Capacity Utilization Sr. No 1 2 Total Description Owners share Services to local traders/butcher Share in Percentage 50% 50% 100%

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To make it more prudent, starting capacity is assumed to be 35% and 85%capacity utilization has been assumed to be attain in ten years with a growth rate of 10%. 6.1 Product Mix Following meat products will be offered to Lahore market (initially), Cattle (veal, beef) meat will be produced for local as well as for export purpose on 20:80 percent respectively. Table 6-3 Products (Goat Meat) Sr. No. 1 2 3 4 5 Products Bone less Mixed meat Minced meat Pieces Full Share in Percentage 20% 40% 23% 15% 2%

Table 6-4 Products {Cattle (beef, Veal)} Sr. No. 1 2 3 Products Veal meat(Bone less) Minced meat Mixed meat Share in Percentage 40% 35% 25%

Following by products can/will also serve as a revenue generating source. Table 6-5 By Products Sr. No. 1 2 3 4 5 By Products Skin Feet and Head Intestines Pluck Dried Blood

Following services will be provided to the local traders, and butchers to earn significant revenue. Table 6-6 Services Sr. No 1 2 Services (Facility) Cold Storage Slaughtering Service

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7. 1

PREMISES AND SITE FOR SLAUGHTERHOUSE


Slaughterhouse Premises

Modern abattoirs have a proper abattoir design, equipment and services. Proposed abattoirs will be operated on industrial lines like a process type industry with a wide range of services featuring cold storage, processing, proper byproduct utilization and waste management activities. 7. 2 Site Selection

Slaughterhouses should be situated at a distance from the residential areas. This is to prevent possible inconvenience to the residents, either by way of pollution from slaughter wastes or by way of nuisance from noise or stench/smell. For this report we are proposing a place in Raiwind, Lahore. Conversely, remote location secures the premises from contact and likely contamination from residential units close by. Nevertheless, some proximity to the city or town should be maintained to take advantage of vital services such as power and water supplies. Another feature of the area selected is that it must be open, treeless and with air currents to provide for natural lighting and ventilation as dark environments can cause lapses in hygiene while stagnant air can induce growth of germs on meat and meat handling equipment. Trees also attract birds, which are agents of contamination. Slaughterhouse premises near waterlogged areas must be avoided. Evidently, such sites can raise sanitation problems as in the breeding of mosquitoes and stagnation of wastes. Where possible, the location of the plant should be made at a higher elevation relative to the surroundings. Location near watercourses or inland bodies of water such as rivers, lakes and lagoons is also inadvisable. This is to avoid the temptation of discharging wastes into the waters with consequent pollution and cross-contamination of the premises. Liquid waste can, however, be discharged into these waters provided it is treated and rendered safe for aquatic life or for humans using the waters. 7. 3 Land and Building

Slaughter house will be built on the area of 2 Acres / 16 Kanals or 72,000 sq. ft. The details of land utilization are given in below. Table 7-1 Land Cost Land 2Acres Total Cost In Kanals 16 Cost in Rs. 12,800,000 /acre 25,600,000

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Table 7-2 Covered Area Description Sq ft. Construction Rate per Sq ft. 1200 350 800 150 Total Cost

Factory Animal2 sheds & boundary Administration Block Covered area Open space Total Area

9,000 57,000 1,500 67,500 4,500 72,000

10,800,000 19,950,000 1,200,000 675,000 32,625,000

7.4 Materials for Construction and Installation The general principle regarding the choice of materials for constructing and equipping slaughterhouse is that the materials must be durable and be able to resist deterioration or destruction from external influences such as the weather, air, steam, water and insects. This means that materials such as swish; wood, thatch and corrugated iron are undesirable. Instead, brick, stone, reinforced concrete, asbestos, tile and slate should be used. For the operating chambers, materials used must not be pervasive to water and blood or stained by fat; glazed tile or a hard smooth material should be used for the walls to facilitate cleaning and prevent absorption of moisture and fat. A similar principle should apply to the selection of equipment for the chambers; stainless steel, galvanized metal and aluminum are good choices for metal fittings or furnishings while plastics may suit containers and working surfaces.

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8. 1

OPERATIONAL PROCESSES
Lairage

The animal should be given rest for at least 12-18 hours before slaughtering and only water should be given to it in this process. 8.2 Slaughtering Slaughters are done manually. The animal being cast down is laid on its back, while the neck vessels and passages (esophagus and trachea) are severed by a single slash of a sharp knife. Bleeding proceeds to completion.

Req. Area per small animal is 15 sq.ft, per large animal is 50 sq.ft,( 2 days animals in stock) 14

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8.3 Bleeding Slaughtered animals must be positioned first for bleeding. A vertical or hanging position is achieved by shackling below the hock of one hind leg and hoisting the animal (head down) to a convenient height. Alternatively, the animal can be placed horizontally on a concrete slab or a sturdy plastic pallet for bleeding. Hoist bleeding is more hygienic and is recommended. It also facilitates collection of blood for further use. 8. 4 Skinning

It is removing the skin of animals. Skinning will be done in hanging position with facilities/equipment of railing, the individual carcasses one after another. 8. 5 Eviscerating

The next step is to cut open the animal body to dislodge the contents and produce the carcass. It is important that the carcass remains or is placed in the hanging position on railing. 8.6 Post-mortem Inspection Inspection will be carried out by professional veterinarians and public health inspectors are to be employed, as it is required by the MCL. (Provision of their salaries has been provided in the financial analysis). Their duty is to examine the slaughter products for evidence of disease and abnormality and reject/eliminate them from the public meat supply. 8. 7 Rigor Mortis process

Before chilling, for at least 2-4 hours, air is provided by fans to carcasses in a separate room.

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8.8 Process Flow of Slaughterhouse

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HUMAN RESOURCE REQUIREMENTS

It is essential to provide adequately trained staff to carry out the above processes and improve slaughter hygiene and meat quality, reduce raw material losses, increase utilization of by-products, and thereby increase profitability. To meet this objective, proper training is required for the meat workers who are to operate these facilities. The type of personnel needed and their cost is given in financial analysis. Table 9-1 Human Resource Requirement Description Administrative Salaries General manager Accountant Drivers Personal & Admin. Officer Peon Gardener Security Guards Operation Salaries Vetniery Doctor Nutritionist Lab technician Un Skilled labor Helper Slaughterers3 No. Per month Annually

1 2 1 1 2 2 2

55,000 10,000 5,500 8,500 4,000 3,500 5,500

660,000 240,000 66,000 102,000 96,000 84,000 132,000 1,380,000 288,000 480,000 240,000 552,000 840,000 52,920,000 55,320,000 56,700,000

2 1 1 10 12

12,000 40,000 20,000 5,000 3,500 300per animal

Total

10 FACILITIES, EQUIPMENTS AND TOOLS


10.1 Water and Drainage The slaughterhouse must have a dependable source of clean water, preferably pipeborne, to maintain hygienic and sanitary services in the plant. The water must be well distributed in terms of point-location inside the premises and must be hot, if possible, for hygienic washing of products and facilities.

slaughterers will be paid Rs.300, on per animal basis 17

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It would be useful, to install a reservoir or tank on the premises as a security against shortages and breakdown of pumps. Drainage of water is one of the main considerations in any slaughterhouse. All washings or wet cleaning must course over the slaughter floor into a collecting drainage and empty eventually outside the building. The floor should be designed to slope toward the main collecting drain, the latter in turn to slope toward exterior connecting pipes. The walls must have a hard smooth surface to prevent staining with blood and fat and hence facilitate cleaning; on the other hand, the floor must be rough or grooved to forestall slipping. 10.2 Lighting and Ventilation Lighting is another important requirement of the slaughterhouse. Electricity connection will be obtained from WAPDA, but a diesel generator is provided for emergency supply of electricity. Transparent insets can also be made in the roofing at vantage points to provide natural lighting or sky lighting. Wide lintel windows (e.g. aluminum frame), covered with gauze to exclude insects, also serve the same purpose, as well as provide ventilation. 10.3 Equipment The standard installation and equipment required in modern slaughterhouse are those necessary to effect a rapid and hygienic conversion of livestock into meat. Table 10-1 Equipment Detail Machinery
4

QTY

Per Unit Cost

Total Cost

Chiller and Freezer Room 1 15% 1% 1 8 15% 3,890,000 3,890,000 583,500 38,900 400,000 600,000 90,000

Dimensions 75'x40'x14' Insulation of cold room panels and doors fittings Sales Tax SED Assembling Of panels, inclusive of fitment of Profiles, filling and caulking o silicon Supply of sliding door for the opening size of 8x5 complete with door frame Sales Tax Refrigeration System For Chiller No1 External Size 40'x20'x14' Air cooled condensing unit model KE 15 S (15 HP)equipment suitable for operation on 380V 50
4

400,000 75,000

650,000

1,300,000

Kold Kraft (Pvt) Ltd. 247-S Industrial Estate, kotLakhpat Lahore 54770,Pakistan.092-425116727,092-42-5116728 18

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Hz,3 phase Sales tax SED Evaporator Unit Sales tax SED Installation of refrigeration system Refrigeration System For Chiller No2 Size 40'x20'x14' Air cooled condensing unit model Sales tax SED Evaporator Unit Sales tax SED Installation of refrigeration system Refrigeration System For Blast Freezer Size 30'x15'x14' Air cooled condensing unit Sales tax SED Evaporator unit cooler model KHU 85--4 Sales tax SED Installation of refrigeration system Refrigeration System For Freezer Store Size 40'x20'x14' Air cooled condensing unit model KE 8 S (7 1/2 HP) Sales tax SED Evaporator unit cooler model KHL 30 -- 2 Sales tax SED Installation of refrigeration system Refrigeration System For Ante Room

15% 1% 2 15% 1% 2

350,000

80,000

195,000 13,000 700,000 105,000 7,000 160,000

2 15% 1% 2 15% 1% 2 16 3 15% 1% 3 15% 1% 2

650,000

1,300,000 195,000 13,000 700,000 105,000 7,000 160,000 2,000,000 2,850,000 427,500 28,500 1,050,000 157,500 10,500 290,000

350,000

80,000 125,000 950,000

350,000

145,000

2 15% 1% 2 15% 1% 2

440,000

880,000 132,000 8,800 330,000 49,500 3,300 130,000

165,000

65,000

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Size 15'x10'x14' Air cooled condensing unit modal KE 3 S (3 HP) Sales tax SED Evaporator unit cooler model KHM 21-1 Sales tax SED Installation of refrigeration Sub Total
5

1 15% 1% 1 15% 1% 1

250,000

125000

40,000

250,000 37,500 2,500 125,000 18,750 1,250 40,000 19,385,000

Machinery & Equipment 1 110 4 10 100 500 500 4 130,000 80 35,000 6,500 800 600 600 50,000 130,000 650,000 8,800 140,000 65,000 80,000 300,000 300,000 650,000 200,000 40,000 2,563,800 10 2 30,000 1,200,000 300,000 2,400,000 2,700,000 24,648,800

Weighing scale Lab equipment Tube lights Sorting tables Conveyor/hooks Trolleys S.S hooks with bearing Over head mobile hook Chiller Hooks Slaughtering kit& equipment Mincing machines Booring Sub Total Others Ac( for factory and admin hall) Generators Sub Total Grand Total 10.4 Slaughtering Tools

Relatively fewer tools are required for the slaughter and some can be made by local metal workshops or blacksmiths. The most commonly used slaughtering tools are shown in the Figure
5

1) Mr. Younas Quereshi: Manager IFFCO (Mob.0334-3997494), Mr.Farooqi : Sales coordinator IFFCO (Mob.0333-4671158),154/4 Block G, Model Town, Lahore Tel:042-5869882, UAN :111-433267. 2) Mr.PAPU, Tel: 0300-4929979, Super Asia Engineering, Varrn Road, FarooqAbad. Shiekhupura. 20

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10.4.1 Skinning Knife As the name implies, this knife is used for the removal of the animal's skin. Also with a six-inch blade and characteristically curved backwards to allow for ease of operation, it can be used to scrape off burned hair from carcasses being dressed with the skin-on. 10.4.2 Meat Saw A replaceable blade handsaw, which is used in sawing through bone. 10.4.3 Meat Chop: Also called the cleaver, the meat chop is a heavy axe used for separating heavy structures, e.g. the head from the neck or the shanks from the leg. 10.4.4 Spreader: A metal device for suspending the animal body and spreading out the legs for dressing and inspection. 10.4.5 Grinding and Honing Stones: Grinding stones are coarse grained and used for the initial sharpening of knives into thin edges, and then finished with the homer, which is of fine-grain to provide extra thinness. Either oil or water may be used in sharpening knives to prevent the stone from heating the knives. 10.4.6 Steel: A long, tapering rounded and smooth metal rod on which knives are smoothened from time to time to improve keenness. 10.4.7 Meat Tree/Hooks: Metal devices with bent-out curved ends for holding or displaying parts of the slaughtered meat and offal for washing and inspection. The pictures of the slaughtering tools are shown in the following Figure 10-1.

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Figure 10-1 Slaughtering Tools

10.5 Van A chiller van which includes reefer container and refrigeration systems will be required for delivery of meat, especially for the delivery to airport for export of meat. Its estimated cost is Rs. 1, 200, 000. 10.6 Raw Material The following is the material used for cleaning purposes. The costs of these materials have been given in financial model.
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Sulfuric Acid Caustic Soda Ferric Chloride Sodium Hypochlorite Coagulation Material (Alum) Anion & Cation Resins

11 REGULATIONS
11.1 Registration Permission is required from Local Municipal Authority before starting construction of an abattoir. Application for permission is to be submitted to: Secretary Livestock Department Local municipal authority No fee is required for submission of application. Public veterinarian/doctor will be required for inspection of meat who will work on behalf of MCL. 11.2 Taxation There is no General Sales Tax on abattoir services. Income tax will be levied as per status i.e. individual, partnership, AOP, or company. 11.3 Laws The regulatory laws governing the slaughtering of animals are as under The Punjab Animal Slaughtering Control Act, 1963 (West Pakistan Animals Slaughter Control Act, 1963) Photocopies of above laws are being annexed for ready reference.

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12 PROJECT ECONOMICS
12.1 Project Cost Table 12-1 Total Project Cost Description Land Building Furniture & Fixtures Plant & Machinery: Transport /van Sub Total Contingency (5%) Working Capital Total Cost Table 12-2 Financing Plan Financed by Sponsors Equity Bank Finance Total Cost Table 12-3 Projects Returns Description Net Present Value IRR Pay Back Period Values In Million In percentage In Years 424,414 49 4.58 percentage 40% 60% Value in Rs. 38,949,996 58,424,994 97,374,990 Rupees 25,600,000 32,625,000 500,000 24,648,800 650,000 84,023,800 4,201,190 9,150,000 97,374,990

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13 FINANCIAL ANALYSIS
13.1 Projected Balance Sheet
Year - I Tangible Fixed Assets Cash in Hand / Bank 58,926 8,917 67,843 Owners Equity Balance of Profit/(Loss) Liabilities against Asset subject to Finance Lease Bank Loan 38,950 (26,582) Year - II 63,417 (11,028) 52,388 38,950 (38,659) Year - III 68,687 (248) 68,439 38,950 (18,741) Year - IV 64,122 61,550 125,672 38,950 42,919 Year - V 60,359 173,593 233,952 38,950 156,268 Year - VI 57,220 346,585 403,805 38,950 331,924 Year - VII 54,566 593,290 647,856 38,950 582,619 Year - VIII 52,296 930,292 982,588 38,950 924,958 Year - IX 50,329 1,374,913 1,425,242 38,950 1,376,321 Rupees (ooo) Year - X 48,606 1,949,164 1,997,770 38,950 1,958,820

55,475 67,843

52,097 52,388

48,230 68,439

43,803 125,672

38,734 233,952

32,931 403,805

26,287 647,856

18,680 982,588

9,971 1,425,242

1,997,770

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13.2 Projected Profit &Loss Statement

Year - I Revenue Expenses Operational Cost Operation Salaries Administrative Salaries Depreciation 921,686 55,320 1,380 7,549 985,935 (32,816) Lease Finance Charges Financial Charges Profit before Taxation
Taxation

Year - II 1,100,852

Year - III 1,271,485

Year - IV 1,468,565

Year - V 1,696,192

Year - VI 1,959,102

Year - VII 2,262,763

Year - VIII 2,613,491

Year - IX 3,018,582

Rupees (ooo) Year - X 3,486,462

953,119

1,037,204 66,673 1,518 6,384 1,111,780 (10,928) 7,652 7,652 (18,580) (6,503) (12,077) (26,582) (38,659)

1,143,697 82,707 1,670 5,604 1,233,679 37,806 7,163 7,163 30,643 10,725 19,918 (38,659) (18,741)

1,261,290 99,233 2,012 4,565 1,367,100 101,465 6,603 6,603 94,862 33,202 61,660 (18,741) 42,919

1,391,159 118,713 2,214 3,763 1,515,849 180,343 5,961 5,961 174,382 61,034 113,349 42,919 156,268

1,534,611 143,449 2,435 3,140 1,683,635 275,467 5,227 5,227 270,240 94,584 175,656 156,268 331,924

1,693,094 174,266 2,679 2,653 1,872,692 390,071 4,386 4,386 385,685 134,990 250,695 331,924 582,619

1,868,215 209,962 2,946 2,270 2,083,394 530,097 3,423 3,423 526,674 184,336 342,338 582,619 924,958

2,061,757 254,608 3,524 1,967 2,321,856 696,726 2,321 2,321 694,406 243,042 451,364 924,958 1,376,321

2,275,703 307,948 3,876 1,723 2,589,251 897,211 1,059 1,059 896,152 313,653 582,499 1,376,321 1,958,820

8,080 8,080 (40,895) (14,313) (26,582) (26,582)

Profit after Taxation Acc. Profit b/f Accumulated Profit c/f

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13.3 Projected Cash Flow Statement

Rupees (ooo) Year 1 Profit before financial charges & taxation Depreciation Cash form other Soureces Owners Bank Finance Total Sources Applications: Fixed Assets Re -payment of Loan Lease Re-payment Tax
Cash Increase/(Decrease)

Year 2 (10,928) 6,384 -4,543 -4,543 10,875 11,030 6,503 15,402 (19,945) 8,917 (11,028) -11028.49395

Year 3 37,806 5,604 43,410 43,410 10,875 11,030 10,725 32,630 10,780 (11,028) (248) -248.0630868

Year 4 101,465 4,565 106,030 106,030 11,030 33,202 44,232 61,798 (248) 61,550 61550.26241

Year 5 180,343 3,763 184,106 184,106 11,030 61,034 72,064 112,043 61,550 173,593 173592.7968

Year 6 275,467 3,140 278,606 278,606 11,030 94,584 105,614 172,993 173,593 346,585 346585.416

Year 7 390,071 2,653 392,724 392,724 11,030 134,990 146,020 246,704 346,585 593,290 593289.8386

Year 8 530,097 2,270 532,368 532,368 11,030 184,336 195,366 337,002 593,290 930,292 930291.6893

Year 9 696,726 1,967 698,693 698,693 11,030 243,042 254,072 444,621 930,292 1,374,913 1374912.882

Year 10 897,211 1,723 898,934 898,934 11,030 313,653 324,683 574,251 1,374,913 1,949,164 1949164.011

(32,816) 7,549 (25,267) 38,950 58,425 97,375 72,108 66,475 11,030 14,313 63,191 8,917 8,917 8916.53245

Opening Balance Closing Balance

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14 KEY ASSUMPTIONS
14.1 Table 14-1 Operating Assumptions Production period 1st year capacity utilization 14.2 Table 14-2 Cost Assumptions Initial (Year 1) Average cost (Rs.) Small Animal Large Animal Fright Charges (for UK only) Growth rate 14.3 Table 14-3 Sales Assumptions Products Local Sales Bone less Mixed meat minced meat Pieces Full Cattle meat(bone less) Minced cattle meat Mixed cattle meat Exports Veal meat Table 14-4 Expected Revenue from Services Services Cold Storage facility Slaughtering Services Table 14-5 Expected Revenue from By Products By Products Skin Feet and Head Small Animal Large Animal Small Animal Large Animal
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360 days/annum 35%

Values In Rs. 4,500 20,000 80/kg 10%

Per Kg Sale Price In Rs. 250 260 300 250 225 155 170 130 300

Rs. Per KG 8.5 6

Per Kg Sale price In Rs. 200 800 150 200

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Intestines Pluck Dried Blood6

Small Animal Large Animal Small Animal Large Animal Small Animal Large Animal

15 20 75 90 30

Table 14-6 Financial Assumptions Project Life Debt: Equity Interest Rate on Long Term Debt Debt Tenure Debt Payment per year 10Years 60:40 14% 10Years 2

It is assumed to get 1 kg dried blood from small animal &10 kg from big Animal
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15 A N N E X U R E
THE PUNJAB ANIMALS SLAUGHTER CONTROL ACT, 1963 (W.P. Act III of 1963) CONTENTS Sections 1. 2. 3. 3-A. 4. 5. 6. 7. 8. 8-A. 8-B. 8-C. 9. 10. 11. 12. Short title, extent and commencement. Definitions. Restriction on slaughter of animals. Presumptions. Examination in stock-yard. Prohibition to cause abortion. Power to exempt. Power of entry, search and seizure. Penalty. Offences to be cognizable and bailable. Cognizance of offences. Offences to be tried by whom. Forfeiture. Reward to informers. Rules. Repeal.

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THE PUNJAB ANIMALS SLAUGHTER CONTROL ACT, 1963 (W.P. Act III of 1963) [17 April 1963] An Act to prohibit the slaughter of useful animals and to regulate the slaughter of other animals in the Punjab Preamble. WHEREAS it is expedient to prohibit the slaughter of useful animals and to regulate the slaughter of other animals in the province of the Punjab; It is hereby enacted as follows:1. Short title, extent and commencement. (1) This Act may be called the Punjab Animals Slaughter Control Act, 1963. It extends to the whole of the province of the Punjab, except the Tribal Areas. (3) This section shall come into force at once and the remaining provisions of the Act or any of them shall come into force in such area and on such date as Government may, by notification in the official Gazette, specify in this behalf.

2. Definitions. In this Act, unless the context otherwise requires, the following expressions shall have the meanings hereby respectively assigned to them, that is to say:(a) Animal means a bullock, bull, cow, buffalo, buffalo-bull, goat and sheep of any age; (b) Carcass means the dead body of an animal and includes a part thereof; (c) Cull means to pick an animal which is suitable neither for breeding purposes nor for draught purposes; (d) Government means the Provincial Government of the Punjab]; (e) Local Authority means an urban local council constituted under the Punjab Local Government Ordinance, 1979 (VI of 1979) or a Cantonment Board established under the Cantonments Act, 1924 (II of 1924);] (ee) meat means the meat of an animal;

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(f) prescribed means prescribed by rules made under this Act; (ff) Rules mean rules made under this Act; (g) Slaughter means to kill animals by any means; (h) slaughter-house means any building or premises used for slaughtering animals and approved by the local authority concerned; (i) stock yard means any enclosure, approved by a local authority where animals are assembled for examination by the Veterinary Officer to determine whether they are suitable for slaughter or not, or where animals approved for slaughtering are housed until they are removed to the slaughter-house; (j) Area means an area which the Government may, by notification in the official Gazette, declare to be an area for the purposes of this Act; (k) Useful animal means (i) a female sheep or goat below the age of one year and six months; (ii) a female sheep or goat of the age exceeding one year and six months but not exceeding four years, which is pregnant or fit for breeding purposes; (iii) Any female animal, other than sheep, or goat below three years of age; (iv) Any female animal, other than sheep, or goat which is pregnant or in milk or fit for breeding purposes; (v) Any female animal, other than sheep or goat between three to ten years of age, which is fit for draught purposes; but does not include any such animal which on account of culling, injury, illness or other cause, is certified in writing by a Veterinary Officer or any gazetted officer of the Livestock and Dairy Development Department] as not likely to live or as no longer a useful animal for the purposes of this Act; and (vi) any male sheep or goat below the age of two months; (l) Veterinary Officer means an officer of the Livestock and Dairy Development Department], not below the rank of a Veterinary Assistant Surgeon, and includes an Officer-in-charge of a slaughter-house, provided that such officer-incharge possesses a degree or diploma from a recognised Veterinary or Animal Husbandry College.

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3. Restriction on slaughter of animals. (1) No person shall slaughter a useful animal. (2) No person shall slaughter an animal (a) Unless such animal has been approved as hereinafter provided, for slaughter; (b) Except in a slaughter-house and during the hours prescribed therefor and (c) on Tuesday and Wednesday or on such other day or days as Government may by notification in the official Gazette, specify in this behalf: Provided that nothing contained in this section shall apply to the slaughter of any animal (i) By a Muslim on the day of Eid-ul-Azha and the two succeeding days; or (ii) Which on account of illness, injury or other cause is likely to die before it can be presented to the officer-in-charge of slaughter-house. (3) No person shall, directly or indirectly, (a) sell, keep, store, transport, offer or expose for sale, or hawk any meat or carcass of any animal which has not been slaughtered in a slaughter-house and does not bear the stamp or mark of the slaughter-house prescribed by the local authority in this behalf; or (b) Sell or cause to be sold any meat at a place other than that set apart or approved for this purpose by the local authority. 3-A Presumptions. In every prosecution under this Act, the court shall presume (a) that any meat or carcass found in possession of any person who is, or has been, habitually selling, keeping, storing, transporting, offering or exposing for sale, or hawking the meat or carcass, was being sold, kept, stored, transported, offered or exposed for sale, or hawked, as the case may be, by such person; (b) That any meat or carcass which does not bear the stamp or mark of a slaughter-house has not been slaughtered in a slaughter-house or during the hours prescribed therefor; and

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(c) that any person who is in possession of the premises where an offence under this Act has been or is being committed by another person has abetted that offence.] 4. Examination in stock-yard. (1) Any person intending to slaughter an animal in slaughter-house shall produce the animal in the stock yard for examination at any time during the hours fixed by the local authority concerned for inspection. (2) After examination of any such animal, the Veterinary Officer may approve it for slaughter: Provided that no useful animal shall be so approved. (3) Any person aggrieved by a decision of the Veterinary Officer may, within twenty-four hours of such decision, prefer an appeal from such decision, to such authority as may be prescribed. (4) Subject to the decision of the appellate authority the decision of the Veterinary Officer shall be final. 5. Prohibition to cause abortion. No person shall voluntarily cause a pregnant sheep mis-carry or induce premature birth of its young. 6. Power to exempt. Government may, under special circumstances subject to such conditions as it may deem fit to impose, exempt any person or class of persons from all or any provisions of this Act. 7. Power of entry, search and seizure. (1) A Veterinary Officer or any gazetted officer may (a) enter and search a slaughter-house or any other premises where he has reason to believe that an offence under this Act or rules has been, is being or is about to be committed, and may seize any animal, carcass or meat, in respect of which such offence has been, is being or is about to be committed, as the case may be; and (b) Arrest or cause to be arrested any person who, in his view, commits any offence under the provisions of this Act or the rules. (2) A Veterinary Officer or a gazetted officer arresting or causing the arrest of any person, or seizing or causing the seizure of any animal, carcass or meat shall (a) without unnecessary delay, and subject to the provisions of clause (b) and clause (c) as to release on bond, take or send the person arrested or the animal carcass or meat seized to the police-officer alongwith a report, in writing, stating facts constituting the offence for which such person has been arrested or such animal, carcass or meat has been seized;

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(b) Release such person on his executing a bond to appear, when so required, before the police-officer; and (c) Release such animal to the person from whose possession it has been seized or to the owner thereof on his executing a bond to produce it, when so required, before the police-officer. Explanation In sub-section (2) police-officer means the officer-in-charge of the nearest police-station.] 8. Penalty. (1) Whoever contravenes any provision of this Act (other than the provisions of clause (c) of sub-section (2) of section 3) or the rules shall, on first conviction, be punished with imprisonment for a term which may extend to one month, or with fine which shall not be less than one hundred rupees or with both and, on second or subsequent conviction, with imprisonment which may extend to six months, or with fine which shall not be less than two hundred rupees or with both. (2) Whoever contravenes the provisions of clause (c) of sub-section (2) of section 3 shall be punished with imprisonment which may extend to three years, or with fine which shall not be less than three hundred rupees, or with both, and the court trying the case relating to such contravention shall direct that any animal slaughtered in contravention of the provisions of that clause shall be forfeited to the Government. (3) An attempt to contravene any provision of this Act or the rules and an abetment of such contravention shall be punished as an offence under this Act.] 8-A. Offences to be cognizable and bailable. Notwithstanding anything contained in the Code of Criminal Procedure, 1898, an offence punishable under this Act or the rules shall be cognizable and bailable within the meaning of the said Code. 8-B. Cognizance of offences. No court shall take cognizance of any offence punishable under this Act or the rules except on a report, in writing, of the facts constituting such offence made by a Veterinary Officer or a gazetted officer. 8-C. Offences to be tried by whom. No court inferior to that of a magistrate of the first class shall try any offence punishable under this Act or the rules.] 9. Forfeiture. The court trying an offence under this Act may direct that any animal, carcass or meat in respect of which the court is satisfied that an offence under this Act has been committed, be forfeited to Government. 10. Reward to informers. The court trying an offence under this Act may direct that an amount not exceeding twenty per cent of such sum as may be realized by way

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of fine or under section 517 of the Code of Criminal Procedure, 1898, (V of 1898), on account of the sale or disposal otherwise of the animal, carcass or meat in respect of which an offence under this Act has been committed, be awarded to the person or persons supplying information relating to the commission of the offence. 11. Rules. Government may frame rules

(i) to regulate the procedure for the disposal of animals, carcass or meat seized under this Act; and (ii) generally to give effect to the provisions of this Act. 12. Repeal. Section 43 of the Punjab Laws Act, 1872 is hereby Repealed.

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